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Our on-line
newsletter bulletin now going on our fifth year!
Offering our clients and readers news items and headlines
often not covered by the mainstream media, articles of interest
regarding banking, economics, real estate, taxes, living or investing
abroad, plus much more. Finally, our very popular readers write
in section, with answers to some of the questions many of our readers
have - that no one else wants to answer truthfully, except us!
Want to See our Other Back Issues from 2002 - 2005?........Click Here
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Our January 15, 2006 Newsletter Edition
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IN THE NEWS:
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CREDIT OR CASH - By Christian E. Weller, Senior Economist, Center for American Progress - December 12, 2005
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On December 8, the Federal Reserve released a new report, The Flow of
Funds Accounts of the United States, a quarterly statistical depiction
of financial flows and holdings across the country. The report tells
the tale of two economies: one drowning in debt, the other overflowing
with so much cash that it doesn't know what to do with it.
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FOR FAMILIES
- Record debt. Household debt is at a record high (121.2 percent) as a
percentage of disposable income. This means that families are more
burdened by their debt than ever before. Record reductions in
home equity: Families have cashed out more home equity than ever
before, $113 billion in the third quarter alone. This means families
are financing more of their consumption by reducing their home equity-a
trend that is not sustainable without further wage growth.
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FOR COMPANIES:
Highest cash holdings in nearly 40 years. Corporate cash holdings
totaled 6.2 percent of their assets in the third quarter of 2005. Cash
holdings for the last four quarters are at their highest level since
1966. Less investment. Instead of using the additional resources
generated by high profits for productive investments, corporations are
using their money to spread the wealth to their shareholders. Typical
mechanisms are dividend payouts and share repurchases that help to
boost share prices. Fewer dividend payouts relative to corporate
profits have been largely compensated for by higher share repurchases.
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http://www.americanprogress.org/
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EDITORS NOTE:
This baits the question: Are US stocks going up because companies are
actually selling more of their products or services OR are stocks going
up because these companies have simply outsourced production to cheap
foreign labor markets and are using that increased profitability to buy
back shares (thus resulting in less public shares with a higher value
as a result)? What is the difference or point? If companies
are selling more stuff and are gaining more market share, this is an
indication of something positive going on at the company. If the
ONLY reason companies have higher profitability is because they have
cut labor costs, have fired US employees and replaced them with cheap
foreign workers, then in such a case, this is an indication of
something else (and basically a negative indicator or temporary shoring
up of the balance sheet, which is a very different
matter).
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SOROS PREDICTS US ECONOMY WILL SLIP INTO RECESSION IN 2007 - By John Burton in Singapore, January 10 2006
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George Soros, the US financier, yesterday predicted that the US economy
could suffer a recession in 2007 owing to falling housing prices as the
US tightens interest rates, with a reasonably significant chance that
the global economy could slow as a result. There was a risk that
the US Federal Reserve would raise interest rates more than necessary
to curb inflation, resulting in a hard landing for the US economy, Mr
Soros told a forum of the Singapore Institute of International Affairs.
He expected the federal fund rate to peak at 4.75 per cent, up from
4.25 per cent. A soft landing was threatened by a fall in US
housing prices and a declining dollar, Mr Soros said, If housing
continues to cool, then it could turn into a hard landing.
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http://news.ft.com/cms/s/e3fbc24a-817e-11da-8b55-0000779e2340.html
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THREAT ASSESSMENT CALLS MONEY LAUNDERING A MASSIVE CHALLENGE: High-Tech and Long-Standing Techniques Used to Move Money Illegally - By Jason Ryan, ABC News
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WASHINGTON, Jan. 11, 2006 -- Money laundering remains a massive and
evolving challenge for investigators, according to the federal
government's first-ever threat assessment of the problem. Even
getting a handle on the size of the money laundering threat and the
success of efforts to stop it has been difficult, the report
found. While law enforcement and investigators have made
considerable progress in recent years, money laundering is still a vast
enterprise made easier by computerized banking and global transactions.
