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.

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.

Again: U.S. Congress Trashes Constitution

The Fourth Amendment to the Constitution of the United States, an essential part of the Bill of Rights, guards against unreasonable searches and seizures.

It was drafted by our Founding Fathers because of a justified revulsion and hatred against "writs of assistance" that allowed British soldiers in colonial America to search anyone and anywhere they chose. It is no exaggeration to say that these widespread, indiscriminate searches were one of the central causes of the successful American Revolution.

IV. The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

The Amendment specifies that judicially sanctioned search and arrest warrants must be supported by probable cause and be limited in scope according to specific information supplied by a person (usually a police officer) who has sworn by it and is therefore accountable to the issuing court. The Amendment clearly commands that only a judge or magistrate can authorize a valid search warrant.

Fear Itself

Clearly the President of the United States has no power to waive the Fourth Amendment or any other part of the U.S. Constitution.

But given that historic and legal background -- consider the past six years since the terrorists attacks of 9-11, 2001, of fostering mass fear of terrorism among Americans, the threat of attacks skillfully used by politicians to promote themselves.

Thus it was that today, as reported by The New York Times, "After months of wrangling, Democratic and Republican leaders in Congress struck a deal to overhaul the rules on the government's wiretapping powers and provide what amounts to legal immunity to the phone companies that took part in President Bush's program of eavesdropping without warrants after the Sept. 11 attacks."

The House passed the bill today. Most significantly, the legislation makes legal the president's previously illegal National Security Agency (NSA) surveillance program. In other words, a majority of the House, sworn to uphold the Constitution, voted in effect to repeal the Fourth Amendment.

I share the view expressed by Timothy B. Lee, Cato Institute adjunct scholar, who writes: "Under our system of government, searches are conducted pursuant to warrants or other court orders. This is an important check on the executive branch's surveillance powers because it ensures an independent magistrate will review any surveillance activity and block those that aren't conducted pursuant to the law. To treat a 'written directive from the government' as a substitute for a court order is to abandon this fundamental principle."

Get the Terrorists

As readers know, we often comment on what we, and others, perceive to be unconstitutional violations of our civil liberties.

We believe, as does U.S. Senator Russ Feingold (D-WI), a president has no power to disregard laws that he doesn't like or finds inconvenient. If he does, then the rule of law has ended in America. If the Nixon Watergate scandal established nothing else, it affirmed that a president too is subject to the law, just as are all Americans.

Most of our complaints arise from laws and policies instituted since the terrorist attacks of 9-11. So we'll say it again; we support every reasonable anti-terrorist action consistent with the Constitution.

But we emphatically disagree that Americans should be forced to surrender their rights in the name of a false "security" that destroys the very rights it claims to protect.

The President has openly admitted that he personally and repeatedly secretly authorized the National Security Agency to eavesdrop on telephone calls and read e-mails of people within the United States -- without obtaining judicial warrants as specifically required by law.

That law, known as FISA, grew out of the scandalous abuse by the FBI of Americans' civil liberties in the 1970s, curtailing domestic spying on Americans by U.S. intelligence agencies. It provided a system under which federal police agencies can covertly obtain from judges legal warrants to eavesdrop on suspected spies and terrorists.

This is the law that Bush secretly brushed aside -- and the same law now gutted by a nervous bipartisan coalition in Congress more concerned about saving their political hides than about the Constitution.

Wake Up America

Of course, we at the Sovereign Society are primarily concerned with the unjustified intrusions by the government into offshore financial matters and the destruction of personal and financial privacy.

As a life long conservative, (albeit with a decided libertarian bent), it gives me no comfort to find myself in league with those on the Left on these important issues of civil rights. But the swift pace of the destruction of rights continues unabated in America and we all should be concerned.

Unfortunately, a large percentage of Americans seem unconcerned as their freedoms diminish. A feeble public awareness needs to be converted into a true understanding of what's really happening -- and action to stop it.

Wake up America.

P.S. I've been keeping an eye on Bush's questionable laws for the past seven years - starting with the almighty PATRIOT Act back in 2001. Seven years later, it's still the scariest law I've ever seen. Click here for the full story on this destructive law.

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/

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/

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.

