GENEVA, SWITZERLAND – “Tax haven” must be one of the most over-used and abused and least understood terms that is regularly unleashed by bureaucrats and politicians on unsuspecting voters who are angry about financial and tax inequality. I’m one of those voters, but I cringe when I see the term, especially coming from the US. This morning it was used by CBS News, which lumped together Ireland, Switzerland and the Bahamas as tax havens” in relation to Mitt Romney and his money.

If the name Delaware surfaces, “tax haven” is replaced by something like “no corporate tax” or “corporate friendly” by its fans and if it is Ireland we hear about “low corporate tax” or “tax friendly” from the big accounting firms, although Business Insider and Ireland’s Politico more bluntly call it a tax haven. Google is one of the key examples there.

Politico’s article on where FTSE 100 companies plant their money and which tax havens they use is a helpful contribution to the discussion.

The over-burdened taxpayer in the US or Ireland could be forgiven for saying yes, but these are companies that create jobs, so this kind of tax haven is okay, whereas the ones that cater to rich individuals (and Switzerland, Luxembourg and the Bahamas are likely to come to mind) are wrong because they’re just used by the rich to hide their wealth.

My sin, but your sensible tax policy

This isn’t a plea for higher corporate and wealth taxes or lower ones for those who aren’t rich. It is a plea to everyone, voters included, to stop using “tax haven” to mean a sin if you do it and sound fiscal practice if I do it. If we can get past that we might get somewhere in finding more balanced tax payment systems.

Here’s the US Government Audit Office (GAO) definition  of the term, and keep in mind the list of countries mentioned above:

“There is no agreed-upon definition of a tax haven or agreed-upon list of jurisdictions that should be considered tax havens. However,various governmental, international, and academic sources used similar characteristics to define and identify tax havens. Some of the characteristics included no or nominal taxes; a lack of effective exchange of information with foreign tax authorities; and a lack of transparency in legislative, legal, or administrative provisions.”

This isn’t too far from the OECDone that has caused Switzerland trouble in the past two to three years: “factors to be considered are:

• Whether there is a lack of transparency
• Whether there are laws or administrative practices that prevent the effective exchange of information for tax purposes with other governments on taxpayers benefiting from the no or nominal taxation.
• Whether there is an absence of a requirement that the activity be substantial.”

For the record, I’ve paid taxes in four countries where I’ve lived and while there is room for improvement, I’d put Switzerland at the top of the fair tax list and the US at the bottom. A bonus: it takes me just an hour to do my family’s taxes in Switzerland.

GENEVA, SWITZERLAND – Kirsten Gillibrand is a senator from New York who has been in Geneva this week to raise campaign funds: she is going after part of her constituency, American voters from her state who live in Europe. Democrats from New York who live in neighbouring France and Switzerland are being given an astonishingly rare treat that could provoke envy among other Americans abroad: a member of the US Congress has noticed and is listening to them.

Her trip has drawn the ire of Republicans back home, however, in the conservative press, with the state chairman of the Republican party, Ed Cox, saying “Senator Gillibrand touts her un-passed ‘Upstate Works Act’ while sipping champagne, popping canapés, and filling her campaign coffers in the shadow of the Swiss Alps. She is clinking glasses overseas when she should be cracking heads in Washington to actually get a bill passed.”

The National Journal published an article on the trip. “Mary Boyle, a spokeswoman at the government watchdog group Common Cause, said the trip ‘shows the insane lengths that candidates and members of Congress go to raise money for their reelection campaigns.’”

The criticism of Gillibrand and underlying assumptions that Geneva = overseas Americans = wealthy Americans come shortly after James Fallows, writing  “The Fatca Chronicles” in The Atlantic, has cautioned Americans abroad that when they complain about lack of representation and  unfair tax regulations they are likely to be viewed as “whiners”:

“Something most overseas Americans don’t realize: The home-bound population does not view them as a hardship class. A known risk category for long-term expats is becoming whiners—I speak as someone who’s lived outside the U.S. for several multi-year stretches and has been known to whine,” he wrote 2 January in “The Fatca Menace”.