With a few clicks of a mouse a drug dealer can wash his proceeds from
New York City through the Dominican Republic to an offshore account
unknown to investigators. Federal Reserve Governor Susan Bies said the
assessment gives banks a better idea of what types of threats are out
there. The volume of dirty money circulating through the United
States is undeniably vast and criminals are enjoying new advantages
with globalization and the advent of new financial services such as
stored value cards and online payment systems. While a great deal of
focus has been given to terrorist financing in recent years, the report
shows that only 1 percent of Suspicious Activity Reports filed by
financial institutions involved potential terrorist financing. Despite
this small number, law enforcement officials remain greatly concerned
about the nexus of criminal organized crime groups engaged in money
laundering and the possibility of financing terrorist operations.
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http://abcnews.go.com/US/story?id=1496387
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EDITORS NOTES:
Just ten years ago, most average Americans had no idea where the
Dominican Republic was located. If anyone did ever heard about
the country, the common consensus was that it is some backwater risky
third world place with no modern infrastructure, never mind a place to
consider with up to date banking facilities. Now, all of a
sudden, of all of the possible jurisdictions to mention as an example
for supposed money laundering activities, the author of the article
chooses the Dominican Republic for his article? Not only that, he
of course does not say this is the case as fact (that money laundering
in fact takes place in the Dominican Republic), but rather words it as
a supposition for his use of an example. Which is it? The
country is modern enough to have the capacity to handle modern banking
transactions - or it is a backwater banana republic with donkeys and
palm trees? Not only that, another exact quotation from the
article states: The volume of dirty money circulating through the
United States is undeniably vast. You got that right. There
is more money laundering activity going on inside the US, the land of
the supposed strictest, most secure banking system in the world, than
anywhere else. In addition, most of money laundering has been
done through real estate in the past (just as an FYI).
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More important though is this discussion of money laundering in
general. The claim from the article is that LESS than one percent
of all financial transactions in the US are subject to review for
POTENTIAL terrorist financing. I will go out on a limb and
suggest to you that the same statistics apply to so-called money
laundering from drug dealing also. So, one hundred people show up
at the bank at 10:00AM on Monday morning to do their banking.
Based on these statistics, 98 people are honest legitimate law-abiding
citizens and 2 out of the hundred might be, and I stress MIGHT BE
involved in something else. For this reason, the personal
liberty, the democratic freedoms and the privacy of 98 people has to be
thrown to the wind because of 2 people who might be involved in
terrorist financing or whatever. Give me a break. The claim
is that money laundering is a massive challenge. You want to know
why it is a massive challenge? Because the percentage of the population
potentially involved in this is so small and minute, it is equivalent
to sending a group of explorers from National Geographic to look for
Giraffes in Antarctica (a waste of money, time, and resources).
In my opinion, all of this is about further restricting the free flow
of capital, and an attempt to stop or hinder average middle class
citizens who wish to get themselves and their assets out. It
would seem that US corporations can do what ever they wish, relocate
jobs and operations abroad, generate and keep tax-free offshore profits
abroad - but different rules apply for the average private
citizen. Does that sound about right?
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I have predicted that you will soon find your bank refusing to complete
a wire transfer out of the country unless you can provide proof that
you are paying some kind of bill or business invoice, and or furnish
tax identification information for the recipient. Some of the
banks in Canada are already doing this. Why? Well, to stop
the drug dealers and financial supporters of Islamic fundamentalist
groups of course. Sending money to domestic radical groups that
incite violence towards public right to life clinics though will still
be permitted. Oh, and corporate bribing of politicians will still be
permitted also. I will make a prediction that anyone who does NOT
consider moving assets now while they still can, will be very sorry 5
years from now when it might be impossible or extremely difficult to do.
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AS BANK JOBS GO ABROAD, ARE RECORDS AT RISK?
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More U.S. Banking Jobs Have Moved Overseas, Raising Concerns About
Fraud and Stolen Records Office Work - By Patrik Jonsson -
Christian Science Monitor
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ATLANTA, Jan. 10, 2006 -- First, U.S. textile jobs were shipped to
Asia, then customer service call centers for U.S. companies cropped up
in Manila. Now the back office of the corner bank has been hauled to
Bombay and Bangalore, India. From SunTrust in Atlanta to Bank of
America in Charlotte, N.C., banks have hired overseas shops to stay
competitive, heighten efficiency and tap a steady supply of cheap
labor. But as more accounting and investment banking gets sent
overseas, Americans' bank accounts become increasingly susceptible to
theft and fraud, some experts say. Outside a Bank of America
branch in Atlanta, customer Pete Johnson says he's surprised to learn
that his bank has offshored some of its processing work. He's concerned
about an increased risk of fraud, and that workers a half a world away
may eye his personal information. It's an invasion of my privacy,
he says. Still, for now he's not moving his accounts elsewhere, he
says. Other top banks such as JPMorgan Chase and Wachovia are
also at the forefront of offshoring. Last month JPMorgan Chase
announced that it expects to double the number of Indian employees to
9,000 by next year. Currently, about 10 percent of employees of U.S.
