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THE GREAT EXODUS
.About 10 years ago, a man by the name of Roger Gallo wrote a book titled - Escape From America. Roger, thinking that he locked onto something new and visionary, he went to all the major US publishers to see if they would be interested to print and distribute his book. They were not, but that did not stop him. They probably thought - Who is this lunatic? Escape from America - Who would want to escape from America? The answer is a large number of people, in fact more than you could ever imagine. So, the first question you might ask yourself is who is doing such a thing and why? Who is participating in this great exodus from the high tax welfare state countries and where are they going? Where could possibly be better? . First and foremost, when you hear the term expatriate, offshore banking, tax exile, offshore trusts and a number of other things - what comes to mind? Probably what you have been lead to believe by the much of mainstream media and rumors as well. Which is to say, you probably think all of these subjects involve very wealthy people trying to avoid or escape taxes. Or you may think, such things involve criminals, drug dealers, and those that are doing something illegal. Go on, admit it - that is what you were told or taught to believe. However, the truth is quite different. . Let us start then with this first topic right from the start - taxes. It is true that someone might be able to reduce or eliminate income, inheritance and other kinds of taxes by living in another country? Yes, but that is only a small part of the larger puzzle. Meaning, there any many, many other issues and motivations, which we will explore shortly. Taxes might be the stated motivation for some, but taxes alone are not always enough to push someone to relocate. And not only the idea of relocation to another state or province - but, rather relocate to another country, with possibly a different language or culture. . To be sure however, taxes are a very visible and important issue. If you think about it, of all the expenses or deductions you have against your income (rent, mortgage payment, car payment, etc.) income and social welfare tax (FICA or social security for Americans) is the single largest deduction from your income. What if you could reduce it or even eliminate it? How much more disposable income would you have to live on? It is curious to note that under rule by monarchs in Europe prior to 1917, the average tax rate was less than 10 percent. When the income tax was first introduced in 1913 in the United States, the rate was 7 percent. So, what happened? How is it possible that some governments can provide the services that they are mandated to provide with taking so little, while others claim they need to take 50 percent or more? Part of the answer has to do with the great welfare state experiment put into place after 1930, and part of the answer has to do with the nature of public officials in a democracy as well. Which is to say, regarding the latter, the nature of politicians in a democracy is to spend other peoples money without any repercussion. Citizens of a democracy are lead to believe they have a voice or some control in that they can vote out a politician at the next election, but the reality is the politician (once in office) can run amok unchecked. The financial damage is done, left to the next group coming in to clean up or the taxpayer to pay for later on. If you take a look at government spending in the so-called wealthy, industrialized social welfare governments of the twentieth century, you will find ever-increasing expenditures over the years (as a percentage of the nations gross national product) and ever increasing government deficits (debt, which the taxpayers some day must pay for). You cannot live on borrowed money forever and you cannot continue to take money away from the productive citizens of society and simply give it away to someone else (presumably much less productive) without a price to pay (socially and economically). . Many middle class people in these highly taxed welfare state democracies already are paying a hefty price - in terms of the ability to maintain the same middle class quality of life their parents were able to do before. One very blatant example of this is the fact that a two-income household is required today (in the so-called modern industrialized nations) in order to provide the same lifestyle that only one income could provide forty years ago. One of the reasons for this is that real wages have been stagnant, and in some cases have declined, over the past forty years, where as inflation has consistently eroded the purchasing power of money over time (and salaries have not gone up in tandem). Why? One culprit that has accelerated the devaluation of money has been the removal of the gold standard after 1970, and the resultant true inflation of the money supply (devaluation of the US Dollar), which has not been correctly stated or reported in the selected government inflation figures. Another reason is the inequality in taxation rates, whereby the middle class have borne the largest burden, both for income taxes and payroll taxes (contributions to social security and other welfare schemes). . It sounds incredible, but it happens to be true. Meaning, many people think or have been told that expatriates or tax exiles are all very wealthy people who might be interested in leaving for greener pastures. Greener pastures? They have it pretty good right where they are. For example, in the case of the US, did you know that the super wealthy earn most of their accumulated wealth from capital gains and not salaried income? This means they (the very, very wealthy) pay only 15 percent marginal tax rates on this kind of earnings, where as most middle class citizens who rely on salaried income principally might pay about 45 percent on more on combined federal, state and payroll (social security) as a marginal tax rate (often