1/24/12 Links worth noting: Germany rejects Swiss banking secrecy deal; Labor Devaluation
1/24/12 Links worth noting by Linda Beale:
Germany rejects Swiss banking secrecy deal; Labor Devaluation
David Jolly, German Lawmakers Reject Swiss Tax Deal, New York Times (Nov. 23, 2012).
The US and other countries like Germany have been pressing the Swiss on their bank secrecy, which allows U.S. and other foreign citizens to establish bank accounts without the knowledge of the home country and thus hide assets and income from home-country taxation. The US passed laws (called by the acronym “FATCA”) that require foreign banks to actively report information on US accountholders. The hope is that every country will recognize the harm done to tax systems by banking secrecy and join in imposing similar information-reporting requirements.
The Swiss, meanwhile, have been trying to circumvent universal adoption of such laws. See, e.g., Nicholas Shaxson, A scheme designed to net trillions from tax haves is being scuppered, Guardian.com (Nov. 22, 2012). Britain, Luxemburg and Austria are cited as being in the forefront of the scuttling movement: Britain, for example, has entered into a “Rubrik Agreement” with the Swiss.
The Swiss thought they had a deal with Germany. This would be a bilateral deal in which the Swiss agree to an upfront payment in lieu of any back taxes on the accounts and then agree to act as tax collector for the foreign government on the accounts, thus maintaining secret the identity of the foreign taxpayers.
Such an agreement is problematic for two reasons: (i) it requires the foreign government to trust the Swiss banks to pay the right amount over in taxes and (ii) it undermines the drive to eliminate offshore banking secrecy as a cover for tax evasion.
Transparency in international banking and taxation matters would require that banks provide information on accounts held by foreigners to the foreigners’ home jurisdictions, without any account-specific or accountholder-specific request required. The reason for a more transparent rule is that otherwise the home jurisdiction has to have information it does not have (who has an account at a Swiss bank) before it can ask for the information it needs to ferret out who has such an account and may be engaging in tax evasion. The biggest cracks in banking secrecy have thus come from whistleblowers and opportunists who sell account-holder information to purchasing jurisdictions.
Friday, the Germans rejected–for now at least–a German-Swiss deal supported by Chancellor Merkel that had been two years in the making. France is apparently also considering rethinking a similar deal.
The Swiss leverage was clearly stated by Swiss banking official Mario Tuor, who “noted that without a deal, the status quo would remain: German officials can seek specific information from the Swiss government on people suspected of tax evasion, or go back to buying data stolen from Swiss banks. ‘With an agreement, every German taxpayer in Switzerland would be taxed,’ Mr. Tuor said.” German Lawmakers Reject Swiss Tax Deal
The Steady Devaluation of Labor, Two Half Hitches (Feb. 2012).
This is an oldie but goodie, one worth reminding you of (or calling to your attention for the first time).
[The] minimum wage, in constant dollars, has had its ups and downs since 1970 but the overall trend indicated by the straight black line is down. The numbers show that the American economy puts less value on the entry level worker than it did in 1970. Why is that? Are minimum wage workers less intelligent now than they were forty years ago? Are they lazier?
The reason probably has a lot to do with the rise of the global economy and cheaper Chinese labor. It may also have to do with basic attitudes toward labor. Some see labor as a commodity, while others believe it is not.
Representative Steve King (R-IA) on the floor of the House of Representatives last year:
“Labor is a commodity just like corn or beans or oil or gold, and the value of it needs to be determined by the competition, supply and demand in the workplace.”
Samuel Gompers, cigar maker-turned-labor organizer and founder of the American Federation of Labor in the early 20th Century, had a different business ethic related to labor and said this:
“You cannot weigh the human soul in the same scales with a piece of pork.”
Labor advocates actually managed to insert a statement affirming the status of human labor in the 1914 Clayton Antitrust Act: “The labor of a human being is not a commodity or article of commerce.”
cross posted with ataxingmatter