The UK offices of Revenue and Customs will be probing the activities of another 4,500 clients at HSBC UK, whose holdings include assets in Swiss bank accounts, expected to be used for tax evasion purposes due to the more secretive operations of many Swiss Banks. The office plans to look back at 20 years of activity, hoping to uncover any irregularities or discrepancies.
The operation is ongoing after a previous settlement regarding wealthy individuals holding offshore accounts, as the UK is eager to repatriate some of the money currently being held abroad, for budgetary as well as simple law enforcement reasons.
Similar problems have been happening in the US as well, where many super-rich are able to evade paying the required rate in taxes by hiding their earnings in foreign accounts. Although the IRS has started cracking down on such behavior, the recently settled budget allegedly cut funding for just this type of service, which means either those IRS agents will have to do more with less, or they will simply be incapable of retrieving as many funds as they would like.
Such a problem has been chronic for quite some time, and with both the US and the Eurozone facing extensive debt problems, an easy solution would be to prevent tax evasion as much as possible, given how significantly revenues, in the US at least, have fallen in recent years, despite the ever-growing wealth of the country’s and world’s top earners. Record corporate profits and record wealth among the top 1% and 0.1% of the US has not translated to record tax revenue, partially due to endless tax loopholes and other write-offs, and such budget shortfalls have led to painful austerity measures in the form of education cutbacks, deteriorating infrastructure, cuts in social services and others.
Though only one particular front in the dispute, tax evasion nevertheless remains a serious problem, and likely requires an international solution for it to experience any chance of success. It remains a mystery why such behavior has not been vilified before, when schools and other services are facing such significant cuts (one school in the US cut school on Fridays altogether). Going after tax evasion is merely the assurance that people will pay what they owe, rather than a literal raise of one’s taxes; the revenue gains are furthermore quite profitable, with one study showing that for each dollar put into tax evasion investigators, four dollars were returned.
Much of the arguments today regarding wealthy citizens not paying their fair share has to do with raising taxes or cutting government spending; but if the first approach is taken, it is unlikely to accomplish a great deal as so many wealthy citizens already have ways to avoid dealing with it. While they do not comprise the entirety of the wealthy elite, it is certainly the case that tax evasion should not be ignored when discussing revenue increases in order to plug budget shortfalls.
Hopefully the lessons learned at HSBC and their Swiss subsidiaries will trigger some sort of policy shift, in which running away from one’s tax obligations is seen as the crime it clearly is. One can hope.
![[Valid RSS feed]](http://www.world-class-articles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
