Regulation & Governance just accepted my article “A Nut too Hard to Crack? Swiss Banking Secrecy and the Problem of International Cooperation in Tax Matters”. Here is the abstract:
How was Swiss resistance to international cooperation in tax matters overcome? This article argues that while Swiss banks are structurally dependent on access to the U.S. financial market, Switzerland is structurally dependent on its largest banks’ economic welfare. Taking advantage of a tax evasion scandal in the midst of the global financial crisis, this indirect dependence gave U.S. law enforcement authorities the opportunity to exercise pressure on Switzerland by threatening to criminally indict Switzerland’s largest bank. The tax evasion scandal and subsequent Swiss concessions to the USA had two important consequences for international tax cooperation. First, the scandal provided a focal point for collective action that allowed other countries to coordinate their strategies and direct them against the country that had just been identified as uncooperative. Second, the scandal undermined Switzerland’s ability to impede collective action because the bank’s public admission of wrongdoing demonstrated the necessity of international tax cooperation.