banks work outside the country. This number is expected to rise to 20
percent -- or 2 million people -- by 2010, according to a recent
Deloitte & Touche study. The new frontier is back-office
processing done offshore, says Bob Olson, CEO of Dallas-based Carretek,
a contractor that runs back-office shops for banks in India.
Banks now also have the technological means and regulatory go-ahead
from the federal government to go offshore, says Olson, because of the
Banking Modernization Act of 1999.
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In 2004, U.S. banks attributed $19 billion in losses to fraud,
according to TowerGroup, a financial services research firm in Needham,
Mass. Some expect more red ink with offshoring. In April three
former employees of Mphasis, an outsourcing company, were arrested in
India for allegedly stealing $350,000 from several of CitiBank's U.S.
customers. They had allegedly tricked the customers into giving their
PIN numbers over the phone, and then transferred the money into their
own accounts.
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http://abcnews.go.com/Business/CSM/story?id=1475360
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EDITORS NOTES:
Lets get this straight now so we understand quite clearly.
Citibank and JP Morgan are allowed and seemingly encouraged to move
themselves offshore or outside of the US, but you as an individual
private citizen cannot or in the least are discouraged from doing
do? The US banking industry in 2004 alone had 19 Billion Dollars
in losses due to FRAUD by using domestic AMERICAN employees, and this
is the safest, most honest and secure banking industry in the
world? We are told that we must fight this terrible problem of so
many people laundering money, and the insinuation is that naughty
unscrupulous foreign bankers are partly to blame - yet the answer is to
now turn over US banking operations to some of these very same foreign
people living in so-called third world countries? Ladies and
Gentlemen, the hits just keep on coming. You got to love them
though. Personally I am waiting for a news report whereby the US
politicians start to tell us the moon in made out of Swiss cheese (and
Kraft Foods is funding a space shuttle mission). Want to have
some fun? Ask you Panamanian or Dominican Banker if they have any
intention of outsourcing bank operations to someone in another foreign
country (and in turn, putting your personal banking records in the
hands of an outsourced third party). Go on and see what they tell
you (just do not be surprised if they direct you to the nearest mental
health clinic).
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A thought just occurred to me as I am writing this. They set up
prisons in Guantanamo, Poland, Rumania and who knows where else BECAUSE
these properties are indeed outside of domestic oversight or control,
and of course domestic civil liberties do not apply in such a case
accordingly either (or so the legal argument would go). Which is
to say, no US laws are broken because such facilities are not on US
soil. I wonder if it would be easier then to simply review
banking records without court order (spy without any formal requests or
other so-called barriers) or without even the knowledge of the account
owner, and glean other kinds of personal information as well - in the
case when the operations center managing this information is located in
say India or another foreign country? I mean, you think you are
doing business with Citibank in New York and presumably whatever legal
safeguards might apply, but alas, we find out that because the
operations center is in Poland, Bangladesh or India, that well, you
know, US laws and regulations do not exactly apply there. If
something were to occur which violated your privacy or civil rights,
the US banks could then feign they have no knowledge and are not
responsible, placing the blame on the third party outsourcing company,
such as this Mphasis Do you still think it is a wise idea
to bank with a US owned banking entity, either domestically or
abroad? As it stands now, some US owned banks in other countries
have already starting notifying US tax authorities regarding accounts
owned by US citizens (in their respective foreign branches) even though
in the country where the account or branch is located - the interest
might be locally tax-free and or no reporting is done to the local
government. I suggest that you think about these and other
issues, as it is going to get worse. Forget about taxation issues
for just one moment, and consider your own right to privacy and
confidentiality.
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READERS WRITE IN:
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John - Here is a link from dr1.com - http://dr1.com/legal/migration/citizenship.shtml
It says that I can get citizenship in 6 months if I buy real
estate. Is this true? I just figured I would run that by
you.
