The Dark Side of Anti-"Swiss Bank Account" Politics
Democratic Swissophobia is hurting patriotic, middle-class Americans.
Senate Majority Whip Dick Durbin (D-Ill.) may be too busy to pass a budget more than every 1,168 days or so, but he can always spare time for passing judgments about U.S. citizens who have the gall to open bank accounts in stable countries with sound currencies and a tradition (if eroding) of banking privacy.
"You either get a Swiss bank account to conceal what you're doing, or you believe the Swiss franc is stronger than the American dollar," Durbin put forth on Face the Nation this weekend, in part of a coordinated Democratic attack on Mitt Romney's overseas finances.
Whether tautological or conspiratorial, Democratic Swissophobia precludes the idea that Americans could possibly have a legitimate reason to park money in one of the world's leading financial centers. "Mitt Romney," Obama campaign spokesman Ben Labolt stated gravely in an attack ad, "had a bank account in Switzerland." Why, that's not what normal Americans like Robert Gibbs do! "I pick a bank because there's an ATM near my home," the former White House press secretary said over the weekend. "Romney had a bank account in Switzerland."
Rep. Debbie Wasserman Schultz (D-Fla.), chair of the Democratic National Committee, also smelled a rat: "Americans need to ask themselves: why does an American businessman need a Swiss bank account and secretive investments like that?" And here's LaBolt again, in a tweet from May: "There are only 2 reasons to have a Swiss bank account: hedging against the dollar or avoiding paying fair share in taxes."
Do you know who else once had a Swiss bank account? I mean, besides Hitler? Various U.S. military veterans, dual-national citizens who haven't lived or worked in America for decades, and panicked retirees who are trying to cope with new tax rules imposed capriciously by a revenue-hungry Congress and president in 2010. Thousands of such Americans are getting bounced out of their existing Swiss accounts and denied new ones, even if they live and work in Geneva for one of the city's many international non-governmental organizations.
You can read dozens of their testimonies in this April 2012 letter [PDF] to the Internal Revenue Service from American Citizens Abroad, including this story from an American retiree who has lived in Geneva (where he worked at the U.S. secretariat for the United Nations' International Labor Office) for all but four years since 1973:
Just since the beginning of the year, I have been informed by one of Switzerland's two largest banking institutions that due to the fact that I am an American, I had to divest myself of all my investment holdings in their financial institution. Another bank agreed to accept my investments; then, just this month, on the day that I went to sign the papers, I was informed that the authority to do this had been withdrawn. Meanwhile back in the U.S., a large insurance company with whom I have been dealing since the early 1960s appears to be resisting changes in the composition of an IRA portfolio that I established with them upon retirement at the end of 2002. […]
I feel that I now am being squeezed between my country of citizenship and my country of residence and they are forcing me to choose my mattress as the only site where I can place my savings. I am an American who loves my country. I always have filed my U.S. income tax return as well as the [Report of Foreign Bank and Financial Accounts], which now seems to be so much in the news. I do not understand why my government is treating me this way.
The gruesomely acronymned Foreign Account Tax Compliance Act (FATCA) essentially outsources overseas IRS collections (the U.S. being one of the only countries to tax based on passport, not just residency) to any foreign financial institution crazy enough to let Americans hold an account. As I wrote in April, and as you can see in testimonies all over the Internet, the stone-predictable outcome is that banks in Switzerland (and Europe, and anyplace where governments are "friendly" with Washington) are shuttering not just Americans' accounts, but accounts of expatriate Europeans living and working in the United States.
All because the U.S. government does not respect limitations on its ability to squeeze money out of citizens, and because there will never be a shortage of Beavis and Butthead-quality political hacks like Robert Gibbs eager to go on the weekend chat shows to impersonate a populist (at least when it's not his client being accused of bottomless wealth).
I have no details about Mitt Romney's Swiss bank account—and neither does the recent Vanity Fair article that the Democratic anti-Swiss brigades were citing as their primary source material over the weekend (all the piece did was regurgitate the news that Romney's disclosures in 2010 showed a $3 million account that has since been liquidated). But in addition to the living-in-Switzerland explanation for having a Swiss bank account, there are at least three other perfectly seemly reasons for Americans to have one:
1) Because you (or your spouse) is making or has made Swiss francs. This explains, for example, me: My wife used to work freelance for various Swiss media outlets, and we were happy to save on wire-transfer and exchange-rate costs by having the money deposited directly into a local bank. Just last week we stopped by the bank to pull out some walking-around money, and were told we would likely have to shut the account down because of FATCA. Only some sensitive negotiation stayed the execution, but who knows for how long; a Swiss banker friend told me later in the day that his company is simply pulling the plug on all U.S.-related business.
In Romney's case, it is perfectly conceivable that he made money at Bain Capital doing Swiss-denominated consulting work, since Switzerland has a disproportionate number of European/international headquarters (including of the Olympic Games), but I have no idea if this is true.
2) Because you believe in diversifying your portfolio. Remember at the top of this article when Dick Durbin criticized people who "believe the Swiss franc is stronger than the American dollar"? Well, it is. Ten years ago a greenback reliably got you more than 1.40 Swiss francs, but the dollar was down to 0.86 when the Swiss National Bank announced a currency peg to the Euro last September. Though that helped break the fall, the buck still hasn't clawed its way back above the 1.00-franc mark since, and I would be comfortable wagering that another decade from now it will be closer to 0.50.
Is Dick Durbin protecting his million-dollar portfolio through a buy-American-only strategy? Hell no, he isn't—why, just right there I can see such asset items as "ING Clarion Global Real Estate Income," and "Matthews Asia Dividend Investor," and "Morgan Stanley Emerging Markets Domestic." Not that there's anything wrong with that! Switzerland is an unusually stable country with an unusually sound fiscal track record and an unusually strong banking sector. I would be shocked if any $100 million American didn't have at least some stake in a country that has long been one of the largest foreign investors in the United States.
3) Because it really is none of your damned business. This applies more to Joe the Plumber than Mitt the Romney (politicians, and especially presidential aspirants, deserve to be held to a higher standard), but the ugly truth as it stands today is that Uncle Sam believes he has a right to know each and every detail about your money, so long as it is parked in a foreign financial institution instead of buried in your back yard. There is something very wrong about the principle that your after-tax earnings are subject to still more scrutiny by the most powerful government the world has ever known, and something insidious about the sight of politicians blaming Americans' investment choices for their own shoddy governance.
Given the bipartisan disaster with public finances, it's no surprise that an already trivial presidential campaign is wallowing in the comparative irrelevance of Mitt Romney's private investment strategies. And anyone who thinks that repetitive attempts to damn a presidential candidate through his European associations is a purely Democratic piece of phony xenophobia ought to do a Google search on "haughty, French looking" sometime.
But sadly, we live in an age when stupid campaign prejudice can too easily be translated into law, with consequences that damage the lives of middle class Americans while leaving the rich unscathed.
Back in January, during a rehearsal of the Democratic anti-Romney line, Sen. Carl Levin (D-Mich.) said "There is no such thing as an ordinary Swiss bank account." Thanks to populist millionaires like Levin, that clumsy slur is becoming a self-fulfilling prophecy.
Matt Welch is editor in chief of Reason magazine and co-author with Nick Gillespie of The Declaration of Independents: How Libertarian Politics Can Fix What's Wrong With America , now out in paperback with a new foreword.
