Is It Un-American to "Go Offshore"?

You would think so -- if you believed 2008 presidential candidate Barack Obama -- or if you believe U.S. Senator Carl Levin, far left Democrat from Michigan, a "soak the rich" politician obsessed with the belief that any American with foreign financial business is somehow dodging taxes.

Larry the Lip

For an extreme example of this offshore phobia, take the case of White House National Economic Council Director Lawrence Summers (left). When good old Larry was President Bill Clinton's Secretary of the Treasury in 1994, he went off the deep end referring to American expatriates as "tax traitors." He was subsequently made to apologize by his boss for that over the top comment.

This idea that it is unpatriotic for otherwise good Americans to have foreign bank accounts, own foreign investments and real estate and live in foreign lands has long been the unspoken policy of the U.S. Internal Revenue Service and other government agencies.

Presumed Guilty

I once heard an assistant U.S. Attorney General publicly state to a conference of several hundred lawyers and bankers in Miami that at the Department of Justice anytime an individual had offshore accounts he or she was assumed to be engaged in something that was probably illegal.

So much for the rule of law and the presumption of innocence.

But, as they say about we humans, "Old habits die hard."

Despite the occasional financial excursion abroad, human nature dictates that most folks prefer to make and save money at home. We tend to be comfortable with the familiar and less threatening domestic economy of our home nation, even if the government is near bankrupt as in America.

In 2009 only 74 million, or about 26% of Americans had passports (and another million Americans living near the Mexican and Canadian borders had "passport cards") – yet this was an historic high percentage.

Buy American or Bye Bye America?

As one who believes in the principle of free international trade and its decided benefits for all parties, the political resurgence of "Buy America" under Obama and the Democrats should concern Americans.

The anti-offshore arguments of the America Left seem to fit into this "America First" theme, and both are wrong headed. I love my country too much to believe such nonsense.

Harry Binswanger, Ph.D

of the Ayn Rand Institute (below) writes: "According to a recent poll, 80% of Americans think it their patriotic duty to give preference to American-made products. But ‘Buy American’ is wholly un-American in both its economics and its philosophy.

"America's distinction among all the nations of the world is that it enshrined political and economic freedom. Although we have departed greatly from our original laissez-faire principles, to the whole world America still symbolizes capitalism. Americanism means understanding that a free market, domestically and internationally, is the only path to general prosperity."

Practical Reasons

But beyond the principles involved, there are good and sufficient practical reasons why aware Americans now should "go offshore" financially -- simple financial survival first among them.

At a time when the United States government is deeply in debt (nearly $13 trillion), with Obama's pending plans for higher income, capital gains and estate taxes looming, and with major and minor banks teetering on the brink, prudence dictates offshore planning and activity.

So-called "patriotism" does not require us to commit financial suicide when there are reasonable escape exits to better places.

What go offshore?

The multi-faceted answer includes greater asset protection, stronger financial privacy, higher returns in carefully selected markets, more diversification of investments and among currencies, increased safety and security, both personal and financial, and deferred taxes on annuities and life insurance.

In contrast to Bank of America, CitiBank and AIG, the offshore banks and insurance companies the Sovereign Society recommends aren’t exposed to the risky investments of third-world debt and Wall Street’s esoteric derivatives.

These banks are located in politically neutral countries that don't employ interventionist foreign policy, making them much less likely to be terror targets.

Act Now

Unfortunately relatively few Americans are taking advantage of the fruits of global diversification. I think you owe it to yourself and to your family to take advantage of offshore advantages. At the very least, you should hold a portion of your assets offshore -- just in case.

For the very good reasons I have enumerated -- and for self-interest as well -- none of us can afford to be xenophobic in this 21st century.

There’s a whole wide world out there -- offshore -- and you need only to recognize that fact and act upon it. With more than a decade of solid experience offshore we’ll be pleased to help you.

You can learn all about "going offshore" and about legitimate and legal offshore financial centers in my just published 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The Sovereign Society is a recognized voice in the complex offshore world.  Join the Sovereign Society and keep informed.

Comments

[Desperado]

In November I called the US embassy to make an appointment to expatriate. I have had dual citizenship for almost 20 years and haven't lived in the US in even longer. During this entire period, I have been faithfully sending tax dollars to the IRS.

A friend of mine expatriated in January of this year, and he had his appointment in less than 2 months. The first available appointment isn't for 10 months after I called the embassy to expatriate! Other US Embassies in Europe refused to perform the expatriation for expats not living in their country of operations.

As in so many other cases, the current government seems to be unable to accept any feedback coming from the extremities, and this rush for the doors by expats is just one of many ignored signals. We are facing nearly total leadership disconnect.

Needless to say, my big concern is that Obama, Levin and all the other decrepit senators and congressmen will change the rules once again, making my expatriation unattainable or exorbitantly expensive.

Earlier this year, a customs officer threatened to not allow my children into the US after I sent them home to visit family. His justification was that they are not allowed to have dual-citizenship. I know from experience that customs know exactly every visit that we have made back to the US for the last 25 years. Now every time anyone in my family visits the US I will have to worry about a rogue customs agent. My children have already asked my if I think they should expatriate too...

One of the major benefits in finally renouncing my US citizenship will be when the federal employee asks me why I am expatriating. I will have an entire speech ready.