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Swiss Miss: Can poor people open a Swiss bank account?
July 15, 2012 9:52 AM   Subscribe

Foreign Policy magazine asks, "Can poor people open a Swiss bank account?" (Bad news: You need more than a passport, some pocket change, and a healthy disdain for the IRS.)
posted by wensink (40 comments total) 9 users marked this as a favorite

 
LaBolt, of course, overlooked a third reason for having a Swiss bank account: living in Switzerland.

...which is highly relevant because Romney spends so much time in Switzerland?
posted by goethean at 9:58 AM on July 15, 2012


Where I live, poor people are struggling under a 11% food & meal tax. I need to switch banks this month before WellsFargo starts charging my $5 per month for not having enough money (Hello, Mr. CK) but I don't have enough money to open a new account anywhere, which is pretty awesome, really. What I'm getting at is poor people could give fuck-all about whatever clickbait drivel Foreign Policy magazine is spewing this month.
posted by laconic skeuomorph at 9:59 AM on July 15, 2012 [4 favorites]


Come to the Caymans.
posted by Burhanistan at 10:12 AM on July 15, 2012 [2 favorites]


Where foreign-policy magazine lives, poor people are those who have less than $1 million in the bank.
posted by orme at 10:13 AM on July 15, 2012 [7 favorites]


In other words, we could have a larger problem than wealthy Americans such as Mitt Romney stashing money in Swiss bank accounts. They might just pack up and head off to Switzerland for good. Maybe that's what the Obama campaign was hoping for?

Is this written by a child or a complete idiot? Why is this even on Mefi in the first place.
posted by Foci for Analysis at 10:14 AM on July 15, 2012 [14 favorites]


"But if we crack down on the rich, the rich might take their ball and go home" has never rung true as an effective argument to me. Good. Let them pillage some other country with more detailed regulations and higher taxes.
posted by Ghostride The Whip at 10:17 AM on July 15, 2012 [31 favorites]


FP does a good job of burying the lede, which is that the numbered Swiss bank accounts--the kind beloved of thrillers and spy novels of old, and the kind that the Obama campaign doubtless wishes to evoke (although they haven't said "numbered" AFAIK) are no longer the money-hiding instruments that they used to be.
posted by Halloween Jack at 10:28 AM on July 15, 2012 [3 favorites]


Did I miss where this article answered the question it led with? Because it sure seems like, rather than doing research about whether and how people with less-than-private-banking assets could try to open an account with a Swiss bank (and reporting what benefits it would or wouldn't have), this "young journalist in the United States" put in calls to two PR reps and then called it a day.
posted by RogerB at 10:33 AM on July 15, 2012 [3 favorites]


Protip: Don't dress like Hitler.
posted by TheWhiteSkull at 10:35 AM on July 15, 2012


Agreed that the piece is poorly titled and the middle class should have been its focus. The point is, the working poor and the middle class can't afford the tax dodging services that the rich have access to.
posted by wensink at 10:37 AM on July 15, 2012 [1 favorite]


Poor people in the United States can't get an account at an American bank.
posted by birdherder at 10:45 AM on July 15, 2012 [15 favorites]


Who needs the Swiss? Read Treasure Islands by Nicholas Shaxson...many other places to use. Mitt, I suspect, has salted away his money in such places and though this is perfectly legal the GOP candidate does not want full identification with the 1%.
posted by Postroad at 10:50 AM on July 15, 2012


Question: Can poor people open a Swiss bank account?
Answer: There are some banks in Switzerland. If you have a million dollars, you can put it in a bank account somewhere. Congress has laws about banks. Does Obama hate the rich?
posted by kiltedtaco at 10:51 AM on July 15, 2012 [9 favorites]


If you have a million dollars and a baby, and you want to put the million in trust for the baby, you can put it in one of those Swiss banks.
Does Obama hate babies?
posted by George_Spiggott at 10:59 AM on July 15, 2012 [1 favorite]


I thought it was quite a good article, ie taking an absurdist look at any defense a potential president could have for why in the past they may have had a foreign bank account and placed it fairly in the ongoing discussion of tax evasion as a problem and methods that have been put in place to control it.

Also touching on the oddity that the USA persists in taxing Non-Residents given most other countries do not. If you were an American living 'permanently' abroad then i suspect you would be seriously considering renouncing USA citizen ship just to cut down on paperwork. And cause the country is a bit of hell hole these days anyway.
posted by mary8nne at 11:00 AM on July 15, 2012 [2 favorites]


Did I miss where this article answered the question it led with?

Not really. The answer is "No, they can't," but the reason is not, as the article implies, that these sorts of accounts are somehow limited to the rich and privileged, but "Even the rich and privileged can't open them anymore".

