Offshore Asset Protection BLOG - Bob Bauman

Last Call for Panama

In a few days I'll be returning to Panama City, Panama for The Sovereign Society's 20th Total Wealth Symposium. And you can join us --  there's still time. (See below).

I first visited a very different Panama back in the 1970s when I was a member of the U.S. House of Representatives and ranking Republican on the Panama Canal Subcommittee. Those were the days when one-term U.S. president Jimmy Carter had decided to give away the American-built Canal, one of the technological wonders of the modern world. While I was opposed to the treaties, it has turned out to be the right thing for both the U.S. and Panama.

I'll be interested to compare the local situation since my last visit eight months ago. This is one of the many visits I have made to Panama in the last 10 years, a period that has seen phenomenal change and growth.

World Discovers Panama

Panama is no longer the "well kept secret" that it was when the Sovereign Society first started reporting on this small tax haven over 10 years ago. Now the whole world suddenly has discovered this strategic nation. So if you're interested in buying real estate there, you have to look beyond the sky high condo prices in Panama City, to the real estate deals still lurking in some of the rural Panama areas such as Chiriqui or Bocas del Toro.

One reason for Panama's successful economic growth has been its carefully planned and enlightened laws that are almost unique in the world. These laws welcome foreigners who wish to move to Panama for a second home or retirement, establish a business or make investments.

There are a host of special visas authorized by laws; the most popular of which is the pensionado program. This unequaled program allows immediate residence for foreigners. Plus, the program offers reduced prices and allows tax-free import of households goods, motor vehicles, even a boat. You can also secure special real estate tax exemptions when you buy or build in Panama as a foreigner. Well explain all this at next week's Panama Symposium.

I'll be conducting a special program on dual citizenship and second passports as part of the Symposium, along with experts on this subject.

There's Still Time

Come on down and see for yourself these great people and their beautiful land, from tropical beaches to cool mountains and -- then you'll understand why thousands of Americans, Canadians and Europeans now make their homes here.

I hope I'll see you there next week. Reserve your seat right now for our 20th Total Wealth Symposium. Click here for details.

The Brit Haven Hit List: Why London’s Opinion Matters

Last week, the faltering British Labour Party suffered its worst defeat in 40 years in local council elections nationwide. They even lost the mayor’s office in London. That’s the first time in half a century.

Indeed, after 10 years in power, it looks as if PM Gordon Brown’s "New Labour" has gotten very old. And this past week’s defeat could mean a resounding victory for the Conservative Party during parliamentary elections in 2010.

Why is Labour going down? U.K. political experts are pointing to Labour’s high tax policies. These sky-high taxes have driven British corporations to business tax havens in nearby Ireland and Switzerland. Also, individual citizens who can afford it have picked up and moved their residence to Monaco or Andorra.

Labour also just slapped a US$60,000 annual tax on "non-domiciled" foreigners living in the U.K. – a radical reversal of their long-standing tax-free status.

High-Taxes May Cost Labour Power

The Labour party has aimed their high tax attack squarely at Brits’ offshore investments, banking, trusts and asset protection plans. U.K. banks have been forced to reveal accounts of all U.K. residents with offshore financial activity.

Tax collectors have also been hounding those named. Indeed, her Majesty’s Customs and Revenue, (aping the U.S. IRS), now seems to assume that any Brit with offshore financial activity is evading taxes.

Before the election rout last week, the House of Commons Treasury Select Committee announced one more major inquiry into tax havens. Committee MPs said they wanted to look at "offshore financial centers." They wanted to investigate whether these jurisdictions "threaten financial stability," transparency for U.K. tax purposes and their impact on the U.K. tax collections, among other things. The committee wants written evidence submitted by June 19.

Judging from the committee’s list of slanted questions released to the media, they could have been drafted by kooky groups such as the U.K.’s Tax Justice Network or the sanctimonious preachers at Oxfam.

This Isn’t Anything New

So here we go again.

Since the Labour Party came to power in 1997, this party has severely restricted the financial freedoms of its British offshore colonies (officially called "overseas territories") and of its Crown dependencies – even though they are some of the world’s leading tax and asset protection havens. The irony is that for decades British governments promoted these offshore havens, encouraging their growth and expansion.

In a reversal of traditional policy, since 1997 Labour has forced "reforms" on the 13 U.K. overseas territories. That list includes the Channel Islands (Jersey, Guernsey), the Isle of Man, the Cayman Islands, Bermuda, the Turks and Caicos Islands, the British Virgin Islands, and Anguilla.

Labour imposed new "international standards" against money laundering. The party also demanded their financial systems become more "transparent," and cooperate with law enforcement and tax authorities. London threatened unilaterally to change laws within the colonies using the arcane royal "Orders in Council" signed by the Queen. In effect, these new laws would impose the Labour government’s policies without appeal on any overseas territory.

