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Offshore

10 Reasons Why Retiring Abroad May Not be for You

vacation travel

Do you plan to be that person sitting in that beach chair? If you are thinking of retiring abroad you must be aware of the pros and cons and seriously them both into consideration. As such I came across an article in the latest edition of Escape from America Magazine that I think deserves your attention. It talks about the downsides to retiring abroad – specifically the article’s author gives 10 reasons why retiring abroad may not be for you.

Here is a list of the 10 reasons given by the author:

1.  Homesickness

2. Loneliness

3. Healthcare

4. Affordability

5. Integration Issues

6. Cultural Differences

7. Accessibility

8.  Language Barriers

9. Alienation

10. You Like Your Current Life…

I think I don’t speak foolishly when I say that you owe it to yourself and your family to seriously consider all these reasons. Have a look at the full article for the details of each reason given above.

I hope you found this post useful.

Best of luck with your retirement plans!

Cheers,
Alan

Is Avoiding Income Tax Moral?

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The question of income tax is a thorny one. On one
hand everybody hates it, but on the other, no one
seriously considers challenging it. It’s like
gravity. We simply accept it as if it were a law
of nature.

Well it should be challenged, and here’s why. To
avoid income tax by whatever legal means possible
is entirely moral. And the reason lies in
understanding exactly what income tax is, and what
it is based on.

To tax a person’s income is to tax that person’s
life. For consider this: when you work you expend
time and energy. You devote forty or more hours
each week of your life to trading your life’s time
and energy for money. That money is therefore a
tradeoff for the time and energy you put in.

If the government takes 25% of that money as tax,
then it is actually taxing your life at the rate
of 25%, and saying in effect that one quarter of
your life belongs to the state. And if the
government takes 50% of your money in tax (as the
UK government has just announced as of writing),
then 50% of your life has been commandeered by the
state.

In order to make this point as clear as possible,
consider the plight of black slaves in the early
days of America. A slave was someone who did not
own his life. His labour was expropriated by the
slave owner. Given this situation you could
consider the slave’s income tax rate to be around
80% – with the remaining 20% being taken off him
as the cost of food and board.

So if having an 80% tax rate is slavery – where
one’s whole life is bound up with a slave master –
then certainly having an income tax rate of 30% or
50% equates to exactly that same percentage of
slavery. Given a choice of being a 100% slave or a
50% slave, you may opt for the latter, but it
would hardly be moral.

To tax income is to tax one’s life. The higher the
tax rate, the higher the claim on one’s life. And
no matter what percentage of income tax is levied,
it represents a percentage of “slavery”. It’s like
the old story of boiling a frog in water slowly,
so it doesn’t realise it’s being boiled to death.
The long suffering tax payer is just like the frog
– being fleeced and enslaved by degree.

At what point does a self-respecting person stand
up and say “No!”? Should he accept a 25% rate
quietly, but get agitated when the rate creeps up
to 40%? Should the long-suffering tax payer only
complain when it reaches 50%? And if not, at what
point does anyone stand up and say “Enough is
enough!”?

The truth is, no matter what percentage, income
tax is a tax on one’s life. The more tax, the more
a person’s life is enslaved.

Apart from the moral argument against such tax,
there are compelling practical arguments also. As
already stated, an income tax is a levy on one’s
own effort. And as such it acts as a disincentive
to work. Just ask yourself the question – at what
rate of tax do you start losing the will to work?
And if the tax rates were lowered considerably,
wouldn’t you work harder, knowing you were keeping
more of your own money?

This fact is well known of course, and high taxing
countries are forever suffering a “brain drain” as
the entrepreneurial class pack up their bags and
head overseas to countries where their life and
money is more their own.

It’s not by sheer luck or coincidence that the
Chinese work hard. It’s because countries such as
Singapore, Hong Kong and China itself have very
low income tax rates in comparison with other
developed western countries.

As a resident of Singapore, for example, you are
taxed at a rate of between zero and 20%, with 20%
being the maximum. If you lived in Hong Kong you
would be taxed a maximum of 15%. That’s a big
difference.

It doesn’t take much thinking to realise that a
worker in either of these two countries is going
to be a whole lot better off than a high income
earner under the new United Kingdom tax regime –
where the top rate is now 50%.

Income tax is both immoral and impractical, and
when it gets out of control, it destroys the very
basis of any thriving economy. It also creates
demand for creative accounting services, to
mitigate such high taxes, and the demand for tax
havens and offshore bank accounts – where a
productive and hard-working person may seek some
respite from the clutches of the tax man.

So what’s the alternative?

There are a number of systems that could be put in
place to fund the activities of government – all
of which would be better than an income tax. And
here’s a few ideas just for starters.

Income tax could be replaced with sales tax. That
would have the effect of eliminating the
departments of inland revenue, abolishing the need
for tax returns, and leave every dollar of income
in a person’s hands – letting them decide what to
spend it on.

