Regarding Bank Secrecy, Is the US Practicing Hypocrisy?

August 24th, 2009

Tax Analysts published a very long (albeit spot-on) article today which analyzes Mexico’s request to the United States to be treated the same as Canada when it comes to exchange of tax information. Basically, the article demonstrates how the United States is an offshore tax haven that is being exploited by (among others) Mexican drug-lords.   Of course, the United States just fought Switzerland for having some of the same tax/reporting exemptions that Mexico is challenging.   Is the US practicing what it preaches?  The short answer is no; it is not.  Here’s a brief clip:

As if Treasury Secretary Timothy Geithner didn’t have enough on his plate, there’s one underappreciated problem his department now must address. This latest headache can be summarized in three words: U.S. bank secrecy.

The issue landed on Geithner’s desk shortly after he accepted his current job, in the form of a February 9 letter from Mexican Secretary of Finance Agustin Carstens. At first glance, its polite language seemed innocuous. Geithner most likely read the letter, mumbled “ho-hum,” and added it to the stack of low-priority items on the back burner.

But six months later, Carstens’s letter — and how Treasury will respond to it — has the potential to become a lightning rod for controversy. That’s because the IRS and the Justice Department, after decades of passive acquiescence, decided to pick a fight with Swiss banking giant UBS, the world’s largest manager of private wealth.

It’s really a fantastic article.  Check out the rest of it (with a Tax Analysts subscription) here

Written by Clark Gascoigne

Follow @FinTrCo