Bank Is Fined For Helping The Rich Evade Paying Taxes

(This image was found on the website Veterans Today.)

It's bad enough that the rich don't have to pay the earned income tax rate (the rate paid by most Americans) on the huge amounts of income they have. Instead they have a special lower rate they pay for most of their income (the rate they pay on investment income). This lower rate, combined with other subsidies and tax loopholes (which most Americans don't qualify for) lets the super-rich pay far less in taxes than they should (which is how Mitt Romney paid only about 13% on an income of more than $20 million).

It goes without saying that this needs to be fixed. There should be no special lower rate for any kind of income, nor loopholes to help them avoid paying taxes. But there is something far worse going on -- illegal tax evasion, that is helped to happen by huge international banks.

Recently the giant international bank Credit Suisse pled guilty to helping rich Americans avoid paying income taxes. They had been under investigation since 2009. Among other things, they helped those Americans create sham companies to hide undeclared income, and secretly delivered large amounts of cash to them from outside the country (which enabled them to avoid paying taxes on that money when brought into the country), and destroyed records of transactions (and encouraged clients to do the same).

Credit Suisse agreed to pay a fine of about $2.6 billion in penalties ( $1.8 billion to the United States government, $715 million to the New York Department of Financial Services, and $100 million to the Federal Reserve). That may sound like a lot of money to most Americans (more than half of which make less than $45,000 a year), but it really isn't that much for the giant bank. The bank admitted the fine will just lower (but not eliminate) their second quarter profits. And nobody went to jail -- in spite of the fact that this was an organized and intentional effort to illegally avoid paying taxes.

And anyone who thinks Credit Suisse was the only giant bank helping the super-rich to illegally avoid paying their taxes is living in a dream world. You can bet that most of the other giant international banks are doing the same (or similar) things, and doing it for the same reasons -- so they can attract rich customers and make money off of them.

I applaud the Justice Department for their effort in exposing this case, but I believe they have just discovered the tip of a gigantic iceberg -- and much more needs to be done. In addition, why haven't we heard about cases being brought against the individuals the bank had helped avoid those taxes? Have they been forced to pay back taxes? Why aren't they in jail (as an example to others doing the same thing)? Are they too rich to send to jail?

Finally, you may be wondering what any of this has to do with ordinary Americans. Well, it's because it is the ordinary middle class American who has to make up for the taxes these rich criminals avoid paying. If you think your taxes are too high, you need to realize that this is a primary reason for it. Someone has to pay for government, and if the rich won't pay their fair share, then the rest of us must pay more to make up for it.