By International Man,
"In this world nothing can be said to be certain, except death and taxes.”
– Benjamin Franklin
In most cases, Mr. Franklin's statement would be correct. However, as you will see below, there are some countries in the world where you can be certain you won't pay taxes.
With the year 2013 marking the 100th anniversary of the income tax and the Federal Reserve in the US (two of the most powerful tools the government uses to extract wealth), I thought it would be useful to look at when Tax Freedom Day occurs across the world to gain some perspective.
Tax Freedom Day (TFD) is the day of the year that the average person has in theory earned enough money to pay his or her annual tax bill.
If TFD falls on January 1, that means you are a milk cow for ZERO days out of the year for the government. If it falls on June 30, it means you are working 181 days each year to pay off your taxes.
Unfortunately, most of us will spend some time during the year acting as a milk cow in some fashion for a government.
Below is a table showing when TFD hits in the countries within the EU.
The government of Hungary, Belgium, and France are the worst offenders in the EU, keeping their citizens in tax servitude astoundingly until around August each year.
If you are unlucky enough to be in the suffocating grasp of a high-tax jurisdiction, you will likely have only a couple of months of salary (if even that) out of the year that can be potentially utilized as savings after essential living expenses are met.
In the US, TFD comes around April 17. Of course, individual circumstances will vary, and TFD in the US can come a lot later than April 17 for many Americans.
Whether you are American, European, or any other nationality, it doesn't have to be this way. You do not need to be working for the government for a good portion of the year.
It is possible to take steps to internationalize and legally reduce the number of days the government milks you of the fruits of your labor.
Some countries do not have an income tax or essentially any other type of tax that could hit the average individual.
TFD could come on January 1 for you if you have no external obligations and fall under the jurisdiction in any of the countries in the table below.
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Countries With No Personal Income Tax
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Andorra
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Anguilla
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Bahamas
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Bahrain
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Bermuda
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British Virgin Islands
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Brunei Darussalam
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Cayman Islands
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Kuwait
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Maldives
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Monaco
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Oman
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Qatar
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Saudi Arabia
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St. Kitts & Nevis
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Turks and Caicos
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United Arab Emirates
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Vanuatu
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There are many ways to internationalize and legally structure yourself and your business around these and other low-tax countries.
One possibility could involve an American citizen obtaining a second citizenship, then becoming a resident of one of the countries above, and finally renouncing US citizenship in order to obtain a tax-free existence. Of course, this is but one possibility. There are many options with varying degrees of protection.
You could prove Benjamin Franklin wrong – taxes are not necessarily a certainty.
It is still legal and practical to take steps to internationalize, but if history is any guide, it won't be so forever... especially as governments (particularly in the West) become more desperate.
Moving your assets abroad is the most effective way to protect what's rightfully yours from your home government… but most people have no idea where to begin. That's why Casey Research has put together a special web event, Internationalizing Your Assets. Featuring New York Times best-selling author Doug Casey and other experts on international diversification, it premiers April 30 at 2 p.m. EDT and is must-viewing for anyone looking for ways to legally shield wealth from greedy politicians. Get more information and register today.
Despite the author's desire to sell a newsletter, Ben's statement still rings true today. You will pay taxes. They might be income taxes, property taxes, import tariffs, export tariffs, hotel taxes, sales tax, wealth tax, cigar tax, gasoline tax, or any other myriad of confiscation. Government will take your money; the only question is the amount and methodology.
Seriously, why the F*$K would you get up and go to work when you know someone is going to take more than half of it from you? (looking at you Frenchman) What % of a man's labor do you need to confiscate before he is considered "enslaved?" Obviously, 100% equals enslavement, but even slaves (in a historical context) were "given" food and shelter, so you could realistically say that slaves kept a third of their income, a reasonable percentage to spend on these items. Seems to me that most European governments have reinstituted slavery with their populations barely even making a whimper of protest. (We're headed the same way America...)
Funny how when private enterprise takes >50% it's called slavery, but when a government takes >50% it is called patriotism. (Cue the national anthem...)
Here is the cycle of evolution.
Bondage to Revolution
Revolution to Freedom & Liberty
Freedom & Liberty to Democracy
Democracy to Socialism
Socialism to Communism
Communism to Bondage
Where do you think we are in the process?
This post is hard to evaluate without also discussing Tax clear conscience day, the day when you have earned enough money to pay for the roads you drive on, the advanced technology or services you take advantage of that came from government grants or sponsorship, and most importantly the higher wages that come from a progressive tax system that benefits small companies over large ones.
