Bizarre News Before the Holiday

Tuesday, December 19, 2006
Vol. 8 No. 251

In Today's Letter:
Comment: Bizarre News Before the Holiday
Wealth: SEC Finally Gets Something Right
Privacy: Say "NO" to the Automated Target System

Even the Mainstream Press
is Catching On to Expats

Today's A-Letter is by our Founding Publisher and Executive Director, Erika Nolan.

Dear A-Letter Reader,

It's the week before Christmas. And it's always interesting to see what's in the news, when most companies, including news organizations, are slowing down to prepare for the holiday break.

For example, yesterday The NY Times ran a story about one of our favorite topics: expatriation. It was a little strange to see such a taboo topic in a mainstream newspaper (even if it is The New York Times).

You have to wonder what made the editor choose to run this story this week. Is it just a slow news week? Or is expatriation really gaining popularity, as the article claimed? Apparently The New York Times interviewed an IRS agent who said over 500 Americans had expatriated this year. Hmmm...

The story began with an anecdote about an ex-marine from California, who decided to give up her U.S. citizenship to avoid estate taxes. Last month, she very unceremoniously turned in her U.S. passport. The ex-U.S. marine had lived in Geneva for 16 years, and was tired of filing her taxes in both the U.S. and Switzerland. (Because of course, the U.S. taxes all its citizens worldwide on any income earned around the globe, no matter where you live.)

This wise Californian maintained her privacy, but NOT revealing her name to The New York Times. However, they did quote her as saying "It's (for) my kids and the estate tax. I don't care if I die with only one Swiss franc to my name, but the U.S. shouldn't get money I earned here when I die."

Or in other words, this ex-marine said what we've been saying for the last five years - that expatriation really can be the "ultimate estate plan" for the right person.

If you're a freedom seeker, who loves to live abroad, then you can legally avoid thousands in income and estate taxes by giving up your citizenship.

You can move to a safer country that stays out of the world's frays as much as possible, like Switzerland. You can move to a country like Panama, which doesn't tax any income earned outside the country.

Not to mention, you get to avoid filing taxes in two nations each year. Trust me: I lived in Ireland for three years as a U.S. citizen. And filing your taxes twice in two different nations makes the April 15th deadline here in the U.S. seem like a field day.

How Could You Legally Expatriate?

There are many steps on the road to trading in your U.S. passport in return for a gigantic cut in your taxes. But in the end it all boils down to four steps really...

1. Securing a second citizenship where you would like to live eventually
2. Moving to the country where you have a second citizenship (I suggest a no-tax jurisdiction).
3. Get your finances in order, whether that means seeking professional advice to move your assets to your new home.
4. And finally turning in your U.S. passport.

Again, this is an extremely bold move. It's not for everyone. But the fact is this is the ONLY way a U.S. citizen can stop paying U.S. taxes. That means it's one of the few ways you can significantly reduce your tax bills - especially if you already favor living in another nation rather than the United States.

If you're interested, I urge you to meet with a qualified financial professional who can tell you if this makes sense for your particular situation.

And keep an eye on the mainstream press this week. You never know when they may start spouting some real insight, when they assume their readers are distracted by the holiday season.

In Wealth & Prosperity This Holiday Season,
ERIKA NOLAN, Executive Director

EDITOR'S NOTE: These days, the U.S. acts as if they own all U.S. citizens. You're taxed no matter where you live, on all income you make, all around the world. The U.S. government even taxes you for dying. Does that seem fair? But you can still legally break away from this "ownership." Learn more about the "ultimate estate plan".

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Wealth

SEC Gets Something Right for Once

I very rarely condone a new government policy, especially when it comes to market regulation. In my eyes, less government is always better for investors.

But on December 13, the United States Securities and Exchange Commission (SEC) advanced several of its chairman's proposals. These proposals included easing restrictions on the Sarbanes-Oxley law and increasing the minimum investment for hedge fund investors. These are both very smart ideas.

Sarbanes-Oxley, introduced following a series of corporate scandals and frauds, makes officers liable for their stated or audited numbers. In essence, a corporate executive can be jailed if he or she signs off on an audit and it turns out to be fraudulent later. That's pretty strict stuff. It's no wonder many executives don't want to sit on the board these days.

But the SEC also proposed easing filing restrictions for foreign corporations. Many of these foreign corporations have fled to London, Hong Kong, or Frankfurt to list their shares because of far less onerous laws. Stock exchange listings in the United States have actually declined since 2004 as opposed to the big gains in London. So this SEC proposal is positive, and encourages foreign companies to list their shares in the United States.

Overall, more government is not a good thing. But in this case, the SEC is doing the right thing by encouraging foreign investment, and easing burdensome listing requirements.

ERIC ROSEMAN, Investment Director

Privacy

Just Say NO to the "Automated Targeting System!"

Since 2002, the Department of Homeland Security (DHS) has been using a data-mining program that creates secret, terrorist ratings on tens of millions of travelers-both U.S. and foreign citizens-who cross U.S. borders.

DHS now proposes that these secret terrorism risk profiles be kept for 40 years and that all "Privacy Act" safeguards should be removed from them. That means those of us on the database, and that includes anyone who has crossed a U.S. border via an airline, will have no right to review the information in our terrorism profile. We also can't request that information be updated or removed if it contains inaccuracies.

The result of a "false positive" terrorist profile is more than mere inconvenience. The Automated Targeting System is the source for the "No Fly" list that is notorious for the inaccurate data it contains. This list STILL contains the names of most of the dead hijackers from the Sept. 11, 2001 attacks on the Pentagon and the World Trade Center, along with thousands of other names of individuals who have no connection whatsoever to terrorism.

And, as I've pointed out before, because of the very small number of real terrorists that exist, a data mining system like the Automated Targeting System, even if it's 99.9% accurate will pinpoint hundreds or even thousands of innocent individuals for every real terrorist it identifies.

There's still a chance that DHS can be forced to include Privacy Act protections in the Automated Targeting System. But it won't happen without a massive outpouring of public opposition to its outrageous proposal.

DHS has extended the deadline for public comments on this system until Friday, Dec. 29. I urge you to contact DHS by this date and let them know what you think of this privacy-invading, rights-stripping system.

To learn more about the Automated Targeting System, see http://www.epic.org/privacy/surveillance/spotlight/1006/default.html .

To submit a comment to HSA on the system, go to:
http://ws.privacyalertnetwork.net/points/point?id=444 .

MARK NESTMANN, Privacy Expert &
President of The Nestmann Group
www.nestmann.com

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