April 10, 2013
By: Kelly Diamond, Editor
Private account holders should seek safe havens that will actually keep their information and assets PRIVATE and SAFE!
Members of the EU are discussing information disclosures, Israel recently betrayed the trust of its offshore American account holders and Obama is looking to cap what individuals can save.
Off-shore and private accounts are becoming the target du jour for troubled nations that have spent themselves into an economic coma. There was Cyprus who targeted the Russian offshore accounts as well as anyone who managed to save over EUR100k. Then there is the United States who has literally SUED countries who defend their offshore accounts, is NOW reneging on their amnesty program after a recent disclosure agreement made with Bank Leumi of Israel, and thinks retirement accounts should be capped. Then there is Luxembourg and Austria who are considering disclosing foreign account banking information as well.
Granted, Austria and Luxembourg are only discussing disclosures of banking information… not necessarily going after funds inside those accounts. But the motive behind this gesture coupled with where this gesture can lead does not bode well for the savers. Cyprus is what could happen. OR something along the lines of the US and its disreputable IRS amnesty program.
The United States offers – or “offered” depending on what side of the issue you happen to fall in – an “amnesty” program called “Offshore Voluntary Disclosure Program” or OVDP. The program allows individuals to repatriate their wealth and pay the taxes on them with some leniency toward the penalties (mainly averting a prison sentence), fees and interest. The way it works is lawyers submit names of their clients to the IRS to see if they are eligible for that program. The IRS then responds with a letter indicating whether the client is eligible or not. If they are eligible, the lawyers begin the process on their clients’ behalf.
Well imagine everyone’s surprise when the IRS decided to renege on their eligibility notifications! Seven months AFTER they received their eligibility notices! Some of these folks literally were well into the process of paying their back taxes and voluntarily came forward on the word of the IRS’ notice. It appears the majority of cases stem from accounts held in Israel’s Bank Leumi. The IRS investigated this bank and came to an agreement involving account information disclosures. It’s not yet known if these individuals will have the protection of the courts when their lawyers inevitably challenge the revocations; so these individuals could very well have been duped into a prison sentence!
Reuters makes it seem like disclosing account information is not that big of a deal. Isn’t it? If it’s not that big of a deal, how do disclosures lead to letters of recision from the IRS? Why are Austria and Luxembourg thinking of breaking this trust with their clients? A centuries’ old tradition of defending the privacy of savers and account holders is about to be tossed out the window in a back room with EU officials, but that’s no reason to be concerned. I don’t see one rational reason why a government should have the bank account information of a private citizen. It’s no different than getting their hands on my medical files. But the government isn’t interested in whether I’m sick or well… it is interested in how much money I have should the need arise to take it.
I tend to cheer for those who manage to find a way to dodge taxes. The way I cheer for any hero in an action film who narrowly escapes the clutches of their sworn enemy. I don’t find it immoral to not get robbed! (I’m silly, I know.) But this effort in the EU to crack down on tax cheats at this late hour is absurd! They’ve gone this long without that money. They spent as if they had five times the amount they never received. And now they are going to vilify the responsible saver? AGAIN?
The Obama administration recently indicated that they are going to limit how much individuals can keep in their IRA and other retirement accounts. Here is what a senior administration official had to say on this:
“The proposal would save around $9 billion over a decade, while also bringing more fairness to the tax code. Wealthy taxpayers can currently accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
Is someone from the Obama administration REALLY opining about “substantially more than needed to fund reasonable levels” of anything?! The budgetary expectations to be released by the administration in the coming weeks is going to disqualify it entirely from using words like “reasonable”. Capping what individuals can SAVE is not an act of fairness, it’s imposing a disincentive to SAVE MONEY.
All of these developments piling on top of one another makes for an orgy of distrust. And once that trust is violated, private citizens feel exposed, and vulnerable to the parasitic and kleptomaniacal inclinations of their respective governments, there is no repairing the integrity of that trust. Worse yet, countries like Luxembourg run a horrible risk of bringing a lucrative industry to its knees when they start entertaining ideas like disclosing banking information. It holds deposits nearly TEN TIMES its own economy, largely based on the understanding that their information is safe.
Betrayals from banks and governments to turn a quick buck to cover their @sses is short-sighted to say the very least. These actions are taken with the very false assumption that things will carry on as they had… that people won’t make a run on the bank or their currency… that people won’t divest into other more trustworthy accounts… that people will continue to do business in good faith despite the bad faith of their banks and governments.
The spin put on these ideas being tossed about by various countries to compensate for their fiscal and political ineptitude is dizzying. They contend that private account holders “could be” money launderers or tax cheats while having no evidence to that effect, but the suspicion alone is sufficient to warrant seizures. This smear campaign against those with wealth seems to make robbing them blind palatable and a noble alternative to austerity measures. Take NO gesture by government or banks lightly… they aren’t going into secret meetings to share recipes and talk football.