Without knowing that information, how could we tell if we are getting a good deal?
"Moving your assets abroad is the most effective way to protect what's rightfully yours from your home government...."
Yes, do like Jeremy says.... starve your democratically-elected government; let the highways and schools crumble. Let others Americans pay more taxes to compensate. Don't give a second thought that you became wealthy in part because you were raised in a strong and free UNITED States of America. Be selfish.
We're no longer in a truly free and strong US thanks to criminals feeding at the trough - and when half the citizenry manage to get themselves sucking down governmental largess, you don't even have a realistically democratically elected government - you have the start of the decline and fall of the roman empire
Protecting your assets from crooks solely interested in seizing as much as they can to feed their personal goals is only common sense - if you think Washington cares one iota about those highways and schools you need to wake up - they wouldn't have spent the last half century driving the education system into the dirt and ignoring those highways and many other important things so they could divert trillions to unproductive useless political payback schemes to keep themselves in office - the ridiculously complex tax system and the Fed serve solely to extract funds from those who work and transfer it to those who don't and the lords and ladies of the governmental royalty and their courtiers
The fall of the Roman empire comes from *Rich* people feeding at the trough, not from *poor* people feeding at the trough.
Of course the television stations owned by rich people will never tell you that.
Here you go Jeff! TJ "The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." We were not in any way anything like the Roman Empire. But when we started to tax everyone 100 years ago we started to become the Roman Empire. Your a good little Socialist aren't you Jeff? Very cunning of you.
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Ok. Which category does someone who works 60 hours a week fall into? Obviously someone who is willing to work. And which category does someone who lives off his investments and his yacht fall into? This is less clear, but I would call that "someone who would not".
Doh! That was supposed to say 60 hours a week at McDonalds.
Heck, no, I'm not a socialist!
Pure socialism is just as bad as pure capitalism. It's a false dichotomy, like "Do you want car engines that have a fuel line or a car engine that has a carburetor or air injection?"
Our economy needs both efficient production and the ability to buy that efficient production.
"And which category does someone who lives off his investments and his yacht fall into?"
I guess capital allocation is not "work" in your book. Most B-schools need to change their curriculum, eh Jeff?
Jason - If you can't win an argument, then just insult the person speaking. Works every time, right?
Your point was that progressive taxation was redistributing from the hard-working to the lazy. I was pointing out that it is more a case of redistributing from those with massive negotiating leverage to those with less.
Jeff - I didn't "try" to insult you. If you feel insulted, that's your personal issue. I guess you stand by the thought that capital allocation is not "work." I partially agree, but this is the MOST important function in an economy, and you seem to flippantly dismiss it.
Question for you to ponder: Why do those with massive negotiating leverage have it? Occasionally, it is due to luck or being born into the right circumstances, but most of the iconic super wealthy folks earned the money, arguably with "massive negotiating leverage." Think Buffett, Gates, Ellison. These guys earned their negotiating leverage. They certainly were not "gifted" it when they turned 18. A more dynamic individual could easily come along and take it from them. (Zuckerburg? Bren? Elon Musk?)
Do I think any person "deserves" 30 billion dollars? No. But, I also don't think it is government's responsibility to take it from him. If you don't like their wealth, stop contributing to it. Most of the super wealthy earned it from non-essential goods and services. (Do you NEED a coke? Do you NEED that software?) Opt out, Jeff. I know I do. Don't buy that iphone, don't buy that Coke, don't use MS Office. We all have choices...unless the government takes them away. Think about that, Jeff.
Last point, capital will always find it's way into the hands of people who are most skilled and knowledgeable about it. Not unlike philosophical thought, fine liquor, sports cars, women, and children. Every person and every object seeks to be cared for or it simply ceases to exist. Geezus Christ, that's DEEP. I need to stop now...lol
Right ON Arch! It is our tax system that created all this crony capitalism and crony politicians that we have today. And I mean both sides of the isles. This is what a Federal Tax system does. Bunch of FREELOADERS living in and running the country now.
Dwight, I was raised strong and free but became a slave of my Masser's the Gov't who takes from me and give to others who do nothing for it or worse yet to Politicians who shackle me down even more with regulations and high taxes. We are no longer free in this country. We work for the Gov't and other people who are parasites. TJ "To take from one because it is thought that his own industry and that of his father’s has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association—the guarantee to every one of a free exercise of his industry and the fruits acquired by it". TJ "I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious". And then this is especially for you Dwight! TJ "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." WE STOPPED BEING FREE 100 YEARS AGO! Today American = Socialism. Start looking for somewhere else to be Free where the Parasites won't take from you.
