Offshore Asset Protection BLOG - Bob Bauman

Creeping Levinism

"Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers." That’s the Big Lie put out last week by leftist U.S. Sen. Carl Levin, (D-Mich)., chairman of the Senate Permanent Investigations Subcommittee.

Levin’s histrionic performance involves more than a little irony.

He chairs the same notorious Senate subcommittee that, half century ago, was headed by the late Senator Joseph R. McCarthy (R-Wisc) who became its chairman in 1953. It was what some felt was McCarthy's reckless use of this subcommittee in pursuing the very real Communist infiltration of the U.S. government that gave rise to a term of opprobrium, especially among the liberal left -- "McCarthyism."

McCarthyism to this day is still defined as "the practice of making unfair allegations or using unfair investigative techniques, in many instances unsupported by proof or based on slight, doubtful, or irrelevant evidence." (Random House Unabridged Dictionary, 2006)

Levinism - The New McCarthyism

Let me suggest a new odious term when it comes to the unrelenting and phony attacks on the world's legitimate tax havens -- that word is "Levinism." For an exact definition, especially as it pertains to attacks on tax havens, see "McCarthyism" above.

Last week Levinism, with all its bombastic hyperbole, was on display under the approving gaze of the Senator's carefully courted media attention. Once again, his chosen targets were a straw man of his own creation, those evil tax havens of the world that the Michigan ultra-liberal hates with a totalitarian passion.

Repeat Performance

As I previously have noted, this Levinism hearing is only one in a recurrent series dating back several years, all of them adhering to the same theatrical theme of wild accusations based on little proof. The basic Levin charge, repeated ad nauseum, that the IRS supposedly loses $100 billion a year because allegedly thousands of American tax payers use offshore tax havens and banks to hide their income and evade taxes.

(That mythical $100 billion figure has never been proven, in spite a four inch long footnote #1 in the subcommittees latest "report" that accompanied the hearing).

Levin's star witness against tax havens surely lacks credibility and he wasn't even at the hearing -- instead the videotaped testimony by Heinrich Kieber showed him as a silhouette against a white screen, a shadowy crook with eyeglasses, a balding head apparent. Kieber is said to be living under a new name in an undisclosed "witness protection program", and is wanted by Interpol and Liechtenstein police for grand theft and violation of bank secrecy laws.

The German secret police agency, the Federal Intelligence Service (BND), (equivalent of the U.S. Central Intelligence Agency), paid an illegal €5 million, (US$7.3 million) bribe to Keiber, a disgruntled employee of LGT Bank in Liechtenstein.

And this is what Levinism passes off as a credible witness.

Guilty as Charged

Several witnesses summoned by the subcommittee declined to testify on Fifth Amendment (self-incrimination) grounds, but Levin and his subcommittee, acting as prosecutor, judge and jury, already had publicly smeared these persons, accusing them of tax evasion.

The other star witness actually showed up -- Mark Branson, chief financial officer of UBS' global wealth management. He surprised the hearing stating that UBS, allegedly having been caught assisting tax evasion, regrets "any compliance failures that may have occurred" and will no longer provide banking services to U.S. citizens.

He said the bank also is working to sell out its estimated 19,000 American clients to the IRS, helping to identify those involved in U.S. "tax fraud" -- although under Swiss law non-payment of taxes is not a crime and UBS probably will be violating Swiss law if they rat on the clients they allegedly helped avoid taxes.

Obama Says "Me Too!"

On a political note, Democratic presidential contender Sen. Barack Obama (D-Ill) praised the subcommittee's work, claiming: "Ordinary Americans pick up the slack for tax cheats who hide assets in offshore tax havens, often with the help of foreign banks like UBS and LGT."

The Illinois Democrat called for passage of legislation to allow the IRS to investigate and prosecute financial wrongdoing in offshore tax havens, (a power the IRS already has in abundance, in case the freshman senator doesn’t know it). Obama introduced radical legislation last year, along with subcommittee chairman Levin, that would seriously curtail Americans right to invest and bank offshore. If you're interested in this piece of unconstitutional trash I have commented on it before.

Patently Absurd

But lets go back to Senator Levin's McCarthyite statement that "tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers."

This is a patent and absurd lie -- typical of Levinism at its demagogic worst.

Tax havens are free and, in most cases, independent jurisdictions freely making their successful way in this world of global economics by offering low or no taxes on foreigners who do business there. Unlike the United States, where Levinism has made certain financial privacy is dead and gone, tax havens guarantee financial privacy by law.

Unfortunately, money grubbing crooks such as Levin's darling witness, Herr Heinrich Kieber, sometimes violate those laws.

As a matter of fact, tax havens and global tax competition are positive goods that should not be curtailed, but rather expanded.

I say that if individual American are violating tax laws, let the IRS prosecute them as they have thousands before.

But let us put an end to reckless Levinism that accuses everyone who has an offshore bank or investment account of being a tax evader. Group guilt is not only illogical prejudice, up until now in America it has been, as it ever should be, unconstitutional.

* While you still can, discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here.

* If you're interested in Switzerland, Click here for Swiss Money Secrets. 

What's In a Name?

In Shakespeare's lyrical tale of "star-cross'd" lovers, Romeo & Juliet, the Bard has Juliet ask the pregnant question central to their families' feud: "What's in a name? That which we call a rose by any other name would smell as sweet."

Well, apparently to some hyper-nervous types the traditional name "tax haven" doesn't smell so sweet as once it did.

In fact, it stinks, according to some public relations conscious officials and financial types located in various jurisdictions that until now indeed have been called, (you'll pardon the expression), "tax havens."

Or as Gertrude Stein so famously said: "A rose is a rose is a rose," probably her most famous quote, which she often interpreted as: "Things are what they are." Plus ca change, plus c'est la meme chose.

It seems that some tax havens worthies, buckling under pressure, now want their locales to be known sweetly to the world as "offshore financial centers." Indeed, some of these nervous nellies don't even want the word "offshore" to be used because they say that has come to suggest dirty money, tax evasion and financial skullduggery.

No doubt much of this offshore linguistic paranoia is the result of the relentless media war against tax havens waged by the Organization for Economic & Community Development (OECD) and its subgroup, the Financial Action Task Force (FATF), both famous for their phony blacklists of selected "tax havens" that refused to surrender to their highhanded demands.

Under the supposed guise of waging war against illicit cash from drug lords and blocking terrorist finances, these groups have done all they can to destroy banking secrecy, as well as personal and financial privacy. Their true goal has been to promote uniformly high taxes and give tax collectors unrestricted access to the bank and financial records of anyone anywhere they target.

Man Oh Man

Thus it was that the Isle of Man's Chief Minister, Tony Brown, last week pleaded with members of a U.K. House of Commons committee who visited the Crown Dependency as part of their inquiry into offshore finance centers: "Don't lump us in with those other 'offshores.'" Brown said that there is no commonly agreed definition of the term "offshore"' and use of that now scare word might lead to "unstated assumptions."

Brown insisted: "We've got a lot of recognition as a being a very good financial center but we are still being lumped in with areas that maybe are not so good. Expressions like 'offshore' and 'tax haven' have no agreed standard definition. We tend to use the term 'international finance center.'"

Another Island Heard From

Far across the Atlantic Ocean The Bahamas Journal reports that: "Offshore finance centers (OFCs) like The Bahamas are seeking to shed their image as places wealthy individuals use to evade taxes, and according to some, the change in image is succeeding. It's a trend marked by jurisdictions promoting themselves as 'well regulated' and 'transparent,' whereas the image of the OFC used to be almost exclusively tied to impregnable bank secrecy laws and regimes."