British Havens Play Ball

For years, the London authorities have wanted an end to financial privacy. They want total bank and investment account surveillance. And strangely, authorities have tried to curb the financial freedoms that allowed U.K. offshore jurisdictions to prosper as tax and asset protection havens.

This included making foreign tax evasion a criminal offense. The changes also forced disclosure of previously confidential information about true ownership of international business corporations registered there.

In addition, London and the European Union also imposed the EU savings tax directive on the British islands. The directive demands either complete exchange of tax information with other EU governments, or a 35% withholding tax on EU nationals.

While these changes mainly affected U.K. residents, the Labour party also targeted U.S. persons for a very different approach. As a result, the Isle of Man, Jersey and Guernsey each signed Tax Information Exchange Agreements (TIEAs) with the United States (as have most of the U.K. overseas territories, including the Cayman Islands and Bermuda).

What London did not expect were the major "clean house" policy changes these U.K. offshore havens adopted on their own. They came out fighting. These havens adopted stricter anti-money laundering, tough know-your-customer rules and much stronger criminal investigations aimed at financial fraud and terrorist cash. Indeed these jurisdictions now have much tougher laws and better law enforcement than the U.K. itself.

If You’re a Normal Investor Abroad – This Shouldn’t Affect You

I have serious concerns about the Labour government’s continued crackdown on all overseas territories. But these islands still offer a great deal of financial services that you can invest in without worrying about U.K. government intervention.

To the average offshore investor, all this recent U.K. history means is less financial privacy. For those trying to hide funds abroad, it means, as it should, an increased probability of discovery and prosecution.

The danger lies in a middle area in which foreign tax collectors try to conduct "fishing expeditions." They’re looking for possible tax evasion simply because their citizens are active offshore financially. The TIEAs with the United States may lend themselves to just this sort of tax overreaching. However, this depends on how the island governments administer the TIEA terms, although each has denied that they will allow IRS fishing expeditions.

Because these islands are under ultimate control of the United Kingdom, they lack the greater privacy and freedom to act that independent tax havens, such as Panama, Singapore, Hong Kong or even Switzerland, enjoy.

Five years ago I wrote: "As long as the British Labour government continues in power, you can expect it will continue its unrelenting efforts to curb tax and asset havens, including those under its colonial domination."

So this latest announcement from the House of Commons Committee is just another skirmish in a decade-long war against British financial privacy and freedom.

And if you are interested in using these jurisdictions as a base of offshore activity, you may be wise to wait for the outcome of the British parliamentary elections due within the next two years.

* P.S. In the meantime, if you’re shopping for a place to set up your business, or invest globally, I would look outside the United Kingdom’s rule. Click here for some ideas. http://web-purchases.com/190STHOW/W190H723/

Tax Evasion = Jail Time

In his Thoughts on Government, the second U.S. president, John Adams of Massachusetts, sagely observed that: "Fear is the foundation of most governments."

Based on its tax enforcement policies, the U.S. Internal Revenue Service could easily adopt that as its official agency motto.

Exhibit A: A "very sorry" Wesley Snipes, Hollywood star of the "Blade" movies, was sentenced to three years in prison last week for willfully failing to file U.S. income tax returns for 1999 through 2001. Snipes was convicted on three misdemeanor tax evasion counts.

U.S. District Judge William Terrell Hodges handed down the maximum sentence and said he felt it was important to create a general deterrent against tax defiance. Prosecutors said Snipes had earned more than $38 million since 1999 but still had not filed tax returns for the years 1999 through 2007 nor paid any taxes.

"I am very sorry for my mistakes and errors," Snipes told the judge. "This will never happen again." Sorry Wesley. Too little, too late.

Co-defendant Eddie Ray Kahn, a longtime tax protester who coached clients of his American Rights Litigators on supposedly how to beat the tax system, was sentenced to 10 years in prison. Co-Defendant Douglas Rosile, whom prosecutors called a "defrocked certified public accountant," was sentenced to 4-1/2 years for his part in the scheme. Both were convicted of conspiracy and tax fraud.

Fear Factor

As in the tax evasion case of the late millionairess Leona Helmsley who went to jail, with the Snipes the IRS wanted a show trial so that all taxpayers would be scared into unquestioning obedience to the laws "by pursuing a few prominent cases, making examples of those it judges to be violators" as The New York Times noted.

As a libertarian and a conservative I view taxes as, at best, a necessary evil.

I believe that when government takes wealth from some and gives it to others, it diminishes the rights and well being of the former, and often destroys the independence of the latter. The issue of taxation involves nothing less than the human and natural right to own, use and enjoy private property. Property and wealth determine personal power to control our own lives, to make decisions, and to live free. Every additional tax diminishes our freedom.