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EDITORS REPLY:
There is more to what they are NOT telling you on this website, than
what they are. Meaning, in the past the government has offered
some concessions for people that invest or start a business or at
times, and this can include certain real estate purchases. In
fact, such faster track qualified investor status still exists.
However, what the website you mention does NOT tell you is that the
minimum required and documented investment is US$200,000 and in the
case of a business investment, it must be done via a locally
incorporated Dominican Company. In addition, this only allows for
a faster track to Permanent Residency status rather than any sort of
guarantee for Citizenship necessarily. Now, with that said, it is
very true that citizenship in the Dominican Republic is granted by
Presidential Decree, and the President has the authority to grant
citizenship at any time to anyone he chooses. Normally, this
would be done in the case of someone that demonstrated some note worthy
service to the country, or perhaps did something of value in terms of a
business project - with respect to a timeline faster than the normal
application process. Otherwise, the very normal and regular
naturalization application process that involves a number of
bureaucratic steps would apply. This means that eventually, via
the normal or regular process as well, the applicants file eventually
ends up in the Presidents Legal office and such a person would be
included in the monthly decree that the President would sign, included
with all the other people that were being granted citizenship for that
month (and listed on that same decree as well). We have assisted
a number of clients with the process, and from our experience this
normally takes about 5 to 6 months to complete - after the applicant
had obtained Permanent Residency status, and after a certain amount of
time has passed also.
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In the case of some recently marketed high-priced real estate projects
in the country, I was advised that the promoters did manage to tie in
the purchase of real estate there to this faster track or quicker
Permanent Residency and maybe they did work something out with the
government in terms of expediting citizenship (I do not know this for
sure, but it is possible). However, on the same token, they were
selling apartments in the project for US$500,000 that would cost about
US$150,000 IF the very same apartment were located in Santo Domingo or
anywhere else. Remember, a cinder block costs what it costs, and
a bag of cement costs what it costs and so on. It costs the same
amount of money to build a luxury 2,200 square foot apartment in Punta
Cana than it does in Cibao, assuming the same or similar
amenities. Now, if someone wants to market that property for
triple what the property would sell for elsewhere and you want to pay
it - all well and good. There is another so-called luxury gated
residential project being touted at the moment and the promoters told
me they are offering ocean view building lots (which I would assume
includes a home on it, but that was not made very clear to me) for the
bargain price of US$1 Million. If you want to pay US$1 Million
for a home probably worth about US$200,000 so you can get residency or
citizenship quicker, then more power to you. Remember that the
President of the country can literally grant citizenship to you one day
after you arrive in the country - if he wants to. So, the
question is why would he want to? If you invest US$500,000 in a
property or business, or open a new factory that employees 800 people -
then maybe that constitutes a qualifier.
.
But, let us be very clear in that this does not mean if you open a
small business or simply purchase an apartment or single family home
that this alone entitles you to a faster track for citizenship.
In addition, the great thing about the Dominican Republic is that the
regular or normal residency process and naturalization process in terms
of requirements, plus the time line, is really very reasonable and
affordable for most people. Plus, the attraction is that someone
CAN purchase a decent home or apartment starting at perhaps US$65,000
for a one bedroom on the beach, up to US$120,000 for a 3-bedroom home
in Santiago or Santo Domingo - and a whole slew of other options in
between. In fact, the Dominican Republic still offers some of
most reasonably priced real estate in the entire Caribbean - if you
stay away from these over-priced tourist projects marketed to
foreigners. In other words, is it worth it to buy a decent home
or apartment for US$100,000 and go through the normal time line or
process - or it is worth it to overpay by US$350,000 just to say you
got your passport six months or 12 months quicker than normal? In
my opinion, using this as an example - saving US$350,000 is worth the
wait.