Former governor of the Central Bank of The Bahamas James Smith noted that the effect of the OECD/FATF "blacklists" led to a new regime of self regulation by various offshore financial centers. In fact, long before the silly discussion of names, most of the leading offshore centers adopted strong anti-money laundering laws, created financial regulatory bodies, adopted "know your customer" regimes and generally set higher standards than the free wheeling banks in the U.S. and the U.K.

Principality PR

And in line with all this new window dressing, Liechtenstein announced it plans to go on a charm offensive in neighboring countries to dispel notions that it is a harmful tax haven. The Principality has gotten a bad rap after the German government paid a huge criminal bribe to an ex-bank employee who sold them a list of Germans with bank accounts there. The government of the principality is introducing a new law relating to family foundations and is planning a marketing campaign in Austria, Germany and Switzerland ahead of the law's introduction next year.

According to the most recent Merrill Lynch World Wealth Report, financial wealth among high net worth individuals is expected to reach US$51.6 trillion (€32.8 trillion) by 2011, growing at an annual rate of 6.8%. Much that cash will be stashed (legally) in tax havens.

Or as that rosey Gertrude Stein said: "Things are what they are."

* While you still can, discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here.

* If you're interested in Switzerland, Click here for Swiss Money Secrets.

Anti-Tax Haven Smear Continues

The Permanent Subcommittee on Investigations of the U.S. Senate will hold a hearing on Thursday and the announced title of this continuing witch hunt is: 'Tax Haven Banks and U.S. Tax Compliance."

The subcommittee is chaired by Sen. Carl Levin, (D-MI) a long-time, fanatical campaigner against financial privacy in general and offshore tax havens in particular. (Levin was one of the authors of the worst parts of the PATRIOT Act that destroyed financial privacy in America).

Repeating the PR formula Levin always uses to attack tax havens, the hearings again will serve as a propaganda platform for release of a subcommittee "staff report" based on "investigative findings" that will no doubt again blast tax havens with a host of fictitious numbers pulled from thin air that supposedly show lost taxes evaded by Americans who conduct business in tax havens.

Here We Go Again

In 2006 the same subcommittee conducted a hearing circus that capped off a year long investigation costing millions of taxpayer dollars. This so-called "investigation" produced a 401 page report that advocated curtailing century old legal rights to create trusts, corporations and other entities to protect assets. It also advocated an end to all financial privacy worldwide.

Subsequently Levin sponsored the infamous "Stop Tax Haven Abuse Act," S.681, that built on the trumped up hearing and report and went over the edge in its zealous advocacy of destroying American freedoms, all under the tired excuse of collecting illegally unpaid taxes.

Millions of Americans enjoy the freedom of offshore financial activity.

Nevertheless, in their 2006 hearing based on only six cases, Levin made the startling, illogical charge that US$40 to US$70 billion in U.S. taxes illegally was evaded each year by Americans' use of offshore financial activity. The Senator offered zero proof of such wild numbers, and even then IRS Commissioner Mark Everson declined to endorse such senatorial fantasies.

In more recent propaganda barrages in support of his inane bill (which Senator Barack Obama [D-ILL] co-sponsors), the supposed tax evasion amount magically has been boosted by Levin to US$100 billion a year. Again, no proof offered.

War on Switzerland, Liechtenstein

You can bet at the Levin hearing the Senator sanctimoniously will scream about the recent alleged crimes of exactly one UBS banker and his American client (both of whom have made bargains with the feds on charges of tax evasion) and the stolen Liechtenstein bank list as fodder for their unending attack on tax havens.

The subcommittee notice states primly: "The hearing will examine how financial institutions located in offshore jurisdictions, including Liechtenstein and Switzerland, may be engaged in banking practices that could facilitate, and in some instances have resulted in, tax evasion and other misconduct by U.S. clients."

How about the thousands of people in New York and London, the world's two leading tax havens, who daily engage in tax evasion? Not enough sexy headlines there, Senator?

Act Now

My advice to prudent planners is to employ the many offshore options now still available -- investments, currency trades, banking, and asset protection plans -- while you still can. How ironic, in the age of free trade and globalization, that demagogic politicians are trying to drag America back into the isolationist Dark Ages.

* While you still can, discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here.

* If you're interested in Switzerland, Click here for Swiss Money Secrets.

Income Taxes & the Destruction of Liberty

Today at the 2008 FreedomFest in Las Vegas, my friend and longtime associate Vernon Jacobs, CPA, presented a fascinating lecture on the American income tax and the U.S. Constitution. The title of his talk was "Income Taxes and the Destruction of Liberty".

I have read Vern's 49-page paper and it is a clear, concise and arresting exposition of the income tax and what it (and the IRS) have done to diminish American freedoms and liberties.

Mr. Jacobs is not one of those "tax protesters" who believes the income tax is illegal, (the 16th Amendment answers that question), or that it applies only to esoteric small groups defined by arcane Internal Revenue Code provisions as interpreted by self-serving fraudsters, many of whom charitably can be called "tax nuts."

Rather his presentation carefully establishes the history of American taxation, the ideological demand for an income tax from socialist and Communist theorists, the role financing American wars has played in expanding the tax, and lastly, the brutal polices of the IRS that view all citizens as tax evaders to be treated to the lash.

He also touches on illegal tax evasion vs. legal tax avoidance and the use of offshore tax havens and government attempts at blocking such use.

Jacobs makes the historic point that while the British Crown's restrictions on religious and other freedoms certainly were reasons for the American Revolution, the principal cause was excessive taxation and its brutal enforcement by King George's agents, as witness the Boston Tea Party.

For those who are interested in what Vern calls "a semi-academic history lesson on the income tax and the related portions of the Constitution" a copy in PDF format is available at http://www.offshorepress.com/liberty/constitution.pdf

I recommend it heartily.

Having a Ball

Several months ago I heard on "All Things Considered" an NPR reporter discussing, (Lord knows why), the role that the male testicles played in the judicial system of ancient Rome.

How's that again, you say?

My reaction also -- so I Googled the topic and came up with some interesting stories.

Seems that the word "testicle" has something in common with the word "testament." The Latin word testis also means witness.

In ancient Rome a person without testicles was definitively not a man and therefore could not testify. That strange (to our modern mind) rule excluded women and unfortunate men. Testicles had to be present as evidence or "witnesses" of one's virility because only verified men were allowed to give witness, or to testify, in legal matters.

To swear by one's testicles was an ancient form of oath. To "detest", at the root of that word, means "to bear witness against" therefore, to curse, and implicitly, to hate someone to the very bottom of one's testicles. (Don't confuse those unhappily altered Roman men with the powerful eunuchs who ran the Imperial Chinese Court in Peking's Forbidden City -- a whole different deal).

The Mouth That Roars

What brought this to mind was the news that the "Reverend" Jesse Jackson, publicly had expressed a wish to emasculate, of all people, the putative Democratic Party presidential nominee, U.S. Senator Barack Obama (D-ILL).

And just when things seems to be going so well for Obama's campaign!

Mr. Jackson, before an interview with a Fox News TV anchor in Chicago, sharply criticized Senator Obama for how he has been referring to African-Americans. He specifically took issue with how Obama had singled out black men in recent speeches for failing to uphold their responsibility as fathers. (This, from a married clergyman who fathered a child out of wedlock with one his young assistants).