enough, much higher). In Europe, the situation is in fact even worse. . In terms of social security payroll taxes in the US, Social security deductions are applied to salaried income up to US$87,000 per year, and at a top rate right now of 6.2 percent. This means if you are unfortunate enough to earn US$87,000 or less, you are paying a much higher proportion of your income to welfare contributions than someone earning more. Why? This is because salaried income above US$87,000 is not taxed for these types of payroll taxes (social security contributions). So as a result, so as a percentage of income being paid in, someone earning US$250,000 per year in salary is only paying 2 percent (of gross salaried income) into the social security system - where as someone earning US$85,000 per year is paying 6 percent of income. . This might all sound like some sort of left wing rhetoric designed to complain about the rich versus poor, but it is not meant to be. It is however meant to clearly highlight that it is indeed the middle class that have been hurt the most over the last forty years and WHY this is the economic group that needs to do something in order to survive. The super wealthy in fact, do have an average lower tax burden (as a percentage of earnings or income), and the poor pay almost nothing (or certainly much less than the middle class) and do get a tremendous amount of free benefits as well. So now you know. The people that are leaving the US and other so-called wealthy industrialized nations are the middle class, and small business owners rather than the mega wealthy. Also, it is not about taxes directly. Which is to say, higher and higher tax rates is one of the symptoms and not the actual disease. The disease is the wasteful government expenditures, outrageous accumulated debt, and bankrupt social welfare programs, which need to be funded somehow. The disease is also the reduced quality of life, reduction in true freedom and social ills that have come about from many of the policies and agendas put into place over the last half-century. . So, the questions remain - When will it end? How much more can the populace be squeezed to pay for it all? Are things being managed responsibly or will it get even worse? Is it too late? While it can often be difficult to predict the future, certainly one can surmise what the potential future direction might be - and for many, it does not look encouraging. In other words, a large ship in motion (even after the engine has been turned off) will continue to drift for some time in the direction it is pointed. You may not know exactly where it will end up, but based on the direction it is going in, you have a pretty good idea, more or less. This is the overall concern for many middle class people living in such environments and why for many, the goal is self-preservation. . . TO LEAVE OR NOT TO
LEAVE - THAT IS THE QUESTION
.For many people, the idea of leaving or expatriating from the country they are in at the moment seems unthinkable. But in part it also depends upon who you are and how connected you are to the current social welfare system, which encompasses a large number of things in general. If you are getting a monthly government check, chances are you do not want to give that up. If you are living month to month (even with a comfortable salary or income), with no savings, no equity - then equally you will find it difficult to extricate yourself. However, this is purely an economic reason, as to why or why not you may be able to leave financially (there are other issues as well). Those people with some assets and some savings can of course easily buy a new home or luxury apartment for cash elsewhere and probably have enough money left over to life off banking or investment interest (which would be almost impossible in North America or Europe these days). How much is enough? Well, if you do have liquid assets of about US$200,000 or more (or have some fixed income in excess of US$2,000 per month from pension, etc, coming in) - you can realistically either retire, or in the least have enough of a base income coming in to pay monthly expenses from interest income (in the case of relocating to a number of different countries). However, this is all part of the problem to be aware of as well in terms of those that would like to keep you against your will. . Meaning, those people that are so intertwined or tied into the social welfare state system, or that are so broke that they cannot leave - develop a subsequent jealousy and loathing for someone that can or does. Of course this is not manifested directly as jealously or loathing, but rather it is displayed as an attack on the so-called moral and social responsibilities of such persons (or the supposed lack of moral and social responsibility). This is why you hear such terms as tax cheat or some similar negative phrase created to describe such a person. In other words, the idea has been to demonize such persons as being anti-social and anti-nationalistic. We are told then by the media and government functionaries that such person are almost tantamount to being criminal simply because they have decided to leave and renounce government and or national affiliation. We are lead to believe that patriotism is intertwined somehow with the collective socialist welfare state, and that we are not good citizens if we disagree or are even disgusted with how things have turned out after 50 years of such a direction. . But how is it so that a person that has legally earned an income or has accumulated wealth in accordance with local laws at the time, and that such a person has paid whatever share of taxes they were supposed to pay up until that point or day they decide to leave - be described as a cheat or a criminal? If I pay my long distance telephone bill each and every month to ATT, and then decide to switch over to Sprint from today going forward, am I cheating ATT somehow? All I am doing is deciding to switch from one affiliation to another, presumably