A UBS Denier

August 26th, 2009

Last week as the UBS settlement was announced and (metaphorically speaking) copious amounts of bourbon were drunk in panic at many of the 4,450 homes where U.S. account holders rest their heads (for now), a producer for a well known news program called to ask if I would appear to discuss the issue. After noting that I would, he wondered if I knew of anyone who might take a view opposite of mine. I gave the producer two leads but was told later that neither panned out and, since they could not provide a balanced view of the matter, my appearance would not be needed. Alas, had I only known about Holman W. Jenkins, Jr.

Mr. Jenkins is what I like to call a “UBS Denier” – someone who tries to explain away tax evasion by blaming it on high tax rates elsewhere. “Tax competition” is the phrase often employed for their cause. He appears to be of the view, much like this person, that paying taxes is not meant for everyone.

In today’s Wall St. Journal, Jenkins wrote a piece in which he said, essentially, that what UBS did wasn’t bad, they were just too obvious about it and got burned as a result. Specifically, he noted that, “UBS’s sin was trying to market Swiss secrecy cheaply and widely. . . .” He also offered his investment advice to would-be tax dodgers. Rather than investing with large and splashy UBS, he said, “the Swiss bank to trust . . . [is the] one whose assets and personnel are safely tucked behind Swiss mountains.”

Perhaps the UBS guilty plea and $780 million fine for tax fraud slipped his mind.

What the Deniers fail to admit is that the UBS case, and the issue of bank secrecy in general, has nothing to do with tax rates, investments or the big, bad government nagging its citizens. It has everything to do with breaking the tax laws of the investors’ home country. It also has to do with the resulting large tax burden foisted on the people who hold up their end of the social contract and pay their taxes.

So, with apologies to Ogden Nash, I offer the following as a reminder to the Deniers:

An Ode to Responsibility

Rogues may think us simpletons, dullards or bleaters,
We’re certainly not Gateses, Bonos or Jeters,
Our finances are tight; our bank balance teeters,
But we who pay taxes cannot be called cheaters.

Written by Tom Cardamone

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