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.

Blacklisting Tax Havens

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

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

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

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

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

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

Phony Blacklists Exposed

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

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

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

Tax Competition Is Good

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

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

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

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

Dirty Money/Terrorism Ploys

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

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

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

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

The Black Beast

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

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

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

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

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

Does UBS Have the Guts to Fight?

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

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

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

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

More of the Same

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

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

Will UBS Fight

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

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

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

Prior UBS Sellout

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

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

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

Swiss Law Imposes Secrecy

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

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

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

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

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

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

Make the IRS Prove It

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

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

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

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

But don’t hold your breath.

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

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

Tax Tyranny Video

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

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

Swiss Vote on Citizenship

In a national referendum last Sunday Swiss voters defeated a measure that would have approved the current practice of allowing secret votes by townspeople on granting citizenship to foreigners living in their communities.

Some wishful thinkers on the Swiss political left claimed that the vote was a blow to the powerful conservative Swiss People’s Party, (SVP), which initiated the measure. Nearly 64% of voters cast "no" ballots, and the measure gained a majority in only one of the country’s 26 cantons.

In recent years Switzerland has seen a gradual shift to the right in the political party landscape. The conservative Swiss People's Party (SVP), previously the junior partner in four-party coalition governments, more than doubled its voting share from 11% in 1987 to 22.5% in 1999 and to 26.6% in 2003. In last elections in 2007 the SVP took 28.8% of the vote for the House of Representatives, up 2.1% from 2003, the greatest vote increase among the four governing parties since 1919, winning 62 of the 200 seats in the House.

In the 2007 election the SVP took a strongly anti-immigration stand. The SVP has risen rapidly in politics, asking for the will of the people in referendums is common in Switzerland’s direct democracy, and the SVP regularly leads initiatives on questions over foreigners asylum and against entry to the European Union.

Enough Is Enough

The Swiss have shown a growing resistance to immigration and granting citizenship. The measure defeated in Sunday's vote would have overturned a 2003 Swiss Federal Court ruling that held that secret citizenship votes by townspeople on foreign residents were unconstitutional. Despite that ruling, the practice has continued in some parts of the country. Some cantons required a public referendum on whether to admit specific lists of applicants and many foreign individuals have been rejected in these votes.

Switzerland has done its part in accepting foreigners, especially refugees. Its population has grown from 1.7 million in 1815 to 7.5 million in 2008. The population has risen by an impressive 750,000 since 1990, including many immigrants. Switzerland has one of Europe’s highest percentages of foreigners living within its borders exceeded only by Liechtenstein and Luxembourg. Of the 7.4 million residents, about 1.4 million, or 20%, are from other countries, especially workers from Spain, Portugal, Italy, and various parts of the former Yugoslavia.

Tough Requirements

For a foreign national, Switzerland is not the easiest place in the world to obtain either permanent residence or full citizenship, but neither one is an impossible goal.

Obtaining the right to become a resident in Switzerland has never been easy, and has become increasingly difficult. Once accepted for residence, however, Swiss citizenship may be available eventually. Switzerland has some of the toughest naturalization rules in Europe. To apply, you must live in the country legally for at least 12 years, pay taxes, and have no criminal record. Until the Sunday vote the application could still be turned down by a vote of a local commune.

Welcome for Selected Foreigners

For financially independent foreign individuals, business investors, and entrepreneurs, it may be possible to obtain a special deal for residence in Switzerland.

That deal currently covers 3,600 foreigners who pay an average CHF75,000 (Swiss francs) (US$60,050) each in tax, earning Switzerland CHF300 million Swiss francs (US$240.2 million) per year. The system allows foreign citizens living there to negotiate a fixed tax rate based on their Swiss property factors, excluding income earned outside Switzerland. Deals vary widely among the 26 cantons, but the basic formula is to calculate a minimum of five times the annual rent or the rental value of the expatriate's home and his living expenses. That amount is taxed at an average rate of 30% and that can mean a huge savings on taxes.

As someone who often has visited and written about Switzerland, my guess is that the Sunday vote says more about the Swiss being a hospitable people -- which they certainly are -- rather than indicating a sea change in a nationally conservative attitude towards immigration.

* To find out about possible residence in Switzerland, and all about the Swiss, see my new book, Swiss Money Secrets. Click here http://www.web-purchases.com/190SSMON/E190J355/landing.html

Report from Panama

I spent the last eight days in Panama, and the answer is -- the Panama Boom goes on.