Mr. Jackson’s comments apparently were a reaction to a speech Senator Obama delivered on Father’s Day, when he told a Chicago church congregation that "we need fathers to recognize that responsibility doesn’t just end at conception." Obama often tells his audiences that absentee fathers are, in part, to blame for some of the problems afflicting black Americans.

Emasculation

Apparently that message prompted Mr. Jackson to accuse Obama of "talking down to black people." He also was video-taped saying about Senator Obama that he (Jackson) would "like to cut off his balls" -- a painfully un-Christian attitude, to say the least.

Rev. Jackson, who sought the Democratic presidential nomination in 1984 and 1988, was said to be a staunch, if not athletic, supporter of Mr. Obama. He has played no formal role in the campaign, but there have been reports of tensions behind the scenes with Jackson, who is known for his demagoguery and publicity seeking.

The New York Times suggested that: "Mr. Obama’s candidacy has served as an example of a generational and stylistic shift in black political leadership in America."No doubt the "Reverend" Jackson is miffed by no longer being in the spotlight, replaced by a younger, more articulate gentleman -- who well may be the next president.

When in Rome

As compared to ancient Rome, in ancient Greece bull testicles were considered a symbol of fertility and power.

We're unsure about Jesse Jackson's waning power these days. Maybe he secretly "detests" Senator Obama, but the Rev has always been a champion when it comes to bull. (Or may be all this was a skillful ploy by the crafty Obama to gain him even more votes).

Artemis was the Greek Goddess of the Moon and the hunt. One of the most famous surviving statues is the Artemis of Ephesus. The round items held in between her arms are bull testicles, an ancient symbol of fertility and power.

In Memory of Sir John Templeton

My esteemed colleague, Eric Roseman, Investment Director for the Sovereign Society, said today: "As a value investor, I mourn the passing of Sir John Templeton yesterday. The pioneering global value investor passed way in The Bahamas at the age of 95. More than any other individual during his lifetime, Sir John catapulted global value investing in the mid-1950s by uncovering cheap stocks across the world. His passing deserves a tribute because he influenced so many investors."

Eric is certainly correct about the worldwide influence of the man who popularized value investing and made mutual funds available to the mass of smaller investors. Templeton didn't invent the mutual fund, but he made it popular and reputable. But he was also a man of great personal conviction and deep religious faith.

Born in Winchester, Tenn., Mr. Templeton developed a strong Christian faith that defined his career and guided his philanthropic efforts. He founded the Templeton Prize in 1972 to encourage "progress in religion." The dollar amount has gradually increased over the years to ensure it remains a greater monetary reward than even the Nobel Prize offers. In 1987, the year he was knighted by Queen Elizabeth, Sir John Templeton founded the John Templeton Foundation, which funded projects that brought science and religion together. It has distributed more than $1.5 billion to date, with $70 million in annual grants distributed.

Profitable Prophet

A $10,000 investment in the storied Templeton Growth Fund in 1954 would have grown to $2 million by 1992, when Sir John sold his company to Franklin Resources, the San Mateo, Calif. based fund giant, for $913 million. That translates to an annualized 14.5% return.

But Templeton knew that when it comes to income taxation Americans face a nearly unique burden. Unlike most other nations, U.S. citizens and long-term residents cannot escape U.S. taxes by moving their residence to another nation. The only way to leave U.S. taxes behind is to give up citizenship or resident alien status.

In 1962, Sir John surrendered his U.S. citizenship to become a citizen of The Bahamas.

This move saved him more than $100 million when Templeton sold the well known international investment fund that bore his name. Many years after surrendering his U.S. citizenship, Templeton told The Wall Street Journal that the political frenzy over expatriation could happen "only in America." Sir John said his investment record improved after he distanced himself from Wall Street and was freed from worry about the U.S. tax consequences of his decisions.

Expatriation: the Ultimate Estate Plan

In explaining why "expatriation" was so attractive to wealthy Americans such as Templeton, several years ago a Forbes magazine article gave the compelling arithmetic that applied at the time: "A very rich Bahamian citizen pays zero estate taxes; rich Americans – anyone with an estate worth US$3 million or more – could pay 55%. A fairly stiff 37% marginal rate kicks in for Americans leaving as little as US$600,000 to their children." Even though U.S. estate taxes have been reduced since then (and may go up again soon), expatriation offered the ability to escape federal and state income, capital gains and other taxes.

Once Templeton became a Bahamian (and British) citizen, he lived tax-free in The Bahamas. Interestingly, his investment record improved markedly after he stopped worrying about the tax consequences. As a result of tax-free compounding, Templeton was worth several billion dollars at his passing and was one of the world’s wealthiest men.

However, Templeton did not necessarily recommend that other investors follow his lead and switch allegiance to a tax haven such as The Bahamas. (It's almost impossible for an American to become a Bahamian citizen today). But, Templeton did strongly recommended that smart investors take full advantage of offshore tax-deferral vehicles such as a life insurance, annuities, self-directed pension plans and incorporation of a business.

Politics as Usual

For more than a decade now expatriation to avoid taxes has been a favorite "hot button" issue kicked around by the American news media and "soak-the-rich" politicians. Templeton was often cited as an example of "tax traitors" who left the country. No doubt many of the hundreds of millions of dollars he saved in taxes went to the philanthropy and charities he supported, instead of to the IRS.

Ironically a few weeks ago a long pending proposal for an "exit tax" on U.S. persons who end their proposal by U.S. Rep. Rangle (D-NY) was adopted by the Democrat Congress and signed into law by President Bush.

This outrageous law imposes an immediate confiscatory tax on unrealized capital gains on all the assets and property of anyone who dares to end their U.S. citizenship or resident alien status (a right the U.S. Supreme Court has upheld). The new law, unparalleled since the days of Nazi Germany and apartheid South Africa, also imposes Draconian restrictions on trust beneficiaries and pension income.

Rest in Peace

Sir John Templeton lived and prospered in a time and in a freer America that allowed him to use his talents, not only for profits for the many, but for global philanthropy that benefitted untold thousands.

Truly sad that petty American politicians now punish such talented men and women instead of rewarding them.

Blacklisting Tax Havens

A "blacklist" is defined as a list of persons or entities to be shunned or banned because they are said to be under suspicion, disfavor or censure. Of course blacklisting is in the eye of the beholder, and one man's blacklist is another man's Honor Roll; some see groups as terrorists, while others see them as freedom fighters.

I was mildly surprised to learn that the first recorded use of this word denoting such odium dates way back to 1692, the same year of the Salem, Massachusetts, Witch Trials. In those quaint times what passed for due process meant that five women were burned at the stake for the offense of being witches.

Perhaps that’s why blacklists and witch hunts seems to operate in tandem.

In American history, one of the most famous examples of blacklisting stemmed from an investigation in 1947 by the U.S. House of Representatives Un-American Activities Committee (HUAC) into the Communist influence on the motion picture industry.

Some in the industry were blacklisted because of their refusal to provide evidence to HUAC, including a group known as the "Hollywood Ten," most of them screen writers who were members of the U.S. Communist Party, a Moscow-dominated group that advocated the forceful overthrow of the U.S. government.

Involved in this episode was an actor named Ronald Reagan, who later said he was not very concerned about Communism until he returned from the U.S. Army after World War II to resume his movie career and became head of the Screen Actors Guild. It was a time of bitter controversy about Communist blacklisting. Reagan, under threats against his life, assisted in exposing the Reds and gained a lifelong suspicion of the Evil Empire that one may suggest contributed to the eventual downfall of Communism.

