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The Daily Reckoning | Friday, January 27, 2012
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Where to Go From Here Tax Laws, Corruption and Other Reasons to Expatriate
Reporting from Buenos Aires, Argentina...
Joel Bowman
Here’s a meaningless abstraction for you, Fellow Reckoner. You ready? US GDP grew at an annualized rate of 1.7% for 2011.
Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement?
What, if anything, does it really say?
Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter.
Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”
But let us imagine for a moment that there was such thing as an economy independent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading...or the payroll numbers of Census employees that pumped up 2010’s read.
According to the first example, the more goods that get destroyed prematurely...the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks...the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?
Sure, nobody would have a roof...but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade!
But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories.
We’re in the mood for some good news today...something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week:
According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone.
To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young...and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days.
The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation.
As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct...but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week... If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.
Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under...‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”
“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”
Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to be amongthem if you don’t want your own pockets picked.
But then, what kind of horrible fate is that...where one becomes the very evil they despise in order to protect themselves from it?
Hmmm...we don’t know. Try writing your congressman. He surely will.
[Ed. Note: Of course, with the reams and reams of paperwork and legalise to hoop through, it can be difficult to map a safe and secure exit strategy that won’t leave you infringing against some inane rule or another. With an ever-mounting debt load, the state needs tax slaves more than ever...and you can bet it will be doing all it can to make sure you don’t slip past their guard.
But there are (for now) still a few safe, perfectly legal, ways you can use to invest and, indeed live, outside the United States. In fact, we’ll be showcasing some of the best of these strategies at our Rancho Santana Sessions, down in Nicaragua this coming March. At the conference (which has a strict, 30-attendee capacity), you’ll learn how to diversify your retirement accounts to include income- producing assets, protect your estate and personal property, and reduce tax liabilities using foreign investments. Learn more here.] The Mother of All Financial Bubbles is Just Now Starting to Pop...
The wild ups and downs in stocks and gold aren’t due to any single factor.
Everything’s shooting up and falling down because we’re witnessing a bubble start to pop that’s been expanding for decades. It’s time you learned the truth about what’s happening. Click here.The Daily Reckoning Presents Best Places in the World to Retire, Part II
By the Staff of International Living In the States today, most Americans are on the verge of retiring are much more likely to talk about their fears than their dreams. The cost of everything from healthcare to food is rising, while incomes, pensions and nest eggs are shrinking... or at least not growing nearly as much as expected — leaving baby boomers with fewer and fewer options for retirement at home.
But all hope is not lost!
If you look at the right places beyond our borders today, you’ll find you have more good choices than ever for a comfortable — even pampered — retirement. In any one of our “Top 19” havens for 2012, a lifestyle well beyond your reach in the States could be yours for pennies on the dollar.
In the 2012 Global Retirement Index we bring you the top choices available on the planet today. From beachfront hideaways to arts- rich colonial cities, from cosmopolitan capitals to small highland villages, there’s an overseas haven to fit your fantasy... and your budget.
For our Retirement Index, we only measure the very best havens against one other. So the country last on our list is still the 19th best in the world.
In each of our 2012 top retirement destinations, you’ll find thousands of ordinary folks who’ve not simply salvaged their retirements overseas... but upgraded them.
The Most Exciting Retirement Haven
Let’s get this out of the way...none of our picks are boring places, it’s just that some have more to offer than others in terms of the range of amenities and entertainment options to keep you busy.
If variety is the spice of retired life, then Paris, Panama City, the expat communities of Mexico, Medellin in Colombia, and Bangkok, Thailand, should be top of your list. Here you’ll find something different every night... Choose from catching a concert, seeing a movie or eating out with friends for a fraction of the cost back home.
“Thai food is amazing,” says Jason Gaspero, “But if you get tired of it, you can find restaurants with food from all over the world.” In Medellin’s El Poblado district you’ll find Japanese, French, seafood and Italian restaurants within a block of each other.
In Malaysia you’ll catch a movie in English for $4...before it comes out in the US. In Punta del Este, Uruguay, artists like Shakira don’t just perform there, they live there, too.
If you love the sea, then Placencia and Amergris Caye in Belize, Roatan, Honduras, and Panama’s Caribbean Coast make sense. Scuba diving, fishing, sailing, kayaking and snorkelling, they’ve got it all. And if surfing is your passion, catch the best waves on Nicaragua and Costa Rica’s Pacific Coasts.
For foodies in love with culture, Spain and Italy offer a menu of delights unmatched anywhere else, even the smallest villages ooze history, and art is everywhere. You’ll find delicious three-course meals for less than $20 in both countries, too.