The Bubble, (if it can be called that), has not burst -- and it doesn't look as if the economy will cool anytime soon. The "crossroads of the world" is Latin America’s economic leader.

My recent close observation of all things Panamanian began in 1999. That's when I returned after an absence of 25 years. (In the 1970s I visited there five times, during the heated debate on the Panama Canal treaties). So I enjoy the advantage of perspective.

And the Panama I see continues to change and grow at a fast pace. It's come a long way from the American colonial days that ended in 1999 -- when the United States turned over full control and sovereignty over the Canal to the Republic of Panama.

No More Devils?

While we were holding our Sovereign Society Total Wealth Symposium in Panama City last week, President Martin Torrijos announced that the cosmopolitan metropolis of 1.5 million will no longer have to endure (or enjoy) those funky school busses known as Diablos Rojas (Red Devils). For as long as there has been motor traffic, these chugging, overloaded, wheezing transports have been as familiar as are red double-deckers in London. Next year they will be replaced with modern busses on regular routes and -- gasp -- with air conditioning!

The main waterfront traffic artery, Avenida Balboa, is being widened from six to 10 lanes, accompanied by a wide swath of green parks fringed with palm trees and flowers. Now -- if they can only get some traffic cops to control the gridlock and ticket the thousands of red light runners.

Bargains Over

What I've been saying for sometime now was confirmed many times over the last week -- if you're looking for low-priced real estate, especially condos, in Panama City, you're too late.

Oh, you may find an occasional bargain, but in spite of hundreds of towering condo blocks inching skyward all around, the prices of same are also elevating everyday. A new bay front condo that could be had two years ago for $140,00 is now going for $260,00 00 -- so Panama is edging toward South-Florida-before-the-U.S.-mortgage-collapse prices. In a suburban town house development along the way to and from Tocumen Airport, row houses that were on sale for $60,000 now bring twice that.

Major Growth

As in China, Panama's GDP is growing at a China-like rate -- over 10% last year, a projected 8% or 9% this year. Unemployment in a country with a lot of poverty is final going down. Rising incomes have produced a growing demand for creature and household comforts. Five years ago there were no major malls -- now there are four.

I dined with close friends and their friends last week in a modest, middle class home in the hills near Panama City and, except for the fact that almost everyone spoke only Spanish, it could have been South Florida - although, come to think of it, more folks speak English in Panama than in South Florida, where I live.

Panamanians are taking a close interest in the upcoming American presidential election. They are at the beginning of their own presidential election campaign, with President Torrijos limited to one 5-year term that ends next year. I spent an overnight at a new Pacific Ocean resort (The Decameron) and on the way the Pan-American Highway was plastered with political signs. Locals predict that Panama City's mayor Navarro may be the next president, and in any case, current pro-American policies will continue-- and, even if Washington doesn't like it, Panama will remain one of the world's first class tax havens.

Favorite Son?

Oddly enough, maybe because he was born in the Panama Canal Zone, a lot of Panamanians think the U.S. presidential winner could be John McCane. Then too, Panama has dealt with control-freak Americans for almost a century -- so may be they recognize Hillary and Obama for what they are.

* If you want to know Panama fundamentals, check out my special 3-part report, Panama Money Secrets. Click here http://web-purchases.com/190SPMON/W190H720/

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/

British Labour's Tax Boomerang

As we predicted, British Labour's "new soak the rich foreigner tax" is soaking a lot of middle-class foreigners as well -- driving many of them out of the United Kingdom.

Until now, the U.K. has been a major tax haven, but with a different twist - the U.K. gave major tax breaks to wealthy foreigners who actually made their homes there. Under U.K. tax law, anyone living in Britain, "rich" or not, who was not born there had the legal right to choose what is known as "non-domiciled" tax status. That status required taxes to be paid only on income earned or actually brought into the U.K.

That meant scores of billionaires and millionaires living there only paid tax on the relatively smaller amount of money they actually brought into the U.K. each year. They paid no U.K. taxes on their larger worldwide earnings.

These rich foreigners spent billions on real estate, goods and services and invested heavily in the U.K. According to British Treasury figures, about 112,000 people claimed non-domiciled status in 2006. These rich foreigners reported £9.8 billion (US$19.9 billion) in U.K. earnings on which they did pay taxes. But their wealth from overseas income undoubtedly was much greater. "Non- doms" already contribute about 2.7 percent, or £4 billion (US$7.9 billion) of the U.K.'s annual income tax revenue, the Treasury said.

