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To: tortoise

"As a consequence, I have averaged $10k gross income for the last three years, which is just enough to cover my basic living expenses."

You may have been in the top earning 1% for a few years, but you certainly are not among the truly wealthy that I am talking about.  I spent more than $10k on my last vacation and I took three last year.  It probably costs that much in gasoline and insurance to run my Suburban for a year.

I know more than a few people who are leaving and I can guarantee you that they might spend that much on a single business meeting.  I used to own a very successful import/export business and traveled all over the world in that business and today I am involved with a company that has me dealing with the wealthiest people in many countries around the world.  There is one change that I have noticed in my travels in recent years.  There are a lot more US expats in a lot of those countries - a whole lot more.  In most small countries, 10 years ago, you would have to ask dozens of people to find out where the single bar or restaurant was, where the local American expats would gather.  Today, you ask any taxi driver that question and he will ask which one you want to go to, since there are so many places like that now.

I'm talking about people like a man I met in Belize a few of years ago, who made, I'm sure, at least $2 million a year, back then.  He has a home in Belize, one in Ireland and one on an island off the coast of Greece.  He is a former US Marine officer who told me that the country that he left was not the country that he grew up in and proudly served.  He was deeply disturbed by the fact that when he became successful, he went from being an honored patriot to being a target for every government agency that could find a way to poke their nose into his business.  After two lucrative business deals in two years were bought out from under him by large corporations that learned of the deal from contacts in the US government, who leaked the content of certain filings that he was required to make, he was on the verge of leaving.  Then Congress passed the Health Insurance Portability and Accountability Act (HIPAA), in which they tried to stem capital flight by punishing those wealthy people who have the audacity to leave.  That law includes a provision that claims the right of the US Government to tax the income of a wealthy expatriate American for 10 years after he renounces his citizenship and is a tax paying citizen of another country (Why would the government pass such an onerous law, if they didn't already know that the wealthy are leaving?).  If you don't believe it, read it.  My associate told me that he saw that law as a howitzer aimed right at his pocketbook.  It took him 10 months to move all of his assets offshore (out of the reach of the IRS) and acquire citizenship in at least two other countries.  He has more than tripled his income since then and he hasn't looked back.

I can tell you similar stories about quite a few other US expats that I have met or talked with on the phone in the past 6 or 8 years.  Most are not as prone to talk about what they make as the gentleman I mentioned above, but considering the subject of our discussions, in most cases, I can assure you that most of them have available cash in the 8 figure range - not just net worth - available cash.  At least two of them have their own private jets.  Another has a 180 something foot yacht on which he spends about half of his time.  I can assure you that he spends more than your $10k a year in a single day on board that yacht.  Chances are, that you would even recognize his name.

But, the people that I'm talking about are the people who aren't worried near as much about the level of the taxes, as they are worried about the privacy issues of being wealthy in the United States.  Many high level business deals might be compromised if word got out to the wrong people before the papers are signed and they are ready to announce the deal.  But, because of the IRS and other agencies that now claim the right to look into and "approve" any deal that involves more than a few thousand dollars, it is not uncommon for critical information to be leaked through one of those agencies.

Although all of the US expats that I know left prior to the (Un)Patriot Act, I know several wealthy US investors who are planning to leave as a direct result of that onerous legislation.  It seems that many high level business deals are very time sensitive and each of them have lost very lucrative deals due to (Un)Patriot Act compliance delays.  One deal that I am personally familiar with should have been completed in only about three days, prior to the (Un)Patriot Act.  The US investor had a 30 day window to complete the deal.  That window expired while the feds were giving every person involved in the deal, including several layers of brokers, a financial anal exam.  I heard that the person that got the deal was European (I think he said German), who dealt in Euros, that don't move through the Fed and completed the deal in guess what time - three days.  In fact, there are now many people who will not even offer a time critical deal to a US citizen or even to anyone who is offering only US dollars, since either of those things will create unacceptable (Un)Patriot Act compliance delays.