Americans living overseas, from Canada to Switzerland, have been complaining loudly in recent months about unfair treatment at the hands of the IRS, starting with double taxation and onerous financial reporting requirements, such as the FBAR and the impact of Fatca on their ability to have bank accounts in the countries where they live, pay rent or own homes and try to set aside retirement money.

Town hall meetings in Geneva and protests in Canada have made it clear that the complaints are coming, not from a handful of wealthy diletante expats, but from a large group of middle income Americans who happen to live outside the country and who ultimately help the rest of the world better understand the US through personal contact.

Many fall below the $92,000 earned income exclusion, the bar set by the IRS for double taxation, and they have been vocal in their complaints about how the system has nevertheless cost them unfairly and grossly.

A significant part of their complaint but one that has so far fallen on deaf ears in the US is that they are taxed without representation. True, an American abroad technically should have Congressional representatives to whom complaints and pleas for help can be sent, and these overseas citizens are supposed to be able to vote and can, in theory, help elect people who understand their concerns.

The system sounds fine on paper, but the reality is very different. For a start, many Americans who live overseas, especially long-term residents or children born abroad to US citizens, no longer or have never had addresses they can use in a US state, and your US address is the starting point for all congressional relations.

Offspring are told by some states, in order to vote and to have a congressional rep, to use a parent’s last address in a state, but this can make voter registration an onerous process. They are simply not eligible to vote in some states.

The Overseas Vote Foundation has been working hard to improve the situation, but few Americans in the US appear to be aware that for a large number of Americans overseas the basic representation and taxation rights that are so stridently defended during electoral campaigns sadly do not apply to all citizens.

Groups like Geneva-based ACA (American Citizens Abroad) have been working hard to draw attention to the issues.

But even if all US citizens abroad managed to find a senator or representative willing to listen to  them, this group is dispersed, so its voice remains weak. Their common concerns appear through a prism of all the states, so few politicians see them as having enough weight to be important.

Gillibrand isn’t just raising money for a campaign. She’s opened a conversation with a group of Americans who are often ill-treated by their own government because its elected leaders too often focus on larger vested interests. She should be given some credit by Democrats and Republicans alike for doing her homework and taking her responsibilities seriously.

GENEVA, SWITZERLAND – American Citizens Abroad are hosting a fourth Town Hall meeting in Geneva Wednesday evening 16 November to talk about US tax obligations. Among the odd questions likely to come up is this one: does the US Justice Department really expect people to inform the Justice Dept. that they are appealing a Swiss federal government decision, if their bank accounts are slated to be turned over to the IRS by Credit Suisse at the behest of the Swiss government?

Swiss law allows the account owners to appeal before any data is turned over, so their privacy is respected until the day the Swiss court rules that the client’s case meets the criteria for “administrative assistance” under the terms of the the bilateral double taxation treaty.

In other words, the day the Swiss tax office says they do indeed appear to be committing fraud or tax evasion involving a substantial amount of money.

Nasdaq, which published a Dow-Jones article Sunday 13 November about Credit Suisse turning names over, ends with this startling sentence: “Taxpayers who challenge the release of the information are supposed to report their challenge to the US Justice Department.”

It takes a bureaucratic mind to come up with that one.

GENEVA, SWITZERLAND – We have reported regularly on the US government’s efforts to bring its far-flung citizens back into the American tax fold, and I’m about to write something on American Citizens Abroad’s efforts to get Congress to repeal Fatca (if you don’t yet know what that is, you’re not alone, which means you’re part of the problem).

But an article that appeared in Tom Dispatch, which is always excellent reading, stopped me in my tracks. There are the very public wars, and the quiet ones: this is part of one of the quiet ones, and I leave you to determine who is fighting whom here.

The story of Ann Jones, Fulbright Scholar in Norway, not being able to get her rent money out of her US bank account, will raise the anxiety level and hackles of many Americans. Years ago I was an illegal alien in France, at a time when Paris was filled with Americans, almost all of them living there illegally because France didn’t give many visas to Americans. Banking was a nightmare, for me and almost everyone I knew. In a particularly Gallic twist on logic, I was allowed by the French to pay taxes and social security there, to the tune of nearly 40% of my income. My US bank was Citibank, so I felt a strange comradery with Ann Jones when I read her saga, even though my problem at the time was not the US Justice Department but the French government.

