Offshore Asset Protection BLOG - Bob Bauman

Obama as Bad as Bush-Cheney

That was the headline on a column by Nat Hentoff, (below) a senior fellow at the Cato Instutute and a principled person whom I consider to be one the foremost civil libertarians in America today.

Sen. Russ Feingold, (D-Wis), the only U.S. senator who had the courage to vote against the PATRIOT Act when it was first adopted in 2001, has been battling the Federal Bureau of Investigation's expanded surveillance guidelines. He also has continued to fight to revise the unconstitutional PATRIOT Act, parts of which are now up for renewal in the U.S. Congress.

In the recent U.S. Senate Judiciary Committee review of the Act, Republicans senators protecting the Act, in a closed-door session, formed an odd alliance working with Obama administration officials on amendments blocking any major changes.

Then all but three Democrats, pressured by the Obama administration officials, voted for a watered-down "compromise" bill by Senators Patrick Leahy and Diane Feinstein. Feingold, Dick Durbin, D-Ill., and newly minted "Democrat" Arlen Specter (Pa.) had the courage to oppose the committee bill that with few exceptions, leaves the Act intact without any meaningful revisions.

Two Faced Obama

Obama, who as a candidate repeatedly attacked the PATRIOT Act and called for its revision in order to protect civil liberties now has abandoned that stance -- as he has so many of his glittering promises of change.

Instead Obama, a former professor of constitutional law, working with so-called "conservative" Republicans, thwarted attempts by Feingold to restore the constitutional civil liberties Bush's PATRIOT Act destroyed.

"In the end," Feingold says. "Democrats have to decide if they are going to stand up for the rights of the American people" or "allow the FBI to write our laws."

Policeman, Prosecutor, Judge & Jury

Hentoff quotes my former House colleague, Don Edwards (D-Ca). "No federal agency," said Congressman Edwards, "the CIA, the IRS, or the FBI, can be at the same time policeman, prosecutor, judge and jury. That is what constitutionally guaranteed due process is all about. It may sometimes be disorderly and unsatisfactory to some, but it is the essence of freedom."

The Constitution, Edwards continued, does not permit "federal interference" with Americans' speech or associations, and other such citizen constitutional rights, "except through the criminal justice system, armed with its ancient safeguards." Read that as meaning the PATRIOT Act.

A Solemn Oath

Apparently the Senate Republicans are not concerned about redressing the constitutional violations contained in the PATRIOT Act, a law that is the worst legislative attack on the Constitution since President John Adams and the 1789 Alien and Sedition Laws.

When I was 15-years-old, I swore my first Oath to support and defend the United States Constitution when I served as a young page boy in the House of Representatives. Later, as a Member of Congress (a Republican and a conservative), I took that same oath to uphold the Constitution, to which every congressman and senator currently serving has also supposedly sworn their allegiance.

To Hell with the Constitution?

So knowing that, how can we explain the U.S. Congress continuing to support an unconstitutional law, the PATRIOT Act, that virtually repeals the guarantees against unreasonable search and seizure in the Fourth Amendment of the Bill of Rights?

My answer: fear. It's not justified fear of "terrorism " -- but cowardly fear of not politicians not getting reelected! Politics rules, to Hell with the U.S. Constitution!

 The PATRIOT Act Report

In this special 44 page report I wrote (and just revised for the third time, Sept. 2009), you learn all about the PATRIOT Act and its far-reaching invasion of your rights -- and what you can do to defend yourself.

Plus, you'll automatically receive a FREE subscription to the world’s most popular offshore e-letter, The Sovereign Society Offshore A-Letter. With more than 230,000 readers world wide, The A-Letter keeps you in touch with global events and investments that affect your wealth and safety. Learn more here.

IRS Numbers Game Rolls On

Indulge me a moment of wild supposition.

Suppose in an unlikely event the U.S. Department of Justice announced they were going to concentrate special efforts on investigating African Americans and Latinos because those groups commit more crimes statistically than other racial or ethnic groups.

Imagine the howl that such an audacious non-PC act would produce in the liberal media! The New York Times would have apoplexy and MSNBC's cables would melt down with molten invective.

But few bat that proverbial eye when the U.S. Internal Revenue Service [sic] continues to treat all Americans who engage in offshore financial activity as criminal suspects.

Built In Prejudice

Do you think the IRS might just be a bit prejudiced against any American who has the audacity to keep their finances beyond the immediate jurisdictional reach of the IRS, U.S. courts, the threat of lawsuits and the dark shadow of the PATRIOT Act?

The fact that offshore bank accounts, investments and other financial activity are all completely legal under American law, (at least at the moment), does not seem to deter the IRS from their overt prejudice against anything and anyone "offshore".

Big Deal?

As an example, last Wednesday, Doug Shulman, IRS commissioner, called a Washington press conference to announce that 7,500 Americans have volunteered information about unreported income hidden in overseas accounts ahead of the Thursday, Oct. 15 deadline for a U.S. government tax amnesty program.

According to Shulman, (below) that’s a number higher than the IRS expected. Under the amnesty program that began in September, Americans could declare unreported offshore accounts pay reduced fines and receive general immunity from criminal prosecution.

The IRS Fear & Awe program turned up undeclared income from offshore accounts ranging in amounts from $10,000 to more than $100 million, Shulman claimed. (The IRS always rounds its numbers to suit their own PR purposes).

Bigger Than 2003

When a similar offshore tax amnesty deal was offered in 2003, we were told that was the last chance, but few responded. That amnesty was built on a major IRS propaganda campaign that claimed as many as two million Americans were evading taxes using offshore bank issued credit and debit cards.

Than as now, the gullible U.S. news media widely reported an IRS press statement claiming success for the 2003 IRS partial amnesty program for taxpayers with unreported offshore bank accounts. A whopping 1,200 people turned themselves in!

Wow! -- But wait a minute. Was 1,200 such an impressive number? You be the judge after reviewing the IRS's own numbers.

A Million Here, A Million There

In 2000, the IRS officially estimated that 505,000 U.S. persons had unreported offshore bank accounts. By early 2002, the IRS figure zoomed to over 2 million, with only 100,000 to 200,000 reporting them.

