Tax havens: the heart of the global economy “[...] tax havens have grown so fast in the era of globalization, since kind of the 1970s, that they have now become right—they are now right at the heart of the global economy and are absolutely huge. I mean, there are 10—anywhere between 10 and 20 trillion U.S. dollars sitting offshore at the moment. Half of world trade is processed in one way or another through tax havens. It’s all around us, and it’s absolutely huge. [...]” http://www.australia-offshore.com/offshore-banking-and-tax-havens-have-become-the-heart-of-global-economy/

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“It is one of the strangest and most important financial whistleblower cases of all time.

Bradley Birkenfeld once lived the high life as secret Swiss banker at UBS in Geneva. Then he delivered some of the world’s best-kept secrets to the US government, expecting a great reward. And now he sits in federal prison in Pennsylvania [...]“: http://www.cnbc.com/id/41257962

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Swiss Voters Reject Proposal to Impose Higher Tax for Top Salary Earners: “Switzerland’s voters rejected a proposal to increase taxes for the nation’s top earners, following the recommendations of most national leaders.

In a referendum today, 59 percent of voters turned down the proposal by the Social Democrats to enact minimum taxes on income and wealth. Residents would have paid taxes of at least 22 percent on annual income above 250,000 francs ($249,000), according to the proposed changes.

Switzerland’s executive and parliamentary branches had rejected the proposal, saying it would interfere with the cantons’ tax-autonomy regulations. [...]” http://www.bloomberg.com/news/2010-11-28/swiss-voters-reject-proposal-to-impose-higher-tax-for-top-salary-earners.html

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“Switzerland’s tax treaty with Germany may finish banking secrecy in Europe and prompt withdrawals as Swiss banks will no longer guarantee client confidentiality.

The treaty will allow investigators to request Swiss assistance in tracking down undeclared money deposited by German nationals, said Eric Jucker, a Zurich-based tax lawyer. It probably will be signed this month by Swiss Finance Minister Hans-Rudolf Merz and his German counterpart Wolfgang Schaeuble.

“The agreement that will come into force will go very much further on the information that can be exchanged between officials,” Jucker said. “Banking secrecy will come to an end” for clients who are not Swiss as the country adopts international tax standards, he said. [...]” http://www.bloomberg.com/news/2010-09-30/swiss-tax-treaty-with-germany-may-finish-bank-secrecy-in-europe.html

Cf. http://theunitedpersons.org/blog/tag/switzerland

http://theunitedpersons.org/blog/tag/cartel

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The European Tax Cartel and Switzerland’s Role, http://www.institutconstant.ch/pdf/IC-Tax_Cartel.pdf , Summary:

• Most European States expect to record high increases in public spending, due to the lack of adaptation of social dependency programs in the face of demographic change. The taxpayers’ fiscal exhaustion leads some Member States to use the European Union to centralize and standardize tax systems in order to render less competitive those countries deemed too attractive for capital or residents, increasingly encouraged to “vote with their feet”.

• Tax centralization at European Union level progresses at a much faster pace than is generally perceived. High minimal rates for the VAT, which represents more than one third of all tax revenues, the standardization of excise taxes and tariffs, the Savings Tax Directive and the project of a Common Consolidated Corporate Tax Base for corporate income taxes are all examples suggestive of the extent to which the European tax cartel is already a reality. The EU makes use of such dubious concepts as “harmful tax competition” or “fiscal state aid” in order to attack less penalizing tax regimes, as in the case of the current tax dispute with Switzerland.

• Arguments in favor of tax standardization generally rely on an erroneous conception of the functioning of markets and ignore the negative effects of the State’s fiscal weight and the role of tax planning in the international allocation of capital. Thus, “fair competition” as advocated by the European Commission through tax standardization is nothing more than a form of protectionism. Fiscal diversity, far from endangering the financing of “public goods” provided by the State, tends on the contrary to improve their relation to the tax burden. Diversity also leads to efficiency gains in international capital markets.

• Fiscal diversity places some limits on an excessive tax burden and thus favors capital accumulation at the source of innovation and economic progress. It leads to greater overall prosperity than under a standardized tax regime. Tax competition is also an essential condition for institutional innovation by allowing comparisons between countries and the emulation of best practices. Finally, fiscal diversity is a necessary bulwark for individual freedom and legitimate rights by restraining the potential for abuse of the monopoly of force intrinsic to the State and by making “voting with one’s feet” easier.