I left France, despite having a good job, because I wanted to live in peace, with peace of mind, in a country where I could do my banking and pay my taxes and sleep at night, a country where the machinations of government were more open: Switzerland.

What really bothers me in the Ann Jones story is reading about the questionnaires. These are oddly and uncomfortably close to the questionnaires Americans appear to be receiving once they have turned themselves into the IRS for non-filing (IRS voluntary disclosure), without knowing in advance they will receive these unless they have a pricey US accountant handling their paper – and that the filing apparently doesn’t count unless they fill out the questionnaires. I’m still looking for more information on that – accurate rather than the rumours floated by a New York Times/Reuters reporter (more on that later today). I’ll report on that when I know more.

For now, I guess this is the little rider, in the IRS FAQ, that implies late filers will have to answer more questions after they have filed: “Cooperate in the voluntary disclosure process, including providing information on offshore financial accounts, institutions and facilitators, and signing agreements to extend the period of time for assessing tax and penalties…”

Meanwhile, the Ann Jones story makes sobering reading, nothing to do with taxes, much to do with the fear of God being put into Americans who live overseas.

A bonus is that I discovered she’s written a book that sounds promising, War is not over when it’s over (women and the unseen consequences of conflict).

GENEVA, SWITZERLAND – I was intrigued by the headline “Ogaden diaspora protest outside the UN in Geneva” because I couldn’t think who the Ogaden were. I found out by visiting a web site for a group new to me, which might interest others, particularly in Geneva: The UNPO, which is not a new UN body but stands for the Unrepresented Nations and Peoples Organization.

The Ogaden are from eastern Ethiopia. Among other surprising things I learned: the Tsimshian are the only North American group that belong to UNPO; they are in British Columbia, Canada. I’m puzzled as to what makes their situation different from other First Nation people in Canada or Native Americans in the US.

We have rough news for you Superman, on the citizenship front

Superman: born in Cleveland, raised in Kansas, a citizen of everywhere but the US?

Geneva, Switzerland (GenevaLunch/An Alien) – The many Americans (there is a waiting list at several embassies) who are considering or trying to give up their citizenship have a kindred spirit this week. It’s a bird! It’s a plane! You guessed it: it’s Superman, who in a fit of pique this week threatens to give up his US citizenship.

In case you didn’t know he was American, just wait, for he might have the ultimate solution for those who are weighing nationality issues. He was given citizenship in 1974 by every member of the United Nations, the Guardian reminds us this week. Can he juggle all that?

Superman’s outburst in the latest Action comic, published 27 April, has nothing to do with tax filing obligations or other such US overseas citizen bugaboos. “I’m tired of having my actions construed as instruments of US policy,” he says in the new comic. Iran is responsible for that.

Iran, not tax issues, should be mentioned on his renunciation request form

But then Americans are not legally able to give up their citizenship, also called renouncing it, for tax reasons, the State Department makes clear. Being confused with the US government by Iran is a better reason, perhaps.

We’ll never know how many Americans gave up their citizenship, wearied by the tax hassles, because they can’t state this as a reason. Ironically, Superman’s outburst comes the week of the 50th anniversary of President John F Kennedy’s recommendation to Congress that all Americans overseas should be taxed, even if they pay tax in another country where they legally reside, the only country in the world to opt for double taxation.

Ironically, the change to US tax legislation in 1962 didn’t bring in enough money from the rich to avoid a massive US debt today, but recent interpretations and amendments to taxes for citizens abroad, coupled with a nose-diving dollar have caught short many Americans who are not rich.

50th anniversary of US citizens’ abroad double taxation

“It is no more justifiable to provide tax exemptions for individuals living in the developed countries than it is to provide tax inducements for capital investment there,” Kennedy argued. “Nor should we permit totally unjustified tax benefits to be obtained by those Americans whose choice of residence is dictated primarily by their desire to minimize taxes. I, therefore, recommend that the total tax exemption now accorded the earned income of American citizens residing abroad be completely terminated for those residing in economically advanced countries.”

In other words: the obligation to file and the liability for paying US taxes no matter where you live in the world, if you’re a US citizen, even if you file and pay taxes as a resident elsewhere, began its legal gestation 50 years ago today.

Superman, do you know about the Fbar form? Have you filed your taxes as well as the Fbar form for every year?