Nevertheless, the 16th Amendment to the U.S. Constitution granted the Congress the power to "... lay and collect taxes on income, from whatever source derived, without apportionment among the several states and without regard to any census or enumeration."

And, oh boy, the politicians have had a wonderful time ever since, laying and collecting taxes.

Enforced Exactions

Notwithstanding that language, it should be balanced by the statement of the late, distinguished Judge Learned Hand of the U.S. Court of Appeals in New York. In a memorable tax case dissent, Judge Hand offered these timeless remarks: "There is nothing sinister in arranging one's affairs so as to keep taxes as low as possible... nobody owes any public duty to pay more than the law demands. Taxes are enforced exactions, not voluntary contributions." Commissioner v. Newman, 159 F2d 848, 851 (2nd Cir 1947).

Charles Cain, editor of Offshore Investment, in an editorial rightfully charged that "the line between tax avoidance and tax evasion is purposely being blurred by governments, with honest people (and their tax advisors) being jailed for failed attempts at tax avoidance while tax evasion is put down on a moral level with heroine and cocaine pushing."

A great deal of time and effort on our part goes into exploring and explaining legal ways by which you can avoid, minimize, and defer taxes -- I repeat -- legal ways.

In the first page of every one of our book publications the following text appears:

The Sovereign Society advocates full compliance with applicable tax and financial reporting laws. U.S. law requires income taxes to be paid on all worldwide income wherever a U.S. person (citizen or resident alien) may live or have a residence. Each U.S. person who has a financial interest in, or signature authority over, bank, securities, or other financial accounts in a foreign country that exceeds $10,000 in aggregate value, must report that fact on his or her federal income tax return. An additional report must be filed by June 30th of each year on an information return (Form TDF 9022.1) with the U.S. Treasury. Willful noncompliance may result in criminal prosecution. You should consult a qualified attorney or accountant to insure that you know, understand and comply with these and any other reporting requirements.

The Biblical admonition to "'render unto Caesar" does not mean we have to surrender unto Caesar, and we shouldn't.

* To find out offshore places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Black Comedy or White Slavery?

In a recent exchange between Comedy Central's witty host Jon Stewart and Democrat presidential candidate, Sen. Barack Obama (D-Ill), Stewart asked:

"Sir, we are concerned that ultimately at the end of the day, if you are fortunate enough to get the Democratic nomination, fortunate to become President of the United States, will you pull a bait-and-switch, sir, and enslave the white race? Is that your plan? And, if it is your plan, be honest. Tell us now."

Laughing, Sen. Obama replied:

"That is not our plan Jon, but I think your paranoia might make you suitable as a debate moderator."

O.K., so Stewart's question was a joke, but the underlying assumptions become less than amusing when one looks deeper into the possibilities of future enslavement inherent in what is being proposed by candidates for president in the 2008 campaign -- and that observation goes for all potential presidents - the Senators Three, Obama, Hillary Clinton and John McCain.

Slave or Free?

Enslavement, (not a word you hear much about these days), is the act of making slaves of other human beings who are your captives. Maybe you never thought about it, but a slave is a person who is the property of, and wholly subject to, control of another. There was a time in the United States when slavery was not only legal, it required a five-year Civil War, the deadliest in American history, causing 620,000 deaths, to settle the issue.

In March of 1857, in the infamous Dred Scott decision, seven out of nine Justices on the U.S. Supreme Court, (with my fellow Marylander, Chief Justice Roger Brooke Taney writing the opinion), declared no slave or descendant of a slave could be or ever had been a U.S. citizen. As a non-citizen, the court said, Dred Scott had no rights, could not sue in a Federal Court and must remain a slave.

It required the Thirteenth Amendment to the United States Constitution, adopted in December 1865, officially to abolish and prohibit slavery, with limited exceptions, such as those convicted of a crime.

White Slavery?

Largely ignored in American history books, (and probably unknown to Jon Stewart when he asked his question), there was an early class in America that could be called "white slaves."

Mainstream histories refer to these laborers as "indentured servants" not slaves, because many agreed to work for a set period of time in exchange for land and rights.

In a new book, White Cargo: The Forgotten History of Britain’s White Slaves in America, (N.Y.U. Press), authors Don Jordan and Michael Walsh argue, however, that slavery applies to any person who is bought and sold, chained and abused, whether for a decade or a lifetime. Many early American settlers died long before their indenture ended or found that no court would back them when their owners failed to deliver on promises. And many never achieved freedom or the American dream they were seeking.

So what are we to make of the true status of those of us who are privileged to live in what we often refer to as "the land of the free" -- the United States of America?

