Prospects for Real Tax Reform

The income tax and the inflation tax have provided the liberal politicians with the ability to extract an unlimited amount of money from the public. Most previous administrations and Congress's have exercised at least some restraint in using that ability. The current Congress and White House seem to have no regard for the consequences of their insane spending programs.

Many of my clients and some of my professional colleagues have concluded that the only way out for them is to give up their citizenship and to seek opportunity or retirement somewhere else. Although there are only a relative handful of people who are included on the government list of tax expatriates, my private sources tell me that there are long waiting lists at the embassies in major cities -- of Americans who want to renounce their citizenship now.

The U.S. has become a magnet for immigrants not because of freedom of opportunity, but because of our extremely generous social safety net. As we attract more poor people with limited education and skills, we are also beginning to lose our entrepreneurs and people with capital. Carry that forward five or ten years and then think about the impact on our economy. Then recall the incredible trillions of unfunded entitlements that will be demanded by millions of retiring baby boomers.

Can this madness be stopped? Perhaps, but I fear we have reached the "tipping point" or the point of no return where the number of people who are dependent on the federal government exceed the number who are not. Who will vote for radical change to restore the U.S. to the kind of representative democracy that is described by our Constitution rather than by the judges who have redefined it to permit the creation of a welfare state? We need to get rid of the income tax by repealing the 16th Amendment and generating federal revenues with some kind of consumption tax, and by either repealing the Federal Reserve Act or somehow restricting the ability of the Fed to create new money without limit.

I hate to be a pessimist but I believe we will need a LOT more pain before there are enough voters who are willing to return us to a land of opportunity and to give up the illusion of a land of free goodies.

Consequently, I anticipate that we will see a substantial increase in the number of U.S. citizens and green card holders who choose to move somewhere that is believed to be less hostile to those with capital or business talent.

Vern

See The Tax Reform Alternative
http://www.offshorepress.com/taxreform2010.html

Fight or Flight?

The political left try to divert the real objectives of the Tea Party movement by arguing that taxes are low for the middle class and that Obama intends to continue the Bush tax cuts for those making less than $200,000 per year. (Those on the bottom half of the economic spectrum don't pay any income taxes.)

But the Tea Party people aren't complaining about current tax levels. They see the huge amounts of deficit spending and the costly laws that the liberals are passing or trying to pass and they understand that huge deficits and enormous levels of debt will translate into either higher taxes or inflation or a combination of the two.

So the members of the Tea Party are organizing and exchanging information in order to replace the liberal members of the Congress with candidates who seem to reflect the goals of the Tea Party for a smaller government, less spending and less taxes. Of course, voting for newcomers is a lot like buying the proverbial "pig in a poke". We won't know if the new comers are just jumping on a bandwagon or are sincere in their intentions and have the fortitude to resist the siren call of power and influence.

Meanwhile, there are some of us who remember the very limited success of the "Contract with America" where a lot of newcomers went to Washington and quickly got indoctrinated with the way things are done in the "Land of Oz." (The crystal city was not in Kansas; it was in Washington.)

I currently have four clients who have retained me to help them with the paperwork to expatriate. That means they are going to give up their U.S. citizenship. For those who don't have any confidence that the Tea Party or anyone else can really change things in Washington, flight is their choice. And there are many indications that flight is becoming the choice for a lot more people.

For myself and my wife, we are at an age and have a family situation such that we are going to stay. Since we have ruled out the choice of flight, we intend to do what we can to join the fight -- even if past efforts to turn things around were not successful. At a minimum, I will continue to share what I'm learning about the issues with those who may have an interest in one more voice for freedom.

As Glenn Beck and some other have concluded, the first step is for all of us to learn about the history of the Progressive Liberal movement so that we can better understand what is happening now. The second step is for each of us to share our discoveries with others and to encourage them to become politically aware.

Just my two cents.

I invite you to visit my Liberty portal at http://www.offshorepress.com/liberty/

Vern

The Greatest Threat to Your Wealth

Asset protection planning appeals to those of us who are constantly subject to lawsuits and predatory litigation. But the greatest danger to accumulated wealth is our government.

They can take an unlimited share of our income with the income tax. They can take a large bite out of the money we spend with an assortment of excise taxes, a national sales tax or value added tax. Although the estate tax is presently repealed for 2010, it isn't going to stay that way and they can set the estate tax at any level to consume any portion of an estate. They impose an exit tax on any unrealized gains and deferred income if we give up our citizenship or resident status. If they want, they could even impose an exit tax on assets and confiscate any percentage of our assets if we wish to leave. Obscenely excessive fines and penalties can be imposed for alleged money laundering or for failing to comply with a mind boggling assortment of very confusing laws. And, if we are merely accused of any one of a variety of crimes, they can confiscate our property under the forfeiture laws.

What can you do to protect your wealth from these threats?

As long as we are still a country of laws, we can look to the various laws to identify legal (allowed) ways to hold assets or to dispose of assets to children or grandchildren. For now, it is still legal to move money offshore, even though offshore assets may need to be disclosed each year. And, for now, each person can take their assets with them if they expatriate and settle up with the IRS on any untaxed gains or deferred income.

But it seems to me that the doors are closing on both domestic and offshore methods of asset protection if the government is the party that wants our assets. Hopefully, it is mostly because the far left lunatic fringe of the Democratic party is in control and they are pushing through every change they can that will move us closer to a Socialist society. Perhaps the Tea Party and the Conservatives can get rid of enough Democrats and Liberals this fall to put a stop to this crazy frenzy of "progressive" legislation. But it seems highly unlikely that anything that has already been turned into a law will be repealed. Our move toward the European style of Socialism is like taking three steps forward and two steps back -- but the momentum is clearly for more government rather than for less.

Meanwhile, there are relatively few legal structures that can survive a challenge by a rogue government -- which is what we will most surely have if the November elections do not result in a sea change in the Congress. So maybe it's time to invest some time and money in helping to "kick the rascals out" this fall. Otherwise, the only way I can think of to preserve your wealth will be to leave the U.S. after becoming a citizen of some other country. And if we don't kick enough rascals out this fall, even that option may be extremely limited.

That's my two cents.

Vern