Of course, you might be content with amazing new views, meeting friends down the boardwalk and a homecooked meal. “If you’re looking for exciting night clubs, Kentucky Fried Chicken, or a night at the opera, Bahia, Ecuador, is not for you. But for peace, simplicity, a dish of Pingüino ice cream, and soothing natural beauty, this is heaven,” says Patricia Farmer. “You would be hard-pressed to find such tranquility in any beach resort town in the US. Even the wealthiest people inhabiting fortress-like beach homes on the hills of Malibu have to spend much of their lives sitting in rush hour traffic, breathing in smog, and feeling the crush and pressures of a type-A culture.”
Healthcare in our Havens
In each of our 19 havens you’ll find first-class hospitals and clinics where care is second-to-none, and the staff are often US- trained. But while the care is similar to the US in many places, it’s a lot cheaper than back home. You’ll literally save thousands on procedures if you need them, and hundreds on prescriptions and doctors’ visits.
For example, a visit to the doctor in Nicaragua is $15, in Panama its $10 and in France house calls are standard. In fact, in many of our choices, doctors put a value on the personal touch. “Our doctor in Nicaragua speaks English and we have his personal cell number for emergencies. Hard to imagine that happening in the US.” says Darrell Bushnell.
In many of our picks the public health care systems provide wonderful low-cost care. In Costa Rica, the public health care system, called the Caja, is part of a socialized medical system. Living in the Central Valley, Sharon and Lee Harris are members. “It provides economical and excellent medical care as well as prescriptions for only $40 per month for both of us. There is a Caja clinic in every neighborhood. There are also many excellent private hospitals in the Central Valley and state-run Caja hospitals in every province,” says Sharon.
The Ecuadorian government guarantees senior citizens access to free health care and medication and exemption from notary and registration fees. “All expats are able to participate in the Ecuador Social Security medical program,” explains Jack Moss who, with his wife Debbie, retired to Cotacachi two years ago. “The premium is about $57 a month, and there is no co-pay or deductible for physician visits, hospitalization, medications, or dental visits.”
Even just living overseas can improve your health, as Lucky and Erin Ivy point out on page 11 of this issue. On the sandy beaches of Placencia, Belize, they found a stress-free life that means they sleep better, and feel healthier, than ever before.
The Best Retirement Infrastructure
These days, you can have a US phone number ring in your home overseas for less than $20 a year. Through online services like Skype, you can video chat with friends and family back home every day if you want to — for free. The world is more connected than ever, and that makes exploring it so much easier than it ever has been.
Good Internet coverage is a necessity most expats today are reluctant to do without. In all our havens, rest assured: You can get online. Malaysia, Italy and France have higher levels of Internet penetration than other countries — but there’s access in all of them. Quality roads and good cell phone coverage matter, too. Now, you may not want to drive, and in that case, you’ll want access to a good public transport system.
In Paris, expat Jim Leavy says he’s delighted by the great public transportation...in Cotacachi, Ecuador, IL editors Dan Prescher and Suzan Haskins get by with taxis and buses. When the mood strikes, Patricia and Ron Farmer can explore the sandy beaches of the Ecuadorian coast by taxi — $35 for the whole day. And what about direct, cheap flights home to the US to visit family? You don’t even have to fly to get to Mexico; you can drive. It takes less time to fly from Houston to Quito or to Panama City than it does to fly from New York to Los Angeles.
The Best Climate
You’ll find lots of climate choice in our top retirement havens. Sharon Hiebing says she practically lives in tank tops and shorts now, and only occasionally needs a light jacket or close-toed shoes. Ever since her move to San Ignacio, Belize, Sharon has been enchanted by the climate. She’s not alone. Thousands of expats have turned in their snow shovels for good.
In places where the weather is warm year-round, not only do you eliminate the need for heavy winter clothes, but you gain in quality of life. Better weather means you’re outside more. And that often translates to “healthier.” Plus it usually means lower utility bills, too.
In Belize you’ll find an average temperature of 80 F, and it isn’t even one of our highest scoring havens in this category. Because pretty much all of our picks offer a perfect climate for part of the year, we concentrated on the ones that are the best year round.
But you could opt for the part-time strategy — capitalizing on good weather in different parts of the world. That’s what Kelly and Angela Grams do. They live lakeside in Canada May to September, then head south to their second home in warm-weather Puerta Vallarta, Mexico, October to December. Then every January to April they rent out their Mexican condo to cover their costs and spend those three months traveling.