Each year every dollar the average American earns up until the third week of April goes to government in taxes!

So in reality there is another, more subtle form of slavery in America and its growing exponentially.

Realize it or not, we live and labor under tax and regulatory control of nearly every aspect of our lives -- ranging from a compete abolition of personal and financial privacy, (i.e the PATRIOT Act and illegal surveillance of all kinds), to burdensome taxation that confiscates our fortunes to finance the ever growing welfare state, either by massive deficit spending or political robbery of the value of our currency.

And what has fate so cruelly handed Americans for leadership in this time of troubles?

Not a Trillion's Worth of Difference

Hillary Clinton and Barack Obama both propose major changes to the tax code that would add to its complexity and increase taxes. His plan, like that of the late Senator Huey Long of Louisiana, emphasizes income redistribution, while her "nanny" approach seeks to force changes in Americans' behavior. Obama's proposal would shift the tax burden further on to "the rich" that already pay almost all taxes. Clinton proposes targeted tax breaks designed to change the way Americans use energy, save money and care for elders.

Both candidates would allow President George W. Bush's tax cuts to expire for workers in the top two tax brackets and set the estate-tax rate at 45% with a $7 million exemption. Obama wants tax rates on capital gains and dividends to rise from the current 15% rate to perhaps as high as 28%. Clinton would also raise the rate on investment income. The centerpiece of Obama's tax plan is a $1,000 tax cut for workers that would cost more than $80 billion annually and effectively eliminate all taxes for about 10 million low income Americans.

Meanwhile, John McCane, who calls himself a "conservative," panders to supply side Republicans by proposing to extend and expand tax cuts that can only increase the annual national deficit and the $9.4 trillion national debt. By the time President Bush leaves office, he will have added nearly $3 trillion to that national debt. Thank you, George! No thank you, John!

As an article in The New York Times observed Sunday: "The Republican and Democratic presidential candidates differ strikingly in their approaches to taxes and spending, but their fiscal plans have at least one thing in common: each could significantly swell the budget deficit and increase the national debt by trillions of dollars, according to tax and budget experts."

The Offshore Solution

Now I know I am beginning to sound like a broken record, (or a skipping CD), but there are only so many ways to describe how best to protect yourself from  government-imposed indentured servitude and financial slavery -- regardless of your race, color or ethnic background.

The first step is to open one's eyes and recognize the dire situation as it is -- then to take proactive action to defend and expand your diminished freedoms.

With the dollar shrinking in value daily, with American freedoms and civil liberties curtailed, with bipartisan deficit government spending continuing unchecked, you well may need the help we can and will provide.

Why would any reasonable person choose slavery over freedom? As I have said before: "Wherever real freedom can be found, that's where freedom lovers should be."

* To find out all about places where you will be able to increase your freedom, click here http://web-purchases.com/190STHOW/W190H723/

Luxembourg Quietly Thrives as Corporate Tax Haven

Over the years I have not written a lot about the Grand Duchy of Luxembourg as one of Europe's leading tax havens -- although it most definitely fits that definition by any standard. That's because the tiny nation is primarily a business and banking haven, rather than a personal tax haven.

Indeed, the official government line is that Luxembourg is not a tax haven, only a leading "international financial center."

As American youngsters are wont to say when something makes only a trivial difference: "Whatever!"

Luxembourg’s citizens know that their economy has thrived because of the attraction of its fund industry and banks as leaders in the European market for worldwide investors. However the official government attitude is stated by the prime minister’s spokesperson: "We do not consider ourselves as a tax haven," he said recently.

Grand Old Duchy

Situated in the heart of Europe, it is well known that the Grand Duchy, one of the founding members of what became the European Economic Community (EEC), and now one of the richest EU member states, derives its prosperity from its status as Europe’s #1 investment fund center and as one of the world’s leading hubs for global fund clearing and distribution, as well as home to thousands of virtually tax exempt corporate holding companies. Over 22,000 persons are employed directly or indirectly in the nation's more than 200 banks and upwards of 20% of the GDP flows from the banking business.

In spite of the usual leftist media blitz against tax havens in February after the German government broke the law paying a multi-million euro bribe for a stolen bank client list from nearby Liechtenstein, Luxembourg, with bank secercy laws almost as strict as those of Liechtenstein, is hardly nervous about the future.

Together with Belgium and Austria, Luxembourg remains an exception to EU anti-bank secrecy rules and its laws still prohibit revealing bank information to the outside world, except in criminal matters. If you want a no-nonsense EU base for business operations and excellent private banking services, this is the place. Here bankers act as stock brokers and investment managers as well.

