The Senate’s leading opponent of tax competition is Carl Levin of Michigan, and a subcommittee he runs held a hearing yesterday to bash low-tax jurisdictions.
His main target was the Swiss banking and finance conglomerate UBS, which sent its employees to the United States to solicit and serve clients — an approach that even I have a hard time defending. Swiss banks have every right to accept U.S. clients, and Switzerland has every right to have a stronger human rights policy than the United States with respect to financial privacy, but Swiss law applies in Switzerland. If Swiss bankers come to the United States and violate American law (regardless of how bad the law is), they should understand that they run the risk of legal trouble.
That being said, Levin is 99 percent wrong on tax competition issues. Perhaps his most laughable assertion was the statement that “tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers.” He is factually wrong and morally bankrupt. Regarding the facts, academic researchers have shown that tax havens boost economic activity in non-haven nations (largely by providing a platform for investments that otherwise would not take place). Moreover, even Treasury Department data confirm that tax havens help bring trillions (yes, trillions) of dollars of investment into the U.S. economy. Regarding morality, Levin is a typical politician who routinely votes for higher taxes on honest hardworking Americans. For what it’s worth, he also routinely votes for corrupt, special interest spending such as farm bills that funnel money from average people to well-heeled agribusiness lobbies.
ABC News has the story:
Federal regulators should consider revoking the U.S. banking license of the giant Swiss Bank UBS because of its role in helping wealthy Americans evade billions of dollars in taxes, Sen. Carl Levin (D-MI) told ABC News today. …UBS’s role in arranging “undeclared” accounts for an estimated 19,000 U.S. citizens was one focus of a hearing by the Senate Permanent Subcommittee on Investigations, chaired by Levin today. The role of the LGT bank, owned by the royal family of Liechtenstein, was also investigated.
…A UBS executive, Mark Branson, said the bank will no longer provide “undeclared” accounts to U.S. citizens and is “winding down” its business involving already existing accounts. …Levin called for passage of new laws to end tax haven abuses. “Tax havens,” said Levin, “are engaged in economic warfare against the United States and honest, hardworking American taxpayers.”