But IRS Commissioner Charles O. Rossotti, in May 2001, demanding subpoenas for offshore credit card records, swore that offshore tax evasion was costing the government US$20 billion to US$40 billion in 2000 alone! No proof was offered, of course.

But when he retired in 2004, Commissioner Rossotti admitted in testimony before Congress that the IRS was able to show only 82,100 taxpayers had unreported offshore accounts.

And this last figure came after the IRS had grabbed thousands of offshore credit card records from Visa, MasterCard and American Express. He lowered the $40 billion estimate drastically down to an estimated the annual tax loss at US$447 million, about US$7,000 per taxpayer.

The IRS Commission apparently could not figure out whether it was US$447 million or US$40 billion that was lost. And they couldn't decide whether supposed offshore evaders number 82,000 or 505,000 or 2 million. (The numbers changed with every IRS press release).

Free the IRS 7500?

So last week's great IRS triumph, according to Shulman, was getting 7,500 unreported American offshore account holders to come in from the cold.

Yet this same IRS hounded the Swiss banking giant, UBS, for a year, demanding the names of 55,000 U.S. account holder at the bank, all of whom the IRS implied were evading millions in taxes.

 When that fracas ended short of President Obama declaring war on Switzerland, only 4,500 names were turned over by UBS. Are they part of the IRS 7,500?

Up the Panama Canal with Rod & Gun

Commissioner Shulman also said the IRS is expanding its offshore tax crackdown and will open new criminal tax offices in Beijing, Sydney and Panama.

A leading Panama attorney called his statement a "scare tactic," adding: "Panama has no tax treaty with the U.S. nor with any other country, so what could an IRS presence at the U.S. embassy here prove? Even if President Martinelli (left) were silly enough to sign an tax information exchange treaty, our legal system and the courts would block any attempted IRS fishing expeditions".

Shulman Outs Levin

We do have to give Commissioner Shulman his due when dealing with one highly bogus number.

Testifying before a U.S. House of Representatives appropriations subcommittee earlier this year the Commissioner in effect called Michigan's radical leftist Democrat U.S. Senator Carl Levin, (below) a liar.

Shulman said that claims that the U.S. government and the IRS lose $US100 billion annually because of tax evasion by Americans who use offshore tax havens are "wild estimates" that "don't have much basis".

Stay Tuned

Vern Jacobs CPA, (below) a leading offshore tax expert, notes that the IRS amnesty is the easy way out for that befuddled agency.

"When taxpayers come forward because the government has announced there won't be any criminal sanctions, it saves the IRS a lot of time, effort and costs. When the IRS has cleared the deck of the current 7,500 backlog, I would not be surprised to hear about another tax amnesty deal for the others who have not yet come forward."

And if the numbers thrown around by the IRS are to be believed, there still could be millions of Americans hiding cash offshore.

And Stay Legal

Make certain you are not one of them, and the Sovereign Society will help you comply with all tax and offshore reporting requirements on a continuing basis.

P.S. Reserve your spot at this year’s Offshore Advantage Academy before it’s too late. We’ve already got more reservations than any event before, and we may just be able to get a few more before the hotel cuts us off. IRS tax and reporting requirements will be major topics. Click here for more on your “last-minute” discount…

 　　

Bob Goes to Washington

I am always nervous, questioning my own beliefs, when I find myself in agreement with editorial stands taken by writers in The New York Times. Today I found myself in that unusual posture not just once, but twice.

Obama & Moral Duplicity

In a column entitled "America's Quest to Collect Taxes Abroad," Times columnists finally came close to being correct about what Obama is doing to Americans right to employ tax havens, to wit:

"The United States claims the moral high ground on taxes. But to some foreigners the combination of a crusade against foreign tax havens and the insistence that overseas companies help with American tax collection shows 'breathtaking moral duplicity.' Those were the words of Wegelin & Company, a Swiss private bank, as it pulled out of the United States. Not everyone would go that far. But Julius Baer, another Swiss bank, said it could live without American clients, and Lloyds Banking Group in Britain has started ditching some as well."

More Obama Promises Broken

And on The Times editorial page, in the lead entitled "Patriot Act Excesses" it was rightfully suggested that as the it considers renewal of parts of the patently unconstitutional PATRIOT Act, "That should be a chance for Congress to give serious consideration to curtailing some of the excessive powers it granted to the executive branch during the Bush years — without enough consideration in the immediate aftermath of 9/11 and later."

Obama repeatedly attack the PATRIOT Act and called for its revision as a candidate -- and immediately abandoned that stance once elected.

Instead of serious consideration, before today was over, the Senate Judiciary Committee, (where reportedly White House aides were working with so-called "conservative" Republicans), had thwarted most attempts by Democrats to restore the civil liberties Bush's PATRIOT Act destroyed.

Strange bed fellows, indeed! (For a copy of my newly revised PATRIOT Act Report, click here).

On to Washington!

 But the surprise is that Bob Bauman is going back to Washington -- not in any official capacity this time, but rather to speak at a meeting on Tuesday, October 20th, at the Cato Institute, the important topic being: "The Case for Tax Competition, Fiscal Sovereignty, and Financial Privacy."

The meeting is being jointly sponsored by the Cato Institute, the Center for Freedom and Prosperity, the Hayek Institute, and the European Center of Austrian Economics Foundation. I will be speaking along with many more distinguished folks than I, lead by our good friend and frequent speaker at Sovereign Society meetings, Dan Mitchell (left), the Cato Institute's tax expert.

His Serene Highness

Other speakers include H.S.H. Prince Michael von und zu Liechtenstein (right); my former House colleague, Hon. Dick Armey of Texas, chairman of Freedom Works and former Republican Majority leader, U.S. House of Representatives; Bruce Zagaris, partner, Berliner, Corcoran & Rowe; Anthony Travers, chairman of the Cayman Islands Financial Services Association, and tax haven expert, Professor Richard Teather, Bournemouth University, United Kingdom, among others.