The Grand Duchy’s Central Bank governor, Yves Mersch, described financial privacy as "...part of our social consensus. Confidentiality in a small country is extremely important for the maintenance of democratic rule." The Grand Duchy's treasury minister, Luc Frieden, states that "...the system of [EU tax directive] withholding tax works well. We transfer quite an impressive amount of tax to other member states of the European Union. We should not change things again that work well."

Dirty Money?

Of course the "usual suspects" on the Left see Luxembourg, (or any place fortunate to have strong financial privacy laws), as a sinister place harboring dirty money and tax evasion.

But a local lawyer echoes my usual mantra, saying: "A clear distinction should be drawn between tax avoidance and money laundering. It is a question of perspective. The fight against money laundering where the origin of funds comes from gun smuggling or drug trafficking is far different than avoiding tax. In Luxembourg failing to report earned income is not considered a crime. Luxembourg's investment and bank funds are strictly authorized and supervised by the financial regulator, the "Commission de Surveillance du Secteur Financier" (CSSF). If banks or other professional have the slightest suspicion about a transaction, they are under obligation to inform the respective authorities without delay."

Even after all the recent fuss about Liechtenstein, Treasury Minister Frieden drew the line: "Luxembourg’s government sees no need and will not come up with new proposals to change the bank confidentiality rules; they have proven to be in the interest of a good working system in Europe."

* To find out all about Luxembourg and other places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Monaco with Bananas

In an enthusiastic article about Panama and its many virtues playfully entitled "Monaco With Bananas," Forbes magazine recently asked the question: "Who needs Liechtenstein or the Isle of Jersey? We've got a lovely tax haven right in this hemisphere."

Who indeed?

Along with a growing throng, Forbes has rediscovered the favorite tax haven of the Americans -- the Republic of Panama.

In a quick review of more than a century of it national history Forbes recalled that the defining event occurred when "...Panama granted the U.S. 'sovereign rights' to a 500-square-mile zone down the center of the country at its independence in 1903; in 1914 the U.S. linked the Pacific and Atlantic oceans with a canal. Poverty festered and the Panamanian military periodically undermined the nation's democratic credentials, most famously in the 1980s when the drug-money-tainted dictator Manuel Noriega was overthrown by the U.S. It was only in 1999 that the U.S. completely relinquished rights to the canal." And Panama has no tax treaty with the U.S.

Free at Last

Forbes goes on to say: "America's recent exit was in some ways the real birth of Panama. This lively backwater--famous mostly for flying maritime flags of convenience and hosting dodgy finance--seems to have found its voice. Democratically elected governments have clamped down (somewhat) on corruption, signed several free trade agreements (the U.S. Congress has yet to ratify a 2007 deal with Panama) and instituted tax and social reforms."

But just as many other outside observers who have recently discovered the New Panama, Forbes marvels at Panama today, (as well they might).

Panama's GDP has been compounding at 7% during the last five years. Panama's corporate tax rate is 30% and levied only on local income. The U.S. 35% federal corporate tax burden is, in contrast, the second highest in the world and applies to almost all global income. Caterpillar, Procter & Gamble and Hewlett-Packard have all recently announced significant investments in Panama. The personal income tax, capped at 27%, is also limited; and foreigners resident in Panama don't pay Panamanian taxes on their offshore investments.

Boom Goes On

Of course the article takes note of the continuing condo building boom in Panama City, plus major developments of former U.S. properties by British and other foreign investors.

But don't take Forbes or our word for it -- seeing Panama is believing.

Come on down and join us at the Sovereign Society's 20th Annual Total Wealth Symposium, May 14th-17th at the Sheraton Panama Hotel & Convention Center, Panama City, Panama.

PS: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details. http://www.isecureonline.com/reports/CJ5191A/E191J5000/

Very Bad Money

A New York Times book reviewer writes today: "At a time when the Cassandras of finance are looking like realists, there is no gloomier prophet than Kevin Phillips. The author of 13 previous books including at least one classic, The Emerging Republican Majority (1969), Mr. Phillips sees a perfect economic storm coming. The final pages of his bleak new book, Bad Money, tell of an "unprecedented" number of Americans planning to leave the country or thinking about it. Readers of Bad Money may come away with a similar impulse to flee."

That Americans are fleeing is hardly news to our members and readers.

For the decade since our founding, we at the Sovereign Society have noted sadly that each year upwards of 400,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. Admittedly, that number pales against the millions clamoring to get into the U.S., legally and otherwise.

But there's a huge difference in the economic status of these two groups.

Those seeking admission (or just crossing our borders) are, by and large, poverty stricken persons desperately trying to better their lot with a new life in the promised land. They'll settle for low paying jobs, welfare, free education for their kids, and U.S. taxpayer subsidized housing and health care.

