Now that the Swiss government, the US Internal Revenue Service and the major Swiss bank, UBS, have agreed to dislose up to four thousand US tax evaders names and details who have secret accounts in Switzerland in order to avoid paying US taxes – the Ship Hits the Fan. Unlike in the case of Financial Reforms the US administration has decided that tax dodging, even by the wealthiest, cannot be tolerated. The Wall Street Journal has delineated well the tax evaders’ conundrum. And according to the Investment News this is just the start of renewed efforts by the IRS:
IRS commissioner Doug Shulman said during a press conference that the accounts being turned over held about $18 billion in assets [averaging to $4M per tax evader]at their peak. He also made clear that the IRS intends to use the UBS case as part of a broader effort to crack down on offshore tax evaders. The case, Mr. Shulman said, “sends a signal” that the IRS is willing to pursue other institutions. “We are very interested in going after people with hidden assets offshore. Expect us to continue to be aggressive,” he said during the press conference. In fact, tax attorneys who specialize in offshore tax evasion said that one of the key details to emerge from the agreement was that the IRS is widening the scope of the investigation.
I expect 3 things from this investigation. First, around 40% of the tax-evaders will be from the financial community. Second, there will be some significant professional, artistic, and political names among the 4458 names. And third, there will be more spontaneous and more sophisticated “townhall and other protests” against the Obama administrations Health, Energy, and Financial Reforms. Talk about another delayed depth charge of elite financial irresponsibility set to explode. This story has legs.