Sock It to 'Em

Now the Labour government has imposed a tax of £30,000 (US$60,000) on any foreigner choosing the non-dom tax status who has lived in the U.K. seven years or more. The higher taxes will cut deeply into the income of middle-class earners, such as college professors and writers and it is predicted that the annual cost tax preparation will double to about £2,000 (US$3900). As a result, foreigners in the U.K. of all levels of wealth are packing their bags and planning to move to far better no-tax havens, such as Monaco, or to places with lower taxes, such as Switzerland.

But Bloomberg News reports that it not only the rich who are being penalized by the $60,000 annual tax.

Francine Stone, born in Pennsylvania, has lived in Britain for 25 years. The researcher on Middle Eastern and Islamic affairs says a new tax on foreign-born residents will drive her out. While the tax plan will extract the most from millionaires, it may make life in Britain unaffordable for people such as Stone who rely on overseas investment income to pay their bills.

"It's the self-respecting, honest, not 'super-rich' people who are being lumped together with the very wealthy,'' said Stone, 63, who's lived outside Wallingford, England, since 1983. "We don't deserve to be targeted." Non-doms who move away may sabotage the plan by cutting the existing tax revenue, said Philip Keevil, senior partner at Compass Advisers LLP and former head of European mergers and acquisitions at Citigroup Inc. The government estimates that about 3,000 people will leave Britain because of the new rules.

Net Loss in Revenue

"It won't take many to leave for the amount the Treasury loses to exceed the amount they will gain from those staying and paying,'' said Keevil, 61. He blames "the politics of envy'' for the notion that foreigners evade taxes. Confusion over the rules is blunting London's attractiveness as a place to settle and do business, said David Treitel, a tax director at U.S. Tax & Financial, a London-based accounting firm, adding: "The politicians think the non-dom changes affect only the wealthy.''

What Labour Party politicians seem not to understand is that taxes are a cost of living and of doing business, just like any other cost. When an individual or business moves away to a tax haven, that revenue is denied to big spending welfare state pols left at home.

Irish Alternative

Some long-established U.K. residents say moving to Ireland may be a good option. Ireland offers the non-dom everything England is taking away, said Jim Ryan, a personal tax partner at Ernst & Young Tax Services in Dublin. Non-doms in Ireland still enjoy the breaks that are disappearing in the U.K. The Irish government estimates that more than 7,000 people live in Ireland as non-doms.

So it looks as if British Labour has finally put an end to "tax haven England." Britain’s loss could be Irelands gain.

This British tax imbroglio serves as a classic example of why tax competition among nations is a positive good. It allows individual freedom of choice and curbs the welfare state’s rapacious appetite for more revenue and spending.

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

Switzerland Will Endure

Switzerland, as it has for many years, continues as the number one target of the world's welfare state governments and their rapacious tax collectors.

It is my considered opinion that Switzerland and its bank secrecy law will survive, as it always has survived -- by dint of sheer national will and determination to repel outside political dictates from any source.

All the media ruckus created a few months ago about secret bank accounts allegedly used for tax evasion in neighboring Liechtenstein was just the overture for the real show -- the plot to destroy Switzerland's bank secrecy -- at all costs.

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 helpings of financial competition and international envy -- and you can understand why Switzerland is always under siege in the left-wing dominated world news media.

For more than a decade the political left in Europe and the United States has conducted a media war against all tax havens, especially against Switzerland, which has steadfastly refused to alter its strict financial privacy and bank secrecy laws. The still intact anti-Nazi Swiss Bank Secrecy Act of 1934 makes it a crime for anyone to reveal even the existence of a bank account in Switzerland, much less information about the account or its owner. Unlike the American government that has killed all privacy, the Swiss believe humans have an innate right to privacy that need not be justified.

At the same time, Switzerland routinely honors proper official foreign requests for information about alleged criminal activity, money laundering and tax fraud, even as it collects taxes on EU citizens with accounts there, passing on their taxes to European Union nations under the EU tax directive. Indeed, the Swiss led the way in adopting tough anti-money laundering laws and they keep them up to date.

Doubting Konrad

Last week The New York Times quoted Konrad Hummler, the managing partner of Wegelin & Company, a small private bank in the canton of St. Gallen.

The nervous Herr Hummler warned that Switzerland's role as secret banker to the world’s wealthy is under threat as never before, as he sees it. Hummler said what we all know -- that the German tax evasion scandal involving Liechtenstein has been manipulated by the media into a debate about Swiss banking secrecy, just as Europe's Leftists wanted. Worried at the degree to which the traditional discretion of Swiss banks is under assault, Hummler said his foreign clients have been inquiring about their money. The nervous Herr Hummler says that this time, Switzerland may not be able to stop the rest of the world from prying open Swiss banking.