JP - Every first world country in history mixed capitalism, mercantilism and socialism. There are lot's of third world pure capitalist countries, and they are getting worse, not better.
Thank goodness our zeal for pure capitalism didn't turn us into a third world country in 1929!
No FDR did until we got involved with WWII. When O is done we will be back into Depression and looking for a WWIII to get us out of it.
True words JP it's the only possible ending to this mess.
FDR grew the economy more between 1933 and 1945 in 12 years than the last 48 years of Republican presidents *combined*. Those are real numbers. Our last 12 Republican presidential terms grew the economy by between 115% total and 145% total, depending on whether you adjust for inflation using the January or July inflation multipliers. FDR grew the economy by 190% after adjusting for inflation in just 3 completed terms. Please let me know if your calculations are different. Also, if you are going to blame the war, then please inform as to how shooting in 1943 contributed to growth in 1934.
oops! Ignore the name above. I accidentally switched My name and JP's name somehow...
Jeff: Lots of statistics which I won't even try to refute, however, the proof is in the pudding. How can you grow the economy 190% and still be mired in a depression?
Leading us further down the path of socialism will not create employment, prosperity nor liberty.
That's great of you to include the war years....doesn't cloud the picture at all.
The growth from 1933-39 was OK, average about 3.5%. I guess you can call that a "successful" economic policy, but please don't pretend that the government takeover of the American economy was some great boon. The economy of the 1920s averaged 4.2% growth, even after the 1929 crash.
War is good for business. Always has been and (probably) always will be.
If you think the government should be in every citizen's and every business's affairs, just say so. Why hide behind statistics?
If you think socialism works, try it at your company. Tell all the folks ( and I mean ALL) that they will all now make the same amount of money no matter what their job is. Next, tell them that no matter how hard or how little they work (or even if they come to work) they will all get the same raise next year. Please report to us after a couple years how your company is faring. Matter of fact, forget the experiment, just cite an iconic company (from any country) that operates with this model so we can all admire their success. We'll be waiting...
Jason - Where are you getting your numbers?
The economy was growing 10% a year starting in 1934 and took a short breather around 1937 when we decreased spending, raised taxes, and increased interest rates all at the same time. We left the taxes, but increased spending and decreased interest rates again and went back to 10%. All the war did was get us to the point in 1943 where we would have been in 1945 anyway. And when you consider the post war recession, that effect reversed itself.
"If you think socialism works, try it at your company. Tell all the folks ( and I mean ALL) that they will all now make the same amount of money no matter what their job is. "
Of course I don't believe that's a good strategy. I could be just as condescending if I want to by saying,
"If you think that high distribution of wealth is effective, then take all of the money (and I mean ALL) and give it to the CEO no matter how much negotiating leverage various employees had before. ... Please report to us after a couple years how your company is faring..."
Of course you would not recommend that experiment and of course I would not recommend the other. The best results come when you get more reward for more results but you don't get rewarded massively based on minimal value creation combined with extreme negotiating leverage.
Jeff - My numbers came from Wikipedia which cited government statistics and a few academic studies. The economy did have good growth in 33 and 34 coming off the steep decline of the previous couple of years, but the end of the decade was lackluster and pulled the average down. I did the averaging myself (could be off a few tenths); feel free to check it. Nevertheless, my point is valid.
I love your reply experiment. (seriously) Why do you assume that I am for CEO pay being 50x greater than the lowest paid in a company? I am outraged by CEO pay packages, as a citizen and a shareholder. I vote AGAINST the CEO pay package in almost every shareholder vote. My 0.002% of the shares doesn't seem to resonate though. Hah!
You're implying that if I am against socialism then I must be for excessive pay? I am for the free market correcting this imbalance (and it will) instead of government promoting it. What you say? Think of FNMA, big banks, GM etc...all got government support and paid their execs these types of packages.
Government only works when it's local and personal. You need to be able to walk over to your reps house, knock on the door, and ask him/her why they voted this way or supported that initiative. Power concentrated 1,000 miles away in DC (or a corporate board room) does not get held accountable.
Jason - It sounds like we are arguing for different things.
If you are talking about software, then capitalism works pretty well in the US and attempting to socialize it would be a disaster. If you are talking about Correctional Corporations of America, then capitalism is a disaster because the very profit motive that goes into better quality electronics will instead go into over-billing the state and under-servicing the prisoners. Putting prisoners into a system that profits from recidivism is not the best idea in the world. The central question here is whether the owner of the problem solution is the same as the owner of the benefits of a job well done (and how big of an agency problem you have in the latter case).