Tax Base Is Leaving

But a large part of the 400,000 exodus is made up of wealthy people seeking to escape the growing tax and regulatory tyranny aimed right at them by the United States government. And it is this gusher of fleeing rich people who take with them U.S. wealth -- and the U.S. tax base. These are the very people who pay for the all those programs the new immigrants covet.

Two years ago next month I referred readers to what was then Kevin Phillips' latest book, American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century. In it he put together an amazing array of historical, religious, economic and political data to argue that the U.S. was about to join its imperial predecessors on the downhill slide - Rome, Spain, the Netherlands and Britain.

But what was particularly prescient of Phillips in his 2006 book was one of the two major reason he saw, (his first was the decline in industrial and manufacturing base), as causes for America's decline -- an increase in what he called "financialization" of all sorts of intangible financial services that replaced tangible production.

Slow Moving Train Wreck

This astute observation was made well before shocked Americans and the world were to learn about the sub-prime mortgage crisis and before scores of billions of dollars worth of bank and financial losses -- due in large part to the phony "financialization" Phillips warned against.

As Phillips showed, a lot of these modern "financial services" consist of little more then creating new forms of debt, then pushing all those debt papers around while collecting fees for doing nothing really productive.

In his new book, Bad Money, Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, (Viking Press 2008), Phillips brings us up to date on what one security analyst quoted in the book calls "one of the slowest moving train wrecks" in history.

Phillips gives an overview of the current debt debacle and notes that the 1980s were the start of "three profligate decades," when the expansion of mortgage credit and the invention of financial instruments like collateralized debt obligations (CDO’s) led to an orgy of leveraging and irresponsible speculation. Greenspan's Federal Reserve kept the bubble afloat with easy money, while federal regulators and credit and bond ratings agencies looked the other way.

By 2007, total American indebtedness was three times the size of the gross domestic product, a ratio that surpassed the record set in the years of the Great Depression. From 2001 to 2007 alone, domestic financial debt grew to $14.5 trillion from $8.5 trillion, and home mortgage debt ballooned to almost $10 trillion from $4.9 trillion, an increase of 102 percent.

The Offshore Solution

With the dollar shrinking in value daily, with American freedoms and civil liberties curtailed by unconstitutional monstrosities such as the so-called PATRIOT Act, with deficit government spending continuing unchecked, is it any wonder reasonable Americans who have the means are considering life elsewhere?

Ten years ago we saw this coming. That's how the Sovereign Society came into being.

We offer our members a detailed road (and trans-oceanic) map to profitable offshore investments, to greater freedom offshore; a step-by-step explanation of legal ways to protect assets, lower taxes, and -- yes -- how (and where) to move your residence and/or citizenship offshore -- if that's what you want.

Wherever real freedom can be found, that's where freedom lovers should be.

To find out all about places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Panama Extends Real Estate Tax Exemption

I often promote Panama as one of the most "foreign friendly" nations in the world -- because it is.

In addition to special investment and business visas available by law, the popular pensinado program allows qualified foreigners to acquire quick residence permits, move in and enjoy tax breaks and discounts on goods, services and imports of household furnishings, autos and boats.

But there are also real estate tax breaks worth tens of thousands of dollars to ex-pats who retire in this peaceful haven or who buy second homes here. Investors have rushed in too and high-rise condos, hotels and shopping centers have sprung up like tropical flowers, with the Panama City skyline a forest of construction cranes and new skyscrapers.

Indeed, these unique incentives have brought in thousands of foreign residents, spurred a national economic boom and created many needed jobs. (Meanwhile, the multi-billion dollar expansion of the Panama Canal is already underway).

Future Prosperity

Nay sayers have talked a lot about the "real estate bubble" being about to burst -- but reports this week confirm that Panama's current prosperity will continue.

Panama now has Latin America's highest economic growth, (Mexico has the lowest), according to new data from the International Monetary Fund (IMF). Panama will see GDP growth of 7.7% this year and 7.2% next. That's the highest rate in Latin America and follows Panama's 2007 phenomenal growth of 11.2%, one of the world's highest, the best in the region and the best GDP growth in Panama's recent history, according to IMF data for the past 27 years.

Quick Action Needed

But you need to act soon to benefit from the much coveted Panama real estate tax exemption law. Imagine buying or building a new home anywhere in the United States (or any country) and being given a real estate tax exemption on your new property for 20 years!

Under Panamanian laws in the recent past, a foreign resident who built a new house or condo paid no real property taxes for up to 20 years. This exemption has been extended several times and did expire, but the Torrijos government and the Legislative Assembly just adopted a new extension. Although there has been lots of talk and uncertainty, yesterday the exemption law became official when published in the Official Gazette (Gaceta Oficial).