Numbered accounts were how you evaded US taxes. Now Swiss bank accounts are basically just a way of diversifying your legitimate investment activities. So yes, you need $1 million or more to open one of those accounts, but if you have less than $1 million to invest, you probably don't need to worry about diversifying your portfolio that much.
posted by valkyryn at 11:13 AM on July 15, 2012 [1 favorite]


These compliance related costs are specific to Americans, a middle class person (though not necessarily a poor one) from most other countries can easily set up a Swiss bank account.

I have an account with HSBC Offshore which was extremely easy to set up, had I been American I suspect it would have been harder to do.

This rather boneheaded article misses the most important reason why anyone who earns their crust from waged or salaried labour can't easily evade taxes - all their income comes from a single source which deducts a certain amount for taxes automatically and reports the income to the tax authorities.

Not just that, but there is little to no flexibility in how your income is classified. You can't decide to structure your income as carried interest, capital gains through compensation paid in difficult to value instruments, or income paid to a contracting company that you own and is located in a low-tax jurisdiction. You get paid (probably through a third-party payroll processing company) and that's it. Of course anyone can try and fiddle their deductions, but that's a high-risk low-reward strategy, the real tax savings are to be had by structuring income which most people cannot do.
posted by atrazine at 11:15 AM on July 15, 2012 [10 favorites]


Come to the Caymans

I moved to Grand Cayman about 4 years ago. It thought it was surprisingly difficult to open a (retail banking) account here as a new resident, and required frankly a lot more paperwork than a savings only account with no credit function should have - and I was transferring in what (to me) was a decent amount of cash. I remember the bank having issues accepting my banking reference from my prior bank because it was addressed to "whom it may concern" rather than specifically to the "Bank Manager of Branch XYX of BlahBlah Bank". The island has a fair amount of "non-banking" residents due to the frequent turnover of immigrants with no/poor banking records, plus there being no stigma about getting paid in cash - it's not like there is any income tax that cash payments would be avoiding.

From what I've heard, people are always coming off the cruise ships in George Town and heading up to Butterfield/Scotia/HSBC/RBC/CNB etc to open a Cayman offshore account - with whatever they have in their wallet as the source of funds, only to find that anything less than a few hundred grand US to start as a wealth management client......yeah....the Bank's not really interested (well the Class A retail banks anyway)....
posted by inflatablekiwi at 11:41 AM on July 15, 2012 [3 favorites]


They might just pack up and head off to Switzerland for good.

And hide out in a secret gulch?
posted by octothorpe at 12:07 PM on July 15, 2012 [1 favorite]


You forgot to add "clickbait" and "SLOutrageFilter" to the tags.
posted by Anoplura at 12:14 PM on July 15, 2012


This is a side effect of the uniquely weird US policy of taxing all their citizens (including dual citizens) even if they live in another country and even if their money is earned and stays in another country. It's supposed to increase tax revenue but really it just leads to lots of bureaucracy for US citizens who work abroad, makes them pariahs when applying for bank accounts, and eventually forces many dual citizens to renounce US citizenship just to avoid the added hassle, removing the option of moving back the US someday.
posted by w0mbat at 1:08 PM on July 15, 2012


Question: Can poor people open a Swiss bank account?
Answer: There are some banks in Switzerland. If you have a million dollars, you can put it in a bank account somewhere. Congress has laws about banks. Does Obama hate the rich?


In conclusion, Switzerland is a land of contrasts. Thank you.
posted by wcfields at 2:41 PM on July 15, 2012 [14 favorites]


If you were an American living 'permanently' abroad then i suspect you would be seriously considering renouncing USA citizen ship just to cut down on paperwork.

Already happening, and not because those doing so particularly want to. Like the wives of foreign nationals, foreign nationals who do not think the IRS has any business with their separate accounts just because they married Americans. But failure of the American spouse to provide this information subjects them to hefty fines.
posted by BWA at 2:54 PM on July 15, 2012


Aha, except there's that impossible-to-enforce rule that says that if you renounce your US citizenship primarily for tax benefits, then the renunciation isn't effective. And since every single person living abroad making wages sufficient to justify living abroad would benefit financially from not paying taxes twice, that means (generally speaking) anyone and everyone can fall afoul of that rule. Saving grace: if you work for the UN or most international treaty organizations that the US is a member of, then you don't pay any taxes to anyone.
posted by 1adam12 at 3:03 PM on July 15, 2012


This Swiss photo essay on where Greeks hide euros is quite revealing.

from Tyler Cowen's blog Marginal Revolution
posted by vozworth at 3:19 PM on July 15, 2012


