Back in July 1989 during the tax-fraud and extortion trial of Leona Helmsley, her housekeeper testified in court that the "Queen of Mean" had told her, "We don't pay taxes. Only little people pay taxes." This now-famous quote, as reported in the New York Times, helped convict Mrs. Helmsley and send the multi-billionaire to prison.
Peter Cohan of Daily Finance recently reviewed the top 400 taxpayers and discovered they "earned roughly $250 million on average in 2005." Their income tax average was a "17.2 percent rate." That is "roughly half that of a family making $75,000 a year which was 37 percent 25 percent for the income tax rate and 12 percent for payroll tax."
There are those conservatives who argue that the rich need a lower tax rate so they can invest their money in America. That is debatable with liberals demanding that there should be tax rate equality among the social classes. However, there are some of the super rich who don't invest in this country but rather hoard their dollars, sometimes illegally.
If the federal government gets its way, more of the super rich will be coughing up millions make that billions for Uncle Sam in back taxes and heavy fines. It is no secret that America's wealthy have money hidden in offshore accounts.
What has changed is that the United States and the Swiss governments have been working on a deal to catch American tax dodgers. According to Associated Press writer Stephen Ohlemacher, we have wanted Zurich-based UBS Switzerland's biggest bank "to turn over the names of 52,000 Americans believed to be hiding nearly $15 billion in assets in secret accounts."
According to David S. Hilzenrath of the Washington Post, "A deal finalized Wednesday [August 19] between the United States and Switzerland paves the way for a potentially historic disclosure of Swiss bank accounts to hide money from the IRS. Under the agreement, UBS ... is expected to turn over the names of Americans who controlled 4,4500 accounts that are currently open or have been closed." That isn't the 52,000 names requested, but it's a start and the beginning of an end of a safe tax haven for the excessively greedy.
What happened to the old idea that Swiss banks would keep mum and not reveal tax dodgers' assets to foreign governments? There are widening cracks in this veil of concealment that threatens all of Switzerland's banks and their traditional secrecy laws. And it all started with UBS's greed right here in the U.S.
According to Hilzenrath of the Washington Post, the "U.S. government holds great leverage over UBS. Largely as a result of the bank's purchase in 2000 of Paine Webber brokerage firm, much of UBS's business and about a third of its assets are in the United States." The love affair between America's super rich and UBS began to fall apart last year when "a former UBS insider pleaded guilty to helping a California real estate billionaire evade taxes of $7.2 million and hide assets of $200 million."
Hilzenrath also reported that former UBS banker "Bradley Birkenfeld told federal authorities that UBS sent private bankers to the United States to surreptitiously woo wealthy Americans and then helped them set up sham companies to mask their ownerships of UBS accounts."
Birkenfeld in addition revealed that he "bought diamonds using the funds from a client's Swiss account and then smuggled the jewels into the United States in a toothpaste tube, according to facts filed in connection with Birkenfeld's guilty plea."
You might want to mark Sept. 23 on your calendar, which is the day the IRS's amnesty program ends for "international tax evaders." Olemacher states in his article that the amnesty program, which started in March, allows "certain tax evaders who come forward before they are contacted by the agency [IRS] usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply."
Peter Zeidenberg, who is a litigation partner for the Washington law firm DLA Piper, is quoted in the Olemacher article as saying "I don't think that you [those with secret offshore bank accounts] have much of a choice. ... I think the landscape is permanently changed."
F. Scott Fitzgerald was right in 1926 when he wrote, "Let me tell you about the very rich. They are different from you and me." In the end Leona Helmsley was wrong: sometimes the big people do pay taxes and sometimes they go to prison for tax evasion.
ABOUT THE WRITER
Carol Jensen is a long-time Barstow resident, graduating from Kennedy High School and Barstow College, where she was an English instructor for many years. Much of her time now is spent writing political and social commentary. She may be contacted at email@example.com.