I see the debate here, and as an American who does live abroad, I think that some of the remarks are misplaced. There is avoiding tax, and then there is legitimately playing the system to reduce your tax. Let me give you an example....
Hi Expatdude,
As far as I know avoiding tax is legal, it is tax evasion that is illegal.
Can you elaborate on which remarks you think are misplaced?
I am NOT a us citizen, not a us resident, not a lawyer and not an accountant or tax planner either but I someone who spent a considerable amount of time in one of those places that are traditionally seen as what is in the topic of this thread.
I have read quite a bit on this topic and my knowledge of the us issues in this field largely comes from the fact that the us gov tends to want to make financial privacy impossible not just for us citizens or residents but for EVERYONE. So if you study this topic you come across the us gov far more often than you would like.
The us definition of money l*au*nder*ing for example is so broad that most if not all attempts to achieve financial privacy are deemed ml by the us gov.
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Up until a couple of days ago, I was working at a fairly miserable, dead-end job in a country where I paid 52% tax on income and 65% tax on bonus. Yes, I got some benefits on the side, but with those kinds of taxes, you're never going to save any money.
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I bet a lot of people in similar situations feel that way and hence the widespread interest in this topic.
If I set up my own company, then the tax rate drops, effectively, further, to around a base level of 20%. (This is because I put in expenses, such as office space, car, etc.) And, I actually may benefit from paying tax in the US rather than here. (I have a US-based accountant who tells me everything to do and not do.)
It is clear from your comments that you are not involved in traditional offshore activities, but if you were there are a few things you should be aware of:
It is dangerous to talk to an accountant about offshore activities because most of them have no or not enough experience in this field and there is no legally protected relation between them and their clients (as in attorney - client relations) and as far as I am aware there are laws in place that force them to rat on you. On top of that they could also fear they harm their reputation or their relationship with the irs if they advise you regarding these matters.
Instead of trying to hide all my cash, I would actually be documenting everything and leaving the tax services to go after those who, well, have cash and no way to explain it.
Cash that is not hidden is easily frozen, stolen or the target of some lawsuit (particularly in the us).
As for those on this board who would like to reside outside the US, do you want to live in a shack in the third world or someplace in the EU or another OECD member state? You can do it, and I'm happy to explain how... all perfectly legal and you don't need to pay some shady outfit in Barbados for their "connections"...
The OECD is actually quite a nefarious organization. The words bullying and coercion come to mind. That might actually be the reason for the "C" in it's name.
Lots of people seem to think tax havens are a bad thing. If you ask me however, if tax havens would seize to exist, countries like those who are members of the oecd would probably jack up their tax rates to new heights because then they don't have to fear any longer that the money will "escape"
They put tremendous financial burdens on people and businesses. In this case money is like water. You put pressure on it and it will flow to a point where the pressure is lower. What the oecd and the eu do is put extremely high pressure on, money starts to flow, and then they complain that elsewhere the pressure is lower/too low. They want that low pressure to rise, not to lower their own.
Like the oecd, the eu is a bully too. Take the eu savings directive as an example. Last time I checked, Switzerland, Andorra and various islands in the carribean are not members of the eu. Yet they have all been bullied into compliance.
Now as far as you comment regarding shacks....
If you are happy living where you are, and happy with how you are treated by your government(s) then all is good for you. Minimize your liability and provided you do it CORRECTLY all is well (for you).
Personally I do NOT live in the eu or in an oecd member state, nor would I want to. I don't live in a third world country either. The so-called free western world and developed countries are heavily overrated if you ask me.
Real estate prices sky high, high cost of living, over-crowded, over-regulated, intrusive governments, expensive labor etc. Everybody his own, but I'll pass.
You can try to make a lot of $$ in places where the cost of living is high, or you go live in a nice place where you can still get something for $1
My comments in this thread and elsewhere on this topic were not to attack anyone or their beliefs but merely to point out that this field is more complex and dangerous than most people think or than some people would like you to believe (lots of websites with "shaky" offshore solutions).
There is a lot more that can be said on this topic but given this is a public forum, I'll refrain from making more explicit statements.
