Date: August 30, 2012
A few weeks ago, western governments’ war on productive people took an interesting twist when US immigration authorities detained two teenage children of an asset manager based here in Switzerland.
The kids were traveling through the United States by themselves to visit extended family, and they were interrogated for six hours about their father’s business and whereabouts.
During the six-hour ordeal, the children were not allowed to contact family members who were waiting for them, nor any sort of attorney or advisor. You can just imagine grandma and grandpa waiting in the arrivals hall for six hours, petrified that something terrible had happened to the children.
This is incredible. It’s not enough that Switzerland already agreed in April to end its once sacrosanct banking privacy and turn over bank records to the IRS. Uncle Sam will not rest until they hunt down every last banker and pump them for details about clients’ assets.
Yet even mafia thugs know that wives and kids are off limits. Western authorities clearly have absolutely no moral compunction whatsoever in getting their ‘fair share.’
Look, this is not some defense of tax evasion. If for no other reason that simply to avoid prison, people ought to pay the minimum amount… and not a penny more. But the fervor with which these bankrupt governments pursue suspects where there is even a -hint- of impropriety is extraordinary.
In most cases, the government just wants your money. They send a demand letter… or sometimes guys in suits… and order you to pay. Sure, you can try to dispute the claim, but they bury you in paperwork and charge you 20%++ while the clock is ticking.
In other instances when they want to send a message, cases are forwarded to the Justice Department and US Attorney’s office.
Their preferred tactic is to send out a subpoena commanding you to show up in front of the Grand Jury within just a few days, demanding that you bring YEARS worth of emails, bank statements, receipts, deposit slips, tax returns, financial records, and anything else they think they may need to convict you.
It’s a bizarre approach when you think about it– they force you to provide them with evidence to use against you… and if you can’t manage to produce ALL of the documents they require within the week’s notice they give you, you can be held in contempt and thrown in jail without being formally charged with anything.
This ‘guilty until proven innocent’ approach is the same sort of special treatment reserved for suspected terrorists. The only difference is that you don’t end up in Guantanamo.
Free societies do not treat people this way. Hell, most criminal networks don’t even treat people this way. And while it may raise a few bucks in the short run, in the long run it’s counterproductive. People adapt. They create underground, cash-based economies. They leave. Foreign investors stay away. It’s not healthy.
For what it’s worth, banking in Switzerland is no longer what it used to be. Aside from the lack of privacy now, many Swiss banks are not particularly well capitalized. This was shown, rather embarrassingly, when UBS had to be bailed out a few years ago.
If you’re looking for a well-capitalized tier-1 banking destination in Europe, Andorra is a much better option. And, surprisingly, banks in Kosovo are also among the best capitalized on the continent. More on that in a future letter.