Unwarranted Leniency For Tax Cheats Supposedly Runs Out Thursday

This morning I listened to a California Republican legislator-- yes though a rapidly dying breed, there are still a few scattered around the state making trouble-- explaining why he and some of his cronies are opposing a water bill for the parched state. He didn't think the Democrats' proposal to impose stiff penalties on people and, most especially, entities that are illegally drilling into public water sources and diverting it for their own use. A small and inconsequential fine? Fine! A real fine that would discomfort Republican campaign donors? He'd rather see southern California shrivel up and blow away in the wind.

Yesterday's NY Times Business Section carried a piece by Lynnley Browning explaining the Thursday deadline for one subset of off-shore tax cheats. Chances are there are "tens of billions of dollars" illegally hidden away, to avoid taxes, in offshore tax havens like Switzerland and shady Caribbean islands like Antigua, the island that knighted "Sir" Stanford, currently in jail as a flight risk after being caught bilking scores of clients out of millions of dollars. Anyone who comes clean by Thursday will get a good deal of leniency. This is a criminal ripoff of American taxpayers. The only leniency should be that instead of life in prison they should merely forfeit every cent they have. But instead of penalties ranging to 50% of what they owe, they'll only be charged 5-10%. This is absolutely disgraceful, something I'd expect from the Bush Regime but something becoming just as typical of the Obama Administration.

Several thousand wealthy people have come forward, hoping to avoid large fines or possibly even prison. But many others are still weighing their options. The choice is stark: They can confess and pay the penalties, or gamble that they will not get caught. With the deadline only days away, tax lawyers say they are being inundated by anxious clients.

“We’re seeing a flood of people,” said Scott D. Michel, a tax lawyer in Washington. His firm, Caplin & Drysdale, has 350 clients who are preparing to report their offshore accounts to the Internal Revenue Service. The firm has 14 lawyers handling their cases, one of which involves a tax bill of hundreds of millions of dollars.

The deadline is part of a broad crackdown on Americans who use offshore accounts to evade federal taxes. As part of the effort, United States authorities have challenged the long tradition of banking secrecy in Switzerland, and, in particular at UBS, that nation’s largest bank.