Lest the brouhaha over Timothy Geithner's AIG coverup leave folks with the wrong impression this week, another story should make it perfectly clear that Geithner was simply acting according to the (admittedly corrupt) norms that now prevail amongst America's ruling elites.
In 2007, UBS banker Bradley Birkenfeld blew the whistle on a massive international tax cheating scheme. Although thousands of wealthy tax cheats ended up paying fines, and UBS itself plead guilty and paid a $780 million fine, that was only a fraction of the total accounts UBS held, most of which were simply ignored. More importantly--and outrageously--the only person to go to jail in all this is Birkenfeld himself: a clear message that further whistleblowing is not wanted, and that wealthy tax cheats can once again rest easy.
The interview began with a setup from Democracy Now! co-host Juan Gonzales, columnist for the New York Daily News who had previously written a column about the case:
JUAN GONZALEZ: A former banker for the Swiss giant UBS who blew the whistle on the biggest tax evasion scheme in US history is preparing to head to prison tomorrow to begin serving a forty-month federal sentence.
Bradley Birkenfeld first came forward to US authorities in 2007 and began providing inside information on how UBS was helping thousands of Americans hide assets in secret Swiss accounts. UBS pleaded guilty last February and paid a $780 million fine. UBS has also agreed to turn over the names of the nearly 4,500 of its American clients to the Justice Department. That's only a portion of the 19,000 it claims the secret accounts of Americans it held. Meanwhile, thousands of other Americans with unreported offshore accounts have been allowed to belatedly disclose them and pay civil penalties.
Earlier this month, President Barack Obama rolled out a new plan to limit the use of offshore tax havens and crack down on corporate abuse of the tax system. These tax havens siphon over $100 billion a year from the government, and have allowed many U.S. banks to duck paying taxes despite receiving massive, taxpayer-funded bailouts. The president's plan is far from perfect, but comes as a welcome acknowledgment of the unfairness embedded in the current tax code.
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