I beg to disagree -- as should anyone who really knows the Swiss and their history.

Jealous Neighbors

What also irks Switzerland's high tax neighbors are low Swiss personal income and business taxes.

A recent report, Paying Taxes 2008 – The Global Picture, a study by the World Bank and PricewaterhouseCoopers (PwC), rates the tax systems in 178 countries according to how much tax businesses are forced to pay. Switzerland was 24th worldwide in terms of total business tax rates and second lowest in Europe, behind only Ireland. (The United State with a one of the highest corporate tax rates of 35% ranked 102nd in level of business taxes and 76th in ease of payments).

"With a total tax rate of 29.1%, Switzerland is only 0.2% behind top-ranked Ireland with 28.9%," said PwC. Switzerland did considerably better in the world listings than its jealous high tax neighbors: Germany (50.8%, ranked 124), France (66.3%, ranked 157) and Italy (76.2%, ranked 168).

Switzerland has been attracting foreign companies for these low tax reasons. A record number of firms set up shop in the country in 2007. Canton Obwalden, which drastically slashed corporate tax rates at the beginning of 2006, recorded the fastest growth.

Election Returns

In October, 2007 the conservatives won their greatest victory ever in Swiss parliamentary elections. That political fact alone helps guarantee that Switzerland will remain the world's leading offshore financial haven and that Swiss banking secrecy remains secure.

It also guarantees that Swiss relations with jealous neighbors and the EU will not be any easier. The EU has been a major critic of Swiss financial privacy laws. Swiss political leaders and the Swiss people as a whole, repeatedly have rejected demands for repeal of bank secrecy, a traditional attraction for foreign investors worldwide. Polls consistently show that 80% of Swiss support the banking confidentiality law.

I do not base my opinions about Switzerland on suppositions. I have just published my latest book, Swiss Money Secrets, which explores in detail Swiss bank secrecy, low taxes, possible residence for foreigners and many other aspects of Swiss history and current policies. For your copy, click here: LINK: http://www.web-purchases.com/190SSMON/E190J355/landing.html

Dirty Money Hypocrisy

Located on the northeastern cusp of South America, bordering the Atlantic Ocean, between Suriname and Venezuela, the tiny nation of Guyana has only about 770,000 people, many of them impoverished. Mining and agriculture are their mainstays.

Originally a Dutch colony in the 17th century, in 1815 Guyana became a British possession, achieving independence from the UK in 1966. Since then it has been ruled mostly by socialist-oriented governments. The current president, Bharrat Jagdeo, was elected in 2001 and again in 2006.

Last week, reports the BBC, president Jagdeo appealed to Western nations to do more to combat money laundering -- and to clean up their own houses. In so doing he underscored, as we often have, the double standard the U.S. and U.K. practice when it comes to demands for others to combat money laundering.

Jagdeo rightly said the major nations have failed to sufficiently address the problem in their own jurisdictions, while pressing nations in the Caribbean and elsewhere to enact complicated and costly laws and regulations.

He flatly said Guyana won't continue to enact laws that make the financial services sector of the Caribbean unattractive. He told an annual meeting of the Association of Caribbean Indigenous Banks that, of course, Caribbean states should make sure that they don't allow movement of illegal money across their jurisdictions.

Financial Suicide

But he warned against these countries legislating themselves out of competitiveness and out of business. The Guyanese leader also said Caribbean nations should not put the kinds of burdens on their banking systems that other countries don't impose on themselves.

"The instruments we fashion must not create undue burden for different sectors of our economy, just to satisfy some notion of probity that even the countries that recommend the probity don't practice themselves," Jagdeo said.

He accused countries like the United States, the U.K. and Luxembourg of having what he called "tremendous double standards". "We saw it with the OECD harmful taxation issue where jurisdictions like Luxembourg and others in Europe were still practicing imprudent lending, but they were not on the OECD blacklist. But many Caribbean jurisdictions were placed there" he told the Caribbean bankers.

Bharrat Jagdeo also accurately described the U.S. as a major center for money laundering due to the demand for illegal drugs there. And he said a lot of "hot money" was circulating in London from tax evasion originating in Britain.

Reasonable Defiance

Guyana thus joins other nations, including Panama, Monaco, Andorra, and Belize, that have refused to go along with hypocritical demands by the U.S. This theme of reasonable defiance simply tells the major nations to clean up their own acts and create a "level playing field" where nations big and small are all treated equally.