because there is some better benefit for me to do so (better service, lower costs, more options, etc.). Do I have some moral or other kind of obligation to continue supporting ATT financially if they have let me down somehow? It is the very same with countries, citizenships and where you decide to live. Are you somehow morally or ethically liable to stay and participate in a system that might be detrimental to you long-term simply because you had the luck (or misfortune) of being born there? No one questions the motivation of someone wishing to leave a nation with communism and a totalitarian government in place. Yet, when someone wishes to get him or herself away from a democratic socialist environment, they are labeled as malcontents, crazy or even worse. . Much of this is part and parcel to the psychology at work, or maybe even better stated - a form of brain washing. Meaning, there are many middle class people that can financially relocate, but what is often holding them back is themselves. Or, it could be the case that you are contemplating the idea, but find nothing but criticism and negativity from other people. In this regard, it is very interesting to note this idea of nationalism or patriotism has been a very useful psychological control tool for many governments. Prior to the American and French revolutions, people would move about at will - without passports or checks on movement. In other words, even though someone was born and raised in France, or Italy or where ever - such persons of course identified themselves as coming from a particular place, but they did not have any mental hang-ups about moving and living somewhere else. And in part, prior to democratic republicanism, rulers were often foreign and changed so much, that people thought of themselves are being part of a more open and fluid polyglot society than they do today. One major change brought about by democratic republicanism has been nationalistic rhetoric and the idea that you are a member (and confined to the borders) of a particular nation. With that we now have strict border controls, travel documents and checks on movement of the citizenry in and out. What is the point of bringing this idea up and what does it have to do with expatriation? . Well, today we live in a world where the local national flag is used as more than just a symbol to identify a particular country or territory. In is used as a psychological tool designed to enforce and cement the idea of separation - us versus them. It also is used as a tool designed to convince citizens that they are part of a greater good that they are responsible to somehow (in terms of the nation state they live in). Stated another way, an emotional argument is created in that we are all a group of worker bees existing only to toil and benefit the so-called greater society (and government that administrates it). But are we really? If you were born in a particular country and the rulers of that country corrupt or abusive in any way, does this mean you are bound to stay there and take it? The laws of nature and the very ideals of democracy and freedom would tell us that no, we are not. Yet at the same time, ironically it would seem that the idea applies to everyone and everywhere else, at least in the minds of the leaders of countries that expose such thinking. Meaning, using the US as an example, it is thought to be natural and logical that citizens of another country would want to immigrate to the United States - but unthinkable that anyone in the United States would want to leave. How can this be? Such a person must be anti-social, anti-democratic and just plain insane. If not this, then they must be radical lunatics that wish to shirk the so-called social responsibility (read this to mean financial welfare payments) that they supposedly have for eternity (till death do us part, and even then there are estate plus inheritance taxes). . In addition, in the case of Americans especially (who certainly do not travel internationally as much as their European counterparts) - they are taught and lead to believe that the rest of the world is corrupt, evil, impoverished, and without basic services considered standard or expected in a civilized nation. This of course is not true and could not be farther from the truth, yet many Americans still believe it - because they are taught to believe it. Think about the kinds of news stories and information you are fed. Mostly, when it comes to other countries and international topics, in the US particularly, you are lead to believe the rest of the world is suffering economically, socially or otherwise - or that is usually the slant. The spin machine or propaganda machine is on full blast- and you probably do not even know it. Maybe you do, and you do not care or maybe you feel helpless to bother with a counter argument. . Regardless, the idea is that you do have a choice. In addition, we all should expect the respect of others in terms of our and their choices as well. Meaning, if you understand everything you think there is to understand and have made a choice to stay where you are (regardless of where that is), then you should do so. But, if someone has made the decision to leave, then that should be respected as a basic human right as well. Despite being told otherwise, there is no irrevocable contract that binds us to any state, location or any form of government. The idea or nature of a contract is that two parties enter into it of their own free will and agreement. Does this not mean then that one or the two can voluntarily (and peacefully) exit the contract as well (assuming one does exist)? And using the basis of law, it is not true that one party can exit the contract when one of the two parties fails to hold up their end of the bargain? Certainly many would say that some governments have indeed failed in the so-called contract in terms of the modern social welfare state. Government managed pension and health care programs are bankrupt, and now they