It could be replaced with a resident’s levy – like
a fee for services. This levy would be the same
for everybody, and would be paid say once a year –
or even in installments. The critical thing here
is that such a levy would be like any expense and
become part of a person’s normal expenditure. And
the great benefit of doing it this way would be
that, unlike the income tax, which is taken out at
source, the paying of such money would be noticed
by everyone. And if the government were to get too
greedy and increase the levy too much, then people
would notice it and rise up to change the
government.

Any system for raising government revenue would be
preferable to the income tax. Without it, people
would get to keep what they earn. A massive
bureaucracy could be dismantled. And a much more
effective brake would be applied to spendthrift
governments everywhere.

Yours in freedom

David MacGregor

Source:

http://www.sovereignlife.com

Can the U.S. Tax Authorities Break Swiss Bank Secrecy?

By: Julian D. W. Phillips, Gold/Silver Forecaster – Global Watch

It would seem so clear that the U.SA. Tax Authority attack on UBS is going to break the Swiss secret banking system.   Will they succeed?  After whacking them with a $780 million fine they are now coming in for another attack demanding the exposure of U.S. Swiss account holders in the bank.   They had agreed to disclose the names of 300 U.S. based clients with accounts with U.B.S. in the States.   They have and will not agree to disclose the names of U.S. citizens who hold accounts in Switzerland.  But the entire body of U.S. citizens holding Swiss bank accounts are worried about this prospect.   On top of that, all other foreign Swiss bank account holders are worried too. 

 

The entire Swiss banking system stands as a holder of countless secret bank accounts going not just globally but back through many, many decades of such holdings.   Banking for foreigners is so important to the Swiss that they passed the Banking Secrecy Act that imposes serious prison time on those who disclose such secrets.   So this is not just a battle between U.B.S. the multinational Swiss Bank, but the Swiss government and the U.S. Tax Authorities.

 

When the South African Reserve Bank decided to hold Swiss Bank investment from a popular equity issue in the country, unless the beneficial owners of the funds disclosed themselves, Fritz Leutweiler, the then President of the Swiss National Bank flew to see the South African Reserve Bank Governor and said to him, unless these funds were released to the investment or allowed to be repatriated, there would be no more Swiss investment in South Africa whatsoever.   The funds were released that day.

 

In the States, the Tax Authorities think they have the Swiss on the run now and they know that U.B.S. bank executives are in an invidious position.   But these executive know full well that they are within the laws of both countries, provided they maintain the secrecy of their clients with accounts in Switzerland [not in the U.S. though where the Swiss laws hold no Jurisdiction].

 

U.S. newspapers are painting a picture that the Swiss will be broken and that Swiss banking secrecy is tantamount to a crime for U.S. taxpayers.   Indeed the charges being leveled against both the bank and U.S. citizens that hold accounts there are that they are evading U.S. Taxes.   It is sad to see such reports and charges take such emotional lines that have departed from the realities of international law.   

 

In short, the authority of the U.S. tax authority is limited to the borders of the U.S. and those tax payers living there.   Yes, it is true that even U.S. citizens living overseas are required to submit a report of their worldwide assets annually to the Tax authorities, but the power of the U.S. remains limited to the U.S. shores even here and these citizens cannot be forced to pay those taxes until they return to the States, except on the assets within the U.S.  No nation outside the U.S. will impose U.S. Tax laws in their country.

 

Two obstacles stand in the way of U.S. Tax officials imposing their will on U.S. citizens in this regard.   The first is Jurisdiction and the second is the reality of a legal entity.  

 

Jurisdiction

It is the real experience of the author, not the academic theory, that Jurisdiction is paramount.   Some real experiences will illustrate this.  

 

Should a citizen of the U.S. be charged with tax evasion [not simply suspicion of tax evasion] in a foreign land, it is incumbent on every court to establish the correct Jurisdiction before proceeding with any court case.   Should it be found that the court does not have the jurisdiction to impose any finding in a foreign jurisdiction the case will be dismissed.   For instance, a German suing an Englishman in Sweden, for a matter taking place in Germany would have the case referred to the German courts as the Swedish court does not have the power to adjudicate on the matter.   Taking this to an extreme, The President of Zimbabwe can starve his own people and no court other than the Zimbabwean courts can try him except the International Court of the Hague.

 

In this case, the laws of Switzerland govern the activities of the U.B.S. in Switzerland.   U.B.S. activities in the U.S.A. are governed by U.S. law, but should those activities be Swiss based then the U.S. has no power to impose U.S. law in Switzerland.   They can accuse Swiss officials in the U.S. as much as they like, but their jurisdiction applies only to activities inside the U.S.A.   Any U.S. citizen that donated assets to a Swiss legal entity must report it to the U.S. Tax authorities [[Donation Tax will apply?], but any money made on the entity in Switzerland thereafter in the foreign legal entity is outside the scope of the U.S. Tax jurisdiction and this will come out in the present attack on the U.B.S.   Under Swiss law, any U.S. citizens, against whom there is substantive evidence of a crime involving the money invested in Switzerland, the Swiss Authorities will cooperate with the U.S. authorities in passing it back to the U.S. and in its criminal investigation.   However, Switzerland does not regard simple Tax Evasion as a crime!

