Wealth International, Limited

Offshore News Digest for Week of May 14, 2001


Pierre LEMIEUX, economist and professor at the U. of Québec at Hull, Canada, lays bare the real agenda of the recent Quebec Summit of the Americas; a cartel whose main export could be statism and lost liberties.

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Summit of the Americas free trade deal agreed.

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Time magazine (Europe)'s "Letter from the Isle of Man: A tax haven that mixes Celtic tradition with sophisticated money."

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Special feature: The Isle of Man - Life After the OECD

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The Times of London's superficial treatment of what's supposedly happening on this Channel Island haven.

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What's really happening; planned tax cuts on Jersey.

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Last year the US domestic FBI began sending agents around the world. Now the U.K. police are following suit. Excuse? Money laundering!

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ROME. Italian voters who "want to get the state off their backs and out of their wallets" are poised to make the billionaire Silvio BELUSCONI their next prime minister.

More on this story here.


WASHINGTON. Another battle between US and Bermuda insurers over closing an alleged tax loophole some US insurers say favors offshore insurance holding companies.

More on this story here and here.


PANAMA CITY. Riots and disturbances here this week were the worst since the dictatorship of General Manuel Noriega 12 years ago.

More on this story here.


AUCKLAND. A statist writer from down under wants even more income taxes imposed on NZ tax exiles.

More on this story here.


Low Tax Net provides information for 55 offshore and haven nations, here.


Tax havens are richest per capita. UK way down at 29th place!

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The Bush administration pushes to cut the top US income tax rate from 39.6% to 33%.

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A bill in Congress by libertarian Rep. Ron Paul (R-Tex) repeals the 16th Amendment and bans "taxes on personal incomes, estates and/or gifts."

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Affluent Americans crave cradle-to-grave security "guaranteed" by government.

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Lackluster gold sales calls for a new promotional campaign to sell the "warm" metal.

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Pack common sense along with your passport.

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Country list of worlds dangerous places.

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More on this story here and here.


World currency converter, here.

Local time by nations & by major cities, here.


An international treaty on law enforcement for the web poses unsettling questions about civil lost liberties.

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Congressman seeks end to income tax, clarifies duties of government.

A proposed constitutional amendment by Rep. Ron Paul, R-Texas, speaks for itself: "Three years after the ratification of this amendment, the sixteenth article of amendments to the Constitution of the United States shall stand repealed and thereafter Congress shall not levy taxes on personal incomes, estates, and/or gifts."

The 16th Amendment, ratified in 1913, allowed the federal government to levy a tax on all incomes. House Joint Resolution 45, dubbed the "Liberty Amendment," would strip the federal government of that authority.

"America existed for nearly 140 years without an income tax," Paul concluded. "The federal government generally adhered to its strictly enumerated constitutional functions during that time, operating with modest excise revenues. When Congress introduced the 16th Amendment, it opened the door to the era of big government. This amendment would close that door."

Many Americans believe they are overtaxed, and investigations into the Internal Revenue Service in recent years have shown the agency to be abusive in the exercise of its authority to collect taxes. The tax code increasingly faces grass-roots legal challenges, and interest in flat-tax and national sales tax proposals is at an all-time high, giving Paul's proposal enormous popularity among disgruntled taxpayers and those simply weary of big government.

While there have been several legal challenges to the veracity of the 16th Amendment's ratification, all such challenges have been rejected by the courts. Plaintiffs argue then-Secretary of State Philander Knox committed fraud when he declared the amendment had been properly approved by the appropriate number of states. (Editor's note: For a more in-depth discussion of this argument, see the April issue of WorldNetDaily's monthly print magazine, WorldNet.)

The Texas congressman criticized his colleagues' frequent manipulation of the massive tax code through various exemptions, credits, deductions and the like.

"America clearly is ready for sweeping tax reform, yet Congress remains focused on rewarding certain constituencies by forever making complex small changes to the existing tax laws. The Liberty Amendment is an attempt to eliminate the system altogether, forcing Congress to find a simple and fair way to collect limited federal revenues. Most of all, the Liberty Amendment is an initiative aimed at reducing the size and scope of the federal government," he wrote.

If approved, the measure will accomplish that goal through more than elimination of the federal income tax, which is the last of four sections in the bill. Comprised of only four sentences in all, the resolution's first section prohibits the federal government from engaging in any business "except as specified in the Constitution." The measure also states that all "activities" of the U.S. government that violate the Constitution will "be liquidated and the properties and facilities affected shall be sold" within three years of the resolution's adoption.