Phony Blacklists Exposed

What got me to thinking about blacklists was an article by Dr. Marshall Langer, the distinguished senior offshore attorney and a retired member of the Sovereign Society Council of Experts. In the May issue of Offshore Investment magazine, Dr. Langer exposed the stupidity and political prejudice of tax collectors from various nations who have decided to blacklist -- of all things -- tax havens.

Dr. Langer points out that so blind and irrational has been the hatred of some national tax collectors that they even have issued official blacklists of non-existent places (the "Pacific Islands," "Damask" and "Patau") and one nation, Venezuela, even issued a blacklist with itself on the list.

Fortunately, the United States under the Bush administration has refused to go along with tax haven blacklists, but Senator Barack Obama, the likely Democratic presidential nominee, is the proud author of a Senate bill that would not only blacklist scores of countries (Switzerland, Panama, Monaco et al), but would curtail the rights of Americans freely to do business there.

Tax Competition Is Good

You would think that few sensible people would object to tax havens -- countries or other jurisdictions that impose no taxes or very low taxes on foreigners who do business there. After all, tax competition among nations helps keep taxes lower everywhere, provides jobs, cuts costs and increases profits form business and investment.

But "sensible" does not include the Organization for Economic Co-operation and Development (OECD), a cabal that has often played bully and villain in its ham handed attempts to crush tax havens and force a uniform system of high taxes worldwide. In pursuing its dictatorial goals the OECD is simply doing the bidding of its 30 member nations, many of which, like France and Germany, are high tax, socialist welfare states bent on ringing every last dollar, pound or euro out of domestic taxpayers in order to finance continuing deficits and statist economies.

And you guessed it -- the OECD publicity instrument of choice in this pro-high tax campaign has been the phony "harmful tax competition" blacklist.

In the twisted OECD view, if a country freely chooses to impose no taxes, that policy choice is "unfair" to high tax countries who choose to soak taxpayers for all they can get. The OECD has created this smokescreen because they know that sensible people take their business to where taxes are low or non-existence.

Dirty Money/Terrorism Ploys

To lend drama to their demands the OECD spun off a subgroup, the Financial Action Task Force (FATF). These worthies claim to be devoted to fighting money laundering, (and more recently, countering terrorism), but in fact their goal has been to destroy financial privacy. Both groups want unrestricted, automatic government access to any and all financial accounts anywhere in the world. Again, doing the work of their tax collecting masters.

The irony in all this is that the OECD is nothing more than a paper tiger based on agreement of its members. It's not a government or international agency, even in the sense that the United Nations has legal standing.

The OECD presumes to tell the people and governments how they should conduct themselves by, as they claim, "setting standards and creating values for the entire world." These folks think they set the "ground rules for good behavior by multi-national enterprises and corporate governance principles."(A lazy world media trumpets every OECD press release, unctuous documents that always hawk the liberal, elitist, pro-tax line).

A tall and very presumptuous order for the OECD's nearly 2000 bureaucrats, the salary of everyone of whom is tax exempt because of their coveted diplomatic status. Housed in a fine Parisian mansion with a wine cellar that once belonged to the Rothschild family, the Château de la Muette, the OECD's annual budget is over $300m (£200m), with U.S. taxpayers footing 25% of the total cost.

The Black Beast

At least for the time being, Americans still can and should avail themselves of their freedoms to bank and invest offshore.

In the meantime, I have an appropriate phrase to describe the OECD and the other blacklisters of tax havens -- the French bête noire, "the black beast," first used in French literature in 1844 and still applicable today.

It refers to someone or something unwanted or even hated, a pet peeve or strong annoyance -- like the OECD.

* While you still can, discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash. Click here.

* If you're interested in Switzerland, click here for Swiss Money Secrets.

Does UBS Have the Guts to Fight?

A U.S. District Court judge in Miami, Florida has authorized the U.S. Internal Revenue Service to seek information from Switzerland's largest bank, UBS, concerning American taxpayers the IRS claims may have evaded income taxes.

The court order allows the IRS to serve a summons on UBS, which has extensive operations and thousands of employees in the United States, to obtain information on possible tax fraud by thousands of Americans whose identities the IRS claims are unknown to the tax collecting agency.

U.S. District judge Joan Lenard, (who badly needs an education in the Fourth Amendment), granted the so-called "John Doe" summons a day after the U.S. Justice Department made what it called an unprecedented request for the records, part of an IRS investigation into services provided to UBS American clients from 2000 to 2007.

The IRS demand is based on nothing more than the questionable testimony of a single ex-UBS banker and his U.S. client, both singing when faced with jail time for their tax evasion. On this slender basis, the privacy of a reported 20,000 UBS American clients is being destroyed.

More of the Same

This IRS scatter gun approach seeking thousands of names without showing any probable cause of tax evasion in individual cases is a repeat of the highly questionable use of the same IRS ploy in 2001. Then it was aimed at alleged tax fraud by Americans with credit or debit cards issued by offshore banks. As I have said before http://baumanblog.sovereignsociety.com/2008/07/irs-plays-hardb.html in that case the IRS managed to obtain tens of thousands of names of VISA and MasterCard and some from American Express, the only one of the card companies to oppose and limit the broad IRS demands.

End result: a paltry 1300 taxpayers paid $170 million in back taxes after the IRS claimed that tens of thousands of taxpayers owed billions.

Will UBS Fight

The big question now is whether UBS, the supposed giant of Swiss banking, will have the guts to take a strong stand based on the Swiss bank secrecy laws and fight for the principle of its clients' financial privacy.

That means the bank, already on shaky grounds financially because of billions in losses from its stupid sub-prime housing loan investments, must appeal the court order to block the production of the American names. Indeed, I think they should fight it right up to the U.S. Supreme Court, if necessary.

If UBS fails to defend its clients' privacy, as Swiss law certainly allows them to do, every UBS client who values their privacy immediately should transfer their accounts elsewhere. (We can recommend far more reliable Swiss or other banks).

Prior UBS Sellout

But don't bet on UBS standing up for privacy, if their past history is an example.

Disturbing to privacy seekers was (and is) a previous UBS surrender under pressure to demands of the U.S. Federal Reserve System. Official U.S. acceptance of the 1998 merger of Swiss Bank Corp. and Union Bank of Switzerland creating UBS AG was approved by the Federal Reserve only after UBS agreed to provide U.S. regulators all information "necessary to determine and enforce compliance with [U.S.] federal law." No doubt, that means U.S. tax laws too. Perhaps the IRS will call in that chit now.

U.S. regulators had threatened to shut down the bank's extensive U.S. operations (an unstated threat that still hangs over UBS now). Rather than defend their client’s privacy rights, the bank compromised. That is why we have always advised U.S. depositors considering Swiss banks to avoid UBS AG and any other Swiss bank with U.S. based branches, affiliates or banking operations, other than a mere "representative office."

Swiss Law Imposes Secrecy

Unless there is a strong suspicion of criminal wrongdoing, under Swiss law it is a crime for bankers to violate the secrecy of their clients. Swiss banks refuse to expose records to foreign tax authorities, unless a Swiss court order requires it. Until now in Switzerland the IRS has been up against the brick wall of statutory bank secrecy that can be pierced only by judicial decree in almost all cases.

In Switzerland bank secrecy is not just a right but also an obligation imposed on the banks and their employees to keep secret information relating to their customers.

Swiss banks are prohibited from responding to inquiries about an individual account, whether from attorneys, credit rating services or foreign governments. Under Swiss law banks must furnish information and testify before public authorities. But in instances involving criminal offenses under the laws of other countries (including tax and foreign currency crimes) that are not crimes under Swiss law, Swiss banks have no obligation to provide information or to testify.