US citizenship versus Swiss neutrality, uh-oh

The hulabaloo over his words is startling if you’re not a regular comic books fan. The conservative right is up in arms, as are some Superman regulars. Jonathan Last at The Weekly Standard writes, “in the end, the only truly interesting aspect of Superman’s character is his complete devotion to America. Because it’s this devotion—of which his citizenship is the anchor—that establishes all of his moral limits. Why does this demi-god not rule the earth according to his own will? The only satisfying answer is that he declines to do so because he believes in America and has chosen to be an American citizen first and a super man second.”

If you’re not American, you don’t believe in anything

But wait, if you’re an American in Switzerland, there’s a serious moral dilemma coming up. Last continues: “Once he’s a ‘citizen of the universe’ what, exactly, will he believe in? Heck, what does ‘citizen of the Universe’ even mean? Will Superman now adhere to the Tamaran code of honor? Will he follow the Atlantean system of monarchy? Does he believe in liberté, égalité, fraternité, or sharia? Does he believe in British interventionism or Swiss neutrality (bold, GL)? You see where I’m going with this: If Superman doesn’t believe in America, then he doesn’t believe in anything.

Whew. I’m from Dubuque, and I thought the world had room for more than America, which is why I live in Switzerland and actually believe in Swiss neutrality.

Wired, for the record, argues that he is “above ephemeral geopolitics and nationalist concerns, a universal agent.”

Home of our fathers – poor S-man just lost that, too

As if Superman’s potential lack of moral fiber isn’t a big enough problem, someone stole the Cleveland, Ohio sign about his birthplace. But relax, S-man, local police think it was just someone who thought the sign was copper and they stole it for scrap metal. Poor fellows, it was aluminum. The sign was stolen two weeks ago, but the news surfaced only this week, in the Cleveland Plain Dealer.

Here’s the letter

Dear Superman,

You can’t just stand up in front of the United Nations to renounce your citizenship. Let’s hope your Kent Clark day job still pays well, not a common thing in journalism these days, because you’ll have to make an appointment, possibly two, go in for an interview at a US consulate, explain your actions and say you understand the dire and irrevocable implications of renouncing citizenship, then pay $450 in administrative fees. And you’ll be asked if you’re up to date on your taxes.

Good luck if you decide to take that path.

You know what happens next? You become An Alien. The Loss of Citizenship papers you’ll be asked to sign call you just that.

I did it just a week ago, in Amsterdam because the waiting list in Switzerland was so long. I was told I could never call myself an American again, and asked how that made me feel. My first reaction was that it makes me feel the US government needs to reconsider this line because while you can take the girl out of the US, you can’t take the US out of the girl: if you were born and raised in Iowa and move abroad, accents, memories, an appreciation for corn and frankly, a good variety of moral fiber remain. I won’t ever again claim to be a US citizen, but that’s another matter.

Hey, maybe being labelled Alien doesn’t feel too odd to you, so I shouldn’t worry. Welcome to the club.

Sincerely, An Alien in Switzerland

Two world leaders get together and hold what are presumably key talks. China, the US. Two world powers, two potential adversaries or, if not partners, at least friends, depending on your perspective.

Presidents Hu and Obama, ready to share with the world the fruits of their discussions.

So the rest of us, sitting at home and watching TV, thought they might say something about what they discussed, during a post-meeting press conference.

We don’t expect earthshaking question-and-answer sessions, since at this level press conferences are somewhat orchestrated (note the tidy black suits, not the daily attire of most journalists).

What we got was so far less than this that I fear it doesn’t bode well for future trade or political discussions. It’s hard to tell if the press conference was badly planned, or if the problems were technical or human, but most of those wonderfully expensive TV minutes were spent watching the two men waiting for translators to repeat what the other had just said.

We heard and saw Obama several times, but Hu was left virtually speechless, not always by choice. The reporters who were there (see NPR blog from the conference, below) seemed blissfully unaware it was mostly incoherent to the watching world.

The NPR blog doesn’t include a Chinese reporter from Xinhua demanding that his question be translated correctly, which brought laughs, so maybe we missed something there, too, watching it on a little screen.