I would be pleased to see you there - from 1:00 p.m. to 5:00 p.m.. Tuesday, October 20th, at the Cato Institute. Click here for information and registration. All are welcome.

You Can Bank on Politicians (If You're a Banker)

Two recent events, one more personal than the other, got me to thinking about banks and their utility, (if any remains).

# 1) The first event involved what, in more normal times, would have been impressive. Goldman Sachs reported $3.44 billion in 2nd quarter 2009 profits, only a year after the firm took $10 billion directly from we taxpayers and another $13 billion indirectly through the AIG bailout. JP Morgan Chase, another bailout bank, also reported earning $2.7 billion for the same period.

Bailout Blues

Yes, I know we were told ominously by the Bush-Obama interregnum coalition that these two banking stalwarts, among others, were about to go under, that to save America, they needed billions in taxpayer bailouts to survive. They got the billions, needed or not, and even paid them back with interest. But this charade confirms my doubts about the lack of need and the wisdom of these bailouts.

These fat profits will permit Goldman Sachs and JP Morgan bankers to get still more record bonuses, even as millions of Americans are losing their homes and their jobs. (For more on the saga of Goldman Sachs, see Matt Taibbi's Rolling Stone article, The Great American Bubble Machine). )

Frosty Encounter

# 2)

The second banking event hit closer to home.

Bank of America, "my bank", sent me a form letter, the contents of which proved without doubt the inherent truth of Robert Frost's observation: "A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."

Now, mind you, I said "my bank." But that's only true in the sense that Bank of American acquired me; I didn't choose them.

When I moved to Florida I opened an account with Barnett Bank, then the state's leading bank. Without asking me, in 1996 NationsBank (one word) bought Barnett. My account numbers have remained the same, even as new bank logos come and go. Within a year I was told that my bank was now Bank of America; another new logo. Seems NationsBank decided to buy BoA and use that pretentious name.

Credit Cut

My frosty Bank of America letter announced that my business credit line had been cut by two thirds from an amount that BoA voluntarily had given me without my asking. (They also have my home mortgage).

In a mildly contentious phone conversation with an actual human, (as compared to a recorded voice), the human conceded they may have been mistaken, that I did pay my bills on time and hadn't used all of my credit lines.

After a series of mildly probing questions, (other than my mother's maiden name), an "analyst" came on the line to tell me my credit line would only be cut by one third! Glory be!

Banks as Government Spies

Now I know American banks have a lot to do, other than just avoiding failure, (57 so far this year to date). Having researched, written and updated The PATRIOT Act Report,  I know the law makes bankers spy on customers and report "suspicious activity" to the government, all part of various losing wars on drugs, terrorism and now on the too-big-to-fail U.S. economy.

Who You Know Counts

But when it comes to the treatment your bank accords you, who you know is more influential than whether you have what used to be seen as good credit.

For example, a New York Times front page puff piece on Sunday, July 19, that masqueraded as a news story, exalted the supposed Obama administration influence of one Jamie Dimon, (above with friend) head of that profitable JPMorgan Chase identified as "...President Obama’s favorite banker, and in turn, the envy of his Wall Street rivals."

 High Friends in Places

We were told that not only does Mr. Dimon hobnob with the President, but is buddy-buddy with White House chief of staff, Rahm Emanuel, tax scofflaw U.S. Treasury Secretary Tim Geithner and the ubiquitous White House economic adviser, Larry Summers.

The supposed news hook in The Times story was that Dimon's old Chicago pal, Emanuel, was to speak to a special meeting of the JP Morgan board of directors in Washington today, Monday, an example of Mr. Dimon’s impressive political clout. (Boy, did that get canceled in a hurry).

Bi-Partisan Sell Out to Wall Street

A few weeks back, columnist David Brooks, said to be the house conservative at The Times, put his finger squarely on the crux of this matter: "But the larger principle is over the nature of America's political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country's success."

One can bash Republicans with accusations of being in the pockets of Wall Street and the bankers, but the Obama crowd is making Bailout Bush and the GOP look like pikers by comparison on that issue. As they say, "Plus ca change..."

Better Banking Offshore

Even though the IRS and the Obama administration are doing all they can to block legitimate offshore financial activity by Americans, now more than ever, we recommend that you open an offshore bank account for greater safety, more asset protection and better privacy.

We meet regularly with Swiss and other offshore bankers. By agreement, reputable Swiss and other offshore banks are willing to accept new or transfer accounts from Sovereign Society members.

These arrangements are in full compliance with IRS and SEC rules and with U.S. law. (U.S. clients must sign an IRS Form W-9 that allows the offshore bank to report required information to the IRS).

Here to Serve

As it has been since our founding 11 years ago, we are available to assist in opening a Swiss or other offshore account. Take advantage of these special banking arrangements -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com/

Mr. Dimond and Wall Street may have friends in the White House, but you can have one or more friends in Switzerland and elsewhere offshore -- where it really counts.

Offshore Bank Accounts a Necessity

With all the negative attacks on so-called "tax havens" by high tax, big spending politicians, such as U.S. president Barack Obama and U.K. prime minister Gordon Brown, it's no wonder that the average American or Brit may question whether having an offshore bank account is a wise move.

Of course, these calculated attacks, by politicians whose sotto voce motto is "Tax and Spend," are designed to sow just such doubt in the minds of citizens. Tax collectors in both countries want people to keep their money and assets where the Internal Revenue "Service" or Her Majesty's Revenue & Customs can get to them with minimal effort.

Big Brother’s Big Lie

Underlying this war on tax havens is the belief on the part of Big Brother government that anyone who does business offshore, rather than in their home country, must be engaged in tax evasion or some other illegal activity.

Indeed, U.S. politicians such as Michigan's far left U.S. Senator, Carl Levin, (above) repeat this lie ad nauseam. I've heard U.S. government officials from the Department of Justice state it as one of their basic assumptions. And now President Obama has added his strident voice to this bogus chorus.

