The Fall of the Swiss Bank Account

A blog about business and economics.
July 23 2012 2:46 PM

The Fall of the Swiss Bank Account

Several years ago, I was on a junket to Switzerland. It was primarily financed by Rolex, but there was some involvement by an array of Swiss business interests, including pharmaceuticals, Nestle, and of course banks. So at a dinner in the fall of 2008, I was chatting with a Swiss private banker and made some joke about getting an account in case I ever had to turn rogue like Jason Bourne. He gave me a very serious look and said that all this business about Swiss bank accounts and terrorists and drug lords is just a lot of negative stereotyping.

"The truth," he said, "is that there are a lot of rich people who don't want to pay their taxes."

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Thus the main point of my latest Breaking Bad TV Club, namely that it's a blunder to try to hide the proceeds of your criminal enterprise in an offshore bank account. It turns out that in a world where bank accounts aren't strongboxes full of gold, it's not really possible for small "offshore" nations to consistently thumb their noses at the desires of the larger and more important countries. Your banking system is only good for anything if it's connected to the wider global financial system. And throughout the 1990s, pressure was steadily ratcheted up to reduce the level of secrecy around criminal investigations of offshore bank accounts. But that still left most major countries being pretty lax about tax enforcement issues. At the time I was over there, however, the pressure was on to change things on that front, and Switzerland was courting international opinion. It didn't work, and soon enough the Swiss government relented, which did a lot to close off this option. And this is why I think Mitt Romney doesn't want to show in his tax documents, namely that he had some money squirreled away there as long as he could get away with it and only paid up when the crackdown forced him to.

Switzerland, of course, still has banks and bank accounts. But these days the Swiss bank account of lore no longer really exists. Your money's not going to be kept secret from the American government once you're on the radar.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.