Critics of HJR 45, however, believe the government is acting within the boundaries of the Constitution by providing public education, welfare services, foreign aid and numerous other programs. But Paul says the sweeping nature of such programs has made government too involved in the lives of individuals.

"The income tax has given government a claim on our lives," Paul stated. "It has enabled government to expand far beyond its proper limits, invade our privacy and penalize our every endeavor. The Founding Fathers never intended an income tax, and they certainly would be dismayed to know that Americans today give more than a third of their income to the federal government."

In order for HJR 45 to take effect, according to the text of the measure, the resolution must be adopted by three-fourths of the states in the Union within seven years of the date Congress adopts it. The most recent constitutional amendment, which was proposed by the First Congress on Sept. 25, 1789, and was first adopted by Maryland in December of that year, was ratified on May 18, 1992. It provided that congressional pay raises could not take effect until after the next election.

More on this story here.


In the late 1960s Wilbur Mills, the mighty chairman of the House ways and means committee, held show hearings to expose all the ways the rich got away with paying fewer taxes.

The problem, it was said, was that progressivity was not working properly. America, to be sure, had a structure of graduated rates, but somehow the wealthy were not paying those rates. Instead, mysteriously, a number of loopholes had worked their way into the tax code. Often, these loopholes were being used in ways their authors had never intended. The system had become too complex, over-engineered. And the loopholes were so numerous that some of the wealthy wound up paying a lower rate of tax than some of the middle class.

Joseph Barr, the Treasury Secretary, was also intent on exposing the evil rich. As Julian Zelizer recalls in his book Taxing America, a biography of Mr Mills, Mr Barr published a list of shame showing that 155 wealthy American families paid no income tax at all, even though they earned Dollars 200,000 or more.

So the Nixon administration and Congress came up with a solution. They would get the rich by making a complex system even more complex. They did this first of all by taking numerous steps to strengthen the progressive rate structure. They also created an alternative tax regime, a sort of fiscal penalty box, to punish rich guys who claimed "too many exemptions" or "too many preferences" by sending them there. In that regime, many of the usual loopholes would not be allowed. Thus the Alternative Minimum Tax was born.

The programme's authors were sure that their gizmo was watertight, that this time they had finally managed to trap the errant rich guys. And trapping the rich guys was their paramount goal. Although today Washington's budgeteers report that killing the AMT would cost hundreds of billions of dollars, it was not originally a revenue-getting exercise. In other words, the plan was pure behaviouralism.

Fast forward to today. Just as in the old days, we have a get-the- rich progressive rate structure. Just as in the old days, people are screaming that the rich are not paying enough taxes. And just as in the old days, government's special devices are not working as advertised.

Indeed, the star failure turns out to be the AMT. The scholarly journal Tax Notes reports that the National Association of Enrolled Agents, a group of tax professionals which negotiates with the Internal Revenue Service on behalf of taxpayers, has honoured the AMT with the label "Tax Headache of the Year".

The charges against the AMT are numerous. Rather than precision-bombing the rich, as was originally intended, the AMT is hitting many of the middle class. It is hurting families, who may not claim "too many children" for fear of being sent to the penalty box.

It is also murdering the high-technology crowd. That is because this group often takes advantage of their companies' incentive stock options, or ISOs. And when workers exercise those options, the difference between the fair market value on the day of exercise and the strike price is often taxable under the AMT regime. In other words, because of the AMT and the market correction, these folks pay taxes on income they never had in the bank.

Still, once again Congress is treating the matter in the old fashion and holding hearings. They are ignoring what should by now be clear: the real problem is progressivity, which inevitably generates loopholes. Lawmakers have instead come up with a wonderful set of mini-solutions for the AMT's failures, all very technical and reminiscent of the late 1960s' efforts. Indexing the AMT, they say, would help the middle class escape the ugly levy. Rejigging the AMT preference list would also do much to make the AMT fairer.

Zoe Lofgren, a California Democrat, has proposed special narrow legislation to target the dread ISO problem. "My constituents are a lot more interested in this bill than they are in marginal tax relief for people in the top 1 per cent bracket," she says.

If this is so, those constituents deserve their AMT punishment, and more. For if the AMT fable reveals anything, it is that "getting the rich" nearly always backfires. We have met the rich, and they are us.

More on this story here.