Under the terms of the extension law foreigners who build new construction have until July 1, 2009 to obtain a building permit, and to December 31, 2011 to acquire the occupancy permit. One source in Panama suggests that anyone wishing to take advantage of this 20-year tax exemption needs to act within the next 8-10 months in order to get everything done in time. For more information, see http://primapanama.blogs.com/_panama_residential_devel/2008/04/you-have-about.html

When purchasing an already existing building in Panama, a foreign buyer may be eligible for tax exemptions that were applied in the past to the property. If you are buying relatively new construction property, check to see if it is tax exempt under a prior owner or builder’s original exemption, since the tax exemption travels with the land to new owners, even though the number of remaining years may have been reduced.

Mucho Mas!

We will explain this tax exemption and much more (mucho mas!) at the Sovereign Society's 20th Annual Total Wealth Symposium, May 14th-17th at the Sheraton Panama Hotel & Convention Center, Panama City, Panama. Speakers will tell you everything you need to know in order to obtain residence, not only in Panama, but in other tax havens where you might wish to make a second home. I invite you to join us and I hope to see you in Panama.

PS: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details.

Avoidance Is Its Own Reward

The late, influential and decidedly liberal economist, John Maynard Keynes, (1883 - 1946), once sagely observed: "The avoidance of taxes is the only intellectual pursuit that carries any reward."

What a kidder that Keynes was. Surely he knew that many other intellectual pursuits, (reading, writing, philosophizing, dreaming about money or sex), also has intellectual rewards. 

It was certainly with the worthy goal of legal tax avoidance that this week Shire Pharmaceutical, a leading British drug firm, announced plans to relocate to Dublin for tax purposes.

Irish Tax Haven

Ireland is well known for having one of the lowest corporate tax rate (12.5%) among the 27 EU nations. (Only Cyprus is lower with a corporate tax of 10%). That Irish low tax compares with a hefty 28% tax in the U.K. But, according to reports, what bugs Shire and a host of other companies is Britain's policy on foreign dividend income. Many countries, including Switzerland and the Netherlands, have holding company tax regimes that enable firms to import dividends tax-free from foreign subsidiaries. Only profits earned within the country are taxed. Shire says it is moving not by a desire to avoid tax, but out of concern that Britain will tighten up rules further with anti-avoidance measures that will harm multinationals, such as Shire, that earn profits from a many overseas subsidiaries.

Other companies have already voted with their feet. Shire is the first FTSE 100 company to shift its domicile, but tax advisers say that a number of others are considering it. The big drug firm is following Experian to Ireland, and Yahoo and Kraft Foods recently moved their European headquarters from Britain to lower tax Switzerland.

The Labour government doesn't seem to realize that higher taxes on business and the rich are self-defeating, sending mobile taxpayers to greener low-tax pastures. Recent changes to the UK tax regime - including a £60,000 (US$30,000) annual tax for non domiciled foreign workers in the U.K. – and present discussions about the rules governing overseas corporate earnings, give British companies with big international operations major concern.

More Taxes to Come?

Is the Labour government going to make the UK tax environment even less attractive? Shire isn't waiting to find out. It's shifting domicile to Dublin, where the corporate tax regime is already more friendly. And a lot more stable.

PM Gordon Brown in 2006 said that the key to economic success in a globalizing world is not just stability in monetary and fiscal policy but also “stability through a stable and competitive tax regime”. Yet the UK tax regime has been anything but stable and increasingly less competitive.

For many business leaders, the recent changes to capital gains tax and the tax assault on non-dom workers was the last straw. They have lost confidence in Labour's commitment to stability and competitiveness. Companies and people indeed are voting with their feet. Goodbye U.K. Another good example of why tax competition among nations is a positive benefit for all.

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Treating Americans Like Idiots

There's an old Russian two-person saying describing the master-servant relationship that goes: "I'm the boss, you're an idiot. You're the boss, I'm an idiot."

Well, an "idiot" is an utterly foolish or senseless person or, in psychology, a person of the lowest order in mental retardation. Not a very complimentary term.

But some far Left extremist members of the United State Senate, (to wit, Levin, Dorgan, Coleman and Obama), are treating Americans and American businesses as if we are all idiots -- and they definitely want to be our boss. They pretend to know better what we should be doing and they're ready to force us to follow their direction under pain of double and triple taxation and even criminal sanctions.

I am referring to the unconstitutional, irrational, illogical (and, as the late Senator Strom Thurmond used to say: "What's more I don't like it!") pieces of legislation these radical worthies of the Left introduced in the Senate last year. These bills are just short of a congressional declaration of war against selected countries and without a doubt violate the Bill of Rights and numerous treaties.

Way Bad Bills

This sort of inane legislation is typical of what happens when self-important senators hire a bunch of sympathetic leftist kooks on their committee staff s and give them free reign. "Stop tax havens? Great, draft something!"

