Click the Pelts
Support Our Viking Kitties
Donate to Free Republic
Sign up to donate monthly
Sponsors will contribute $10
For each new monthly donor
Posted on 02/13/2012 6:24:09 AM PST by SeekAndFind
Once thing's for sure. Mitt Romney didn't send his money down to the Cayman Islands to work on its tan.
The former Massachusetts governor has been criticized by some for having some of his vast fortune in the Caribbean offshore banking center. Yes, it was politically clumsy. But it was not uncommon, and -- assuming he has filed all the right disclosures -- it was perfectly legal.
But if you're not running for president, and don't have to worry about public relations, what are the legitimate reasons for moving money offshore?
I spoke to Jim Duggan, a partner at Chicago law firm Duggan Bertsch, to get the skinny. He's a tax and estate planning attorney who specializes in wealth management issues for the very rich, and he's been practicing in this area for nearly 20 years.
He says a growing number of wealthy people are looking into moving some of their money offshore. "The interest in offshore planning has increased basically by a factor of five in the last ten years," he says. Clients want to talk to him about it all the time.
Why?
Contrary to popular opinion, it's not really to save on taxes.
That's because American taxpayers are taxed on their worldwide income -- so if you're making $10,000 (or $10 million) in interest on a bank account in, say, the Caymans or Switzerland, you're getting taxed by Uncle Sam as if you're making it in a bank account here.
CLICK ABOVE LINK FOR THE REST
To summarize, there are two reasons why the Rich move money offshore:
* Litigation risk, and
* Political risk.
Litigation risk is the old reason. You could get hit by a crazy lawsuit here in the U.S. The wealthy are an easy mark, and anything onshore is vulnerable. But the U.S. courts don’t have jurisdiction overseas and if you plan things right you have at least some chance of protecting money held offshore, It keeps you away from our court system and the caprices of our courts.
The new reason, though, is political risk: Diversification from our government, policies, and banking systems. A growing numbers of the wealthy are worried about the financial system, confiscation — the whole shebang. They’re concerned about our government, and where our society is headed. There’s a lot of socialistic tendencies, capital controls, the redistribution of wealth.
However, I understand the desire to diversify assets offshore. If I had enough to do so, I would. And, I wouldn't worry about the US confiscating it, because if it came to that point, I'd be long gone.
"Political risk" is more than just avoiding confiscation. It's also about having some place to go and the means to survive outside the US if things go completely into the toilet in this country (like what is happening in Greece).
I have non-US accounts. All this hub-bub about ‘hiding money’ is utter nonsense! I have to report all my accounts and the amounts therein. Because I have non-US accounts, I have far greater audit risk.
Further, you cannot ‘hide’ an account in a jurisdiction that has an information sharing treaty with the US. To claim otherwise is to claim that unicorns crap skittles. er, um. well some people really do believe that, don’t they?
But that group has used their privileged position of lawmaking to protect themselves from the results of their own actions.
A person may be poor going into high office but how many leave that way?
The one activity that the congress and senate will give their greatest effort to is securing their own futures no matter the cost to everyone else.
All this says to me is that “wealth confiscation” ...is coming..and in fact has already occurred at MF Financial courtesy of the Democrat operative John Corzine....
RE: you cannot ‘hide’ an account in a jurisdiction that has an information sharing treaty with the US.
It looks like HONGKONG or MACAU are the best places to hide your account. China does not have information sharing treaty with the US. I’d like to see America bully China the way they did Switzerland or even the Caymans ...
- the tax man;
- creditors;
- your spouse, and
- potential currency controls.
Not one purpose is legal.
Not everything LEGAL is MORAL.
It was once LEGAL for Germans to round up Jews and put them in concentration camps.
It was once legal to tax Americans without representing them in Parliament.
I learned just last year that if you are a German working in America, your salary in America is NOT TAXED in Germany. On the other hand, if you are an American working in Germany, what you earn in Germany is taxed IN GERMANY *AND* IN AMERICA.
In fact, the USA and Eritrea are the only two countries that lay claim on ANY income you have anywhere in the world by virtue of your residency.
I also know of several smart foreign engineers who have green cards. BEFORE coming to America, they made money back home ( be it Taiwan, South Korea or India ) and invested their money back home BEFORE coming to America to work.
In other words, the money was made in India, Taiwan and Korea BEFORE they came here. They invested in property BEFORE coming here and receive income from rent that are deposited in their bank accounts back home.
Now, they realize that simply by virtue of receiving a green card ( being permanent residents in the USA ) working for such companies as INTEL, Oracle or Hewlett Packard, the income they derived from their investments back home ( MONEY THAT NEVER ENTERED THE USA AND WAS MADE BEFORE THEY CAME HERE ) is now being CLAIMED by the IRS.
IS IT MORAL FOR THE IRS TO LAY CLAIM ON MONEY THAT YOU MADE BEFORE YOU RESIDED IN THE UNITED STATES?
Is that fair? Is that just? Are we a free country compared to Germany, Taiwan or South Korea in this case?
All part of the diminishing loyalty phenomenon. First corporations, now individuals. We don’t really owe anyting to the United States, after all is said and done. It’s just a geographic location. If it doesn’t suit your purposes, you’re smart to find someplace that does. Citizens of the world, you betcha.
RE: We don’t really owe anyting to the United States, after all is said and done.
Here’s the solution to this problem ( and Herman Cain had it right too when he talked about how to deal with a country like China ) -— BEAT THEM BY SHEER COMPETITION.
Instead of threatening investors with the IRS and spending humongous amount of money going around the world to catch residents and then making an imperialistic ass of ourselves, WHY NOT MAKE OUR TAX SYSTEM MORE ATTRACTIVE TO INVESTORS?
Why do people go to Switzerland and the Caymans to deposit? Simple — because their savings ARE NOT TAXED. So, why don’t we compete with Switzerland and BE just as generous as they are? I’m willing to bet that with a policy like Switzerland or the Caymans, people will be queueing in DROVES to put their money HERE in the USA.
COMPETITION is the key, not coercion and threats.
The political class isn’t on board with that. Doesn’t seem to matter which Party is in power either. Why swim upstream? Just go where the livin’ is easy.
You are caught by either U.S. residency OR citizenship.
As for immigrants, I think that by becoming a citizen or permanent resident you are agreeing to play by the same rules as everyone else. We agree that the tax system should be reformed, with rates lowered, etc., but fairness supports the treatment you describe. A U.S. citizen working in Germany pays German tax, declares the same income in the U.S. and gets a tax credit for German tax paid; not unfair. Countries like the U.K. and Canada permit immigrants to exempt foreign income for a period of years, attracting some wealthy immigrants from low-tax jurisdictions like Hong Kong. If they come to the U.S., then they are taxed here on their Hong Kong income and get a tax credit for Hong Kong withholding tax.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.