US insistence that the Swiss bank UBS handover client data to the US government authorities is having a ripple effect in the Swiss political and banking circles. For decades, the Swiss banks have maintained secrecy of client information and as a result has attracted many high net worth clients. Swiss laws do allow the banks to divulge data in cases of tax fraud or criminal investigations, the problem is that tax evasion or as they say, forgetting to declare assets, is not considered a crime under Swiss law. Swiss worry that their core model of banking is under threat if they are not able to protect UBS. For UBS this is a conundrum as they do more business in US than they do elsewhere in the world.
I have difficulty understanding why Swiss do not consider tax evasion as a form of tax fraud. Be that as it may, it may also be worthwhile for the US authorities to consider what drives this form of tax evasion by its citizens. As reported in the media, IRS loses out on approximately $100 B in tax revenues due to unreported assets hiding in Swiss banks. This is a lot of money. Could it be that we need to take a closer look at our tax policies and simplify the tax code so that this type of tax evasion is no longer attractive or possible? May be it is time to consider some form of flat tax or fair tax or national sales tax system which is much more equitable and has less loopholes and reasons to evade paying taxes.
Shailesh Kumar is an Entrepreneur, investor and blogger. He writes about value investing at Value Stock Guide. Learn about the stock market and discover the techniques proven to work best for long term investors for finding appropriate stocks to buy in their portfolio to get superior risk adjusted returns.