S. 396, introduced by Sen. Byron Dorgan, (D-ND), would prevent American companies from deferring taxes on their foreign-source income, as the law has allowed for many years, if they dare to do business in selected low-tax or "tax haven" nations Dorgan doesn't like. The bill would punish offshore companies owned by Americans by directing the U.S. Internal Revenue Code to treat controlled foreign corporations created or organized under the laws of a tax-haven country as U.S. domestic corporations for tax purposes.

The bill audaciously sets forth a list of presumably "bad" countries (because they are recognized tax havens), and grants the the U.S. Treasury (i.e. the IRS) the plenary authority to remove or add a country from this unique blacklist.

S. 681, the Stop Tax Haven Abuse Act, (introduced by Senators Levin [D-Mich], Norm Coleman [R-MN] and Obama [D-Ill]) would establish a legal presumption against the validity of any personal or business transactions by Americans that involve offshore jurisdictions where there are bank and financial secrecy laws. This bill also includes its own bad list of tax havens. In other words, in an unprecedented action, American law would establish an international blacklist of countries simple because they respect individuals' privacy.

The Liechtenstein Affaire

In some Washington circles the current theory is that the adoption into law of these legislative monstrosities will be advanced by the recent media uproar concerning the German government's criminal bribery of a Liechtenstein bank employee.

The German secret police agency, the Federal Intelligence Service (BND), (the equivalent of the U.S. Central Intelligence Agency), paid a €5 million, (US$7.3 million) bribe to this disgruntled employee of LGT Bank in Liechtenstein. The compact disk is alleged to contain the names of German and other nationals with accounts at the bank, supposedly persons evading taxes in their home country -- or so claims the German tax collectors.

The IRS says it is currently initiating enforcement action involving "more than 100 U.S. taxpayers" with names on the stolen CD. The IRS announced that tax collectors in Australia, Canada, France, Italy, New Zealand, Sweden, and the U.K. are working together following the stolen CD revelations. By coincidence, most of the other governments also claimed they also are investigating "more than 100 taxpayers."

Enough to make you believe in global conspiracy theories -- or in canned press releases.

Farmer Grassley Again

Meanwhile, the U.S. Government Accountability Office, at the behest of the Senate's resident busybody, Sen. Charles Grassley (R-Iowa), is conducting an investigation of possible offshore tax evasion by U.S. companies and individuals using the Cayman Islands.

Grassley's bogeyman is the known fact that thousands of corporations are organized in the Caymans in order to take advantage of legal offshore tax breaks allowed under U.S. law. As if an office building was some how sinister, Grassley claims he wants GAO investigators to check on a five-story Cayman Islands building listed as the address of thousands of U.S. and international companies.

He might just as well send the GAO to investigate similar incorporation service buildings in corporate-friendly Wilmington, Delaware, where hundreds of thousands of American corporations are little more than files in a computer.

So what, Senator? Do you take Americans to be idiots?

Criminalizing Foreign Trade & Business

"The main thing that the Stop Tax Haven Abuse Act does is criminalize transactions with particular jurisdictions by creating presumptions that, while rebuttable, could be almost impossible to rebut," says Martin Tittle, a Washington, D.C. based international tax attorney. "For instance, it says that any money that you have in account in an offshore secrecy jurisdiction is presumed to have not been taxed by the U.S. So if you put something into a tiny Swiss bank account 30 years ago, it’s unlikely that you could ever prove that you paid tax on the money you sent there. A taxpayer that does not or cannot rebut these presumptions could be taxed three times on the same income," he said.

"If you read through the Levin bill," says our friend, Daniel Mitchell, senior fellow at the Cato Institute, "...there’s no ‘there’ there, just a bunch of hurdles and restrictions that would make it difficult for Americans to compete in the global economy. And the Dorgan bill clearly imposes a burden on American multinationals that other countries don’t impose. Every multinational will use subsidiaries in places like the Caymans. If U.S. companies are the only ones facing these restrictions, they will be severely hampered in competition." Not to mention abolishing American jobs and making criminals out of innocent offshore investors

Worried Tax Havens

Taking all this Capitol Hill idiocy seriously, the Channel Island of Guernsey, Luxembourg and the Isle of Man have all petitioned the U.S. Treasury to be removed from the list of "offshore secrecy jurisdictions" in S. 681. That's a bit premature, since the Treasury wont have any power over the list unless and until the Congress adopts such garbage as law, and the President signs it. Assuming he is still sane, one would hope George Bush would veto such a mess.

But having served in the U.S. House of Representatives, I stand by the sentiments expressed in an embroidered sampler that used to hang in my House office: "No man's life, liberty or property is safe while Congress is in session." Amen!

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