In most cases, the Swiss government cannot obtain information about an account without a court order. To obtain an order, investigators must demonstrate the probable violation of Swiss law and that there is reason to believe the particular account at issue is involved in that violation. Non-payment of foreign taxes is not a crime in Switzerland, but "tax fraud" is, and no doubt the IRS hopes that is a rather elastic phrase.

A guarantee of bank secrecy was added to the Swiss Constitution in 2005 and a violation is punishable under Article 47 of the Banking Law, even after termination of an official or employment relationship and even after retirement from banking. The law imposes a fine of up to CHF50’000 (US$38,800) and six months in prison.

1934 Swiss Bank Secrecy Law as amended in 1971 - Whoever divulges information entrusted to him in his capacity as officer, commissioner of a bank, as a representative of the Banking Commission, officer or employee or as a recognized auditing company, or who has become aware of such information in this capacity, and whoever tries to induce others to violate professional secrecy, shall be punished by prison up to 6 months or by fine up to CHF 50’000. The violation of professional secrecy remains punishable even after termination of the official or employment relationship or the exercise of the profession. (Art. 47, Federal Law on Banks and Savings Banks).

Make the IRS Prove It

I'll repeat what I have said before -- if the DOJ and IRS have probable cause to believe any individual American has illegally avoided taxes, that person should be investigated and prosecuted if the evidence warrants it -- which is what they did in the instant case.

But the IRS has no right to assume that every American with a UBS bank account is ipso facto guilty of tax evasion, nor should they have the right to access the banking information of tens of thousands of innocent persons in a massive fishing expedition.

If a Bank of America banker and a BOA bank account holder both pleaded guilty to conspiring to engage in tax evasion, on that grounds should the IRS be given the names and information about millions of BOA bank account clients?

There is still a Fourth Amendment in the Bill of Rights prohibiting unreasonable searches, as tattered as it may be under the Bush regime, but that Amendment and Swiss banking secrecy law should be more than enough grounds for UBS and its lawyers to appeal this horrendous court ruling.

But don’t hold your breath.

* While you still can, discover the legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash. Click here.

* If you're interested in Switzerland, click here for Swiss Money Secrets.

Tax Tyranny Video

A new "Tax Tyranny" video highlights the harsh consequences of oppressive taxation. The video also presents a stark contrast between the low tax rates of the dynamic economy of the Republic of Ireland and the stifling high tax policies promoted by the European Union and the Organization for Economic & Community Development (OECD) in the phony name of "tax harmonization."

Gather friends and family and click below to play this impressive video: YouTube Link: http://www.youtube.com/watch?v=uz1KxEeUvak

It's Simple Economics, Stupid

If American workers understood that corporate taxes are a tax on the common man -- on them! -- wouldn't they clamor for a cut in corporate taxes?

But the little most Americans know about corporate taxes is the blather from U.S. politicians demagogically demanding more taxes on the rich and the big corporations, making those bloated bond holders pay through the nose -- especially those greedy oil companies.

U.S. Senator John McCain, the Republican who may be president of the United States within a matter of months, has had the singular courage to advocate a cut in U.S. corporate taxes to 25% from the current 40%, now one of the highest in the world.

American corporate taxes start at 35% and when you add state and local taxes, the overall rate is nearly 40%. In 2007, corporate taxes brought in $370 billion, representing 14% of federal revenue. Cutting the rate to 25% could cost the Treasury about $100 billion a year. Senator McCain wants to fill that hole in the budget by restraining spending.

Hurting the Average Guy

McCain makes the point that a corporate rate cut to 25% would help a lot of Americans, even though they might not know it. As pointed out in a New York Times article (June 1st) by N. Gregory Mankiw, a professor of economics at Harvard and former Bush advisor, "...the most basic lesson about corporate taxes is this: a corporation is not really taxpayer at all. It is more like a tax collector."

The professor points out that "the ultimate taxpayers of the corporate tax are those who have a stake in the companies on which that tax is levied. If you own corporate stock, if you work for a corporation or if you buy goods and services from a corporation, you pay part of the corporate income tax." That description includes just about every living person in America. And he adds: "The high corporate tax leads to lower returns on capital, lower wages or higher prices — or a combination of all three."

In other words, the worst of all worlds for the consumer.

Rates Revolution

Britain and the United States launched the corporate tax cut revolution in the mid-1980s. Since then, every major nation has cut its corporate rate. In the European Union, the average corporate tax rate has fallen by 24% since 1996. Further cuts are in the pipeline in Britain, Germany, and other countries. Canada has announced a cut to its federal corporate rate from 22% to 15%. The United States is far behind with that combined federal/state rate of about 40%.

Corporate tax reform was a key part of President Reagan's tax cutting blitz. Following the Tax Reform Act of 1986, the base of the corporate income tax was broadened but the top rate was slashed by 12 percentage points, from 46% to 34%, the biggest cut since the tax was introduced in 1909. Thus began a trend of reducing the tax rate on companies that has spread across the globe.

Many other nations have cut corporate taxes, from Ireland (with a super low rate of 13%) to even Communist controlled China, (which recently cut their rate to 25%), and the result has been increased jobs and prosperity as business has expanded.

To see an excellent video explaining why corporate taxes should be cut, click here: http://www.freedomandprosperity.org/videos/corporatetax/corporatetax.shtml

Let’s Talk About Trusts

If you watch late night American TV you may encounter a local lawyer claiming that you’re in dire need of something you hadn’t even considered – a trust.

A trust is usually touted as the best way to protect your assets, cash and investments from claims and lawsuits – and indeed, America is one of the most law-suit happy nations in the world.

Stripped to bare bones, a trust is a three-way legal device, a contract of sorts, that allows one person (the trustee) to take title and possession of cash or property to be held, used, and/or managed for the benefit of one or more other persons (the beneficiaries). The person who creates the trust (the grantor) decides what it will do and donates property to fund it. A trust is created by the writing and signing of a trust declaration, usually as part of an overall estate plan. Setting up a trust requires expert advice and a careful review of existing arrangements that affect the grantor’s estate.

One special kind of trust that I often recommend, the offshore asset protection trust (APT), can place your wealth well beyond the easy reach of claimants, creditors, an irate ex-spouse and even the government of your home country. More about that in a moment.

What a Trust Can Do

Most offshore asset protection trusts are discretionary trusts, a form that allows lots of planning flexibility. “

Discretionary may mean the trustee is given power to decide how much will be distributed to beneficiaries and, in some cases, who qualifies as a beneficiary. A trustee often is given the authority to recognize beneficiaries in a class of persons, (“my children and their heirs”), or the trust may contain what is known as a “power of appointment” allowing the trustee to choose beneficiaries from a class of eligible persons. A trust may be created for any purpose that’s not illegal or against public policy.

A trust can own title to, and invest in, real estate, cash, stocks, bonds, negotiable instruments, and personal property. Trusts can provide care for minor children or the elderly; or pay medical, educational, or other expenses. A trust can provide financial support in an emergency, give help for an older person’s retirement, pay for a young person’s education, administer financial plans during marriage or divorce, or even carry out premarital agreements.

Foreign Asset Protection Trust

One of the most popular asset-protection devices in trust form is the foreign asset protection trust (APT), a personal trust created and based in a foreign nation. This kind of APT shields your assets far better than any domestic trust, because it is located outside the United States or your home country. Distance makes the trust grow stronger. This trust shields business and personal assets against demanding creditors, litigation and other unpleasant financial liabilities in your home country.