want more of taxpayer money to fix it. Public Debt has been piled on top of debt, and it is the local citizenry that has to pay for it some day in the future. Where is the accountability and responsibility? Is it only a one-way street in that one party (the person making payment or the taxpayer) has to blindly continue while the service provider can do whatever it wishes without compensation or repercussion? In private business, a customer can and will leave if the service provider drops the ball or is even negligent. Government is also a service provider and nothing more. It is not some mystical, magical entity but rather a provider of services in exchange for payment (taxes). . Roger Gallo identified this trend of people who have decided to switch governments or switch countries some time ago. In fact, he made the comment that in the case of the US that Americas best and brightest are leaving. But he was not talking about people like Bill Gates, George Soros or some other wealthy high profile person. These people have no reason to leave. They probably pay lower marginal tax rates than the average person and they are certainly plugged into the government spheres of influence as well. No, the person being discussed was or is the independent self motivated thinker that feels crushed and abused by a system that punishes hard work, productivity, innovation and self reliance - and rewards sloth, unproductiveness and parasitic behavior (people that might prefer to live off the hard work and earnings of others). We are of course talking about socialism. . Interestingly enough, those countries with socialism and a dictatorial government have failed already. Some have gone away altogether (Soviet Union) while others have moved so close to capitalism (China, Vietnam) that the founding revolutionaries probably would not recognize the place today. But what about the so-called free western democratic socialist countries? In reality, this term applies to what we have in North America and Europe at the moment. Does socialism some how work better under a democratic form of government than under a dictatorial regime? Considering the current crisis regarding the state of affairs with the government run pension and health care systems in the democratic nations we referenced - it would seem not. . WHY IS THE GRASS
GREENER ELSEWHERE?
.Is it true that the grass is greener in Panama, Ecuador, Brazil, Thailand and the Dominican Republic (just to name but a few)? Well, we could not necessarily say about the grass literally, but certainly the long-term prognosis would seem to be. Again, taxes are lower in many of these jurisdictions - but why? Taxes are not in and of themselves a problem, but rather it is a reflection or symptom of something else. Meaning, in many other countries, for a variety of reasons (some intentional, some not), a bloated government infrastructure and expensive social welfare scheme does not exist. Also, a more libertarian environment does exist (in many cases by accident rather than design), whereby the local culture is such that people are still responsible for themselves (responsibility has not been socialized) and government handouts almost non-existent (as least in comparison or to the extent in Europe and North America). This is a very important point, because even when it comes down to the law and the local society, in many other nations, citizens are still responsible for themselves. Which is to say, responsibility has NOT been socialized. The government is not to blame for everything (and is not responsible to act as a nanny, with the charge of taking care of every one and every aspect of life via regulation) and others are not always to blame for certain events either. . So, why is it that such middle class people from the supposedly wealthier industrialized nations are attracted away to these other places? In part, because like attracts like. Meaning, expatriates are often enough Libertarians by nature. They feel very comfortable with less government regulation, not more. They do not want or expect any handouts from government, yet they do not want government to pick their pockets either as the counter balance to this idea. They believe in private property rights. They believe in personal responsibility. They believe in short, in liberty. An idea often enough expressed in words in many places, but not practiced. . So, in summary, is the grass greener elsewhere? It certainly can be, and lower cost of living, lower housing costs and lower taxes are only a part of the appeal. Liberty, freedom and escape from socialism yet another benefit that can be found in some of the least expected places as well. . . THE NEW WORLD ORDER OF 2005:
.THE SOVEREIGN INDIVIDUAL IN CONFLICT WITH THE WELFARE STATE We have heard this new world order thing for some time now. It has been used in conjunction with a large number of topics: globalization, the fight against terrorism, multinational trade agreements, etc., etc. However, I will give you a few more topics never mentioned, which will be the basis of some ideas in this article. . THE SOVEREIGN INDIVIDUAL
