The US President knows what he’s doing: a Senate paper explaining why Joe Biden attacked Switzerland
Biden put Switzerland on a par with a Bermuda tax haven. Fed Member Maurer was amazed that this was quite old, but Biden was still new. But he knows what he’s doing.
It was a provocation with an advertisement. Joe Biden sent the Treasury Secretary first. Janet Yellen described her plan in the Wall Street Journal to bring a better corporate tax to America. Switzerland first appeared in a disturbing context. The United States no longer wants to be measured in tax competition with Bermuda – or with Switzerland.
It was early April, and Switzerland can hope. Yellen’s writers might have made a mistake. The error will be corrected. But after a few weeks, it couldn’t be talked far about: the Biden administration in fact considers Switzerland a tax haven of the same status as Bermuda. Biden said in his speech to the US Congress: “Many companies also evade taxes through tax havens in Switzerland and in Bermuda and the Cayman Islands.”
How does Switzerland respond?
Criticism of Biden sat down. The reactions in Switzerland were reminiscent of expressions of anger or surprise known from popular culture. In a modification of the saying that Obelix’s bewildered comic character always repeats over and over on her trips abroad, it looked like this: “They are crazy, Americans.”
When anger mixed with requests to speak, it was reminiscent of the legendary angry speech of Italian soccer coach Giovanni Trapattoni, who spoke in German. Then one of them said, “Biden, excuse me.” Business attorney Bernays Peter F. Coons was a model. When asked about the similarities between Switzerland and Bermuda, he replied to “NZZ am Sonntag” that there was very little left of them.
Switzerland has made a lot. Today it is an international average in terms of money laundering and transparency. Its regulations are at least as strict as those in the United States, if not more stringent. What Biden said was a backwards criticism. “It is about the situation 10 or 15 years ago, and it is no longer justified today,” she added.
What does Ully Maurer say about the Biden comparison?
Federal Chancellor Ueli Maurer also objected. “Switzerland considers this assertion of Switzerland as a tax haven by the United States to be inappropriate and totally outdated,” the finance minister said from a spokeswoman. He himself told Swiss television that the writers of President Biden’s speeches did not know the current facts yet.
“I think things like that happen. President Biden is new.”
Are they crazy Americans?
Did Biden stop at the right time? Or is he doing it like his predecessor Donald Trump, throwing out all the facts and launching political attacks? Research shows that he did not. An explanation for Biden’s attack can be found in the appendix of a Senate paper. The paper contains an analysis of the countries in which US multinational corporations do the most business. Internationally recognized tax economist Gabriel Zucman certifies “sound analysis” on request.
Why Biden compares Switzerland to Bermuda?
The Senate paper contains an analysis of the international tax policy of the United States. Set up on March 19, 2021, to take care of the Senate’s powerful Finance Committee. The appendix contains basic facts about the most important countries in which US multinationals operate. This gives a clear picture of how the United States views Swiss tax policy. For them, this is close to the textbook example of a tax haven.
Something has gone out of control in tax havens. The profits or sales that US multinationals post there exceed the size of these countries. It gets ridiculous in Bermuda. The net profits of multinational corporations in the United States are several times greater than their annual total economic output. These profits bring in a lot of tax money to the island nation.
It’s not as glaring as Switzerland, but the proportions are amazing. According to the Senate paper, mail sales to US multinationals in this country are in the same order of volume as in Germany, which is ten times the size of the population. The net profit is greater in Switzerland. The number of employees is seven times less than in Germany. Sales with related companies are much higher than in Germany. It relates to the services that parent and subsidiary companies meet against each other (see diagram).
Why are tax havens a problem for Biden?
He needs tax money for his spending programs. Biden wants to invest about $ 6 trillion. In his view, tax havens are a problem – one that is constantly growing. This can be found in the Tax Plan. “Switzerland” appears only once, in a note on a chart. This graph shows the dramatic increase in the importance of the “seven tax havens”. These include Bermuda, the Cayman Islands, and Switzerland.
US multinationals now pay far more income taxes in these “oases” than they did twenty years ago. The oases doubled their share of total foreign income for US multinationals. Switzerland is playing an important role in this transformation. “It remains one of the most important destinations to which US multinationals turn their profits,” says tax economist Zucman.