Thursday, February 21, 2019

France punishes tax evasion 100 times more harshly than the U.S. (Michael Simkovic)

A French court recently ordered Swiss Bank UBS to pay a penalty of 4.5 billion Euros (equal to about $5.1 billion U.S. Dollars) for allegedly facilitating tax evasion.  The U.S. fined UBS only $780 million for similar charges in 2009 (the equivalent of $890 million in today's dollars).

To put this into context, France's GDP is about 13.4 percent of U.S. GDP, and France has proportionately fewer ultra-high net worth individuals (only 6.5 percent as many billionaires, who on average are less wealthy than billionaires in the U.S.).  Thus, scaled by number of billionaires, France fined UBS more than 100 times as much as the U.S. fined UBS for facilitating tax evasion (scaled by GDP, nearly 50 times as much). 

The U.S. fined Credit Suisse around $2.5 billion in 2014, which makes France's UBS penalty still proportionately around 33 times harsher than the recent U.S.-Credit Suisse settlement.

France, Italy, Spain, the UK, Sweden,Greece, Ireland, Bulgaria, Israel, Jordan and the Netherlands are facing popular protests over regressive tax policies that protestors say excessively favor the rich over the middle and working class.  Protests in France were set off by repeal of wealth taxes and other regressive tax policies, social spending cuts, and loosening labor protections.  

UPDATE 2/25: This article was corrected to reflect that fact that the U.S. fined UBS $780 million in 2009, not $78 million as was reported in the Financial Times story linked above.  Additional context about a Credit Suisse settlement was provided.  Thanks to Pierre-Hugues Verdier (UVA) for pointing out the error.

Guest Blogger: Michael Simkovic, Jurisprudence, Legal Profession, Of Academic Interest | Permalink