Big Business

Offshore banking is big business worldwide. Some estimates calculate that more then US$6 trillion is stashed in nearly 40 offshore banking havens that impose no taxes, have less onerous regulations, guarantee privacy and cater to foreigners. One-third of the entire world’s private offshore wealth is held in Switzerland alone.

And I suggest, offshore banking could be very good for you.

Avoidance Vs. Evasion

While legal tax avoidance, (as opposed to illegal tax evasion), does figure among the reasons some people bank offshore, it is certainly not the main one. Indeed for U.S. persons, offshore tax savings are minimal, because U.S. persons are taxed on all their worldwide income, no matter where it is earned.

So here are some good reasons you should consider for opening your offshore bank or investment account:

1) Investing for Greater Profits:

An offshore account is an excellent platform from which to diversify investment, with instant access to the world’s best investment opportunities, including currencies, precious metals, and real estate and without being limited by your home nation’s anti-investment restrictions. Foreign stock, bond and mutual fund trading are not covered by SEC rules.

You also can purchase attractive, tax deferred insurance and annuity products unavailable in the U.S.. Unlike most U.S. banks, offshore banks offer "multi-currency functionality", the ability to invest and transact business in your choice of currencies. And offshore assets can be moved more freely, without some U.S. reporting requirements applying.

2) Solid Asset Protection:

The United States leads all other nations in lawsuits. The odds that a U.S. person will be sued during their lifetime are high. But lawsuits seek cash and assets. If your assets are located in the U.S., they're at the mercy of any state or federal court.

If they're hard to get, located offshore, a plantiff’s attorney usually wont take the case. They know they're not likely to collect a judgment. (At times it makes good financial sense to discourage a potential litigant by letting him know just how difficult it will be to reach your offshore assets).

Because of defendant-friendly local laws in asset protection and tax haven nations, foreign judgment holders have a difficult time enforcing it. To reach your assets, a successful creditor must start all over, using the foreign judicial process to press a claim. That means the expense of hiring foreign lawyers and paying for travel and witness transportation.

Besides promoting compromise of pennies on a dollar, the delay in such a strung out legal process allows time for a defendant to fight the action. Many offshore havens have one- or two-year statutes of limitations that run from the date an initial claim arises. Since a U.S. lawsuit takes years to get through the courts, this means an American court judgment could be void under the foreign nation’s cutoff date.

3) Flexible Planning:

Having some of your assets offshore allows more flexible tax planning and inheritance tax advantages, such as the establishment of an asset protection trust (APT), private family foundation or a limited liability company (LLC) for business purposes, each of which may have their own bank accounts.

4) Better Privacy:

Offshore accounts offer wealthy individuals a way of legally concealing their wealth from prying eyes, (other than government reports that are required). In addition to avoiding becoming a target for extortion and kidnapping campaigns in countries where such occurrences are common, persons of wealth may well want to avoid news media attention or relatives or others looking for hand-outs.

In spite of the false impression you may have gained from all those rabid anti-tax haven attacks, far greater financial privacy is still available in many nations, such as Panama, Switzerland, Liechtenstein, Singapore, Hong Kong, Andorra, or Belize.

In such countries it is a crime to release financial information unless ordered by a court, and that includes foreign government requests as well. Although most tax havens now are moving to exchange of tax information, that exchange procedure applies only to individual cases in which probable cause of tax evasion or other crimes are shown.

One fact we know -- under the harsh terms of the PATRIOT Act, privacy is dead in America. And, to be honest, who knows what currency or other offshore controls may lie in the political future. The time to act is now.

Sovereign Society Members Banking Services

One of the major benefits of membership in the Sovereign Society is our extensive offshore banking advisory service and our banking connections in diverse jurisdictions. At a time when the IRS has frightened away some offshore banks from taking American clients, we can recommend Swiss and other European, Asian, Latin American banks that welcome our members.

Join us and enjoy the freedom of offshore wealth.

What Will Panama Do Now?

In the days since the G-20 hypocrites flocked together in London earlier this month, condemning a large part of the offshore world to their version of tax haven Purgatory, more than a few people have asked me: "What will Panama do now?"

A logical question, considering the established fact that Panama has been and remains, at least for now, one of the leading and best tax havens in the world. And I hope you noticed that when a many countries on the phony G-20 blacklist scrambled to sign up and "do right," Panama did not get in line, literally or figuratively.

There are good and historic reasons for Panama's enviable tax haven standing: 1) a territorial tax system that levies only on earnings within the country;  2) constantly modernized asset protection laws, dating from the 1920s; 3) an array of useful statutory legal entities (trusts, corporations, private foundations); 4) a host of qualified offshore professionals and bankers; and 5) some of the strongest financial privacy laws anywhere -- plus having no tax information exchange treaties (TIEAs) with any other nation.

Hatred for Financial Freedoms

All of the above are major financial freedom factors the G-20 and their ravenous tax collectors ritually hate. Their muscle flexing response, based on the absurd claim that tax havens contributed to the current word recession, was an arbitrary "tax haven blacklist" smear trumped up by the notorious G-20 financed, the Organization for Economic and Community Development (OECD).  The seeming OECD motto: "Tax havens are bad because we say so."

There is no doubt that the G-20, and especially the United States under anti-tax haven President Obama, potentially could apply great pressure on Panama (or any country) to surrender its financial privacy laws. In their relentless hunt for more taxes, they could threaten to cut off Panama, the largest banking center in Latin America, from access to the U.S. banking system. (Did you know that the U.S. Treasury has the power to do exactly that, thanks to George Bush's beloved PATRIOT Act?)

But as Panama's major trading partner and security guarantor by treaty of the Panama Canal, even the Obama radicals would not be so foolish as to have the U.S. attack Panama based on G-20 and OECD press releases.

Panama a Hold Out?
 
But a headline in The Times of London, without offering much hard proof, is of the opinion that: "Panama holds out against campaign to end era of banking secrecy." Times reporter Elizabeth Judge notes that: "Faced with the growing hostility of politicians, some tax havens quickly crumbled under the pressure."

"But," she adds, "while countries such as Switzerland have bowed to demands to end the era of 'no questions asked banking', Panama is digging in its heels and touting for business as one of the few places where money can still be safely stowed away."