* Find out why smart taxpayers are moving to Switzerland. Just published -- my latest book, Swiss Money Secrets, explores in detail Swiss bank secrecy, low taxes, possible residence for foreigners and current policies. For your copy, click here: LINK: http://www.web-purchases.com/190SSMON/E190J355/landing.html

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/

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 collectors who hate financial privacy and bank secrecy (which they wrongly equate with tax evasion), then throw in a large dash of international envy -- and you can understand why Switzerland is always under siege in the left-wing dominated world news media.

The latest anti-Swiss media campaign started weeks ago with the approach of the Swiss national parliamentary elections to be held on Oct. 21st. The anti-Swiss outcry is being led by the usual suspects, self-appointed representatives of the United Nations, the European Union, and Amnesty International.

What has upset these do-gooders is a campaign theme being used by the Swiss Peoples Party (SPP), the largest of several national political parties. The theme addresses a major Swiss domestic concern, the huge influx in recent years of foreigners into the nation. The theme is expressed in what the Left sees as a controversial campaign poster showing three white sheep kicking a black sheep off a Swiss flag above the slogan, "For more security."

The poster is the creation of the anti-immigration SPP, which in three decades has grown from a small group to the party with the largest number of seats -- 55 of the 200 -- in parliament's lower house, the National Council, and a major player in the coalition government. Indeed, opinion polls show the SPP again leading the other parties in the run up to the election.

Chain Saw Reporting

As if the United States did not have any problems of its own with illegal immigration and crimes committed by unlawful immigrants, The Washington Post wins the prize for sensationalized reporting on Switzerland. It published a truly horrific story about a 37-year-old black Angolan man living in Zurich who was attacked and seriously injured by chain saw wielding thugs shouting racial epithets. The article suggests wrongly that many other Swiss people would do the same thing, given the chance.

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You can bury your money in your backyard or under your mattress. You can put your money in a domestic bank or money market account, and earn a paltry interest.

You can invest in the so-called "safe" investments that your broker recommended on the NYSE (that supposedly produce meager 10% a year for a diversified domestic stock portfolio).

Or you can house your wealth in an offshore region, for superior investments, access to the hottest emerging markets, iron-clad asset protection and financial privacy.

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Last week, counter-demonstrators threw rocks and bottles at Swiss People's Party protesters during a political rally at the national parliament building. Police fired tear gas to break up the melee. A UN "fact-finder" on racial intolerance, accused the SPP and its campaign posters of "advocating racist and xenophobic ideas."  "That's nonsense," says Ulrich Schluer, an SPP legislator, newspaper editor and creator of the sheep campaign. "It's not against race. It's against people who break laws. People are fed up." (Sounds like Bill O'Reilly on the Fox TV network).

The SPP has initiated and won national referendums making it tougher for foreigners to enter Switzerland and obtain citizenship and easier to deport immigrants. Switzerland now has some of the strictest naturalization laws in Europe.

Enough Is Enough

Switzerland's population is now about 7.5 million, up by 750,000 since 1990. It generously has opened its borders to refugees from many nations and now has one of Europe’s highest percentages of foreigners living within its borders, many of them workers from Spain, Portugal, Italy, and parts of the former Yugoslavia. More than 20% (1.4 million) of Swiss inhabitants are foreign nationals, and the SPP argues that a disproportionate number are lawbreakers. Many drug dealers are foreign, and according to federal statistics, about 70% of the prison population is non-Swiss.

In recent years, there has been a growing resistance to immigration and granting citizenship. Some cantons (provinces) now require a public referendum on whether to admit applicants and many individuals have been rejected in these votes, as the law permits.

In the best of all worlds, no one should support racism. But Switzerland probably is no better or worse than other European nations (or the United States) when it comes to trying to deal with a massive influx of foreign persons. At the very least, every nation has the right to protect its citizens from criminal activity, regardless of who the culprits may be.

But you can bet that much of the current anti-Swiss media uproar is just another phase in the left's continuing anti-Swiss campaign. And you can also be certain the very independent Swiss will go their own way -- without the need for advice from outsiders.

