Offshore private banking model is dead in U.S. according to experts

September 1, 2009 by · Leave a Comment
Filed under: Global News 

It won’t be die but private offshore banking will continue to be under scrutiny as tax revenues are falling and our budget expense rise.  The United States needs all the tax receipts it can get with all these massively expensive social programs coming online.  We can not have the wealthiest portion of our population not pay their fair share of the taxes by making income in the U.S. but then sending the proceeds overseas so they are essentially not taxed.

Regardless if you agree with the tax structure, once you get everyone paying in the system, if they still strongly disagree with the level of taxation, the taxpayers have a strong incentive to lobby their representatives for tax reforms.  Right now, our wealthy class doesn’t seem to care either way because they have found a loophole to avoid having their wealth taxed like the rest of us.  Right incentives are key to having a functioning democracy.

News:

Reuters, Zurich – A U.S. tax probe against Swiss bank UBS has killed traditional offshore banking and wealth managers will have to improve their offers to survive, bankers and industry experts said on Tuesday.

Offshore private banking involves managing the wealth of rich clients from a foreign location.  However, some clients have exploited the system to avoid paying taxes, especially if carried out in traditional banking secrecy strongholds like Switzerland and Liechtenstein.

The situation has been thrust into the limelight since Washington accused UBS of using Swiss bank secrecy laws to help wealthy clients avoid paying taxes and forced it last month to hand over some treasured client data.

UBS’s capitulation to the U.S. tax authorities and a global crackdown on tax evasion are denting the allure for banks to shelter untaxed money, experts say.

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