Her proof? "Leading tax advisers report that lawyers from the republic...have been e-mailing them to highlight its credentials as one of the last remaining tax havens."
(Understand that Panama is not about to end its tax haven status by imposing  taxes on foreigners; rather the OECD and G-20's major demand is that Panama, and all offshore financial centers, repeal financial privacy laws).

I turned for advice to Derek Sambrook (left), a valued, long time member of our Sovereign Society Council of Experts and a leading trust officer in Panama, the head of Trust Services SA.

Derek tells us that the government of Panama has sent a reportedly non-committal letter to the OECD acknowledging the G-20 position and that's about it. Says Mr. Sambrook: "Unlike the domino waltz in which many tax havens engaged after the G-20 threats, Panama is not about to rush to agree to anything the OECD wants. There may be changes, but they will occur over a protracted period and at a snail's pace." In any case, he added, "I don't see Panama signing a TIEA with the United States in the near future".

Suggested Course: No Serious Changes

A leading Panama newspaper, La Estrella (The Star), seems to agree with Mr. Sambrook's view. In an editorial entitled "Panama must clean its image," it suggests a possible course to follow:

 "Unfortunately, it would be predictable for Panamanian officials to attempt to sidestep the issue by imitating the recent announcements by the tax-haven nations of Andorra, Liechtenstein and Switzerland that they will address certain tax and banking transparency concerns.

"Why would Panama, a country whose comparative advantage is providing a haven for foreign firms to avoid taxes, consider such an announcement? Because the plans that the other three secrecy jurisdictions rolled out are far from adequate, full of loopholes, and do not represent a meaningful way forward for them - or for Panama.

"Thus, Panama could try to quell the growing controversy without making serious changes to its excessive banking secrecy and policies that waive taxes for foreign firms."

Panama: Smiles and Firmness

There is a certain irony in all this.

Unlike some other nervous “tax havens,” such as The Bahamas, Bermuda and the Cayman Islands, the Republic of Panama, jealous of its hard won sovereignty after a century of U.S. control, in the past pointedly has refused to go along with the OECD on the basis of fairness for all.

For several years it has refused to sign an OECD memorandum of understanding which would have committed the government to imposing taxes on offshore investments, banking and other financial activity by foreigners. It also would have forced Panama eventually to automatic exchange of tax information among all governments, contrary to Panama’s financial privacy laws.

Panama’s refusal was based on its reasonable demand that the proposed OECD rules apply to all nations, that a “level playing field” be guaranteed before it would commit to accept and apply them. It has stood by that position ever since.

Defiance or Compliance

Impartial observers know that there is not now any “level playing field” among nations when it comes to tax information exchange and other financial rules. Repeatedly ignored is the trillion dollar volumes of international investment that make the U.S. and the U.K. the world's leading tax havens -- for foreigner investors, but not for their own citizens and residents.

Historically, Panama, the crossroads of the world, has survived handily for centuries, having learned how to deal with far worse invasions by foreigners (including Americans) than the OECD can amount.

Don't look for any open defiance -- and don't look for any immediate compliance.

** To learn about the many current offshore opportunities offered by the Republic of Panama, my best-selling book, Where To Stash Your Cash: Tax Havens of the World, explains all. For greater detail, Panama Money Secrets, which I also wrote, is your best bet.

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

Liechtenstein Capitulates, Somewhat

The latest news from Vaduz heralds what is being billed by the media as a major crack in offshore financial center secrecy.

In a formal joint "Declaration" Liechtenstein's Prime Minister Otmar Hasler and the ruling, Prince Alois von und zu Liechtenstein, announced that the principality has agreed to ease its strict bank secrecy law by committing to Organization for Economic Cooperation and Development (OECD) standards on tax transparency and tax data exchange.

Liechtenstein ruler Prince Alois (left), Liechtenstein Prime Minister Otmar Hasler (center) and Liechtenstein Prime Minister-designate Klaus Tschuetscher held a press conference Thursday on banking secrecy

No Automatic Tax Info Exchange

The principality is also offering to sign bilateral tax information exchange agreements (TIEAs) that go beyond OECD standards, provided that clients of its banks holding secret accounts "are allowed to bring money to their home countries and meet their tax obligations in an orderly manner," (whatever that means.)

Liechtenstein insists that it will not allow automatic exchange of tax information, but it will be more cooperative with other national tax authorities when requested. It has already started TIEA talks with individual countries.

Prime Minister Says

"Our bank secrecy has always served to ensure the legitimate protection of the privacy of the citizen, which we will continue to retain. With this declaration, however, we want to make clear that bank client confidentiality in future cannot be misused to facilitate tax crime."

So said Prime Minister Otmar Hasler. The "Government Declaration" is said to be supported by all important sectors of Liechtenstein politics and business.

While the principality’s "Declaration" emphasizes that it will maintain client privacy, the statement focuses on stopping tax fraud rather than tax evasion. As in Switzerland, tax fraud is a crime in the principality, while tax evasion is a lesser civil offense. That could complicate efforts for TIEAs with other countries that view tax evasion as a crime.

Prior Co-operation

Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free enterprise economy with a vital financial service sector and the highest per capita income in the world.

Europe’s fourth smallest country agreed in December to share information on tax evasion and signed a TIEA with the U.S. It also adopted anti-money laundering legislation and signed a Mutual Legal Assistance Treaty with the U.S. in 2003.

Liechtenstein's new commitment comes just weeks before a London meeting of the G-20 nations on April 2 that will discuss possible restrictions on tax havens. Its action also could add pressure on neighboring Switzerland, the world’s largest offshore center.

Cash Hemorrhage

No doubt outside pressure, especially from neighboring tax hungry Germany, was a factor in this declaration.

But it appears this is more a case of money talking (and walking). Billions of cash hemorrhaging no doubt commanded the close attention of the royal family and many of the other 35,000 citizens of the principality.

The money drain began when LGT Bank, owned by the royal family, came under fierce criticism last year after German intelligence agents bribed a bank ex-employee to get a list of hundreds of foreign LGT customers allegedly evading taxes.

