BUSINESS WORLD
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September 14, 2012, 7:17 p.m. ET
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Jenkins: Bradley Birkenfeld, Hero of Tax Reform
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Why some people send their money to Switzerland
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By HOLMAN W. JENKINS, JR.
Is there anything redeeming to be found in the adventures of Bradley Birkenfeld, the UBS whistleblower whose tale is sordidness piled on sordidness?
Mr. Birkenfeld is the soon-to-be-paroled felon on whom this week was bestowed a $104 million IRS bounty for exposing the activities of his former employer, the giant Swiss bank UBS, in helping Americans dodge U.S. taxes.
Mr. Birkenfeld got his reward not because he discovered tax evasion going on at UBS. He was a prime instigator of it, trolling the watering holes of North America for the rich and nervous. His now-famous exploits include delivering diamonds to one client concealed in a toothpaste tube. And, to fill out the picture, his UBS treachery was not his first attempt at turning "whistleblower" on an employer when a job ceased to meet his needs.
He told Bloomberg: "I'm the most famous whistleblower in the history of the world. It's aquestion of doing the right thing, and that's what I did."
What would have been right was not participating in tax evasion in the first place..
Bloomberg
Render unto Caesar what is Caesar's, and unto God what is God's, says the Bible. U.S. law permits a third option: drop your citizenship, as record numbers of Americans have been doing, especially those working abroad whose financial lives are increasingly rendered impossible by statutes like the 2010 Foreign Account Tax Compliance Act.
Mr. Birkenfeld is the soon-to-be-paroled felon on whom this week was bestowed a $104 million IRS bounty for exposing the activities of his former employer, the giant Swiss bank UBS, in helping Americans dodge U.S. taxes.
Mr. Birkenfeld got his reward not because he discovered tax evasion going on at UBS. He was a prime instigator of it, trolling the watering holes of North America for the rich and nervous. His now-famous exploits include delivering diamonds to one client concealed in a toothpaste tube. And, to fill out the picture, his UBS treachery was not his first attempt at turning "whistleblower" on an employer when a job ceased to meet his needs.
He told Bloomberg: "I'm the most famous whistleblower in the history of the world. It's aquestion of doing the right thing, and that's what I did."
What would have been right was not participating in tax evasion in the first place..
Bradley Birkenfeld at Schuylkill County Federal Correctional Institution in Minersville, Penn., in 2010.
Render unto Caesar what is Caesar's, and unto God what is God's, says the Bible. U.S. law permits a third option: drop your citizenship, as record numbers of Americans have been doing, especially those working abroad whose financial lives are increasingly rendered impossible by statutes like the 2010 Foreign Account Tax Compliance Act.
Of those who chose a different path, it's worth noting that the average UBS client appears not to have been hiding money earned illegally or that went untaxed when earned. The taxes they dodged
were on the relatively meager earnings their savings accrued in UBS's care.
Their tax evasion, in other words, was likely incidental to the real purpose of their UBS accounts: to have a nest egg where the U.S. government and U.S. legal system didn't know about it.
It's also worth noting that though UBS was forced to hand over 4,700 names, 33,000 Americans had already lined up voluntarily to disclose their accounts.
Call them paranoid, but some of our wealthy citizens apparently aren't prepared merely to worry about the myriad ways they can be unwillingly parted from their wealth in America. A drunk steps in front of your car and everything you own is at risk in a lawsuit. Your government decides, based on some inventive reading of criminal law, that what belongs to you actually belongs to it. Your president becomes enamored of tax hikes that serve no purpose except to punish the rich.
The author of the whistleblower law that so benefited Mr. Birkenfeld was none other than prairie populist Sen. Charles Grassley, who issued a statement this week: "An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid."
This is the same Mr. Grassley last heard calling for AIG workers "to resign or commit suicide" during the 2009 retention bonus furor, which also saw the New York Attorney General implicitly threatening to publish the names of innocent AIG employees who didn't "voluntarily" relinquish money they were legally entitled to.