For more information about Switzerland as an offshore financial haven, click here:
http://web-purchases.com/190STHOW/W190H723/

Another View on Nicaragua

We received a response to my comment of yesterday (Stay Away from Nicaragua, Oct. 8) and the writer, an American real estate agent in Nicaragua, makes some points worth considering as follows: 

We can't argue with much of what you say here. It's an unfortunate situation that most Nicaraguans did not vote for. But here's another perspective: all of this could repreent a window of opportunity...if you can stomach the elevated political risk. The fact is, Nicaragua was on the verge of being heralded widely -- globally -- as the “next Costa Rica” and the “next Panama” in the world press before Daniel Ortega's presidential victory earlier this year.

Our hope is that as real estate prices continue to escalate in both Costa Rica and Panama and Ortega approaches the end of his five-year presidential term, that'll happen again. Ortega 2.0 can't be Ortega 1.0 -- if he wanted to. He has even less support now -- including less support among his own Sandinistas -- then he did after the election, and he was elected as a minority president to begin with. He faces a hostile legislature that has opposed him on a number of significant issues. Nicaragua is more dependent financially than it has ever been on the U.S. and the European Union. It will never receive as much support from Chavez, Iran or Cuba as it does from the U.S. and the European Union in both government aid and private investment -- and most Nicaraguans know this.

It is our view (and yes, hope) that apprehension created by Ortega's minority government has opened a window of opportunity for smart, forward-looking investors with a five- to ten-year time horizon to get in “before the herd” -- before the end of Ortega's term and before what we anticipate will be the resumption of the real estate investment boom that preceded Ortega's presidential election victory.

We have seen estimates from global real estate analyses earlier this year that Nicaragua as a whole may be as much as 68% undervalued, given its level of economic freedom and its business climate (as measured by the Wall Street Journal Index of Economic Freedom). In other words, adjusting statistically for what Nicaragua offers investors compared to other countries – as far as property rights, tax burden, transparency, government spending (as a share of the economy), inflation, trade, labor, financial and business regulation policy -- Nicaragua is only 32% of the average cost of countries offering similar business climate characteristics.

This isn't to take anything away from what you've said. We are not apologizing for Ortega. We're only providing broader long-term perspective. We only wish to point out that Nicaragua now may represent the same investment opportunity that Mexico in 1994, Argentina in 2001 and Eastern Europe in the early 1990's represented -- that Nicaragua itself represented in the early 1990's -- during and after political and financial crises in those regions. Those crises eventually gave way to fantastic real estate booms.

And the political risk in Nicaragua now may be far less than it was back in the early 1980's. Ortega just doesn't have as much support now as he did back then -- nowhere near it. Wishful thinking on our part? Maybe. Just some food for thought. For all the political heartburn, it's still a beautiful country with a beautiful people -- a great place to live with enormous untapped investment potential.

Stay Away from Nicaragua

Because we owe a duty to our members and readers, over ten years of our existence we at the the Sovereign Society have devised a reliable system to evaluate offshore jurisdictions and their acceptability. Among the factors we consider concerning a tax haven or offshore financial center are government and political stability, the judicial system, available legal entities such as trusts, financial privacy laws and taxes.

All of the other factors become meaningless, however, if the government of the country in question lacks stability in general, or worse, is openly hostile to free market economics and the freedom and liberties of foreigners who do business there.

Which brings me to the currently sorry state of affairs in Nicaragua -- where the radical leftist government has become openly hostile to capitalism and and property rights.  It never has been a tax haven, but it has become a retirement destination for foreigners, includng many Americans.

Back from the Dead

Before he made a miraculous return to power last year as president in a rigged election with less than 38% of the votes cast, José Daniel Ortega Saavedra was a washed up extreme leftist who, during his previous term as president (1985-90) had dragged Nicaragua into the Communist orbit of Cuba's Fidel Castro. His first term was characterized by Communist policies, seizure of private property, economic suffering, repression of internal dissent, hostility towards the United States, and armed domestic rebellion against his government by the U.S.-backed Contras.

For many years he has been a leader in the leftist Sandinista National Liberation Front (FSLN). He was defeated in 1990 (and twice more afterwards)  because of his extreme views in a country that is far more conservative. During his five-year tenure numerous private estates, businesses and properties were confiscated for their personal benefit by Ortega and other Sandinista bullies and never returned to their rightful owners.