1adam12: US income taxes are generally lower than those overseas, with some odd exceptions (e.g., Monaco which has a high level of sales tax instead). The income taxes you pay in most non-US Western countries can be claimed against US taxes, so there's no double taxation. So if I were a US citizen I would just have to declare my Australian taxes and I wouldn't be liable for any US income taxes. Mind you, it would still be a pain to do two sets of accounts; and Australian banks might not want the compliance burden of having my business.
posted by Joe in Australia at 3:24 PM on July 15, 2012


I'm surprised Bitcoin hasn't emerged as a vehicle for tax evasion. No, wait, I'm not surprised.
posted by Cash4Lead at 3:25 PM on July 15, 2012


6 million Americans living abroad according to the FP article. About 218,000 tax returns received from this group in 2008 according to BWAs link - a little under 4%. That leaves a lot of people who are ignorant of the law, managing to evade payment or working for the UN.
posted by rongorongo at 3:25 PM on July 15, 2012


Aha, except there's that impossible-to-enforce rule that says that if you renounce your US citizenship primarily for tax benefits, then the renunciation isn't effective.

I'm pretty sure it is effective; they just get extra huffy about it, e.g. Sen. Schumer's wanting to bar Savarin of Facebook fame (among others) from ever setting foot in the country again (or, strangely, ever investing in this country ever again).

US income taxes are generally lower than those overseas

Investment income, which is what retirees depend on, not so much, and heading up. The US taxes foreign investment earnings of US citizens regardless of where the money comes from or even where the citizen actually lives. (You're an American living in Thailand earning money on Spanish bonds? The US wants a cut.)

There are also new surcharges to help defray ACA, and I'm guessing that the assumption is that these too will rise in coming years. So even hardcore democrats are getting out while the getting is good.

More here and here.
posted by BWA at 4:45 PM on July 15, 2012 [1 favorite]


I need to switch banks this month before WellsFargo starts charging my $5 per month for not having enough money but I don't have enough money to open a new account anywhere, which is pretty awesome, really.

I recently opened a credit union account with $20. That's just the seed I planted for growing over time. I'm pretty sure you meet some credit union's requirements for amount of money you need to open an account there.
posted by hippybear at 4:52 PM on July 15, 2012


Aha, except there's that impossible-to-enforce rule that says that if you renounce your US citizenship primarily for tax benefits, then the renunciation isn't effective.

There is no such rule. Rather, the rule is that if you renounce your citizenship, the IRS assumes it's for tax purposes and imposes an expatriation tax, treating your entire net worth as income for the year in which you renounced. And you still have to pay income taxes for the next ten years.
posted by valkyryn at 8:04 PM on July 15, 2012


There is no such rule. --Valkyryn

There is a law, which Congress passed specifically because of one person.
posted by eye of newt at 9:57 PM on July 15, 2012 [3 favorites]


They might just pack up and head off to Switzerland for good.

Won't that make it rather hard to be President?
posted by His thoughts were red thoughts at 10:03 PM on July 15, 2012 [1 favorite]


There is no such rule. Rather, the rule is that if you renounce your citizenship, the IRS assumes it's for tax purposes and imposes an expatriation tax, treating your entire net worth as income for the year in which you renounced. And you still have to pay income taxes for the next ten years.

Sometimes I think Metafilter exists primarily as a vehicle for getting me to cry over lost liberty. How in the world is this possibly legal? Holy fuck.
posted by corb at 11:03 PM on July 15, 2012


That leaves a lot of people who are ignorant of the law, managing to evade payment or working for the UN.

My younger sister is an American citizen by birth, but had nothing to do with the place between 6 months and 21 years. When she was planning to visit, she got worried that never having filed a tax return would be a problem, but checked with the consulate/IRS helpline and they basically said that for someone like her who hadn't really had a connection with the country, the IRS would have no records on her, and immigration would never know about tax stuff until it led to a warrant, so it wasn't an issue. And if she did move to the USA, they might get her to file back taxes with her first real return, but unless it turned out she owed a bunch (unlikely for a normal person) it would never be a problem.
posted by jacalata at 1:21 AM on July 16, 2012


That leaves a lot of people who are ignorant of the law, managing to evade payment or working for the UN

Given that the United States is the only developed economy in the world that taxes the overseas earnings of its citizens living overseas, and that there are quite a lot of "accidental Americans", ignorance does indeed account for a fair amount of this. Ignorance that people have of a law that's an enormous exception to the way things are done in the developed world, and ignorance that America in general has that all those other countries on the other side of the ocean aren't just film locations and factories making coffee, chocolate, computers and cheap-ass patio furniture.