The key to creating such a trust is simple: planning. The offshore APT must be planned and created long before you really need it, at a time of personal financial calm. As a last minute response to a sudden financial crisis, an APT will help very little. Belated attempts to create an offshore trust can lead to civil liability for concealing assets or fraud under the fraudulent conveyance laws. In litigation-crazed America, you shouldn’t wait for trouble before taking offshore precautionary measures. As a practical matter, placing title to property in the name of an offshore APT cannot really protect assets if they physically remain within an American court's jurisdiction.

Assets actually transferred to the APT's foreign jurisdiction, like funds moved to an offshore bank account, are usually safe from a U.S. creditor, even if he knows the account exists.

A few reasons why offshore APTs have proven to be so effective:

1) Start-Over: In many cases, the courts of foreign “asset haven” nations will not recognize the U.S. or other nations’ domestic court orders. A foreign judgment creditor seeking collection must re-litigate the original claim in the local asset haven's courts after hiring local lawyers. He may be required to post a bond and to pay legal expenses for all parties if he loses. The legal complexity and cost of such an international collection effort is likely to stop all but the most determined adversaries and promote quick settlement.

2) Minimal Requirements: An offshore APT does need not be complicated. Creation can be done with little more than the signing of formal documents and opening a trust account managed by your local trustee in a bank in the foreign country you choose. Respected offshore banks traditionally provide experienced trust officers to handle offshore trust matters. U.S. asset protection attorneys routinely work directly with such offshore banks and trust companies. Most international banks have U.S. dollar denominated accounts, often with better interest rates than American banks offer.

3) Greater Protection: Under the laws of asset haven nations, assets placed in an offshore asset protection trust have far more protection than under domestic U.S. trust law. The law in such countries provides an asset protection “safe harbor” that is unavailable in the U.S. and many other nations. With an offshore APT, foreign-held trust assets are not subject to the jurisdiction of your local or home country judicial system.

4) Fast Acting: The statute of limitations imposed on initiating a foreign creditor’s suit varies. In many asset haven nations, the statute begins to run from the date the APT is established. Some haven nations, such as the Cook Islands, have a limit of one year for initiation of claims. Others impose a claims filing limit for certain creditors of two years after APT formation. As a practical matter, it may take a creditor longer than that just to discover the existence of a foreign APT to which your assets have long since been transferred.

5) Confidentiality: The offshore APT can provide greater privacy and confidentiality, minimization of domestic, home country inheritance taxes, and avoidance of the probate process in case of death. It provides increased flexibility in conducting affairs in case of personal disability, allows easy transfer of asset titles, and avoids domestic currency controls in your home nation.

6) Estate Planning: An offshore APT can serve the same traditional estate planning goals achieved by domestic strategies. These include using bypass trust provisions to minimize estate taxes for a husband and wife, trusts that allow maximum use of gift tax exemptions through planned giving, and trusts that provide for maintenance and tax free income for a surviving spouse. An APT also avoids the problems, delays, and costs of the domestic probate process in the U.S. and other nations.

7) Profitable Investments: An offshore APT is an excellent platform from which to diversify investments and benefit from global tax savings. The APT permits access to some of the world's best investment opportunities, without concern for your home nation’s legal restrictions. Offshore foreign stock, bond, and mutual fund trading are not covered by laws such as the U.S. Securities and Exchange Act or its administrative arm, the SEC. An offshore APT can also purchase attractive life insurance and annuity products not available in the U.S. and other nations.

* If you want to know more about how an offshore APT can help you, click here: https://www.sovereignsociety.com/catalog/product_info.php?cPath=22&products_id=35

U.S. Social Security Facts

This week I am in Mexico at a conference dealing with possible offshore residence by Americans. Here, as in other such meetings, I often get the same question: if I live abroad, will I still be eligible to receive my U.S. Social Security or other federal benefits?

In the past, based on my research, I always have responded that, "Yes," SS benefits will be paid if you live offshore, although many Americans in this situation have their SS checks directed deposited to their U.S. bank account to avoid confusion.

It was therefore with surprise that I read an April 30 article in The Washington Times that seemed to claim that any SS payments to Americans outside the country were illegal.

The article cited reports by the Social Security inspector general and the Government  Accountability Office (GAO) that claimed millions of dollars had been wrongfully paid to otherwise eligible U.S. persons because they lived outside the country. The Times articles stated flatly: "The Social Security Administration is paying out more than $100 million a year to people getting benefits overseas despite rules that say recipients cannot live outside of the United States."

I checked with my good friend Vern Jacobs CPA, a distinguished guru about all things financial offshore, and Vern's research turned up a much different answer than did the lazy Times reporter. An official web site of the U.S. Social Security Administration states: "If you are a U.S. citizen, you may receive your Social Security payments outside the U.S. as long as you are eligible for them." See http://www.socialsecurity.gov/pubs/10137.html

That Social Security web site goes on to explain that there are certain qualifications in indvidual cases that may alter the right to SS payments offshore, but it lists scores of countries where there are no restrictions on SS payments to Americans living there.

It pays to check all the facts before you go offshore, but this is one question that is settled in your favor.

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

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!

* 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/

Good as Gold

Gold is once again riding high. Indeed, if the United States dollar still had gold backing, it wouldn’t be in the decrepit state it now suffers.

Gold ownership by Americans was illegal after 1933, when, to block Americans legal right to demand that banks give them gold for their dollars, President Franklin D. Roosevelt issued an executive order prohibiting it. (In the early 1970s, President Richard M. Nixon cut the last links of the "gold standard" that had made U.S. currency redeemable for real gold.)

The last top bull market in gold was on Jan. 21, 1980, when eager buyers paid more than $900 apiece for coins containing an ounce of gold. That gold bull market began in January 1975, after President Gerald R. Ford signed a bill again legalizing private ownership of gold coins, bars and certificates.

But after that Jan. 21, 1980, gold hit an historic $850, then suddenly the herd turned. The next day, sellers suddenly outnumbered buyers and gold tumbled to $737.50 an ounce. It continued falling and then traded sideways from $300 to $400 for nearly two decades. When gold bottomed at about $250 in the summer of 1999, smart investors made their first forays back into buying.

Ups and Downs

After the "Wall Street Crash," from September 1929 to April 1932, the Dow Jones Industrial Averages Index slid from 382 down to 56, a drop in value of nearly 90%. Some 4,000 U.S. banks closed their doors and soon millions were unemployed. The Great Depression had arrived with a vengeance.

During that same bleak period the price of gold skyrocketed upward 70%. The value of gold producer stocks, such as Homestake Mining, shot up almost 800%. Impressive fact: after the market crashed, anyone holding 10% of an investment portfolio in gold and mining shares would have had all their other stock losses neutralized by their valuable gold holdings.

Gold also increased in value after "Black Monday", October 19, 1987, when the Morgan Stanley index of world shares fell 19% over 10 days. And during most all the mini-crashes of the stock markets since then, gold has held and/or increased its value.

Golden Days

On Nov. 7, 2007, the market price of a troy ounce of gold bullion briefly touched $845.50, the top so far in gold's current eight-year bull market and a 28-year high in New York trading. The news made headlines and became a hot topic on radio talk shows. (It closed last week at $800.20).

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Gold is a fairly accurate mirror of the American economy. When the economy is in the doldrums – a stock market crash, lagging real estate sales, a relative drop in the value dollar, a ballooning trade deficit, higher inflation – the value of gold has increased, even skyrocketed upward.

