Financial Transparency Coalition

Michelle Caruso-Cabrera is a CNBC anchor and a tax haven apologist.  During her program yesterday she claimed that the agreement between the Justice Department and Swiss bank UBS, in which the identities of 4,450 American scofflaws holding UBS accounts will be provided to the IRS, “is a terrible thing.”

“Follow me here,” she pleads.  Okay Michelle, convince me that pursuing cases in which Americans violated U.S. law is a bad thing.

Her arguments are the following:

1) The U.S. is the world’s largest tax haven because it does not tax interest earned by non-citizens who invest here.

2) Tax havens are a bulwark against tyranny because rogue heads of state like Venezuela’s Hugo Chavez could ask for information about his citizen’s account in U.S. banks.

Well, I’m not clear on her logic here but let’s take a peek.  In her first argument I think Caruso-Cabrera is trying to say that because the U.S. doesn’t tax non-U.S. citizens on income earned here American citizens shouldn’t have the IRS snooping around in their foreign accounts.  This is the old civil liberties canard that is always trotted out by those who see all government as bad government (it’s interesting that these people are nowhere to be found when a tornado hits and they want FEMA to show up).  But this was not a civil liberties case.  It was a case in which UBS pleaded guilty to aiding and abetting American citizens in their evasion of U.S. taxes – a felony.  The IRS simply wanted the account information.

On the Second point Caruso-Cabrera neglects to mention two things.  First, any request by a foreign government would have to be in line with current tax information exchange agreements.  If it’s not in the agreement no data would be handed over.  Second, and more importantly, she ignores the fact that if providing such information could reasonably be seen as a threat to a person’s human rights the request could be denied.  To use an extreme example (which she employs) if Nazi Germany had requested bank information on German citizens the U.S. government could simply deny that request on human rights grounds.  Case closed.

But don’t take my word for it.  Watch the video that accompanies the text.  In an eight-minute discussion with tax attorneys about the case she asks three separate times if there is “any disagreement” with her position.  Each time the answer was, essentially, “yes.”

Add to that an editorial in the Financial Times this past week in which the paper says “Supporters of bank secrecy have wrung their imaginations dry in coming up with ingenious defences for secret accounts. . . But for the most part opacity simply helps to evade taxes.”

What we are seeing in these arguments in favor of bank opacity and secrecy jurisdictions is the same warped logic, misinformation and desperate spinning of the issue that would make proud those in the health care debate who claim the government is in favor of killing old people.  What is need is some old fashioned frankness, as in Barney Frank.