.What is a sovereign individual? Some might say it is a person that is a citizen of the world. In other words, a man or woman that defines him or herself as being truly free to live and work where and how he or she wishes. This idea probably sounds odd to anyone indoctrinated with the idea that a nation or country defines you rather than the other way around. Meaning, we are often taught to believe that love it or hate it, we are British or Canadian or Mexican or German, American, Japanese, what ever. But the truth is, especially when you consider people currently living in any part of North or South America (what was the so-called new world 500 years ago) or Australia - your grand-parents, great-grand-parents, or someone before them, most certainly came from someplace else. So it is safe to say that somewhere in your family tree, some previous person decided to live somewhere else to seek a better life (whatever that might have entailed for them personally). It could have been to escape war, religious persecution, famine, a poor economy, lack of opportunity and a whole list of other possibilities. In short, someone in your family lineage probably thought of them-selves as a sovereign individual and acted upon it. . In other words, they were motivated to go where they wished, to affiliate with whatever nation or land more suited to them-selves (politically or otherwise), or that offered opportunities, which did not exist in their previous home country at the time. But let us now flash forward to the present time. Let us imagine that there are people today who do not want to live someplace else to seek fortune necessarily, or escape war, famine or the like - but rather to hold onto what they already have. In this regard, perhaps we can say, to escape another form of government persecution, albeit different from before. This baits the question: What has changed in the last 100 years or so? Is the sovereign individual something new, or just a new word for someone that existed before? If so, who are the new sovereign individuals and how are they different from their predecessors? . Immigration of poor people to wealthy countries is nothing new. Urban dwellers migrating to the wealthy and opportunity filled city is nothing new either, on a local or domestic scale. Our article is about something else. Meaning, what is a fairly new idea (or twist to a very old idea) however, are the middle-classes, who are motivated to migrate some place less taxing, less costly and even less restrictive. We have seen this before to some extent on a local level. Which is to say, city dwellers or urbanites wishing to move to the suburbs (or even more rural areas) for a slower and less expensive lifestyle. Now it has gone international. This is a growing and very real trend, born out of necessity, born out of survival to escape the out of control welfare state. . TECHNOLOGY THAT CUTS BOTH WAYS
.One very important change over the past 100 years has been new technologies, but it does truly cut both ways, which is both the benefit and the problem. The famous book 1984 by George Orwell warned of a government in an industrialized nation that turned to technology as a way to control and monitor the masses and to maintain its dictatorial form of government. James Dale Davidson and Lord William Rees-Mogg who authored the more recent book titled, The Sovereign Individual, argues that it is technology that is freeing citizens, allowing them to live and work anywhere because of it (technology). Perhaps it is safe to say, a bit of both these ideas have come true. . For sure it is very possible for a single person with a relatively small investment (the purchase of a computer and internet access) to invest or do business anywhere in the world. This being the case, the argument is, as long as you have your computer and reliable telephone access, why not live in Tahiti (for example) while you work on architectural blueprints for a client in Belgium? Why not live in the Caribbean while you offer your skills as a medical consultant via teleconference to a hospital in Canada? In other words, a large number of work or job functions can be accomplished with the employee living where he or she wants to be, with the employer or client possibly a continent away. Obviously there are some limitations as to who can do this or better said, the types of jobs (or work) that can be transported in this manner. There will always be jobs that cannot be expatriated away and of course the people that continue to do them. However, it is very interesting to note the differences in salary earnings between these two classes (or more correctly the amount of disposable income each one has after the application of taxes) and what would seem to be the signs of strain between these two groups - those that CAN leave, and those that cannot. In other words, the people that can go and gain the benefits of going, and those that must stay because they do not have the financial resources or education to do something different. . Again, as we already said, technology does cut both ways. The same technology that allows the truly free and independent individual to live where ever in the world that they wish also is the same that allows government to keep tighter tabs on its citizenry. Perhaps in some cases, to even stop them from leaving (or stop their money from leaving), if you can believe it. So perhaps we can say then that government, in trying to maintain its current power and income stream (from the middle class paying taxes), by using technology in many of the ways George Orwell predicted, although of course a more watered down version of it. Of course the welfare state has never considered spending less nor ever considered to resolve the reason why so many bright, productive and self-sufficient citizens are leaving in the first place. On the contrary, they are becoming more repressive rather than more responsive to the problems and needs of their own productive citizens. This is one of the major problems at hand today for the sovereign or free individuals. . . GOVERNMENT AND CLASS WARFARE