As for FATCA, the law mentioned in TFA that's "making it harder" for rich Americans to park money in Switzerland.. well, that's a bit of an understatement. As an American living in Switzerland, I've had accounts closed due to FATCA compliance costs, and when I was looking for replacements I've had treatment ranging from no-we-don't-take-Americans to simply ignoring my calls to (and this is my favorite) a kind invitation please to not set foot in the bank after setting up an appointment, on apparent fear that I was an IRS inspector or informant therefor. FATCA's got so many Swiss-American dual citizens giving up the Blue Book that there's a backlog at the embassy in Bern; they helpfully suggest going to Vienna instead.

Okay, Romney's Romney, and as a symbol of America's Gini coefficient you couldn't do much better. But sometimes a guy with a Swiss bank account just needs somewhere to cash his damn paycheck (actually, Switzerland has an operable electronic payment system like much of the rest of the world, so, there are no checks and if you take one to the bank, you get funny looks, and they have to go behind the counter to read the operations handbook to find out what the hell do do with it, and it takes sixty days to cash because the process for clearing it involves putting it on a boat, but that's a different story), and all the "hurf durf swiss bank account" noise really only has the effect of making it far less likely for me and those like me to jump through all the hoops necessary to vote for Obama (this is also a sore point -- if you're going to take taxes on money that's already taxed in my country of residence, you should at least make it somewhat easy for me to pretend I have a say in how it is spent).

Rather, the rule is that if you renounce your citizenship, the IRS assumes it's for tax purposes and imposes an expatriation tax, treating your entire net worth as income for the year in which you renounced. And you still have to pay income taxes for the next ten years.

The effect of American tax policy is (1) to incent citizens living abroad to renounce and (2) to incent renouncers not to set foot in the country for seventeen years (ten for the continuing tax liability and seven for the statute of limitations to run out on failure to file).
posted by Vetinari at 2:37 AM on July 16, 2012 [2 favorites]


That leaves a lot of people who are ignorant of the law,

What Vetinari said. Plus there are those who earn less than the $92,900 exclusion (doubled, if the spouse works), but who wrongly assume that no liability means they do not have to file.

And if she did move to the USA, they might get her to file back taxes with her first real return, but unless it turned out she owed a bunch (unlikely for a normal person) it would never be a problem.

Sadly, I wouldn't put much faith in the word of an IRS hotline- the IRS in general is notorious for giving out as many different POVs as there are advisers. Not only back taxes, but some whopping penalties and fines (tens of thousands of dollars, even for normal people). She might want to talk to an accountant there who deals with American expats, especially if she thinks she might want to come her long term.

Which gets us to the next point - just how many energetic, moneyed, ambitious foreigners this kind of stuff might scare off from coming here? Under current circs, I can see how a foreigner shopping around for a place to settle and do business might prefer someplace else. (Conversely, such laws will decrease the number of American's that multinationals send overseas on business, another, I hope unintended, and bad result.) Not great for America, but again, these laws seem more grandstanding than anything else. Honestly, how much money do they expect to gain from this? Is it really going to get Congressman Red Whitenblue the winning edge in his district's election?

This post suggests that we are running into some established law; but that raises the question, who's gonna make a federal case out of it?
posted by BWA at 8:13 AM on July 16, 2012


Halloween Jack: FP does a good job of burying the lede, which is that the numbered Swiss bank accounts--the kind beloved of thrillers and spy novels of old, and the kind that the Obama campaign doubtless wishes to evoke (although they haven't said "numbered" AFAIK) are no longer the money-hiding instruments that they used to be.
While absolutely true, it's still relevant to Obama's criticisms of Romney's holdings in the past, when Switzerland was still a safehaven for illegally untaxed profits. So, I wouldn't call it buring the lede at all.
posted by IAmBroom at 8:29 AM on July 16, 2012


The effect of American tax policy is (1) to incent citizens living abroad to renounce and (2) to incent renouncers not to set foot in the country for seventeen years (ten for the continuing tax liability and seven for the statute of limitations to run out on failure to file).

(As far as I can tell, and google did not get me to the any .gov sites, the fly in that ointment is that the statute of limitations on failing to file tax returns on foreign income is nonexistent. Moreover, tax based renouncers may be forever after excludable from American soil, on account of being ungrateful wretches or something. No weddings or funerals for you! (Schumer wants this to be mandatory.))

Compare his tone to the Expatriation Act of 1868.

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any declaration, instruction, opinion, order, or decision of any officers of this government which denies, restricts, impairs, or questions the right of expatriation, is hereby declared inconsistent with the fundamental principles of this government."
posted by BWA at 8:35 AM on July 16, 2012 [2 favorites]


There is a law, which Congress passed specifically because of one person.

That's not what the article says. The renunciation is still effective, it just triggers punitive tax consequences.
posted by valkyryn at 7:41 AM on August 2, 2012


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