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ANOTHER READER WRITES:
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John - Well, I took your advice and bought a villa in Cabarete instead
of Sosua. Wow, things are too different when it comes to ethics in real
estate in the DR compared to Canada. The agent told me that the Paris
couple were getting divorced and are HIGHLY motivated. If such
information were exposed to a perspective buyer here in Toronto and
then found out by the seller, the poop would most certainly hit the
fan! Knowing this, I used this to my advantage and put in an offer of
US $100,000 when it was listed for US $150,000. A few days later, after
I returned home (made the offer while I was in the DR), my agent
emailed me with the confirmation that they had accepted it! 2000
square ft, 4 bedroom, 3-bathroom, extra-detached room, own pool, big
lot etc. I have to furnish it and do some small repairs but it is
a sound home built in 1995 and just a 10 minute walk to the famous kite
surfing beach! Anyway, this is not to relocate to, only for
holiday/rental. We are buying it without a mortgage too, so this makes
it financially headache free as well. I will snap you a picture
once it closes which will be in about 2 weeks. I was thinking of
opening a US bank account. Any suggestions? Thanks neighbor.
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EDITORS REPLY:
Well, I am not very familiar with real estate regulations in Canada,
but I tend to think an agent divulging that a couple is going trough a
divorce as the motivation for the sale does not necessarily constitute
an ethics problem. I think that purposely NOT divulging certain
negative things about the property (should they be known by the agent)
is more of an ethics issue. In any event, I am glad to hear you
found a property with swimming pool that you very much like.
There are many, many decent properties like this in the same price
range in the country, so in comparison to what you might get for your
money elsewhere in the Caribbean - I still say the Dominican Republic
is one of the best buys around and that clients should take their time
and compare.
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In regards to banking, my tendency is to stay away from any North
American affiliated banking institution for a few reasons (I
highlighted just one of these reasons above). One is they have the
tendency to not be very competitive in terms of interest rates, and
generally speaking, I have found the service to generally terrible as
well. But aside from that, If you are Canadian, you are going to
have a difficult time when trying to open an account with Scotia Bank
simply because the Canadian Government has put pressure on Scotia NOT
to accept Canadians as customers in their banking branches outside of
Canada. In addition, two different clients told me that, starting
with the 2004 calendar year, Citibank has started to voluntarily submit
account information to the US tax-authorities regarding any accounts
owned by Americans at Citibank branches outside of the US. The
reason they know is because, surprise, surprise, they got a 1099 in the
mail. While that might not seem so unusual or a big deal, when
you consider that it is often the case that such a bank does not report
to the local government where the account is domiciled because bank
account interest is locally tax-free, then is it more interesting to
see the bank voluntary do so with another foreign government. In
Panama, such reporting to a foreign government is actually against the
law and a violation of Panamas Banking Privacy regulations, so if you
want to do business with some of these institutions affiliated up
yonder - do not say I did not warn you.
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ANOTHER READER WRITES:
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Dear Editor - Most interesting to read your articles I have received
for a while now. There are many interesting points indeed! Just
in the beginning of your letter you did just mention an example "just
to be an example", but it was most interesting indeed: You did
mention: Take your children away because a neighbor had seen you
spank your own children"! Well, that was just an example well
understood but it was so good that you should not leave it "just like
that!!! Well, let us say that an American tourist is in
Scandinavia example Sweden on a visit, and he brings his family with
him, and let us say two of his children behave very bad and get spanked
and a social welfare-lady should see that - what would the happen with
this American? If he were Swedish you can bet on that they would
take his children away for good if he should CLAIM that he spanks them
often for a disciplinary purpose, as all discipline in such way is
absolutely forbidden in Scandinavia! Just most interesting to know if
they should dare to threat an American Tourist in the same way??!
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If there are tax-troubles, they are said to be very hard in Sweden -
but you can never ever compare them with Inland Revenue USA in any
aspects however! Since Loooong Ago some people have disagreed with
tax-authorities and taxes in Scandinavia, and they have gone to
different "tax-havens" like Andorra, Bahamas, Switzerland, etc/ - and
found out that the only ones who get 100% anonymity is in the Isle of
Man. So, if a Scandinavian person would "get in trouble anyhow,
then the Tax-authorities are rated "democratic" anyhow just because
they do ask people to "give up" their foreign accounts (what they have
in assets, etc.) so, that was just an example. But Inland Revenue is
certainly NOT a thing to "play around" with. They seem to always have
been very strict. I do have old American Document from 1859 and
even at that time they were interested to know in detail what people
had!!! Once again most interesting Site you have Sir!