.Class warfare: an old catch phrase that probably invokes images of rich versus poor, no? Maybe even to an extreme, with images of Marie Antoinette telling the poor to go eat cake if they cannot afford or find any bread. But that was then, and this is now. Which is to say, there is a new kind of class warfare, but it does not involve the super wealthy versus the very poor - but rather the middle-class versus everyone else. . Why the middle class? Well, for starters, they always pay most of the bills, or more correctly most of the taxes. The poor pay nothing and get quite a bit in the modern democratic social welfare state. The wealthy are, well, they are just plain wealthy. I mean, who cares if you have 20 Million Dollars and the government takes 50 per-cent of it. You are still left with 10 Million Dollars, which is an amount of money you can live on, and very well I might add. If you have 50 Thousand Dollars and the government takes half, well, it may mean the difference between sending your kids to university - or not. It may mean the difference of paying off your mortgage so you can retire debt free - or not. . Granted, in our example, 10 Million Dollars is a heck of a lot more than 25 Thousand, but that is not real difference. The real difference is how you are affected afterwards as a result. Stated another way, the wealthy citizen will complain and certainly will not be happy. In addition, it is also true that the reality is, this top 1 percent of the wealthy indeed make up about 25 to 30 percent of government revenue from income tax. However, even though these persons are paying a large share, it is doubtful the event will prevent him (or her) from sending their children onto higher education, or buying a new car, or whatever else. For the middle class, it hurts a whole lot more because of the changes in plans or lifestyle that comes about as a result. Stated another way, the middle class are now close to paying the very same marginal tax rates as the super wealthy, but without the additional resources or other assets to back them up. . So, what is the point? Well, in our new future society, some of the wealthy might fly the coop, but chances are the vast majority may not unless it truly starts to crimp their lifestyle (or they already have high priced lawyers, accountants, financial planners and so on to assist with some solutions, if they have not already). We see this to some extent in the Scandinavian countries, where even though the very wealthy are taxed at rates up to 70 percent, most continue to stay and pay out of nationalism, out of believe that they are getting their monies worth, or what ever else the reason. Such a concept of participating in such a way for the supposed better good of society is indoctrinated in the school systems, etc., so the decision is an emotional one. However, there are some in these countries that are indeed fed up and see no logic in supporting non-productive members of society, and especially social welfare payments to an increasing amount of new immigrants as well. . What will the likely long-term scenario look like? The poor will do nothing but clamor for more of the social services that feel they are entitled to by society - or more correctly by the government. The middle class however will either fight for survival or face some severe reduction in lifestyle if they do not (if they stay and pay in other words). This is the real conflict. The increased squeeze on the middle class and what they will end up doing as a result. Many have decided to go, and it would seem the government has taken notice (increased efforts on tax collection, special new taxes and restrictions on foreign transfers of funds, etc.). Which is to say, that in part due to inflation (and taxation rates that never have been adjusted for inflation) the middle class are now paying onerous tax rates simply because their income has crept up, even though that very same supposed high income just about allows them to survive. . All in all, one cannot blame them from deciding to leave. Consider that in the US, the median household income in 1958 was about US$18,000. In 2005, AFTER you adjust for inflation and taxes, the median household income is also about US$18,000 in terms of purchasing power, etc. Ever ask yourself why it took only one income to maintain a comfortable middle class lifestyle during the year 1950 yet some fifty years later a two-income household is a necessity (and even with that many feel like they are just getting by)? If you feel that even though you earn more, that in reality you have less - you are not crazy and are not alone. Inflation over time is one culprit to blame, increased taxation in the social welfare state yet another. . In summary, we see the middle-class as being the primary economic group inside the so-called high tax or industrialized nations that are migrating to other lower tax and lower cost jurisdictions (such as Ecuador, Dominican Republic, Thailand, Brazil, etc.) simply because this is the group being hurt the most. In addition we also see increased aggression on the part of government to restrict this flight of both capital and citizens. Obviously as government starts to see a reduction in tax revenue income (corporations already have moved manufacturing away and also enjoy some of the lowest tax payments in history due to tax loop holes that allow it, so their overall tax contribution has gone down, not up) and as more and more opt out, this places even more pressure on government to maintain the social welfare state with even greater difficulty and less resources. Again, those left behind will obviously complain as well, claiming that the expatriate migrants are unpatriotic and ungrateful (plus such critics will probably see their own taxation burdens increase to make up for this shortfall, not helping matters). All in all, a vicious cycle of reduced government social welfare benefits for whom ever remains plus even higher taxation - resulting in perhaps an even increased exodus as well. . THE ROADMAP OUT TO FREEDOM