But don't hold your breath that will happen any time soon.

* Find out more about offshore tax havens, anti-money laundering, real financial privacy in places where you're the foreigner - and you may be able to reap the foreigner's tax benefits. Click here for some ideas on where to look. 

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/

Air Andorra

The Principality of Andorra lies in a secluded valley between France and Spain, high in the Pyrenees, one of Europe's most impressive mountain ranges.

Since 1993 an independent parliamentary democracy, this little known tax haven with strict banking secrecy until recently was a secluded medieval principality ruled jointly by the president of France and a Spanish Catholic bishop. For a few in the know, this picturesque country, almost forgotten by the world, offers affordable, crime free and tax-free living.

Until now Andorra, an accident of geography, has been hours away by auto from the nearest airports in Barcelona, Spain or Toulouse, France. Much of the year the skiing is great, but roads might be snow covered. But this week the Andorran government announced plans for a new airport just fifteen minutes from the border with Spain that could boost the number of ski and other tourists. It also may very well increase the number of resident foreigners seeking tax freedom and financial privacy.

Andorra's lone airport is to be located in Seu d'Urgell, with first flights anticipated in 2010 or 2011. With a runway of 4,500 feet, not long enough for some medium range aircraft, most commercial air planes using the airport will be 60 to 80 seaters, plus private jets much favored by the wealthy who may now consider Andorra as a viable and more accessible tax haven.

Andorra has been transformed in the past 40 years from a poor European country with no real economy to a vibrant independent state, sought after by the wealthy for her tax haven status, and skiers for ski runs that match the best in Europe for facilities and ski holidays infrastructure.

Andorra, and the more famous Principality of Monaco, are Europe's leading tax havens, with residents enjoying the benefit of no income tax. Property prices in Andorra are less than a third of the price of Monaco's. Indeed Andorra is a tax haven -- no income, capital gains or inheritance taxes. No sales taxes or customs duties. There is a small  local residence tax charged in most "parishes," as the local government unit is called.

And perhaps soon we may be seeing the logo of "Air Andorra".

P.S. Are you fed up with how the U.S. penalizes you for working hard and making a larger income? Ready to seek your fortunes elsewhere? Click here for some more accommodating locations offshore.

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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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.

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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 one can even, if one jeers loudly enough, send some worn out and useless phrase into the dustbin, where it belongs."

I raise this question because in the last few days I noticed two blatant examples of the abuse and/or distortion of the phrase "tax haven."

Example 1:  Speaking to a group of U.S. congresspersons (PC) and foreign leaders from Caribbean tax haven nations, the Premier of the British overseas territory of Bermuda, Dr. E.F. Brown MP, said that his government monitors "legislation and congressional musings on what some of your colleagues refer to as 'offshore tax havens' with great interest and we respect your legislature's aims in protecting revenue for American taxpayers."

No doubt he was referring to the blatantly anti-tax haven bills introduced by U.S. Senators Levin (D-MI), Dorgan (D-ND) and Obama (D-ILL). These ugly legislative attacks on Americans' right to invest and do business freely in other nations include the creation of blacklists of many leading nations simply because they honor financial privacy and refuse to share private information with the IRS. Bermuda's Dr. Brown then baldly added: "Our position when lobbying on Capital Hill is frank and forthright. We are not a tax haven and not an environment of corporate inversions designed to allow any evasion of taxes. [emphasis added]. Ours is an Island of sound, AA-rated practices and we deliver a product attractive to companies who otherwise would have significant liabilities were they elsewhere."

He then went on to  note that since Hurricane Katrina and the 9-11 terror attacks "...almost $25 billion in claims have been delivered from Bermuda to American policy holders. Perhaps even more impressive, $100 billion dollars of U.S. capital is invested in Bermuda; the overwhelming majority of that money is a result of the insurance and re-insurance industry."

Who does the Premier think he is kidding?

The only reason all those billion dollar insurance and re-insurance companies are clustered on the pink sands of Bermuda is that the island is indeed a major tax haven imposing little or no taxes on foreign owned companies. Apparently the Premier is afraid to speak the truth with words that are not PC.

Example 2:  Democratic presidential candidate Barack Obama on Tuesday proposed what he claims would be a tax cut of more than $80 billion for low- and middle income workers and retirees funded by higher taxes on investors and some businesses. Senator Obama said he would "penalize companies and individuals" who do business in such "tax haven" countries as Andorra and Liechtenstein that do not follow international standard