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EDITORS REPLY:
Thank you for your letter. So there you have it first hand, the
folks in the high tax nations of Scandinavia do not like to pay ultra
high taxes either. It is very interesting to note though, that
some Scandinavian countries can be a tax haven, if you are NOT
Scandinavian. Which is to say, the locals pay some of the highest
tax rates in the western world. In addition, on the topic of bank
account interest, it is taxed at source. Meaning, the banks
automatically deduct taxes due on bank interest from your account and
forward these funds along to the government. However, if you are
a non citizen - non resident and open a bank account in the very same
country, not only is the bank account interest tax-free, but it is not
even reported to the local government (nor any other government for
that matter).
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On the issue of socialism (democratic or otherwise), there are many
people that think this involves getting something for nothing.
Better said, that they the government sends you money for free every
month. Aside from other issues, the cost of socialism is usually
the surrender of your own freedom and independence. The almighty
government then feels they have the right to tell you how to rear your
children, what kind of locks you need to put on your backdoor yard gate
if you have a swimming pool, and an entire list of other items too long
to mention. Of course, they feel they have the right to do this
because you sold your freedom out to them - in exchange for the
supposed guaranty that they take care of you. Is it or has it
been a fair exchange? Only you can decide.
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ANOTHER READER WRITES:
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John: Happy New Year. I continue to enjoy your newsletter and
always look forward to reading it. Perhaps due to having seen
what happened in my native Cuba, I tend to maintain a global
perspective. I have a particular sensitivity to what can happen
to personal liberty and finances when the country one lives in falls
under tyranny. Many affluent Cubans would have fared much better
had they exercised the prudence of keeping some assets off shore.
To me, diversifying out of your country of residence is part of a
prudent strategy of diversification of assets strategy. In terms
of the DR, can you enlighten me with regard to firearms
ownership? I value the right to keep and bear arms and would
prefer relocating to a country where such rights are protected.
Moreover, I have long owned a collection of firearms that includes
handguns, shotguns, and semi-automatic weapons such as Ak-47s and AR
15s. Would I have a problem in terms of legally bringing this
collection with me to the DR? What would such a process
entail? If the process is too burdensome, I would likely sell off
the collection before relocating then restart the collection process
once settled in the DR. I also have a question relating to
taxes. I know that interest and investment income is not taxable
in the DR. However, if I were living solely off investments,
would I still be required to file a tax return? What is the
process for filing and by what date must the filing be accomplished in
the DR? I thank you in advance for any guidance you might provide.
.
EDITORS REPLY:
On the first part of your letter, I think it is safe to say one must
always hope for the best but plan for the worst. Anything can
happen, but those people well prepared will most likely suffer the
least. Never say never, as history has taught us this lesson time
and time again. Castro came to power via a military coup,
although he would have never won if he did not have the support of the
mob. However, it is also true that the democratically elected
politicians gave Hitler, Napoleon and Julius Cesar their totalitarian
powers under the excuse to supposedly save the republic (from external
or other enemies). But who saved the republic from them?
Personal Liberty is one of the most important gifts you can ever
have. If you do not believe it, find out what life can be like
without it. How foolish are we after more than 3,000 years of
history to teach us? How costly is the price a country and its
people have paid to gain liberty and how easily do we simply give it
away to a slick talking politician?
.
On the subject of firearms, one may apply for a gun permit in the
Dominican Republic AFTER permanent residency status has been
obtained. However, automatic assault rifles and the like are only
permitted for the armed forces and individual citizens may not possess
them. But, as I said earlier, you can of course bring in personal
weapons via the proper and correct channels, but bringing in a cadre of
weapons certainly sends the wrong kind of message as a new resident, so
I would not suggest doing so. However, individual citizens are
certainly permitted to own firearms and many, many people do so.
.
On the subject of taxes, this is a broad subject in terms of passive
income versus salaried income, where the income is earned and so
on. However, what I can say is that there certainly are some very
legitimate strategies for reducing and sometimes eliminating certain
kinds of income and capital gains taxes if proper planning is done (and
this not very difficult really). Also the top tax rate in the
Dominican Republic is 25-percent, which is certainly much lower than a
number of other countries, including the United States I might
add. In addition, touching upon the topic of thinking globally,
you are on the right track in that one can certainly use the different
jurisdictions for different purposes, picking and choosing the best for
whatever you are trying to accomplish. In addition, diversifying
your assets across different countries or regions and into different
kinds of assets (gold, real estate, bonds, bank investments, etc.) has
never, ever hurt.