.In the book we mentioned earlier, THE SOVEREIGN INDIVIDUAL, the authors claim that technology will set the masses free and that government will change a great deal in as much the current state of politics as we know it. The argument is that as citizens start to look for what ever new country that will give them the best deal, that such competition will eventually force a change into smaller, more regionalized government, catering to rather than terrorizing its members (its citizens) least they should loose them to another country. All well and good, but not something that will take place overnight, if at all. In addition, we do not believe there will be a massive number of these new enclaves for the wealthy that is insinuated (the book discusses the idea of new special tax free zones and tax free communities popping up for the super wealthy). On the contrary, those very traditional tax havens discussed are coming under fire for this very reason. In other words, they asked the famous banker robber, Willy Sutton, why he robbed banks. He responded - because that is where the money is. And so it goes with tax havens such as the Bahamas, St. Vincent and a whole slew of others that have felt the pressures of the high tax industrialized nations. Some have rebelled to some extent, such as Panama and Nevis, because they felt these efforts as an affront to their own sovereignty, but many others have capitulated (and no longer offer the protection, privacy and security they once did). So, in short, we do not see the expatriation movement being spear headed by the very wealthy nor do we see the future countries receiving such persons as being the traditional tax havens either. After all, what is the financial definition of whom is wealthy these days really? Most homes in US suburban enclaves outside of cities like Chicago, Boston, and Detroit cost at least US$500,000 or more. Add on pension account savings and other investments and presto - you have someone that on paper is supposedly worth close to one million dollars, but in reality is someone defined as living a middle class or upper middle class lifestyle in terms of how they are living or kind of lifestyle. Wealthy in the industrialized nations therefore is NOT someone with US$1 Million Dollars anymore. It is someone with US$20 Million. Someone with between $200,000 Dollars and 1 Million of net worth these days is middle class, even thought the US Government classifies any liquid net worth in excess of US$600,000 as being super wealthy (and subject to special inheritance taxes, expatriation taxes, etc.,). . So who really can and will benefit from relocation? Roughly anyone that can be called middle class in most industrialized nations, or those that have about US$200,000 or more in assets (if you count home equity, investments, etc.) This applies to a very large segment of the population, and is a social group that is really just getting by or struggling to live comfortably. Not super wealthy, not someone jetting off to exotic locations every month, not someone with a personal trainer or personal chef, just the average middle income family trying to have the things they strive for (a safe and comfortable home, the ability to afford university education for children, etc.). . In any event, in terms of the existing democratic welfare states in Europe and North America, no existing political system in history has ever gone down without putting up a fight. The people currently in power have a lot to loose. Why should they sit back and allow themselves to give up power and prestige so easily? The authors of the Sovereign Individual do acknowledge a crackdown before any crackup, but it is difficult to imagine any sort of smooth transition if in fact this new user-friendly government ever does come about. . So, what will the resulting new world order be like? It can be hard to say, but in the least, or in the meantime, many of the conventional politics and systems will remain in place for some time going forward. What that means is one must work within what exists today as the reality and not what one thinks or hopes will be the case in the future. This being the premise, identity with one or more nations still is the order of the day (and having relevant identification, such as a passport, etc. equally important to travel or conduct business). As such, if you want to opt of the country and its system where you currently are living, you still have to go somewhere. This means finding a new place to live and the relating procedures to obtain citizenship someplace else. . However that is not so daunting a task as it might sound. There are a number of countries that do not tax its citizens for local and or foreign source income, inheritance, or even have the outrageous tax rates for whatever income is taxed. With that said, it is very interesting to note that these countries we speak of are not considered to be traditional tax haves, or are not listed on the special OCED so-called bad country list. In addition, passive income, such as bank account interest may be tax-free as well. So, there are places to go whereby cost of living is lower, taxation less burdensome and overall higher degrees of personal freedom. Where are these places? . Believe it or not, usually the nations that are called emerging markets, or perhaps even third world by some. This is the real irony of it all. Which is to say, locations that are often presented as backwards, dangerous or extremely poor by the industrialized nations. However, these are the countries getting all the transplanted jobs (because of lower wages), and that have some of the fastest growing economies as well. In addition, these are the same places with a growing middle class that now has many of the products, services and conveniences that were not available in the past, but are today. In short, some of our clients have made the comment that it would seem that many of the industrialized or so-called first world nations are going backwards and the third world countries are starting to look more and more like the wealthier nations those clients originally came from (although in the good ways, the way things used to be about 50 years ago, and not the negative situation of present). This is a process getting to that point to be sure, but a very truthful statement or observation just the same. . THE NEW - NEW WORLD