Included were members of Germany's business elite. Since then, billions of Swiss francs have flowed out of LGT and other banks, which may have prompted the country to rethink its role as a tax haven. Liechtenstein's third largest bank, VP Bank, said it had net outflows in 2008 of 1.3 billion Swiss francs (US$1.13 billion).

Not Unexpected

Last March I reported that Prince Alois, (left) hereditary ruler of Liechtenstein, had confirmed that his tiny Alpine tax haven planned to seize the initiative in response to foreign criticism of its financial sector’s strict bank secrecy laws. "The time has come for us to base our system of mutual legal assistance and administrative assistance in tax matters on a new foundation," the Prince said then in his traditional national day speech to the nation.

No Unconditional Surrender

No doubt the leaders of sovereign nations such as Liechtenstein, Switzerland and other tax havens that rightfully protect financial privacy by law realize that no compromise, other than unconditional surrender, will ever appease the OECD and the major tax collecting nations of the world it represents.

All this anti-offshore pressure is a smoke screen for welfare state tax collectors aiming for complete destruction of financial and personal privacy for everyone, just as the so-called PATRIOT Act has done in the U.S.. These tax bureaucrats demand access to every citizen's financial lives, no matter where you live or where you may have assets.

For them abolishing bank secrecy is not enough. They also want to end lawyer-client privilege, mandatory publication of all beneficial ownership of private trusts, private corporations and private foundations, plus the imposition of a global system of total tax information exchange among all nations.

Right to Privacy

These leftist advocates believe that personal and financial privacy must yield to Big Brother government's unlimited right to know all and to tax all.

Last year I wrote: "After conferring with trusted investment and legal experts with whom we work in Liechtenstein it is my judgment that a very limited cooperation on tax information with foreign governments in individual cases may now be allowed – but absolutely no fishing expeditions. But don’t expect the fondest dreams of the tax collecting Left to come true – Liechtenstein and its historic bank secrecy will stand firm."

It remains to be seen whether I was right or wrong. We'll soon find out.

** The Liechtenstein Report, explains the many legal advantages of banking and asset protection in Liechtenstein. Find out how to use this country to your advantage.

The Insanity of Drug Prohibition

The late Albert Einstein defined "insanity" as doing the same thing over and over again and expecting different results. Keep that thought in mind as you read what follows.

For two days this week a United Nations meeting in Vienna will review the failed 10-year-old global "war on drugs" policy. Their goal is to proclaim international drug policy for the next decade, hopefully with a new and far different declaration of purpose.

The Economist magazine observes that a century ago "a group of foreign diplomats gathered in Shanghai for the first ever international effort to ban trade in a drugs. On February 26th 1909, they agreed to set up the International Opium Commission -- just a few decades after Britain had fought a war with China to assert its lucrative right to buy, distribute and sell opium. Many other failed bans of mood-altering drugs have followed."

Unmitigated Disaster

The Economist, hardly a leftist publication by any measure, says about the Vienna meeting: "Like First World War generals, many will claim that all that is needed is more of the same. In fact the war on drugs has been a disaster, creating failed states in the developing world even as addiction has flourished in the rich world. By any sensible measure, this 100 year struggle has been illiberal, murderous and pointless. That is why The Economist continues to believe that the least bad policy is to legalize drugs."

Drug Free Indeed!

In 1998 the UN General Assembly committed member countries to achieving a "drug free world" and to "eliminating or significantly reducing" the production of opium, cocaine and cannabis by 2008. They adopted the slogan "A drug free world -- we can do it" and launched a campaign that supposedly would eradicate all narcotics by using tough law enforcement to stop producers, drug lord traffickers and end user consumers globally.

But a report from the European Commission this week says the global struggle against drugs in the last ten years has achieved nothing -- a view with which most objective observers agree.

Drug policy campaigners, social scientists and health experts say that this strategy has failed miserably. Statistics show that drug production, trafficking and use have all skyrocketed during the decade, while the cost of law enforcement, both financially and socially, has rocketed, with vast numbers of people imprisoned.

A Police State Spawned

Indeed a major and fallacious official justification for attacks on financial privacy and on tax havens, was the lie that the war on drugs could be won if we all surrendered our privacy. That war on drugs was also the principle cause of the militarization of U.S. domestic police, with countless mistaken SWAT team drug raids resulting in needless innocent deaths.

Meanwhile, over $4 billion in cash and private property has been confiscated by police under forfeiture laws -- and in 85% of the cases no charges were brought against the persons from which property was grabbed. In most cases, federal, state and local police kept the loot.

In the United States, where illegal drug use is highest, a vast police-prison-government lobby has arisen. It devours about $70 billion a year in taxpayer funds, supposedly to combat drugs. What a costly hoax!

Prison America

Illegal drug use has risen steadily over the past decade and now a fifth of the entire 2.1 million U.S. prison population, the highest per capita in the world, is behind bars for drug offenses.

The total number of U.S. citizens accountable to the American correction system is the highest in the world. It even exceeds the combined Soviet Union and China prison population during the height of their dominate Communist regime. Currently in the U.S. one in every 31 adults is either in jail or prison or on parole or probation. That amounts to 7.3 million Americans at a cost that exceeds $68 billion annually.

Keep in mind that one fifth of all those numbers results from drug offenses.

More of the Same?

Those campaigning against the U.S led strategy at the Vienna conference predict another 10 years of the same failed approach will fuel the organized crime that shares the estimated $200 to $300 billion a year illegal drug trade, will increase the spread of HIV, and produce more narco-states such as Guinea-Bissau, Afghanistan, Columbia and, increasingly, Mexico -- which now is in an undeclared state of war because of drug gangs.

There have been more than 8,000 drug deaths in Mexico in recent years, and now this daily violence is spilling over the U.S. border into Texas, New Mexico and Arizona.

Political Promises

As The Economist says: "Fighting drugs is the kind of promise politicians love to make. It assuages the sense of moral panic that has been the handmaiden of prohibition for a century. It is intended to reassure the parents of teenagers across the world. Yet it is a hugely irresponsible promise, because it cannot be fulfilled."