.
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ANOTHER READER WRITES:
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I thought you might like to observe. The 16th amendment makes
reference to income tax in the "several" states. The term several
is a legal term from Blacks Law Dictionary. Several means separate
able. That which can be separated. Can the States of the
Union be separated? Not according to the Civil War! But U.S. states can
be separated from the US. For example; Alaska and Hawaii became
separated from the U.S. and became states of the Union. Since you
are an American National I thought you might consider this idea.
.
EDITORS REPLY:
Well, thank you for the information and to tell you the truth, I do not
know what I am other than someone that believes in liberty, fairness
and reduced government intervention in our lives. However, as I
have said before, something formally written down into law, Blacks Law
dictionary or not - is one thing, and finding a legal system to uphold
the law (rather than twisting it or convoluting it) is quite
another.
.
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ANOTHER READER WRITES:
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Dear Mr. Schroder: I have been reading your commentaries for a
while now and have enjoyed them thoroughly. Would you be so kind as to
comment on the attached link http://www.heritage.org/research/features/index/indexoffreedom.cfm showing the DR in a slightly less favorable light - Looking forward to your insights.
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EDITORS REPLY:
This list or score card of economic freedom is done every year, and I
think it interesting, but any set of statistics are certainly subject
to interpretation. For example, if you think this survey is very
accurate, then it is true that as a final overall score, the Dominican
Republic is ranked lower on the list. HOWEVER, Hong Kong,
Singapore, Ireland, The United Kingdom, Luxembourg, Iceland and Estonia
are listed as being better countries to live in or do business in than
the United States (in theory are more economically free than the United
States). Now, if you tell most Americans on the Street that Hong
Kong, Singapore or Estonia is a better country and more free all around
than the United States, they will probably give you a few choice
words. On the other hand, the report says that the Dominican
Republic has a lower top tax rate than the United States (25-percent
versus 35-percent, of course this does not include Social Security
payments which would push the US tax-rate up to 50-percent for many
people) AND that the Dominican Government is in much better shape than
the US Government as well (Dominican Republic Government consumed 7
percent of the nations GDP in 2003, and the US Government consumed 15
percent of its GDP). Also, the comments regarding the US are as
follows:
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The U.S. Supreme Court's June 23, 2005, Kelo v. City of New London
ruling on eminent domain exposes many Americans' property to arbitrary
seizure; and while countries in Eastern Europe are adopting flat taxes,
deregulating, and privatizing, the U.S. may be drifting toward bigger
government. But it is likely that local governments' abuse of
eminent domain power with the seizure of private land (with some
compensation) and its transfer to another party for a non-public or
quasi-public use will accelerate with the U.S. Supreme Court's June
2005 Kelo v. City of New London ruling. By ruling that governments may
take even non-blighted property and transfer it to another owner for
the purpose of increasing the tax base, the Court's Kelo decision
seriously undermines, or effectively eliminates, the U.S.
Constitution's requirement that private property may be taken only for
a public use. Unless the decision is reversed or countered with
legislative protections that stop the abuse of eminent domain, the
practice will be difficult to isolate, and evidence of extensive use of
this decision could be grounds for downgrading this factor in future
editions of the Index.
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So, if you live in the United States, you pay higher taxes and the
government might take your house away. Not so in the DR.
Yet, on the list, the US scores higher or better than the DR on
property rights. Go figure. In regards to the United
States, the folks at the Heritage Foundation also state that:
Corruption in the bureaucracy is rare. Oh really? I invite
you to read the following:
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First there was California congressman Randy Cunningham, a Republican
who took $2.4 million in bribes from defense contractors. Then
Abramoff's indictment and plea bargain set off investigations of at
least five and perhaps as many as 20 members of Congress. A
Capitol Hill correspondent for Business Week has said that as many as
60 members of Congress could be caught up in the investigation.
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http://www.villagevoice.com/news/0603,mondo1,71769,6.html
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http://www.roanoke.com/editorials/wb/wb/xp-47073H
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Here is my personal favorite whereby we learn about earmarks. What is an earmark you might ask?
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Language in spending bills that directs federal dollars to private
entities for projects that are not tied to an existing federal program
or purpose. The public knows the practice better by a different
name--pork-barreling.