.The question of course then is - where are these new countries? Well, they can be clearly defined by a number of parameters. Taking a cue from the comments mentioned in the Sovereign Individual, it seems very apparent to us that the so-called customer friendly governments (customer friendly for the wealthier segments of society of course) already exist (as opposed to the believe that they will come into existence for the benefit of the wealthy escaping North America and Europe). Specifically, many of the nations in Latin America and elsewhere whereby you have a small wealthy social group that controls the majority of wealth and business inside these respective countries. Meaning, such countries that have very little, if any, sort of benefits or wealth transfer programs in place by the government (and such programs will not be instituted either). In other words, you already have a group, and a very powerful group I might add, that are treated as customers rather than property by the government (and these people want to keep it that way). This is a good thing in the sense that it has and still continues to keep the government in check (as these people never had and do not want a repressive social welfare tax system in place). It probably is not a good thing, in that perhaps many of these people can and often do abuse their privilege in regards to business transactions (making it very difficult for foreign firms to invade their turf) or in other ways as well (maybe getting away with things the average person would not). However, it is not a perfect world and chances are, you will not be doing something to threaten these people anyway (meaning you are probably not planning on trying to move in to take away their local monopoly for petroleum distribution, pharmaceutical manufacture, or whatever else). In summary, regarding these other countries and with this particular theme, the concept that it is a good idea for the government to act as a modern day Robin Hood, taking money from the productive or those that have it, and give it to those that do not is clearly a European and North American phenomenon. Not only that, this great social experiment has failed miserably, just as full blown socialism managed by a dictatorial government, has failed as well (Soviet Union, Vietnam, and China have all gone capitalist). . In regards to many of such countries, the blatant comment I often hears is - Oh, there is such poverty there or Oh, all the poor people are exploited with lower wages (meaning lower wages than what are paid for the same work in the industrialized countries). However, it is interesting to note that after 50 or more years of socialism elsewhere, you still have poverty (in 2005, today, it has been estimated that 25 percent of the US working population are still classified as working poor - never mind the roughly 15 percent that are indeed truly poor) and not only that, you have a large segment of society that believes they are entitled to something for nothing. When I make this comment, I am not necessarily speaking of people that are on the dole (as they say in Ireland or the UK) but rather workers as well that believe they are entitled to high wages for low skill or low knowledge level work, or people that wish to believe someone other than themselves is always to blame (frivolous lawsuits against supermarkets because someone slipped on a tomato or bumped into a display of canned peaches, etc., etc.). Sadly enough, this is what the welfare state has created. A nation of individuals indoctrinated with the belief that they are entitled simply because they exist - a mob if you will that is demanding nothing more than extortion, and a government in place to back them up. This is not the case, nor the belief, elsewhere in the world. Which is to say, government should exist to guarantee the smooth functioning of society (that also does include law, order, legitimate fairness, and so on), but what one defines are being fair or correct may certainly differ around the globe (and thank goodness for that). . So, who and where are these emerging markets with low costs for housing and labor, lower income and little or no government sponsored entitlements, and perhaps even low or no tax incentives for investment, business and or banking? They are all on the map and surprisingly enough they are NOT on the OECD tax haven hit list. Here is the list of the countries that fit at least some, if not all of the above criteria: Argentina, Bangladesh, Bolivia, Brazil, Dominican Republic, Cambodia, China, India, Mauritius, Panama, Paraguay, Peru, South Africa, Thailand, Uruguay, Vietnam and Venezuela. Obviously this is not a perfect list, which to say each country listed here may have some attractive attributes but none are of course perfect, as no country every can be. However, it probably will be the case that you can make up a list of what attributes are most important or attractive for you personally and then see which of these places scores highest on your personal criteria list. In addition, it could also be the case that you may choose to live in one, bank or invest in another and so on, electing to pick and choose the best benefits of each. There are some nations we have left off the list simply because while they might fit some of the ideals we discussed, at the same time they might have become too expensive in terms of cost of living in comparison with the others, or they simply might be too dangerous for a foreigner in general (civil war, kidnappings, or other kind of safety issues). . In short, you can truly elect to live, do business and associate with whatever country or jurisdiction you like. For many, this will be a new idea or new way of thinking. Some, for example, will have a difficult time with this concept as feelings of nationalism creeps in or maybe feelings of separation anxiety comes into play as well. But the truth of the matter is, we are all victims of accident in terms of where we are born and which political system we are born into, which is something we can change. The real question is - Are you happy and are you able to live the lifestyle you want where you are living right now? If you answer yes, then look no further and be content with the status quo. If not, you do have other options. . . Some Similar Articles Related to This One:
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