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Profits Are Moving Offshore
According to a study published in Tax Notes [http://www.taxanalysts.com/], between 1999 and 2002, American companies increased
their profits taken in low tax countries by 68%. This means that American companies earned US$149 billion in profits that
they took in eighteen tax haven countries. Taking profits in tax havens is a consequence of the increasing mobility of capital
and the existence of sovereign nations with different tax systems. To do this study, Tax Notes analyzed the most recently
available U.S. Commerce Department data.
Most American companies try to lower their taxes by setting up foreign subsidiaries and using internal lending so profits
are taken primarily in tax havens and costs are incurred in high-tax countries. Techniques that shift profits to tax havens
involve pushing the U.S. laws to their limit. However, they are currently legal and corporate officials are obligated to minimize
taxes. There is no question but that the use of tax havens to lower tax rates makes investing offshore more lucrative than
investing in the United States.
In 2002, fifty-eight percent of offshore profits are now taken in tax havens. Subsidiaries of U.S. corporations now generate
profits mainly in tax havens rather than in locations in which they conduct most of their business. This offshore profits
trend is expected to continue and by the end of this decade, over ninety percent of American's major company's' profits will
be earned in tax havens. Similar trends can be found in Western Europe and in Asia.
The tax burden is being shifted from multinational corporations to individuals and purely domestic companies. The logical
response for individuals is to use the same tax loopholes and move their liquid assets offshore to low-tax jurisdictions.
The Prime Directive for domestic companies is to become international companies so that they can export their products and
services overseas. Once they are doing business outside of the United States, these national companies qualify for all the
tax benefits of any multinational corporation. If the trend continues, the only people paying income taxes will be the local
barbershop, bakery and veterinarian. And even their after tax disposible income is likely to be moved offshore.
The European tax defense against corporate profits moving offshore has been the Value Added Tax (VAT). It taxes everything
at every level of a product's production. It tends to increase the retail price of goods and makes those domestically manufactured
noncompetitive on price with imports. And, the trend toward free trade continues, thus threatening the European Union's economic
base. The major added obstacle for the U.S. in adopting the VAT policy is that most States rely on sales tax to partially
sustain themselves. A VAT combined with sales tax would cause a recession.
If you share Corporate American's view that you are the best person to wisely spend your money, you'll follow Corporate America
offshore. If you feel that Washington has a better grasp of your financial needs, leave your assets here.
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Globalize to Survive
Civilization in the 21st century is in serious trouble. Modern economic models that manipulate the public's perception of
the economy's stability aren't working as well as they have in the past. The cost of repairing the environment is beyond the
financial and technical means of governments to do. Population is growing while resources are diminishing. Demand for a Western
lifestyle is almost universal, while civilization's ability to meet that demand doesn't exist. The result will be social upheaval,
political instability and economic uncertainty. The individual will be sacrificed to the needs of the government bureaucracy.
As an individual, your civil rights are subject to the whim of your government. Most people prefer the illusion of security
above personal freedom. Thus, most citizens are willing to give up their rights in the belief that it offers them greater
protection against the forces arrayed against their government. You can see it in the fact that it took the American Government
about six weeks to repeal the Bill of Rights after the attack on the World Trade Center. The Russian Government plans to give
its citizens the rights they had during czarist times, thanks to the Breslan School siege.
Governments tax their citizens to pay to maintain the illusion of national security and economic wellbeing. During the Roman
Empire, the income tax rate varied from 1% to 3%. From the Dark Ages to the Renaissance, the income tax rate was usually 20%.
In modern times, the income tax rate averages about 50% of your income. History teaches us that no government or civilization
will survive over time. Whatever you are buying with your taxes, it isn't long term security for your family and descendants.
Business investment is risk. Governments expect their citizens to bear the full risk of creating local employment. If you
succeed, you pay local taxes. If you fail, you are broke. However, those same governments will share your risk when you aren't
a citizen of the country. The government won't tax your profits.
Society's values change. Religious and racial tolerance, a hallmark of the last half of the 20th Century, are the exception,
not the rule in history. Too many people see Islam as the religion of terror in the West and Christianity as the religion
of subjugation in the Middle East. Entrepreneurs are seen as a force for good now, but are the likely scapegoats for the coming
environmental meltdown. Science and technology, the gods of the 20th century are the likely devils of the 21st century. As
individuals are associated with these groups they will find themselves in need of relocation beyond their national borders.
There is no group in any country that can be certain they are safe from changes in the national value system. There is no
individual anywhere who can't be seen as an Enemy of the State, at some point in the future.
Even in the most repressive of societies, capital and personal flight are possible. During the Chinese Cultural Revolution,
hundreds of millions of dollars fled China. Hundreds of people flee North Korea every year. Globalize your assets before your
government finds the extremes of oppressive economic and social policy. In most countries, individuals can find legal methods
for moving some of their liquid assets offshore. There are even creative ways of moving your fixed assets, beyond the control
of your government.
Plan for the future. Otherwise, you and your family may not have one. An ounce of planning offsets a ton of future regret.
Your goal should be to put your assets beyond the control of any single government and to have more than one passport. Doing
so is your best insurance against an uncertain future. There are groups that are willing to help you, no matter whether you
live in Mongolia or France. Find one and let them help you Globalize to Survive.
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The Globalize to Survive Workshop
For those who see the future and want to ensure their family survives it. Contact us for notification of Workshops being
held in your region of the World.
If you are an investment club or a financial service firm interested in sponsoring this Workshop, please contact us. It
can be very profitable to do so.
Contact: Investmentclub@Earthlink.net
Globalize to Survive
We are investors with Global Vision
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