Income Inequality

Nomads with a fistful of passports and several far-flung homes

Haig Simonian in Zurich, Financial Times, US presses Switzerland over secret accounts:

Almost two years after Switzerland signed a landmark agreement with the US to identify certain bank customers, the two countries are set for another confrontation over allegations that Swiss private bankers helped wealthy Americans to evade tax.

…Until now, only UBS, the world’s second-biggest wealth manager, and Credit Suisse, which in July revealed it was under US investigation, were known.

However, the latest documents refer – although not by name – to at least six other Swiss banks, one Liechtenstein bank and at least one Swiss public sector cantonal bank.

The court documents allege that some of the banks offered wealthy Americans the opportunity to open secret accounts. They also allege that some of them provided investment advice, in contravention of US Securities and Exchange Commission rules…

In late 2010, an investigation by the CBC and the Globe and Mail revealed that more than 1,700 offshore accounts of Canadians were on a list of secret bank accounts in a single financial institution, the HSBC Private Bank (Suisse) SA. British, French, German and Indian investigators admit targeting Swiss banks for assistance to tax evaders. Other developed nations have followed suit, resulting in considerable political pressure to drop or soften the examinations.

That some of the very, very rich have no hesitation in moving money to avoid taxation is no surprise. It has long been understood and privately acknowledged by the helping professions: financial advisers, tax lawyers and accountants. There is little sense of guilt when actions shift from tax avoidance to evasion.

And, why should there be? What’s a little cunning circumvention when it’s for the benefit of friends and colleagues. The Atlantic Magazine noted the common interests of the crème de la crème:

“These global super-rich work and play together. They jet between the Four Seasons in Shanghai and the Four Seasons in New York to do business; descend on Davos, Switzerland, to network; and travel to St. Bart’s to vacation. Many are global nomads with a fistful of passports and several far-flung homes. They have more in common with one another than with the folks in the hinterland back home, and increasingly, they are forming a nation unto themselves.

This international plutocracy is emerging at a moment when globalization and the technology revolution are hollowing out the middle class in most Western industrialized nations.

…Among the big political questions of our age are whether they will notice that everyone else is falling behind, and whether they will decide it is in their interests to do something about that.

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