El Pacto - Dirty Deal

In 2006 Ortega worked a back room deal between the FSLN and the Constitutional Liberal Party headed by José Arnoldo Alemán Lacayo, president from 1997 to 2002. In 2003 Aleman was convicted and sentenced to a 20-year prison term for crimes including money laundering, embezzlement and corruption. The corrupt  alliance of two of Nicaragua's major parties distributed power between the PLC and FSLN.

"El Pacto," as it is known in Nicaragua, personally benefited Ortega and Alemán greatly. One of the key provisions of the deal was agreement to keep Aleman out of jail and, importantly, to rig the elections laws for Ortega by lowering the percentage necessary to win a presidential election from 45% to 35%. In the 2006 elections Ortega's squeaked by with 37.99% of the votes cast.

In his first week as President, Ortega met with and praised Iranian President Mahmoud Ahmadinejad. The two toured slums in Managua. Ortega told the press that the "revolutions of Iran and Nicaragua are almost twin revolutions...since both revolutions are about justice, liberty, self-determination, and the struggle against imperialism." He was visited by Venezuela's radical president Hugo Chavez, and Ortega again embraced Fidel Castro as his hero.

More Property Seizures

Worse, from the point of view of possible foreign investors in Nicaragua Ortega, who has aligned himself with Iran and Venezuela, seized an Exxon Mobil Corp. oil facility. In a recent United Nations diatribe claimed that the "genocide perpetrated by global capitalism'' was responsible for "destruction, death and poverty.'' In his UN speech Ortega defended Iran and North Korea's development of nuclear power. "The enemy continues to be the same,'' he said. "and it's called global capitalist imperialism."

In the past two months Ortega's government seized an Exxon fuel storage terminal and also scrapped government contracts with a business owned by an opposition party leader.

As far as foreign investors are concerned, Ortega is returning to his Sandinista roots. Yields on the nation's debt have risen to the highest in Latin America. The increase marks a turnaround from earlier this year, when the former Sandinista guerrilla leader said he would improve relations with the U.S. Now, investors are growing concerned that Ortega is returning his 1980s policies, when the country defaulted and inflation topped 14,000 percent.

History Repeats

Land grabs were part of Ortega's socialist policies in the past. He restricted trading, boosted public spending and took over banks and supermarkets. Then president Ronald Reagan, who called Ortega "a little dictator,'' ordered a blockade of Nicaragua and funded the Contra rebels. The economy fell into recession, gross domestic product per capita fell by more than a third and debt rose to more than five times GDP.

Investors are concerned that nearly a billion in government bonds won't be repaid when they start coming due in 2008. "It's paper with zero value,'' says Marlon Gutierrez, an anti-Ortega activist in Miami who said his family lost 1,000 acres to the Sandinistas in the 1980s. "`Nobody wants to put money in our country.''

And for very good reasons!

* There are far better offshore places to invest your hard earned cash. For more information, click here.

Tax Havens - Politically Incorrect

As one who has been forced by economic necessity to become a writer over the years, I am acutely aware of language, word choice, syntax and the use of proper English. As one of those voracious readers I take pleasure in a well-constructed sentence, a well written essay or a captivating book that holds my interest.

When I was a very small boy I learned that certain words the big kids might utter were not acceptable for my use. Accompanied by a memorable smack on my bum I was told very clearly: "Bobby, don't you ever let me hear you say that again!"

About thirty years ago a new phrase intruded its ugly presence into the national consciousness -- "PC" or "politically incorrect." The American Heritage Dictionary defines this phrase as: "Of, relating to, or supporting broad social, political, and educational change, especially to redress historical injustices in matters such as race, class, gender, and sexual orientation."  In more recent times its meaning has broadened to include not just excluding the supposedly unacceptable words categorized above, but placing a negative connotation on formerly acceptable words that the Left uses to describe their selective bogeymen.

Recently in this space I quoted the famously politically incorrect George Orwell who wisely opined that: "Political language...is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind. One cannot change this all in a moment, but one can at least change one's own habits, and from time to time o