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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Prosperity & Privacy in the Offshore World
Friday, August 2, 2002 - Vol. 4 No. 74
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In This Issue:
* COMMENT: Unpatriotic Underwear.
* OFFSHORE: Swiss 711th Birthday Party. French Bank Exits Panama. BVI Wants Changes. Bermuda IBC Registrations Way Down.
* WEALTH: IRS Cuts Foreign Reporting Plan. Latin Troubles? Brits Anti-Euro. Hedge Funds Slow. ERISA Ruling. Texas Sheik. The Onion.
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* COMMENT: Unpatriotic Underwear.
Dear A-Letter Reader:
Odds are you've never heard of alternative girl punk band 'L-7.' Their 1997 album 'The Beauty Process: Triple Platinum' contains a song that I nominate for the attitude anthem of the current US Congress: "The Masses Are Asses."
That sums up the congressional view of you and me; that we're ignorant rubes likely to fall for their posturing that passes for lawmaking. My problem is that I've been there, so I know how Capitol Hill pols think and operate, especially in an election year marked by scandal and economic uncertainty. I smell the nervous panic of endangered incumbency.
I'm weary of talking about it, but once again, let's revisit the issue of US corporations that re-incorporate offshore in tax havens -- they're in the news again this week.
First, some basics: 1) a corporation is owned by shareholders and, by law, directors owe a fiduciary duty to maximize return on their investments, including keeping taxes as low as possible. 2) US corporate taxes, complex and compliance costly, are the 4th highest among major nations at about 40%, nearly 9% higher than the OECD average top rate of 31.4%. That makes US companies highly uncompetitive in a global economy.
So scores of former US corporations have moved their legal incorporation to tax free havens such as Bermuda or the Cayman Islands -- to save millions in taxes and boost profits for shareholders.
Keep in mind this tax saving process is fully legal under US tax law.But, intones the sanctimonious Sen. Charles Grassley of Iowa: "It's not Worse, this is an election year in which too many corporate executives stand exposed as foul repositories of immorality and sins ranging from greed and cupidity to serial dishonesty. These wrongs have hurt many thousands of their shareholders, employees, driving companies into bankruptcy. We all know the litany: Enron, WorldCom, Tyco, etc. etc.
So for the last week, the US House and the US Senate have engaged in target practice, taking pot shots at expatriate companies that have done what the law requires and allows them to do; cut taxes. Both houses adopted amendments banning the federal government from contracting with expat companies, theoretically cutting billions from company earnings.
With hypocritical Democrats in full cry, our MBA president, political weather vain a quiver, joined the mob. Said he: 'I think American companies ought to pay taxes here, and be good citizens.' He was joined by other putative Republican 'leaders,' excluding one who got it right: 'This is easy to demagogue, but it is a complicated issue in tax policy,'said Sen. Don Nickles of Oklahoma, the asst. Senate Republican leader.
On the congressional blacklist is Fruit of the Loom, the underwear makers, seller of US military skivvies by the millions. So all you real Americans, start burning you shorts in protest. And I think we ignorant masses know exactly who needs to be the object of our protests.
That's the way that it looks from here.
BOB BAUMAN, Editor
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COMMENT LINKS:
* Bush Company Went Offshore. NY Daily News.
LINK
* Bush Faces Questions on Offshore Affiliates. Wash. Post. http://ap.tbo.com/ap/breaking/MGAL3LGMB4D.html
* Offshore tax shelters under fire. USA Today. LINK
* US Senate takes aim at offshore tax havens. Boston Globe.LINK
* Senate Moves Against Tax-Haven Companies. NY Times.
LINK: http://www.nytimes.com/2002/08/01/business/01HAVE.html
* Federal Tax Laws Blamed for Tax Havens. AP.
LINK: http://www.philly.com/mld/philly/business/3765565.htm
* Corporate Inversions: Tax Policy Implications. US Treasury paper.
LINK: http://www.ustreas.gov/press/releases/docs/inversion.pdf
* Inversions Have Turned US Politicians Thinking Upside Down.
LINK
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* OFFSHORE *
SWITZERLAND DAY CELEBRATION
ZURICH. 711 years as a confederated nation, neutral and at peace. LINKS:
http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1252420
http://www.mb.com.ph/news.php?art=16253§=3&fname=OE02073116253f.txt
* Dirty cash accused Swiss ambassador stays in jail. LINK:
http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1251424
* Swiss wont yet assist Argentina in Menem bribery probe. LINK:
http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1251399
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ANOTHER BANK LEAVES PANAMA
Societe Generale, 2nd largest French bank, shuts down. LINK (scroll own)
http://www.thepanamanews.com/pn/v_08/issue_14/business_briefs.html
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BRITISH VIRGIN ISLANDS CHANGE ASKED
ROAD TOWN, BVI. Colonials ask more local power from British Foreign Office, revised constitution. Income tax to end in 2004.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8950
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BERMUDA INCORPORATIONS DROP
HAMILTON. Number lowest since 1999, decline for the 2nd quarter in a row; weak markets, expatriation controversy to blame. LINKS:
http://www.theroyalgazette.com/apps/pbcs.dll/artikkel?Avis=RG&Dato=20020729&Kategori=BUSINESS&Lopenr=107290027&Ref=AR
http://www.tax-news.com/asp/story/story.asp?storyname=8947
* IBM buys Pricewaterhouse consulting, Bermuda company plan dropped.
LINK: http://www.nytimes.com/2002/07/31/business/31HAVE.html
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* WEALTH *
I.R.S. WANTS SCALED DOWN FOREIGN TAX REPORTING
WASHINGTON. Warmed over Clinton plan regs proposed by IRS.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8951
LINK (subscribers only):
http://online.wsj.com/article/0,,SB1028065022741474000-search,00.html
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LATIN AMERICA IN TROUBLE?
* Latin American economies 'vulnerable'. LINK:
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028126222735
* Uruguay bank freeze extended. LINK:
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028126221042
* Brazil's Real falls to lowest level. LINK:
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028126221151
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BRITISH TURN AGAINST EURO
LONDON. Anti-euro mood hardens among Brits.
LINK: http://www.timesonline.co.uk/article/0,,5-370023,00.html
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HEDGE FUNDS DISAPPOINT
Despite a bear market, hedge funds struggle to do well. LINK:
http://www.economist.com/finance/displayStory.cfm?story_id=1248141
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ANOTHER REASON TO GO OFFSHORE
US court ruling on ERISA greatly expands employers' liability.
LINK: http://www.law.com/jsp/article.jsp?id=1024079072718
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U.S. SEIZES TEXAS HOUSE OF PHONY OFFSHORE SHEIK
FORT WORTH. Feds grab property linked to offshore investment fraud.
LINK: http://www.dfw.com/mld/startelegram/3766569.htm
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MONEY LAUNDERING 101
Ten common violations of anti-money laundering laws.
LINK: http://hr.pro2net.com/x34833.xml
* PATRIOT Act bank surveillance software ready to spy.
LINK: http://www.eweek.com/article2/0,3959,425736,00.asp
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;) U.S. TAKES OUT DEBT CONSOLIDATION LOAN
WASHINGTON. Plagued by late fees, high interest rates, harassing creditors, the US takes out a debt consolidation loan combining the nation's $6.1 trillion debt into a single, easy monthly payment. LINK:
http://www.theonion.com/onion3827/debt-consolidation_loan.html
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