This is the same Mr. Grassley whom Wikipedia baldly states "repeatedly introduced measures that increase the level of double taxation on American citizens living abroad, including retroactive tax hikes."
Need we add that Mr. Grassley's longtime aide, who actually drafted the whistleblower law, now represents Mr. Birkenfeld and stands to collect an interesting percentage of the award Mr. Grassley so obligingly applauds?
If one were rich, if one had a sense of
Their tax evasion, in other words, was likely incidental to the real purpose of their UBS accounts: to have a nest egg where the U.S. government and U.S. legal system didn't know about it.
It's also worth noting that though UBS was forced to hand over 4,700 names, 33,000 Americans had already lined up voluntarily to disclose their accounts.
Call them paranoid, but some of our wealthy citizens apparently aren't prepared merely to worry about the myriad ways they can be unwillingly parted from their wealth in America. A drunk steps in front of your car and everything you own is at risk in a lawsuit. Your government decides, based on some inventive reading of criminal law, that what belongs to you actually belongs to it. Your president becomes enamored of tax hikes that serve no purpose except to punish the rich.
The author of the whistleblower law that so benefited Mr. Birkenfeld was none other than prairie populist Sen. Charles Grassley, who issued a statement this week: "An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid."
This is the same Mr. Grassley last heard calling for AIG workers "to resign or commit suicide" during the 2009 retention bonus furor, which also saw the New York Attorney General implicitly threatening to publish the names of innocent AIG employees who didn't "voluntarily" relinquish money they were legally entitled to.
This is the same Mr. Grassley whom Wikipedia baldly states "repeatedly introduced measures that increase the level of double taxation on American citizens living abroad, including retroactive tax hikes."
Need we add that Mr. Grassley's longtime aide, who actually drafted the whistleblower law, now represents Mr. Birkenfeld and stands to collect an interesting percentage of the award Mr. Grassley so obligingly applauds?
If one were rich, if one had a sense of
history,one might well wish to move a part of one's nest egg out of the way of Mr. Grassley and his ilk.
But the UBS story comes with a redeeming moralafter all. Mr. Birkenfeld, doubtlessly sounding a lot like his ex-clients at UBS, told Bloomberg: "I don't trust my government. That's why I lived in Switzerland for 15 years."
One thing on which we all might agree is that few experiences are as satisfying as being treated fairly, and with respect, by your government. How many users of Form 1040 feel that way?
Even Mr. Grassley knows a tax code with flatter rates and less riddled with loopholes is objectively better policy. A flatter tax system encourages compliance and reduces the payoff tocostly and unproductive cheating. It also reduces the payoff to Capitol Hill's corrupting trade in tax favors. Mr. Grassley, when he wasn't issuing press releases denouncing what he was pleased to call the loopholes of others, was guardian of one of the most egregious handouts of all, the giant tax break for ethanol.
You want your senses assaulted by fewer grotesqueries like the two careers of Mr. Birkenfeld or the one career of Sen. Grassley? Tax reform—an elixir for much of what currently ails America—is your solution here too.
But the UBS story comes with a redeeming moralafter all. Mr. Birkenfeld, doubtlessly sounding a lot like his ex-clients at UBS, told Bloomberg: "I don't trust my government. That's why I lived in Switzerland for 15 years."
One thing on which we all might agree is that few experiences are as satisfying as being treated fairly, and with respect, by your government. How many users of Form 1040 feel that way?
Even Mr. Grassley knows a tax code with flatter rates and less riddled with loopholes is objectively better policy. A flatter tax system encourages compliance and reduces the payoff tocostly and unproductive cheating. It also reduces the payoff to Capitol Hill's corrupting trade in tax favors. Mr. Grassley, when he wasn't issuing press releases denouncing what he was pleased to call the loopholes of others, was guardian of one of the most egregious handouts of all, the giant tax break for ethanol.
You want your senses assaulted by fewer grotesqueries like the two careers of Mr. Birkenfeld or the one career of Sen. Grassley? Tax reform—an elixir for much of what currently ails America—is your solution here too.
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