According to a recent survey by market research firm CF Group Inc, 67% of Canadians think that most people are honest and pay all the taxes they should, up from 59% who felt that way in 1995. The CF Group telephone survey of over 1,000 Canadians, aged 18 and over, was conducted between January 15 and 22 this year.

David Stark, public affairs director of CF Group, said in a statement: 'Canadians are somewhat more positive about taxation in Canada now than they were in 1995. The number of Canadians who think that they get good value for the taxes that they pay to governments has increased from 37 per cent in 1995 to 42 per cent today. Recent federal and provincial tax cuts probably have a lot to do with it.'

Nonetheless, a large number of Canadians believe that they are not getting good value for their tax dollars and think that governments squander a lot of the money they get from taxes. And despite many Canadians thinking that most people are honest when it comes to paying tax, some say they would personally evade taxes if they had the opportunity and believed they would not get caught. Of those surveyed, 17 per cent would not report some income on their income tax return.

Mr Stark commented: 'There is a greater sense now that the Canada Customs and Revenue Agency (formerly Revenue Canada) has stepped up its efforts to clamp down on tax evasion and the underground economy. In 1995, just over half of Canadians believed that tax evasion had increased between 1990 and 1995. Today, 37 per cent feel that tax evasion has increased over the past five years.'

Over two-thirds of Canadians believe today, as they did in 1995, that if taxes were lower, fewer people would try to evade them. 'While Canadians are largely supportive of the CCRA increasing its efforts to catch people who cheat on their taxes, and they feel somewhat more positive about taxation now than they did in 1995, there is still a sense that the present tax system is basically unfair to average Canadians,' said Mr Stark.

More on this story here.


High school students who protested what they considered infringement of their free-speech rights last week will be allowed to wear armbands with socialist symbols, school district officials said Monday.

The district and Principal Ron Briggs decided to allow students to wear the armbands after lawyers said banning the symbols - red stars on black backgrounds - would infringe on the students' first amendment rights to free expression.

"I guess we probably should have known right away that you can't keep kids from wearing political armbands because of the Constitution and the Supreme Court," said associate superintendent Joe Graybeal.

Two students were asked to remove the armbands April 26 because a bus driver complained about the symbols.

Students ---- hundreds of whom wore paper stars with the words "Free Speech" last week to protest that decision ---- called Monday's announcement a triumph for free-speech rights at high schools.

"This shows that just because we are students, we are not going to just roll over if someone tramples on our rights," said junior Jennifer St. Clair, 16, who helped pass out flyers and red stars after her friends were asked to remove the armbands.

Briggs said he asked the students, juniors Ashley Bagnall and Jonathan Martin, both 16, to remove the armbands because he wanted to check with the district before allowing the bands. Martin, 17, a junior at El Camino High School, wore the armband as a symbol of his socialist ideology.

Banning the armbands would have flown in the face of a 1969 U.S. Supreme Court decision that allowed high school students to wear armbands protesting the Vietnam War, Graybeal said.

Even in the 21st century, students need to continue to fight to preserve their expression rights, said Ashley.

"Nothing is more important than free speech," she said. "Maybe someday someone will read about this or hear about it and realize that they can stand up for their rights, too."

Not all El Camino students were pleased with the district's decision to allow people to wear a symbol that might offend their classmates.

"There are people in the world who have died for symbols like that, and people shouldn't be wearing it around like it's nothing," said Kiley Robinson, 16, a junior. "It could really offend some people."

The protest and eventual victory for the students was a good civics lesson for the students, Briggs said.

"These kids stood up for what they believed was justice, and they did it peacefully and did it right," he said. "Nobody wanted to stifle these kids or their expression; we just needed to check on it. We did, and they're right."

The incident taught administrators a lesson, too, Graybeal said.

"They taught us to look at something harder before we make a decision," he said.

More on this story here.


Why have many of our most successful and wealthy business people left New Zealand?

Some will argue it is because of a rise in the upper tax rate to 39 per cent and excessive Government regulation. But the opposite may be true; it could be because our tax rules are lax and sympathetic to individuals whose primary source of income is derived from overseas investments.

Any individual can avoid paying New Zealand income tax by leaving the country for 325 days in any 365 day period and taking their family with them. They must also sell their primary residence and have no intention of returning, thereby severing their "enduring relationship" with the country.

It is as easy as that.

Afterwards they may return for no more than 182 days in any 365-day period and still pay no tax here on overseas income.