If you look at the results, we have 5 people in prison for every 1 in prison in 1980, when Ronald Reagan was elected. You could literally count off prisoners, 1, 2, 3, 4, 5 and four of those faces would not be in prison today if we hadn't had ALEC-sponsored law changes and Reaganomics.
Here is a thought experiment for you. What if the government didn't do any picking of company winners and losers, but did the following:
* Increased spending on science research from a miniscule fraction of our military budget to a larger fraction and used an NSA competitive bidding process to divvy out the money.
* Start a multi-national "Unpatentable medicine foundation" whose goals would be to research life-prolonging treatments whereever it is not profitable to pursue the research for whatever reason in the private sector. This could operate via a competitive micro-grant bidding process.
* Create a flat 20% revenue tax on companies that pay their highest 10x or more than their lowest accounting for stock grants, subsidiaries, and captive suppliers. This means your uncle with the pet shop or grocery store will have an easier time competing with walmart and petsmart, but it is not picking winners and losers.
* Bump that up to 30% for imports and for companies with a 50x ratio. Stock grants are handled with a 7 year reward lookback and suppliers are handled by using the lowest paid supplier worker to calculate the ratio if the company buys more than X% of the supplier's output (captive supplier). The import tax can be set to automatically decrease when our trade moves closer to balance.
I imagine you disagree with some of the above, but could we at least agree that this is an issue of math and what works rather than a morality play of the lazy trying to take advantage of the hard working?
Jeff - interesting programs.
Why the bait and switch? I thought we were discussing the merits of FDR's programs in improving the economic situation and government involvement in the economy in general. You started by arguing for it using FDR's programs as a model of success. Now, you seem to be for government hands-off programs illustrated by your thought experiment. I can't understand what you are for and what you are against so this is my last response.
I am manually coming back to this thread b/c I don't use my real email. 🙂 I'm not going to manually come back to here to discuss waffling issues.
"would not be in prison today if we hadn't had ALEC-sponsored law changes and Reaganomics." What? Are you assessing some blame for the growth in prison population to supply side economics? You are slipping into "crack-pot land," Jeff. Most of the things you say sound quite intelligent, but then you have a zinger in there like this one. You just confuse me about your true arguments and beliefs, so again no need for me to read or reply.
Thank you for the discourse. It was entertaining.
you damm right, these people that want to get out of paying there part of tax and not help others is NOT AMERICANS, they like to have, but not GIVE.
...all this talk about everyone 'paying their part' or their 'fair share'.
Just what is the value (if fixed) or the percentage (if sliding) of 'their part' or their 'fair share'?
For example in the case of income tax, the Russians incorporate a flat 15%, the French 7% (which I guess is progressive, I do not know). Are either one of these 'their part' or 'their fair share'? Are both of them? How could that be?
Booker, you miss the point. If I want to help less fortunate people (and most of us do), I should be able to direct my time and money to who I think deserves it and in what proportion. You're advocating that the government should take my money with taxes, then they can decide who to help.
Assuming you are for the government taking the money and deciding the winners and losers, please tell us what % is fair? 10% 20% 30%? 40%? more? Then, we can all look at our tax burdens (federal, state, and local) and know we are doing our part or not. Nobody I have this conversation with will EVER say a number.
With tax freedom day in America being around April 15th, we pay 29% (105 days/365) on average in taxes. Is that not enough? Looking at our current spending....NO!!! So how much should the government take if almost a third is not enough? Personally, I think 20-25% is the right answer.
The biggest problem is the tax system itself. They have so many different types that you don't even realize how much you pay. I wonder what fuel taxes would be if this were the only taxing mechanism....hmmmmm. I wonder what property taxes would be if this were the only taxing mechanism....hmmmmmm. I think the number would SHOCK ordinary folks.
"The biggest problem is the tax system itself. They have so many different types that you don't even realize how much you pay. "
I agree with this part of what you wrote. This is also why the tax system is far less progressive than most people think. Andrew Saez came out with a study that if you include all taxes, then the top tax bracket earns 59% of the income and pays 63% of the taxes.
When I speak of income redistribution, I am not talking about redistributing from someone making 200k to someone making 20k. I am talking about putting less burden on someone making 200k and more on someone making 20M a year. Every dollar of the local rich doctor or lawyer's income has at least a chance of participating in the economy if we only produce goods to cater to that. When Michael Bloomberg gets a hot dog at the park, though, you and I have a better chance of winning the lottery than one of his dollars has of being used to buy that hot dog.
Er. I mean Emmanuel Saez, not Andrew. Sorry.