Drugs and drug use will not go away. They have been around as long as humans have been on earth.

As the 12 Step Serenity Prayer says: "God grant us the serenity to accept the things we cannot change, courage to change the things we can, and wisdom to know the difference." There could be no better rule to follow than that Prayer when considering future drug policies.

A Solution

As a conservative and a libertarian, I believe we can lessen the effects of drugs on society by strictly  controlling drug distribution and sale, (thus ending obscene drug profit incentives), by minimizing health implications and by reducing the causal links between crime, terrorism, poverty -- and politics -- that absolute drug prohibition guarantees.

That's my personal view, and that's the way that it looks from here.

An End to "Your papers, please!"

One of my all time favorite movies is Casablanca (1942) in which a struggle to obtain visas for free transit out of that Nazi-occupied North African colony of French Morocco is a central theme.

In any 1940's Hollywood European war/intrigue/spy movie there's usually a scene in which national police board the train at the border to inspect passports. "Your papers, please," demands a stern faced police officer.

That has happened to me occasionally, as when I took the train from Prague to Budapest and Bucharest a few years back, or the express from Paris to Frankfurt. There was a moment's hesitation as the French, German, Czech, Hungarian or Romanian immigration officer came through the railway car checking passports. He took my passport, then glanced at me to make sure my face matched the picture. As the inspector thinks to himself: "Not another American tourist!," you think to yourself, "Am I in trouble?" (Usually not).

Passport Power

Until a century ago almost everywhere in the world passports generally were not required for international travel. Such documents were mainly used to insure passage by diplomatic emissaries sent to negotiate peace treaties or carry official papers.

But in more recent times governments use passports to control (and watch) the movements of their citizens. That official control was especially prevalent in Europe during the Cold War years, and it has returned with a bureaucratic vengeance, especially in the U.S. since the 9-11, 2001 terrorist attacks.

Borderless Europe

But now, at least in Europe, official border checks are largely a thing of the past, at least for the residents of 25 of the 27 nations of the European Union, plus non-EU member Switzerland, as of last month.

From December 12, 2008 Switzerland is part of the "Schengen Area," a zone covering 4,268,633 sq km (1,648,128 sq mi) offering unrestricted travel to 450 million Europeans. (The Schengen agreement also allows closer cooperation with the EU on cross-border police and asylum matters. The agreements were named after the small town of Schengen in Luxembourg where they were signed).

Switzerland Too

Switzerland's joining the Schengen Area, a 25-member European block, allows it to enjoy passport-free travel within and between these 25 member states. Switzerland is not an EU member, but it has several treaties with the EU. (Swiss voters have repeatedly, and wisely, rejected full Swiss EU membership, preferring their historic independence and neutrality).

Switzerland is not the first large non-EU country to join the passport-free zone. Norway and Iceland are also members, although as members of the European Economic Area (EEA) they are associate EU members. And two EU members, Britain and Ireland, by choice, are not members of the Schengen Area in an effort to control their immigration from outside.

Schengen = Freedom of Movement

The term "Schengen Agreement" describes two international treaties (1985, 1990) dealing with cross-border legal arrangements and the abolition of border controls that are now part of the EU code of laws. The main Schengen purpose is the abolition of physical barriers to cross border movement among European countries.

This borderless, Schengen free travel zone greatly enhances the usefulness of a passport issued by any EU member nation. That EU citizenship status allows the passport holder not only to travel, but to live, work, or establish a business in any of the EU nations, a major potential commercial and investor plus.

For non-EU residences, a common Schengen visa allows travel for tourism, business visits or temporary transit for employment. Non-EU citizens who hold standard EU residence permits from a Schengen state enjoy freedom of travel to other Schengen states for a period of up to 90 days.

You can learn all about dual citizenship and second passports, including those from EU countries, in one of my most popular books, The Passport Book, now in its sixth edition. Click here to learn more.

Obama Says: "Shut Down" All Tax Havens

Well, he finally has come right out and said it. Yes, he has.

Democrat presidential candidate, Barack Obama, speaking yesterday (Oct. 23) in Indianapolis, again attacked "big corporations" who use "tax loopholes" offshore -- but he also made plain that he wants "to shut tax havens" down.

If you would like to hear the farthest Left member of the U.S. Senate advocate an end to tax havens, spoken in his own mellifluous baritone, click here, then click on "Listen Now." 70781

Of course, Obama, who can draw 100,000 adoring Europeans in socialist Berlin, is not yet Dictator of the World.

He has no power, as yet, to ban tax havens worldwide or change the internal bank secrecy laws of sovereign nations such as Switzerland and Panama. But a President Obama could impose currency controls on dealings with selected countries, ban Americans moving cash offshore, and even confiscate assets under emergency decrees and the nefarious PATRIOT Act.

He Means What He Says

The young Illinois senator has made crystal clear that high among his goals in an Obama Administration will be: 1) the curtailment, if not abolition of tax havens worldwide; 2) an end to all business and personal financial privacy; 3) automatic exchange of tax information among all national tax collectors; 4) nullification of bank secrecy laws, and; 5) public records of all hitherto private beneficial ownership of trusts, foundations and corporations.

No doubt a host of far left foreign politicians and radical groups, now suddenly eager to "reform" the international financial system, will be overjoyed to join the Savior Obama in a global quest to remold the financial world.

Global organizations like Tax Justice Network, Oxfam GB, Friends of the Earth, Global Witness and Christian Aid have been waging a new global campaign against tax havens and offshore financial activity. They've been enlisting support from left-dominated countries like Norway, Chile, Brazil, Spain and France, organizations like the UNDP, the World Bank and even the International Monetary Fund.

How can I be so sure?

Because his words and actions, today and before, have defined what he intends to do.

Obama's Manifestos

In a Dec. 13, 2007 Iowa debate with Hillary Clinton, Obama said that as president he would crack down on corporate loopholes and tax savings, particularly those involving "offshore transactions".