Our elected representatives in Washington, in their lust for power, control and more of our money to spend, are actually making it impossible for high level investors to function as US citizens and many are preparing to leave.  The only thing that is delaying them is the time it takes for people that wealthy to move all of their assets out of reach of the IRS, before they leave (remember HIPAA? - if you leave it, it gets taxed for ten years).

And, even with all of that, I haven't even touched on the fact that the US government confiscates much more private property, per capita, every year, than any other Western nation.  What it boils down to is that the more you have to lose, the more incentive you have to leave.

I congratulate you on making it into the top 1% for a few years.  But, if you can live on $10k, then even if you managed to reach that top 1% for a few years, you are certainly not among the elite major taxpayers that I am talking about.  You obviously just don't have that much to lose, yet.  When your basic living expenses reach $100k or more and when each day or even each month, you risk millions, then I would be interested in hearing your thoughts on expatriation of the wealthy.  And, should that ever happen (and it sounds like you may be headed in that direction), I would not be surprised to learn that you had changed your tune significantly, if you were still here, at all.

 

113 posted on 09/28/2003 1:15:52 AM PDT by Action-America (The next country to invade Europe has to keep France!)
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To: Action-America
I congratulate you on making it into the top 1% for a few years.  But, if you can live on $10k, then even if you managed to reach that top 1% for a few years, you are certainly not among the elite major taxpayers that I am talking about.  You obviously just don't have that much to lose, yet.  When your basic living expenses reach $100k or more and when each day or even each month, you risk millions, then I would be interested in hearing your thoughts on expatriation of the wealthy.

You didn't really read what I wrote. I set my own "income" to whatever I want, and could easily have put myself in the top 0.1% for all the years I was making $10k on average. I've been risking my millions for many, many years. Right now I am heavily invested in new businesses, and $20-50k of additional capital could make or break them over the last couple years and so I have marshalled my resources to an extreme to insure their survival. I outgrew your Hollywood conception of how I should use my money years ago -- its a phase -- and most wealthy people mature rather quickly, because they wouldn't have become wealthy in the first place if they didn't. There are a number of very wealthy people in my extended family, all self-made and bootstrapped, and none of them do what you do even though many have incomes in the tens of millions of dollars a year. And I know dozens of business people who are extremely wealthy that I deal with on a day-to-day basis, and none of them do what you are talking about either. (Family tradition: money is NEVER inherited, lent, or given to less fortunate family or relatives. Everyone earns their own dime and pays their own way through the world, even the kids. A lot of foundations and non-profit organizations have made a mint off my relatives kicking the bucket. Still, every generation produces a collection of wealthy individuals that started from absolutely nothing.)

If my basic living expenses exceeded $100k, it would mark me as a dumb-ass; I did that for about a year a long time ago and quickly realized how remarkably pointless it was. I simply don't have much in the way of living expenses even though I have lots of assets. One can have a gorgeous mountaintop home, fancy cars, etc and live on less than $20k/year very easily unless you are financially incompetent. How the hell would I spend $100k now? I don't have time to cruise the world for months at a time -- I have business to take care of -- but I still manage to spend a few weeks here and there traveling where I choose to. Managing that much money and business is a full-time job if you want to do it right and maximize it. It is hard to blow that much money on food and wine unless that is all you spend your time on, and even then, my wine cellar has some of the rarest old bottlings in the world and my cooking skills are on par with many of the finer restaurants in the world, so I can eat very well (and I don't have time for good restaurants most of the time anyway -- I'm working).

My point being that most of the people who actually require extravagant incomes to live either 1) have nothing better to do with their time anyway, 2) have only income and no real wealth, or 3) are pretty poor at financial management. My biggest single expense is gas for my gas guzzler, which is what I typically drive. On an income of $40k/year I wouldn't even have to tighten my belt, because that is essentially all spending money.

I know a lot of extremely wealthy people. While some have some fairly extravagant toys, none lead the odd Hollywood lifestyle that you are imagining because they all have to earn their money. I don't think the lifestyle is typically what you think it is.

123 posted on 09/28/2003 11:10:51 AM PDT by tortoise (All these moments lost in time, like tears in the rain.)
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