How to Know You’re Safe Overseas
The expats living in each of our top havens report they feel safe. In fact, often they say they feel safer than they did back in the States. That’s not to say there’s no petty crime or that nothing bad ever happens.
But just as you wouldn’t dismiss the idea of owning a condo on Chicago’s upscale Magnificent Mile because of the crime stats on that city’s south side...you shouldn’t reject a town we recommend in a country where you can retire well for less...because you remember hearing something about that nation being “dangerous.” Old stereotypes die hard. You’re best served by seeing a place for yourself. Talk to expats on the ground. See how comfortable you feel there. We predict: You’ll be pleasantly surprised.
Regards,
The International Living Team,
for The Daily Reckoning
Joel’s Note: For more than three decades, our colleagues at International Living have been showing readers how to live better for less and invest for profit outside the States, outside the dollar, in destinations around the world that are cheaper, healthier, safer, freer. For a free research report on today’s best opportunities, go here.
As for those Fellow Reckoners interested in doing a little “boots- on-ground” research, we encourage you to join us in Nicaragua this coming March for...
The Rancho Santana Sessions
Learn how to diversify your retirement accounts to include income- producing assets, protect your estate and personal property, and reduce tax liabilities using foreign investments...all from the paradisiacal setting of the Nicaraguan coastline. We’ll have more on this as the event draws nearer...but please note that positions are limited to just 30 spots. We don’t expect they’ll remain available for long. We hope you can make it. Again, here’s a link to get you started. A Wealth Chance This Extreme Pops Up Once Every Few Lifetimes
Only 62 people know exactly why these four companies could change the world. Starting right now, you’re #63 on the inside. That means you’re on the verge of massive wealth.
Click here for the full story — you can’t afford to miss this epic, one-time wealth chance. Bill Bonner Unattainable Government Goals
Reckoning from Baltimore, Maryland...
Bill Bonner
Yesterday, investors digested the big news from Wednesday...the Fed’s announcement that it would continue handing out money, asking nothing in return, for the next three years.
Stocks went down. Oil stayed under $100. The yield on the 10-year note fell under 2%. And gold just kept going up.
The New York Times reported:The Fed said that it now planned to keep short-term interest rates near zero until late 2014, continuing the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers.
How do you like that, dear reader? The Fed has goals for unemployment and inflation. Targets. And it moves its policies around in order to achieve its goals.
“What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said Kevin Logan, chief United States economist at HSBC. “That’s what they concluded — ‘We’ve eased policy a lot, but we haven’t eased it enough.’”
The new forecast showed that the Fed expects to hit its inflation target over the next three years, but to fall well short of its goals for unemployment. The Fed projected that unemployment would drop no lower than 8.2 percent this year, just slightly below the current rate of 8.5 percent, and no lower than 7.4 percent by the end of next year. By the end of 2014, the Fed still expects that at least 6.7 percent of people actively interested in working would not be able to find jobs.
Of course, it doesn’t necessarily hit its goals. Still, we’re supposed to believe that by trying to hit them it somehow encourages them in the right direction...
Most people believe they are successful. Which makes us wonder. Maybe the Fed should set goals for other things? Weight-loss goals, for example.
The idea is that by changing interest rate and banking policies the Fed actually influences inflation and employment. So, there’s a logic to thinking that the Fed should set targets and try to hit them. Trouble is, if it could really change things for the better, why does it put up with an 8.5% unemployment rate now — four years after the subprime crisis began? Why doesn’t it exercise its magic to bring the rate down...?
Well, we all know the answer. It can’t. Once you’ve taken interest rates down to zero...and announced that you’ll leave them there for the next three years...what more can you do? Drop money from helicopters? Right!
But no point in getting ahead of ourselves. Right now, interest rate policy doesn’t work. Because the money supply is expanded by retail and commercial bank lending, not central bank lending. The Fed lends money to the money-center banks. They’re happy to take the Fed’s money. But that doesn’t mean they will multiply it out by risking it in the economy.
So, for the moment, they might as well set a fat goal...too...
And more thoughts...
Excuse us as we pause in admiration and shock...
We had a sneaking suspicion that Alan Greenspan, former Fed chief, was not as dumb as he pretended to be. When he was on the job he could barely say a straight sentence. Probably because he didn’t really believe what he was saying.
Since he’s been unemployed, he’s begun to speak more clearly. In yesterday’s Financial Times he has an opinion on capitalism which is actually among the best in the series. In it, he makes a good point. Anti-capitalists are not really annoyed at capitalism. What bothers them is “crony capitalism:” “Crony capitalism abounds when government leaders, usually in exchange for political support, routinely bestow favors on private individuals or business. That is not capitalism. It is called corruption.”