The BBC has a headline about Hu’s response to a human right’s question, which certainly shifts the emphasis away from economic issues, which appeared to me to be the bulk of what the press conference dealt with, not human rights. CNN and China’s CCTV both emphasized that the talks were about positive ties, somewhat empty as headline news goes.

Duh . . . Maybe the two nations’ communications gap isn’t cultural after all, but just plain bureaucratic? Surely the technology they both sell is up to the job.

I watched the BBC, switched to CNN, checked out China’s CCTV, which not surprisingly was not carrying the live press conference.

Summaries of their talks, from broadcast media: BBC Britain, CNN US, FR1 France carried no story on this, NPR US, CCTV China

Then-US Ambassador to Switzerland and Liechtenstein Pamela Pitzer Willeford, 2003

Two things only surprise in the latest batch of Wiki-Leaked US cables published Tuesday 11 January by the Guardian that relate to Switzerland: the enduring insistence of the US government in January 2006 over what it saw as the anti-US stance of Swiss media, and the confidential tag for a 13-point cable by Ambassador Pamela Pitzer Willeford that was almost entirely filled with matters of public record.

The only thing possibly requiring confidential protection was author Willeford’s efforts to say who US real friends were (Liechtenstein, keen to clean up its money laundering image) and who the cooler friends were (Switzerland, which had the audacity to disagree with the US now and again, and to ask uncomfortable questions).

The bulk of the cable refers to various Swiss reports that anyone can find on the Internet, and which journalists, on a regular basis, have written about, making me wonder about the extent of confidential cables inflation over the years. Surely the original idea was to classify as highly private only comments and conversations? Cloak and dagger work is more exciting, I suppose, than the slogging work of information-gathering that we journalists routinely do, but what a shame that tax money has to be spent on keeping under wraps information that in reality isn’t under wraps at all.

Willeford wasn’t the one who classified it, but the addresses at the top, to the FBI and Ofac, the government office that oversees sanctions, plus her signature on the end of it makes it clear that she thought the FBI at least would benefit from the information.

US feared Switzerland was too soft on Muslims in anti-terrorist fight

The cable does offer us a chance to remember that Switzerland was seen officially but privately by the US government in 2006 as far too tolerant of Muslims in the context of the fight against terrorism. In contrast, in March 2010 “the US State Department annual report on human rights cited it [2009 Swiss popular vote banning the construction of new mosques] as an example of anti-Muslim discrimination in Europe,” reported swissinfo.

Ambassador apparently in the dark about CIA secret prisons

The other bit that offers fodder for reflection is about CIA secret prisons and overflights, words that indicate the ambassador was in the dark about this activity, yet she was quick to decide the Swiss government was out of line in insisting on some answers. The cable was written in January 2006, 10 weeks after the Council of Europe assigned Swiss lawyer and European member of parliament Dick Marty the job of investigating the matter, in November 2005. In June 2006 Marty issued his initial report, providing damning evidence that the CIA indeed had secret torture centres in Europe. US President George W Bush confirmed the existence of the secret prisons, in September 2006.

The European Parliament in the months that followed issued its own report, concurring with Marty’s. Marty then published additional evidence of the secret prisons and overflights, in June 2007. The Council of Europe adopted his report 27 June 2007, but by then Ambassador Willeford had been gone from Bern for nearly a year. A remark made to me by a departing US State Department employee comes to mind, “The embassies don’t really do diplomatic work and haven’t for a long time. They’re just the decorative icing on the cake. The only place where things really happen is in Washington.”

For the sake of the US staff in Bern, and Swiss officials working with them, I hope this ex-staffer had it wrong. Willeford’s cable doesn’t provide much reassurance, though.

Going down in history as witness to VP shooting friend

The most significant thing the just-published cable provided me was a reminder of Willeford’s role as ambassador in Bern from 2003 to 2006, when received prejudices, such as the anti-US stance on Swiss media, were confirmed with little evidence, feeding US misconceptions about this small and apparently too independent nation.

And a reminder, too, of Willeford’s strange history, a string of often-puzzling successes and the odd historical note that 21 days after sending this cable she was the only eyewitness to Vice-president Dick Cheney accidentally shooting 78-year-old Harry Whittington. The three were out quail hunting on an old friend’s ranch with others from the Texas business aristocracy.

Frankly, that story made more exciting reading than Willeford’s hapless cable.