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http://www.opinionjournal.com/editorial/feature.html?id=110007825
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The plain English version of the above is, the government takes up to
half of your money (some of it to pay for Medicare and Social Security,
which they tell us is now broke, by the way) then the politicians give
it away to private entities (and I shutter to think whom and what they
are referring to that is getting your tax money) by quietly slipping in
little crib notes onto legislation that other politicians vote on,
without the other politicians even knowing these so-called earmarks are
there (so they do not even know what they are voting for). Why do
they do this? Because some lobbyist sent them on an all expensive
paid luxury ski trip and asked them to do it (asked them to spend your
money for you). This is the world's greatest democracy at work
that should be emulated around the world? God forbid.
Anyway, I will take the Dominican Republic any day of the week,
whatever the ranking the Heritage Foundation gives it. By the
way, Dominicans hate paying taxes. No, I really mean it. I
am not talking about, yeah, everyone in the world hates paying
taxes. These people really, really loath taxes and are convinced
all politicians are crooks (unless proved otherwise). The logic
of the Dominican people is, why give the government more money?
The politicians are only going to steal it, so might as well give them
as little as possible. Not so dumb, those banana farmers -
huh?
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ANOTHER READER WRITES:
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If old Karl Marx, the inventor of communism, could return from the
grave, he would no doubt be surprised to find that most of the 10
planks of his Communist Manifesto, issued in 1848 in collaboration with
Frederick Engels, have been happily adopted or are at least supported
by Americans as well as many other nations of the world. Let's
look at the 10 planks:
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1.Abolition of property in land and application of all rents of land to
public purposes. Well, we're working on this one. The federal
government owns huge amounts of land and is acquiring more. Private
property rights are being eroded deliberately in the name of protecting
the environment.
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2. A heavy progressive or graduated income tax. Many support the
idea of taxing the rich more than the less rich. Need I say more?
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3. Abolition of all rights of inheritance. We haven't gone all
the way on that one, but heavy estate taxes are a step in that
direction. Estate taxes are purely punitive because they are taxes
levied on assets on which multiple taxes have already been paid many
times.
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4. Confiscation of the property of emigrants and rebels.
Well, our forefathers confiscated the property of those who supported
the British during the Revolution, and, under the Racketeer Influenced
and Corrupt Organizations Act and other civil statutes, property is
being confiscated right and left in the name of the war on drugs, money
laundering, accusations of offenses etc.
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5. Centralization of credit in the hands of the state. Pretty
much done - See the Federal Reserve Act or any other central bank.
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6. Centralization of the means of communications and transport in the
hands of the state. Seen a private road or bridge lately? Who licenses
all radio and television? Only the First Amendment saves the print
press from federal licensing, but I suspect that hate-speech laws will
soon follow hate-crime laws, and that will erode that freedom.
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7. Extension of factories and instruments of production owned by the
state. Well, the government runs many businesses and some folks
would like to see it run more.
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8. Equal obligation to work. Establishment of industrial armies,
especially for agriculture. We've escaped this one mainly, in my
opinion, because of mechanization.
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9. Combination of agriculture with manufacturing industries; gradual
abolition of distinction between town and country." Pretty much done,
because big corporations dominate what's left of agriculture and mass
communications have more or less erased cultural differences.
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10. Free education of all children in public schools. Abolition of
child factory labor in its present form. Combination of education with
industrial production. Done.
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Now, you must understand that what communism was driving toward was not
economic nirvana for the people (that was the advertising) but total
power in the hands of the state. Note, for example, the manifesto does
not advocate education for children per se but education in public
schools where, of course, they can be under the control of and
indoctrinated by the state. The hatred for property and for
farmers was based on the knowledge that people who are economically
independent of the state can assert their political freedom from state
control. Communism is just another form of slavery in which the
slave is provided work, housing, food, education, medical care and
retirement -- but at the price of freedom. You can see Americans
and Europeans advocating the very same system today, and most of them,
because of their poor education in government schools, don't have the
foggiest notion that they are advocating Marxist ideas.
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EDITORS REPLY:
Thank you for your letter and your comments. Why do they not
teach or at least introduce students to the works of Ludwig Von Mises,
F.A. Hayak, Murray N. Rothbard and Llewellyn H. Rockwell in the public
schools? Oh, never mind, I just remembered they are graduating
kids that cannot read anyway. Maybe that is on purpose?
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