• In view of the dangers involved in the cartelization of tax systems in Europe, Switzerland continues to play an essential role. Switzerland’s enlightened dissidence contributes significantly to the preservation and increase of productive capital while enhancing individual rights and choices, in the interest of all Europeans and the future of Europe.

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“Lump-sum taxation is a special way of assessing income and wealth. It is used when the assessment of worldwide income and wealth of a taxpayer would involve substantial practical difficulties.

“The basic prerequisite for lump-sum taxation is that the persons concerned must not pursue an occupation in Switzerland. This type of taxation is available to those who make Switzerland their tax home for the first time [...]. Foreigners enjoy this right indefinitely [...]

“The lump-sum tax is calculated according to the total amount of annual costs for livelihood expended by the taxpayers in Switzerland and abroad for themselves and their dependents living in Switzerland. To simplify the calculation, expenses for federal and most cantonal taxes are deemed to be five times the notional rental value of one’s home. No deductions may be claimed.

“The law also provides for an additional minimum calculation according to which the tax may not be lower than the tax on specified gross elements of income and wealth according to the regular tax rate. This income includes all income from Swiss sources as well as income for which the taxpayer claims relief from foreign taxation in accordance with a double taxation agreement concluded by Switzerland.

“Lump-sum taxation is available to all persons meeting the specified prerequisites, irrespective of the amount of their income. [...]

“Some states, such as Germany, France, Italy, Belgium and Sweden, consider lump-sum taxation to be harmful tax competition, as this type of assessment is said to lure wealthy taxpayers from these countries to Switzerland. In general, the tax burden of these taxpayers is indeed reduced. However, this has less to do with the type of taxation than with the generally lower tax burden in Switzerland than in the countries of origin.

“Other countries have also taken measures to attract wealthy taxpayers. Not all of these countries are so-called tax havens. The best-known example is the UK, which taxes certain foreigners only with respect to the part of their income transferred to the UK from abroad. Even though not directly comparable, the British “non-dom system” (GBP 30,000 lump-sum tax) is sometimes more advantageous, since unlike Switzerland, it allows time-limited employment. Many foreigners, including Swiss citizens working for a few years in the UK, benefit from this rule.

“The Federal Council does not accept the accusation that lump-sum taxation encourages tax flight to Switzerland from abroad. It believes that abolishing lump-sum taxation would not make any significant contribution to preventing national and international tax flight in light of the existing measures to prevent abuses.”

http://www.efd.admin.ch/dokumentation/zahlen/00579/00608/00720/index.html?lang=en

Cf. http://www.horizontalimage.com/2010/03/why-should-one-go-for-a-swiss-bank-account

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German tax case: the prospect of the authorities obtaining the CD for €2.5 million that contains sensitive data relating to the bank accounts of about 1,500 German citizens (who have allegedly stashed their money in Switzerland in order to avoid paying tax in Germany) persuaded 9547 tax evaders to voluntarily turn themselves in. 1529 of them put €155 million in as additional payment. http://magazine.web.de/de/themen/finanzen/steuern/10053114-10-000-Steuersuender-zeigen-sich-selbst-an.html [in German]

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“The German government has signalled it intends to purchase a CD containing information about tax evaders with Swiss bank accounts [...] German Chancellor Angela Merkel [...] was adamant that the CD was worth the risk. “Everything should be done to get this data,” she said. “If this data is relevant, it must be our objective to acquire it,” she said.

The CD in question is believed to contain sensitive data relating to the bank accounts of about 1,500 German citizens who have allegedly stashed their money in Switzerland in a bid to avoid paying tax in Germany. An informant offered the CD to the German tax authorities some time ago for an asking price of €2.5 million ($3.5 million). Although the chancellor has so far been unwilling to commit herself to the deal, she sounded determined at the press conference. She wants the CD, even if the price is high — and not just financially.

The chancellor has effectively given her blessing to German authorities accepting the indecent proposal. She called Finance Minister Wolfgang Schäuble and informed him that he has her support “in bringing about a solution,” according to an official government statement issued on Monday.

Schäuble, for his part, points out that the current case is similar to another case that involved the purchase of stolen data relating to accounts in Liechtenstein which made headlines two years ago. [...] In 2007, the Bundesnachrichtendienst (BND), Germany’s foreign intelligence agency, paid a thief about €5 million for stolen data that included evidence of tax evasion by German citizens in the tiny Alpine principality of Liechtenstein.” http://www.spiegel.de/international/germany/0,1518,675371,00.html

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