This is the speech 11-year-old Daniel Yuval gave in Geneva 29 November 2010 to the international meeting convened to review progress made on the Mine Ban Treaty since the Cartegena Summit in Colombia a year earlier.

Background story

Daniel’s words should set a fine example for politicians, straightforward, clear and to the point. Daniel, a landmine survivor, argues eloquently for the removal of all mines:

Daniel Yuval during a break in Geneva, 29 November 2010

Thank you, everyone, for letting me speak to you today. This is my first trip to Geneva. I am so happy Switzerland invited me to come. Thank you!

I want to tell you my story and ask for your help. We have a big problem in Israel—landmines. Most people in Israel didn’t know about it until this year.

Ten months ago, I went on a picnic with my family to the Golan Heights. It had just snowed, and I had never seen or played in the snow. The place is called Har Avital. My sister Amit and my brother Yoav and I were laughing as we ran into the field to make snowballs. My mom and dad were there, along with many other families.

Suddenly, there was a big “boom”. I didn’t know what happened. I didn’t feel anything at first. I didn’t know there were landmines under the snow, and all around us.

My dad came into the field to pick me up and carry me out. I told him not to worry, I would be okay. And, I told my brother and sister to hold tight to dad’s legs, so they wouldn’t get blown up, too.

Other parents took off their shirts to tie around my leg. Then a helicopter came to fly me and my sister to hospital. Only then I started to know what happened. I had stepped on a landmine.

When I woke up from the operation, the pain in my leg was bad. But, I started to think about something just as bad, that this could happen again to other children.

I spent more than three months in the hospital, and had almost 20 operations, to cut off my right leg below my knee, and to clean and fix my left leg. Many famous people called or visited me in the hospital. When Prime Minister Netanyahu called me, I told him, we have to do something to clean up landmines. I told Mr Netanyahu that no more children should ever get hurt from this weapon.

Jerry White and his friend Dhyan Or came to visit me in the hospital.

Jerry also lost a leg to a landmine in the Golan Heights. I asked them, “How do people get rid of landmines?” They told me that many countries do it. They said, “If we work together, we can try to stop any more people from getting hurt or killed.”

I am now the Youth Ambassador for the Campaign for a Mine-Free Israel. We are asking the government of Israel to pass a new law to clean up old minefields everywhere in Israel and the West Bank. I’m told there over 500,000 mines to get rid of. Some say, one million.

In March and May, I went to the Knesset and told them it was time to take action. I am asking everyone to support this new law. Help us clean up the mess. I believe we can do this by the time I graduate from high school in Israel.

Someone told me we need about 70 million dollars to do this. That is a lot of shekels, that I don’t have! But, I hope that the Israeli Government and others can make this happen. It is worth it, to make sure no more children get killed, or have to spend months in the hospital like I did.

Daniel Yuval, age 11, addresses Geneva followup meeting to Cartagena Summit on implementing the Mine Ban Treaty

Stepping on a landmine is terrible. It’s scary and painful, not just for me, but for my mom and dad, and my whole family. For myself, it was really hard work. I had to learn to walk all over again. But, the good news is, I have learned to run, and can beat some people in my class in the 660 metres. I also take kick-boxing and Judo, and play football.

I want to thank everyone in this room who is committed to getting rid of landmines. We in the Middle East have a big problem. But, we know it can be done. My neighbor Jordan joined the Mine Ban Treaty and is almost finished clearing all its minefields. I hope Israel will be next. I hope soon all the world will be free from landmines.

I thank you for listening to me and hearing my story. I want to thank Roots of Peace for bringing me here, and Mom and Dad for believing I can make a difference. Thank you!

50,000 march in Dublin against Irish austerity plan

Ireland: rain coming (The Burren, view of Galway Bay, October 2010) - click on image to view larger

Economist and Nobel laureate Paul Krugman has just given the Irish an early Christmas present, some badly needed cheer and praise for a population that doesn’t deserve to be mired down in its current mess.

Meanwhile, 50,000 people took to the streets in Dublin to protest against austerity cuts Saturday 27 November. Krugman likely has some fans in the crowd.

I wish he could come up with a Christmas miracle for them now.

A great read: “Eating the Irish”, NY Times