Earlier in 2007, Obama joined the anti-offshore crowd, co-sponsoring and speaking in behalf of bills by fellow leftist senators Levin (D-MI) and Dorgan (D-ND). Their radical legislation wrongfully paints offshore tax havens as tax evasion centers and proposes giving the U.S. government plenary power to restrict Americans' offshore access.

Indeed Obama seems to see any offshore financial activity by Americans as suspect criminal activity.

On May 1, 2008, in a statement supporting yet another of his anti-offshore bills that would end the privacy of beneficial ownership, he said: "It is unacceptable for American companies to be used by criminals and terrorists as shields for tax evasion, terror financing, and financial crimes. We must ensure our law enforcement agencies have the ability to properly investigate any financial criminal wrongdoing. This important legislation promotes transparency, fairness, and public safety, and sheds light on the people behind corporate entities so that criminal and terrorist activities can be deterred or detected more effectively."

That there are ample federal laws to accomplish such goals seems lost on the freshman senator from Illinois, but to acknowledge that would not score any political points.

Pernicious Legislation

The Anti-Tax Haven Act, S. 681, sponsored by Obama, if it becomes law, would allow the U.S. Treasury to issue rules that could restrict American banks who have received billions in bailouts. Suddenly with the socialist "spread-the-wealth" Democrats in power, the offshore financial activity of these bailed out U.S. banks could be seriously curtailed.

Among other enormities in his legislation, it creates an unprecedented blacklist of 34 offshore jurisdictions (Switzerland included) presumed to be tax evasion sites, based only on the fact they have financial secrecy guaranteed by law.

His legislation gives the U.S. Treasury free reign "to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement." It also requires all U.S. financial institutions to report to the IRS any offshore financial activity by clients and impose taxes on offshore trust income used to buy real estate, artwork and jewelry for U.S. persons.

More Fascist Powers

But I am indebted to Sovereign Society Council of Experts member, Larry Grossman, CFP, for pointing out that U.S. Treasury Secretary Henry Paulsen and very lame duck President George Bush already have handed a potential President Obama all the power he may need to curtail Americans offshore financial activity.

Larry pointed out language in the new Troubled Asset Relief Program (TARP) law that authorized a $700 billion bail out of banks (and, it seems, almost anyone else except taxpayers).

The TARP law authorizes the Treasury Secretary "to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation, the following: Designating financial institutions as financial agents of the Federal Government, and such institutions shall perform all such reasonable duties related to this Act as financial agents of the Federal Government as may be required."

It's not bad enough that the PATRIOT Act has forced all U.S. bankers to be spies for the government, don't you think Obama's Secretary of the Treasury can (and will) use this unlimited power seriously to curtail Americans' offshore financial activity?

Cynicism Unbounded

But the Chicago style political cynicism of Obama in denouncing offshore financial activity and tax havens is breathtaking -- as is the eagerness of bankers and Wall Street to appease him -- and prostitute themselves.

Example: In September Obama released an Internet and TV ad mocking John McCain for visiting Bermuda last year, vowing to preserve the tax haven there, then taking money from the insurance industry. McCain did indeed tell the local Royal Gazette last year: "The industry, the re-insurance that’s had such phenomenal success has been good for both nations. I would oppose any measures that would upset that." Obama claimed that insurance CEO’s and lobbyists then donated $50,000 to McCain.

But Obama's ad never mentioned that he also received plenty from the insurance industry, ranking as one of the top recipients, with $1,290,434 in the 3rd quarter election cycle alone.

Similarly, at a U.S. Senate hearing last July Obama praised Senator Levin's anti-offshore attacks, 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."

But in issuing his ringing anti-tax haven statement critical of UBS, the major money losing Swiss bank, Obama said nothing about one of UBS' most prominent executives, Robert Wolf, CEO of UBS Americas, who by July, 2008 had collected and bundled more than $370,850 in campaign contributions, making UBS Obama's fifth largest corporate donor.

Obama's New World Order

So much for that selfless "new era" in politics Senator Obama talked so much about. We certainly don’t begrudge him his offshore banker friend at UBS – but why should have want to block all Americans from having their own legal dealings with offshore banks of their choice.

Let's face it, Obama does not just want to pile more taxes on U.S. middle and high income earners, he wants to control productive Americans and their financial dealings -- forcing them to keep their funds in America where they more easily can be confiscated and "redistributed" to the 40% of Americans who pay no taxes.

Alexis de Tocqueville predicted Obama's ilk way back in 1835 when he wrote: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." And so the New Deal motto has been revived: "Tax, tax, spend, spend, elect, elect."

And one last thought.

At a time when the world may be facing a global depression unlike anything seen since 1929, Obama, for the sake of his wealth redistribution schemes, would seriously disrupt the ability of American capital to invest, expand and aid foreign economies and other nations hard hit by the recession.

His liberty destroying, global finance disrupting plans could be the modern equivalent of the disastrous Smoot-Hawley Tariffs that prolonged Roosevelt's decade long-Great Depression.

What They Really Think

O.K., so Obama yesterday unashamedly admitted his plans to do all he can to harm and limit his favorite bogeyman, offshore tax havens.

But in an article in The Nation (July 22, 2008) states the Class Warfare doctrine that the Democrat's radical presidential nominee hints at -- but wont admit openly:

"Rich people the world over, including tens of thousands of wealthy Americans, are now free to opt in to this sophisticated, secretive, utterly unprincipled global private banking industry. They can become, in effect, residents of nowhere for tax purposes, citizens of a brave new virtual country, which offers its inhabitants unprecedented freedom from the taxes, regulations and moral restraints that the rest of us take for granted. They wield enormous political influence even without paying taxes, merely by making contributions, threatening to withhold them--or better yet, threatening to abscond with their capital unless certain conditions are met. In a sense, this is the ultimate libertarian pipe dream: representation without taxation. But it is a nightmare for the rest of us, and we must design and organize our way around it."

Have a nice weekend – and don’t forget to vote.

* While you can there still are many legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here. And if you're interested in Switzerland, Click here for Swiss Money Secrets.