Like most countries, Germany has been trying to crackdown on tax evasion lately. The way it is doing it raises the question of whether two wrongs make a right. 

The IRS hates Switzerland given its banking secrecy rules. Well, imagine how the German authorities feel. While many Americans probably can’t pick out Switzerland on a map, Germany shares a border with the country! Given this, it should be no surprise a few wealthy German citizens have opened accounts in Switzerland and not paid taxes on the gains in those accounts. 

The problem for Germany and every country has been how to figure out who is cheating and who is not. No country has really figured out a good method. The primary course of action has been to wait for some disgruntled individual to come forward and report on the tax evaders. The IRS got lucky in this regard not long ago, but the Germans have faced a different twist. 

A person has come forward to German authorities with information on German taxpayers who are evading taxes with Swiss bank accounts. The problem is the person is doing it for financial gain. They are selling CDs of the bank account information to German authorities. As you might imagine, the CDs are being sold for millions of dollars. This is a large number, but one that pails in comparison to the amount of money being brought in. 

So, do two wrongs make a right? German tax authorities are buying stolen information to pursue tax evaders. As you might imagine, Swiss authorities are furious and the legal prospects for the individual selling the information are not good if he or she is ever caught. The ultimate answer appears to depend on whether the Germans decided to continue to purchase the disks. The news they paid $1.5 million for a list of 200 accounts this past week would seem to suggest that in German…two wrongs do make a right when it comes to catching tax evaders!