For example, with the U.S. stock markets at an all time highs in 1998, gold was near a 21 year price low at US$278 per ounce. It sank even lower later that year to a price of about US$271, not far above production costs then averaging about US$250 to US$260 per ounce.

Today trading and owning gold have never been easier, thanks to the Internet. "There’s been a democratization of gold ownership and new ways to acquire it," said Jon Nadler, a senior analyst for Kitco Inc., a bullion dealer based in Montreal.

"While gold coins or bars remain popular, investors no longer have to worry about storing their gold when they can buy gold certificates or digital ounces," Mr. Nadler said. "And with exchange-traded funds, the metal can be traded much like shares of stock."

Gold investors tend to buy on bad financial news. Rich Checkan, vice president of Asset Strategies International Inc. (ASI), a leading precious metals and currency broker in Rockville, Md., said purchases at his company started picking up substantially after the sub-prime mortgage turmoil began in August. Most of his buyers were acquiring Perth Mint Certificates entitling them to gold held in a government-owned vault in Australia. (Michael Checkan, ASI’s president, serves on the Sovereign Society’s Council of Experts).

Historic Proof

Throughout our ten-year existence the Sovereign Society has recommended that any balanced portfolio required some precious metals holdings, especially gold. There are historic reason for this confidence in gold as a continuing investment.

Douglas M. Cohen, an analyst for Morgan Stanley summed it up: "Gold has thousands of years of history on its side. That history is full of episodes when people insisted gold was dead, and sure enough, gold has tended to rally back very strongly."

Gold ownership has always defended against both inflation and deflation. That’s because of its constant purchasing power.

Compare gold today with the biblical times of the Old Testament during the reign of King Nebuchadnezzar. Then and now an ounce of gold buys about 350 loaves of bread. The same quantity of gold will buy a loaf of bread today under Britain’s New Labour Party as it would have under an earlier, less bland reign, that of King Henry VIII in the 16th century.

One gold mutual fund manager summed it up: "Gold is the only real money. Silver is only pocket change and everything else is really just a credit instrument taken on faith." That’s sadly accurate when paper money, like the Indonesian rupiah, te Thai bot and the South Korean won, declined in value hourly as they did in the late 1990s Asian currency crisis.

But as the value of Asian currencies evaporated, (and as now the U.S. dollar slips downward), gold remains solid. Every nation’s paper currency buys far less than it did a century ago, but gold buys almost twice as much. That historic record demonstrates true insurance against economic swings.

A Perfect Hedge

Think about it. Gold cannot be inflated by printing more. It cannot be devalued by government decree -- the free market dictates the price. And, unlike paper currency or investments in stocks and bonds, gold is an asset which doesn’t depend on anybody’s promise to repay.

Although gold has been mined for more than 6,000 years, only about 120,000 metric tons have been produced. Lump that together and it’s just enough for a cube measuring only 18 meters (about 55 feet) along each of its six sides. New gold mined each year totals less than 2,000 metric tons, about the size of the living room in a small modern house. Gold remains one of the scarcest, and most sought after metals on earth.

Time and again, gold has proven the successful hedge against devaluation of an investor’s national currency. It’s one of the few investments that survives, even thrives, during times of economic uncertainty.

For those who in recent years followed Sovereign Society repeated advice to buy gold, the investment has paid off handsomely.

With gold at record high prices and the world facing what could be a prolonged period of major economic turmoil, buying gold even now may be a good hedge against the future.

People who have known prolonged prosperity may not fully understand the historic implications of gold and its role when bad times arrive. Once those bad times arrive, (as they inevitably will), gold once again be recognized generally as the one perennial investment that’s still "good as gold."

Russia Then and Now

"Juxtaposition" is defined as "an act or instance of placing close together or side by side, especially for purposes of comparison or contrast."

I experienced what might be called a case of historical juxtaposition a few days ago while reading The New York Times.

There, on the page of international news, was an intriguing story about the possible discovery of the remains of two of the children of the late Tzar Nicholas II, Prince Alexei and Princess Maria -- and nearby was a story about how two rallies in Moscow by an anti-Putin coalition protesting the unfairness of the upcoming parliamentary elections were broken up by club-wielding riot police. The former chess champion Garry Kasparov, a coalition leader and potential presidential candidate, was sentenced to five days in jail for organizing one of these demonstrations.

I studied two semesters of Russian history at the School of Foreign Service at Georgetown University long ago in the Cold War years. As a staunch anti-Communist I was interested in understanding what in the Russian national character and soul allowed the horrific brutality of Lenin, Stalin and the Bolsheviks -- the mass starvations of the kulaks, the slaughter of millions in order to gain and retain power, the messianic, bloodthirsty expansion of Communism beyond the borders of Mother Russia crushing whole nations and their peoples.

Nicholas II abdicated in 1917 as the Communist revolution swept Russia. Detained by the Bolsheviks, the next year, the tsar, his wife, Alexandra, and their four daughters and son were sent to Yekaterinburg in central Russia, where a firing squad executed them on July 17, 1918, in a basement room of a house where they were held. The royal family's remains were hidden and not unearthed until 1991. After genetic tests convinced forensics experts of their authenticity, with the approval of the new "democratic: government of Russia, the Romanovs were buried in 1998 in the royal crypt of the Cathedral in St. Petersburg. The Russian Orthodox Church canonized Nicholas and his family in 2000.

History Repeats

A study of the history of the Russian tsars, including the infamous Ivan the Terrible, shows the last tsar, Nicholas, to be a weak, clueless absolute ruler who neither understood democracy nor trusted individual rights.

So what really has changed in Russia from Nicholas Romanov to Vladimir Putin? 

In recent years the world has been told that the "new Russia" is a democracy, a great place to invest, suggesting Russia is like western nations that value individual human rights and liberties. In truth, Vladimir Putin, the current president, has returned with a vengeance to the ways of Russia's old dictatorships, whether under the tzars or the Communists. By his systematic silencing of a major political opponents and the opposition press, former KGB agent Putin has shown his true totalitarian core, relishing a calculated use of force at which the Tzars would smile. Putin has called into serious question the right to private property and the state of "democracy" in Russia.

Aa the International Herald Tribune in Paris said yesterday: "For a leader who has everything - control of the military, the government, the voting process and the media - President Vladimir Putin of Russia looks increasingly desperate and threatened ahead of parliamentary elections on Sunday. Polls suggest his United Russia party will win the balloting overwhelmingly, giving him leverage to continue wielding power in some form. But his greedy grab for victory while quashing credible political opposition demonstrates that this is no free and fair election and Russia is no democracy."

U.S. Senator John McCain says the U.S. is giving a free ride to Russia at a time when it is re-adopting Soviet-era tactics. "It's time to face unpleasant facts about Russia," he correctly warns.

Meanwhile, President Bush, who claims he wants to expand "democracy" everywhere in the world, remains silent about his alleged friend "Putty Poot Putin".

U.K. Tax Haven Dead?

Yet another example of the beneficial impact of international tax competition may see a major shift of the wealthy from London to Switzerland and/or Monaco.

When the British Labour Party first won power in 1994 one of now Prime Minister Gordon Brown's pledges was to close the so-called "non-dom loophole" when Labour came to power.

The non-dom loophole refers to a provision in United Kingdom tax law that, until now, has made it a major tax haven, but with a different twist -- the U.K. gives major tax breaks to wealthy foreigners who actually make their home there. Under the law, anyone living in Britain and not born there simply can choose the non-domiciled tax status and thereby escape almost all income taxes. The tax break was originally formulated in 1799 to help British colonialists avoid tax on their overseas income.