Having left, they have to find a country with a sympathetic tax regime or become permanent travellers.

In several jurisdictions income earned outside that country is non-taxable. Under certain conditions expatriates living in Britain are not liable for UK income tax on earnings derived offshore. This is why many wealthy pop stars and Arabian Gulf Sheikhs are based in London.

Most employees cannot avoid paying tax because their income is taxed at source in most countries.

The other option is to become a permanent traveller. Individuals may own homes in several countries under company names and never become permanent residents. As long as they don't spend too much time in any one country they fall between the cracks and can avoid paying tax anywhere.

It has been argued that many of our wealthy expatriates would return if the top income tax rate were reduced from 39 per cent to below 20 per cent.

This is unlikely because many of them have a strong philosophical opposition to taxation. They believe the Crown squanders and misallocates the money it collects through the tax system.

Why pay tax here when one can leave the country and avoid paying any tax on worldwide investment income?

The departure of these wealthy businessmen is a loss both in terms of skill and equity capital. It also reduces the country's taxation base.

The voluntary exile of wealthy individuals has hurt many Latin American countries, particularly Argentina, over the past 50 years. It is a recent development in this country and is expected to have a negative impact on economic growth.

As a country we go backwards if the Government invests $20 million in a venture capital scheme while one of our best businessmen leaves the country with more than 10 times that amount in his back pocket.

The tax regime in the United States is far more restrictive. US citizens and green card holders are taxed on their worldwide income no matter where they live. They continue to be taxed in the US for 10 years after renouncing their US citizenship.

To obtain a replacement citizenship, a US citizen usually has to live permanently in another country and it is much more difficult to avoid paying tax when one is seeking to become a new citizen.

There is also a comprehensive capital gains tax in the United States. The only exemption is on the initial $US250,000 profit on the sale of the primary residential property or the first $US500,000 in the case of a married couple.

In contrast, a number of our richest businessmen have obtained a large proportion of their wealth from non-taxable capital profits on the sale of shares in former state-owned enterprises.

Wealthy New Zealanders are on the pig's back as far as taxation is concerned. Their capital profits are non-taxable at home and they can avoid paying tax on their investment income by leaving the country.

More on this story here.


The European Forum calls for protection of taxpayers' privacy.

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The outcome of Swiss-EU talks may decide the issue.

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Offshore Business News & Research's six-month poll shows just how gullible and unrealistic some eager investors are when it comes to offshore scams. Many expect 100% investment returns!

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EXAMPLE: MANILA. The Philippine Securities & Exchange Commission shuts down 18 Manila based financial services companies allegedly involved in swindling foreign investors.

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EXAMPLE: MEXICO CITY. The head of a leading Mexican construction company and his family are charged in a massive offshore insider trading scheme.

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EXAMPLE: ORLANDO. Bankrupt: Evergreen Securities, a Florida based offshore investment fund promised high returns and secrecy; 2,000 people worldwide entrusted them with $214 million.

More on this story here and here.

However, well managed closed ended offshore funds are worth a look. They're listed on stock exchanges, and shares trade at discounts to the funds' net asset value.

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The U.S. Marshals Service hires an online auctioneer to sell real estate and other assets seized in US federal criminal cases.

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Consider the post mortem havoc wrecked by crooked estate lawyers. Plus tips on how to avoid the bad guys.

More on this story here and here.


SAN JOSE. A new government “Investors Manual” in Spanish offers foreign investors a step-by-step start-up guide for business.

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A British economist says God damns the euro!

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Two leading experts explain international criminal anti-money laundering laws and how dirty cash is detected.

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BERN. Speaker of the SWISS House of Representatives, Peter Hess, denies offshore IBCs he directs have engaged in money laundering.

More on this story here and here.

HONOLULU. Official watchdogs say they have underestimated the extent of money laundering in the ASIA PACIFIC region.

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TOKYO. Money laundering scrutiny in JAPAN is lax and banks here are said to be routinely abused by criminal elements.

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THE BAHAMAS. The government admits anti-money laundering programs here are being run with help from Washington and London.

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BUENOS AIRES, Argentina. A commission to investigate alleged money laundering by local banks contained in a US Senate report.

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US Senate minority report available for download in pdf file form here.

UNITED STATES. Main Street businesses, from leather goods stores to travel agencies, to consumer electronics boutiques are being pressured to adopt anti-money laundering "know your customer" practices.

More on this story here.
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