by geezer in Paris
Wed Oct 14th, 2009 at 05:25:06 AM EST
The level of misinformation about the UBS-tax dodgers story is only equaled by the level of vitriol and hypocrisy.
Almost everyone has it wrong. Perhaps it's the need to have a villain to throw rocks at, or perhaps it's just hate-the-rich, sour grapes. In any case, here's my attempt to set the record straight.
Many years ago my wife and I decided we would like to retire and live in France when we got to retirement age. Since we knew our US social security would not supply a living wage- not by half- we would have to work during retirement. But France expressly prohibits working by holders of the Carte Sejour- visitor's long term visa. What to do? We thought we might work on line. But we were told that if any payments were made to any French account that looked like income earned in France, in a job that might be held by a French person, the hammer falls, and your visa can be lost.
The solution we found was to open a corporate account with a Swiss bank . It cost us $800 to create a corporation in a totally legal manner.
Over the years, we would travel to Europe on cheap winter package deals, go by Geneva and deposit money saved from work at home. Not a lot-- as sailmakers, we didn't have a lot to deposit- but we wanted to keep the thing active, and learn to live in Europe, and that included doing bank things.
We did not declare the account, or pay taxes on it.
First, we asked our tax guy in the US. His advice was to not mention the account, because having a foreign account was an automatic audit, a thoroughly unpleasant experience, but to pay the tax on any income, so in the future no one could accuse us of cheating- just of overlooking to mention it. This was many years ago, when the US was more confident of it's status as King of the World, and therefore less defensive- so penalties were far milder.
As to taxes, the account earned so little in interest that it would have made no difference whatever on our taxes anyway.
Years pass, my wife dies, I remarry. We have two children. I have an accident that costs me my legs. I Get a settlement from the insurance company of the guy that ran over me. I come to France for a superb prosthetics program that is simply not available in the US, and never leave, legally remaining on a Carte Sejour. In the wake of 9/11, the US government makes it incredibly difficult to do funds transfers out of any account in the US-- personal appearances are now required. Shit. In my wheelchair? I think, "Aha! We already have that ancient account, with a few dying tech stocks in it, and no cash. We can finally use it!"
----See it coming?
I deposit my settlement in the account, which now has enough money in it for us to live, frugally, for perhaps ten years.
Over five years, the account predictably declines in value to about half it's original value.
The UBS side of the story:
UBS gets greedy, and opens a bunch of branches in the US, laying themselves open to US pressure.
They have aggressively courted US customers, and are alleged to have offered corporate accounts and advice to customers on how to evade taxes. They never did any of this with us.
The plot thickens. The US wants the money from all those accounts of multi-billionaires who allegedly hang out at the UBS club. UBS says, piss off. So the pressure is ratcheted up. A couple high-level executives of UBS get jailed in Florida, and the US demands draconian action or UBS will lose their access to US accounts and money, and perhaps their executives will get to stay a while. Kidnapping? Ransom? Not if the Gov does it- only if a bunch of starving nobodies from some third-world pesthole do it.
We get a notice in the mail that our account data is among thousands UBS has sent along to the IRS--used to pay off the IRS, and get UBS out of the shit. Kiss, kiss. "Yass, massa, I done wrong. Nevah again, and here's my customers to eat as a token of submission."
Does this sound like the story you've read about in soo many places in the blog world and MSM?
Are there bad guys? Yes, I'm fairly sure there are many rich people who hid lots of money. I also suspect their names remain safe, for the most part, by whatever means that the really rich have to arrange such things.
But are there others like us who just got caught up in a game of economic imperialism typical of the US? Yes--lots more.
Was I a fool? Yes. I should have declared the account.
Did I cheat anybody? Hell no.
There's far more. The penalty I will pay is not based on unpaid taxes, as has been so often said incorrectly- I probably will have little to pay there- This is a punishment. Not for tax evasion, but just for NOT TELLING THEM ABOUT THE ACCOUNT. It's called an FBAR penalty. It's a straightforward bite, 20% of the account's PEAK value over the last six years. Sound--not so bad? Remember, these guys in the IRS are tasked with ---getting money, not being nice guys. They know most accounts have declined hugely in value from 2003 till 2008. That apparent 20% will be far greater in reality. The worse your brokerage hit, the more the IRS will take of whatever is left.
Since our account is in consistent decline due to our use of the money in daily living, to supplement the $1100 per month I get from SSA, (yes, all you Europeans, that's what I get as a disabled retiree in the Land of the Brave),I will likely lose almost all of the remains. Our lawyer says it could be worse--he's got a retired customer, 84, who got hit hard by the stock crash, and will lose all of what's left, and still owe a bundle.
This is not an appeal for sympathy, but a reaction to the level of hatred, and the incredible level of misinformation on the whole subject.
What's really going on here?
It looks to me like theater- a straw man diversion - a convenient villain propped up to absorb the angst of both the right and left, in hard times.
I think, in a deeper sense, it's punishment for those who would take their money and lives, and go elsewhere.
It's the citizens who are viewed as property, and our departure is seen as theft---of ourselves.