 

For some reason President Sarkozy of France has cast his stone at the Swiss [he appears to like the stage] and suggested that Switzerland be added to a blacklist of Tax havens.   He would not do this if he believed that the Swiss could be broken by the U.S. Tax Authorities.  

 

In the seventies the Bank of England wanted to explore the Swiss based activities of certain British citizens and sent a detective to Switzerland to investigate.   This official was promptly locked up for breaching Swiss banking secrecy laws.   The same would happen to a U.S. Tax Official.   Perhaps we will see this happen?

 

Taken further, any U.B.S. official who passes bank account details of U.S. citizens against whom there is no [Swiss agreed] tax evasion evidence to U.S. Tax authorities would likely be imprisoned on his return to Switzerland.  

 

Legal Entities

A foreign legal entity is under the Jurisdiction of the country in which it is formed.   No outside Tax authority can impose taxes on it.   If the entity carries on legal business what should happen is that any cash flow from that entity to the originator in a foreign land has the right to impose taxes on the repatriation of that cash flow.   What also happens in some countries is that where a Tax Authority deems the entity to be placed in the foreign location solely to avoid taxes it can impose anti-avoidance taxes on the flow of cash and tax it as though there were no legal entity there in the first place.  But the cash flow has to come home first.   That taxation is then imposed on the individual or entity originating the foreign entity but in the country of origin.   The Tax Authorities cannot step over into the foreign jurisdiction and impose their laws there!

  

 

Evasion & Avoidance

Many individuals and corporate structures are set up in a way so as to avoid taxes.   This is vastly different to evading taxes.   Avoidance is ensuring that taxes are not due, whereas evading [in most countries] is criminally ducking taxes due.   One is within the laws of the U.S. the other is outside it.   The chest beating of the U.S. Taxman seems to be obscuring that difference.   But nevertheless the difference is clear.   The U.S. has often barked about “Dummy Corporations” in foreign Jurisdictions but a corporation is a legal entity or it is not.   It is governed by the laws of the Jurisdiction it is in.   The concept of a “Dummy Corporation” implies tax evasion in the U.S. but not elsewhere.   Its existence, in reality, may well facilitate tax avoidance only.   Even there, the U.S. Tax Authorities must establish evidence of Tax evasion and gather evidence to confirm it.  Where it is legally permissible corporations set up primarily to minimize tax can be simply a re-routing of cash flow in such a way as to avoid or postpone taxes.   The important feature of this is that the letter of the law is obeyed.   However, in many cases the Taxman is shouting about the ‘spirit of the law’, which may be different.   It is comforting to realize that even the U.S. Taxman has to obey the letter of the law!

 

It appears that U.B.S. paid the huge fine primarily to pacify these authorities so they could continue business within the U.S. and did not admit to Tax Evasion support.   If they did support such in the U.S. then we are sure that the executives concerned will be hung out to dry by their own people.   Swiss bankers are extremely precise and in the U.S. they would also obey the laws of the U.S.  What is tragic is that at the end of the day, U.B.S. may well depart the shores of the U.S. battered and bruised but with its Swiss secrets intact.   Switzerland has been a haven for money by all types of individuals for the last 400 years.   It is perhaps the main commercial activity in Switzerland.   This service has gone hand in hand with the neutrality of Switzerland a policy guarded by nearly all Swiss citizens.   They are unlikely to change these laws because of the huffing and puffing of U.S. Tax officials. 

 

As this goes to print we have just received the news that the Obama administration is not interested in escalating a dispute between the United States and Switzerland over bank secrecy laws.   The tensions have been rising and led to a meeting between Switzerland‘s top Justice official and her counterparts from the U.S. Justice Department. 

 

Jurisdiction rules!

   

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter.  To subscribe, please visit www.GoldForecaster.com

Brought to you by Alan’s Money Blog:
http://alansmoneyblgo.com

Everything You Need to Start Your New Life Offshore

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Hello dear readers. Have you ever wanted to expatriate? Are you aware of the numerous financial and lifestyle benefits of relocating your family business offshore? If you answered yes to both questions then the next logical step is to go ahead and actually do it. But, like all important decisions in life you need to do your research and think carefully before you make your move.

I happen to be a subscriber to Escape From America Magazine, and I found an interesting article written by Robert E. Bauman in the August 2008 issue. In this article Mr. Bauman give some very helpful and insightful tips about moving to another country (becoming an expat.) In this article Mr. Bauman breaks down the process of relocating offshore and discusses the following topics or key points:

1) Decide if This Is Really What You Want

2) Create Your Own Blueprint of an Ideal New Home

3) You Have to Think about Taxes

4) Choose Your Moving Day

5) Rent, Don’t Buy at First

I don’t want to be stealing the limelight, so if you’re interested in this topic I’d suggest you click here to read Mr. Bauman’s article. I hope you find it informative.

Cheers,

Alan