Or you could call it zombification...or geriatric capitalism...or, as Kurt Richebächer used to call it, “degenerate capitalism.” But it’s not real capitalism.
The ‘greed’ that preoccupies Occupy Wall Street demonstrators is not a feature of capitalism, Greenspan points out. It’s a feature of human nature. He might have pointed out that socialists are just as greedy as capitalists. They are just more corrupt. Rather than get their gains by honest deception, they get it by brute force — by using the police power of government to take it from others.
Greenspan provides an example of a corrupt system, designed to protect the wealthy from competition — immigration law. It keeps out qualified foreigners willing to work for less:
“The H1B program is in effect a subsidy for the wealthy, a policy that is anathema to the supporters of capitalism.”
He goes on to suggest that “improvements” to capitalism, such as those to be considered today in Davos, are not likely to be good ones.
Good on you, Alan.
*** “Hey Bill,” writes a Dear Reader, “How can you say America is going to Hell? We’re the most Christian country in the world.”
The trouble with Christians is that from time to time they render unto Caesar far more than he deserves...and lose sight of their own faith. Hardly had the martyrdoms stopped under Emperor Constantine than early Christians began pointing the figure, calling one another heretics...and then murdering each other.
Christian crusaders sacked the Christian city of Constantinople on their way to the Holy Land ...where they did even worse mischief. In the 15th century, Lutherans under Charles V gave Rome a worse sack than the barbarians had a thousand years before. They raped nuns, murdered priests, and stole whatever they could carry off.
And now, once again, Christian mobs are calling for blood. Jon Utley, who we met Tuesday night, explains why America’s evangelical Christians are an ungodly bunch. Logically, they should support Ron Paul. He opposes abortion, gay marriage and promiscuity. He’s never been divorced. Two of his brothers are ministers. And he’s a Baptist. What more could they want?
What they want, Utley explains, is to live by the sword:Why...are evangelical leaders now opting for Santorum, and before him Gingrich? The one big area of disagreement with Ron Paul is war; foreign wars and the domestic one against drugs. For this they oppose him. Santorum supports unending war in Afghanistan, backing Israel without limit and a new war against Iran.
Regards,
Earlier there was a major far leftist candidate who supported all the issues that evangelicals oppose, and was a vocal proponent for expanding Israeli settlements on the West Bank and promoting the war on Iraq. He was overjoyed when open homosexuality became allowed in the military, he supports abortion, gay marriage and the leftist agenda for big, intrusive government; power to labor unions as well as expanded, unconstitutional police powers within the US. Evangelicals adore him and went all out to support him 2006, when he lost his primary race and ran as an independent for the Senate. He is Senator Joseph Lieberman of Connecticut.
All this shows how evangelical leaders put support for wars ahead of their social values. Their support includes every new law giving Washington ever greater police powers over American citizens, such as the Patriot Act, Military Commissions Act and the recent National Defense Authorization Act which tear asunder much of the Bill of Rights. Most also supported torture of prisoners of war (with the notable exception of Chuck Colson of Prison Fellowship). All this comes with their “social values.”
They loved George Bush. They were major supporters of the two wars against Iraq and the occupation of Afghanistan. Fear and ignorance of the outside world joins together with a belief that God uniquely favors America. Mostly poorer Southerners they also have strong affinity for the American military and its industrial complex. In addition, author Chris Hedges has written about how they are joined by many Northern blue collar families hurting from new technology, globalization, and poor schools in seeing government as out to undermine their communities and social values. Their solace is to hope for Armageddon.
Evangelicals like to quote a biblical text that God favors those who favor the Jews. However, for them they mean only Jews who make wars and contribute to chaos in the Middle East. Jewish peacemakers are cursed in their view. No tears were shed for Yitzak Rabin who negotiated peace with the Arabs until Israeli fanatics killed him. Indeed Pat Robertson said that Rabin was killed because he was trying to thwart God’s plans.
Herein lies their antipathy to Ron Paul, who in all other respects is a family values conservative. Indeed, most of them are Baptists who used to look upon Catholics with suspicion. Today they would prefer Senator Santorum or Newt Gingrich, both Catholics, to Ron Paul, who is Baptist. Santorum is no libertarian believer in limited government (he would use government to enforce his social values) and urges absolute support for Israel and the military industrial complex. These evangelicals don’t want peace because it would mean postponing Armageddon. That’s why their leaders oppose Ron Paul.
Jon Basil Utley is Associate Publisher of The American Conservative.
Bill Bonner
for The Daily Reckoning
Friday, 27 January 2012
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