You read the title of this post, Immigration Reform, and thought you’d be reading a rant involving leaky borders and illegals from south of the border overwhelming our society didn’t you? Gotcha! Actually I’m writing about the illegal immigration of our tax dollars to offshore accounts, to the tune of $100 billion.
The Wall Street Journal has an article about a US Senate investigation into allegedly illegal tax shelters that are sold by European firms UBS AG and LGT Group to wealthy Americans. From the article:
The U.S. loses about $100 billion annually due to
offshore tax evasion, according to a Senate probe that is taking aim at
Swiss bank UBS AG and Liechtenstein’s LGT Group for allegedly marketing tax-evasion strategies to wealthy Americans.
U.S. clients hold about 19,000 accounts at UBS, with
an estimated $18 billion to $20 billion in assets, in Switzerland,
according to the findings from the Senate probe and Justice Department
It seems that the IRS and their counterparts in other countries are finally getting serious about going after the tax shelters that the rich have enjoyed:
The probe adds fuel to a burgeoning effort by tax authorities around
the globe to shatter the veil of bank secrecy that tax havens hide
behind in catering to the world’s elite.
Update 7/21/08: Via Fec I see that UBS is dumping its offshore banking services for US clients. Will miracles never cease?
Two years ago I was putting myself through a self-education program on taxes and reading David Kay Johnston’s fine books and articles on the subject of tax reform, and back then he wrote an article for the NY Times on a Senate investigation into tax cheating by the super-rich. This has been going on for a long time and it is having a very big impact on our society.
It’s not fair to lay everything at the feet of the rich, but it would be equally unfair to not acknowledge the role that their active tax evasion has in the breakdown of our tax system. In his books Johnston does a fine job of explaining how tax reform could actually result in lower effective tax rates for everyone, but with the vested interests in just isn’t happening. Unfortunately the entire tax system is so opaque that we average citizens don’t have the ability to see how royally screwed we are, but maybe, just maybe, with more investigations like those the Senate is undertaking we can get some sunlight on this problem and get it fixed.
Or hell can freeze over.