Last week I posted about the Senate investigating offshore banks like UBS in an effort to thwart wealthy US citizens from evading their tax obligations to the tune of $100 billion.  Well, according to this article that Fec linked to UBS is discontinuing its offshore banking operations for US clients.  From the article:

UBS, the world’s largest private banking group, stunned the
financial world yesterday when it shelved all its offshore banking
services for US residents and appeared to rip up the traditional Swiss
franchise of secrecy, saying it was co-operating with the US’s tax
authorities to expose tax cheats…

"I am here today to make it absolutely clear that UBS genuinely
regrets any compliance failures that may have occurred," said Mark
Branson, UBS’s Zurich-based chief financial officer of global wealth
services.

"We have decided to exit entirely the business in question," he said
of questionable banking services for US residents. "That means UBS will
no longer provide offshore banking or security services to US residents
through our bank branches."

But he also announced that UBS was now working with the US
Government to "identify the names of US clients who may have engaged in
tax fraud".

He said while Swiss banking laws prevented client disclosure, "such
privacy protections do not apply when disclosure of client names is
requested in connection with an investigation of tax fraud". Mr Branson
said the 80,000 worldwide employees of UBS — the investment bank has a
substantial presence in Australia — were alarmed by reports of
misconduct.

I’m feeling suddenly heartened, at least a little bit.

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
prosecutors.

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.