That means scores of billionaires living there only pay tax on the relatively small amount of money they bring into the U.K. each year. They do not pay U.K. taxes on their much larger worldwide earnings. This has made London a tax haven for everyone from Russian oil tycoons to thousands of international investment and hedge fund bankers. The country now has 68 billionaires - three times as many as four years ago. Only three of its 10 richest people were born in Britain. A current estimate of 150,000 to 200,000 non-doms for 2007 is “entirely reasonable” says one expert.

Wealth Tax

But now the Labour Party, egged on by the so-called "Conservative" Party, is considering imposing an annual minimum tax on all foreigners in the U.K. who claim non-dom status -- a fee of £30,000 (US$62,000). Cato Institute tax expert Dan Mitchell suggests that higher U.K. taxes would result in a major shift of economic activity to Switzerland.

According to the The Times of London, lower tax  Switzerland would welcome the opportunity to make their system more attractive to the British financial services industry who well may want to move. The Labour proposal would exclude those who have lived in the U.K. for less than seven years. This is so a not to scare away the many hundreds of bright foreign bankers who come to the City for a few years and then go elsewhere. But experts says the new fee effectively raises the tax paid by a U.K. private equity or hedge fund manager on his investments from 10% to 18%.

The Labour Party pro-tax shift is attributed partly to embarrassments over millions in non-dom Labour political fund donations and the International Monetary Fund’s designation of London as a de facto tax haven.

But even talking tough on non-doms remains risky. Hedge fund managers have only to move to Zurich and the new tax may result in a big net loss to the Exchequer. “The Monaco property market is booming,” a leading real estate agent mused, referring to that tax haven for the wealthy. “These people already feel on safer ground there.”

OECD Complains Again

Those Left leaning busybodies at the Organization for Economic and Community Development (OECD), ensconced in the tax-free luxury of their Paris ivory towers, are whining again about the few stalwart nations that still defend the right to enjoy financial privacy and banking secrecy. (In America financial privacy is dead and gone, killed by the unconstitutional PATRIOT Act).

The most recent OECD criticism, (their anti-tax haven sideshow has been going on now for over a decade), is aimed in part at the Republic of Panama's continuing (and very correct) refusal to violate its own national bank secrecy laws by exchanging tax information with other governments. (Panama has no tax information exchange treaties with any nation).

But Panama is in very good company when it comes to the OECD targets. This round of OECD yapping is aimed not just at Panama but also Switzerland, Austria, Liechtenstein and Singapore -- all equally respectable offshore financial centers -- all with strict financial privacy laws that the OECD bureaucrats hate -- not only because the OECD represents the major nations' tax collectors, but because these high tax nations pay the OECD's tax-free salaries.

The OECD claims that many offshore financial centers are "making progress in improving transparency and international co-operation to counter offshore tax evasion" but they insist that those who don't tow the OECD line still fall short of "international standards."

The OECD says "significant restrictions on access to bank information for tax purposes remain in three OECD countries (Austria, Luxembourg and Switzerland) and in a number of offshore financial centers (e.g Cyprus, Liechtenstein, Panama and Singapore)."

That should be a major hint as to where you should do your banking offshore -- if you want guaranteed financial privacy. Unfortunately, there are only a few nations that still guarantee financial privacy by law.

If you're looking for maximum privacy and legal tax avoidance, we can explain where these places are and how you can take advantage of them. Click here for some ideas on where to look.  http://www1.youreletters.com/t/1357788/2309209/831463/4533/

Escape from America

In spite of the many disturbing trends in America about which I must write, (all too often it seems), I still have a modicum of hope that our nation will endure and prosper. But that won't happen without a clear recognition of our problems and a determined effort to address them.

Unfortunately, the current crop of American presidential wanabees doesn't bolster what may be my misplaced hope. While many still are willing to stay and fight the good fight, many Americans have had enough.

A 1999 U.S. State Department survey of its embassies and consulates suggested a total of 4.1 million Americans living overseas at that time. Every year about 250,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. The U.S. Bureau of the Census in 2005 upped this estimate, guessing that over 350,000 US citizens and resident aliens would leave the United States permanently.

Many of these are wealthy people seeking to escape what they see as the excessive taxes and political tyranny of the United States government. And increasingly, much of this exodus is not only composed of of retirees -- but younger Americans.

John Gaver of Action America.org notes: "The problem is that increasingly, the wealthy perceive that they are under attack by their own government and they are taking the only rational option left open to them. They're taking their wealth and leaving."

Figures Don't Lie

Recent in-depth surveys (2006-2007) were done by the well known pollster, Zogby International, of adult Americans on the subject of possible relocation outside the United.States. With more than 115,000 respondents, the remarkable survey excluded anyone relocating offshore for less than two years, or because of requirements of the government, the military or their jobs. The Zogby results compared against the entire U.S. population (now about 303,116,000) are shocking. The numbers below are for households, not individuals:
• 1.6 million U.S. households have already decided to relocate offshore and are now moving in that direction. That figure remained stable over the year and a half during which seven surveys were conducted.
• Another 1.8 million households are seriously considering relocation and are likely to do it. Many have taken preliminary steps.
• 7.7 million households are "somewhat seriously" considering relocation and "may" do it.

• Nearly 3 million households are seriously considering the purchase of a vacation home or other property outside the U.S., and another 10 million are "somewhat" seriously considering it.

This means that almost 10% of U.S. households are considering leaving the country. Another 10% are considering living outside the country part time. This silent massive emigration is ignored by nearly every analyst. These would-be emigrant households plan to spend an average of $260,000 on the purchase or construction of a house, and at least $36,000 annually on living expenses outside the U.S. In total, they represent the emigration of hundreds of billions of dollars a year from the U.S. economy.

One eye-opening fact: the single largest group that already has made the decision to relocate offshore -- households where adults are 25 to 34 years old.

The Soaked Rich

One of the factors that is driving wealthy Americans to live offshore is the tax burden.

Yet the constant false drumbeat of class warfare U.S. politicians and their left-wing allies in the news media is that "rich" Americans do not pay their fair share of taxes. Only last week, would-be president Hillary Clinton proposed increasing estate and other taxes on wealthy Americans in order to transfer money to those persons who earn less, this loot to be used to set up government sponsored retirement accounts. The late U.S. Senator Huey P. Long of Louisiana used to call this sort of robbery of the "rich" to pay the "poor" his plan to "redistribute the wealth."

But this myth of the rich not paying their fair share is given the lie by figures just released by the Internal Revenue Service for 2005 (the most recent available) that show the top-earning 1% of U.S. taxpayers earned 21.20% of the income and paid 39.38% of the tax collected -- or almost double their share, based upon the income they earned.

In addition to paying double their share of taxes, there are other good reasons for this offshore exodus of the wealthy. Well-to-do Americans face frivolous lawsuits by the greedy, in ever growing numbers. They, like all Americans, have lost any semblance of privacy in their personal and business transactions. Their business dealings are saddled with onerous PATRIOT Act and Sarbanes-Oxley Act requirements that consume time and money. And they have little defense against having their property confiscated under civil forfeiture by the government money police.

We Can Help

The Sovereign Society exists to give advice and direction to those interested in "going offshore." With a decade of experience, we can offer a reliable road map to offshore freedom, including legal ways to protect assets, lower taxes, expand investments and how (and where) to move your residence and/or citizenship offshore.

If a move offshore interests you, whether older or younger, we can help.

Left Targets Switzerland

Start out with the natural prejudice that the world's leftist elite has against wealth (except their own), add the outrage of welfare state tax collec