Wealth International, Limited

Offshore News Digest for Week of April 5, 2004

Note:  This week’s Financial Digest may be found here.

Global Business Taxes Asset Protection Privacy Law Opinion & Analysis



Cyprus aims to meet EU economic convergence criteria in 2007 but a widening public deficit is hampering efforts to meet the target date for eurozone membership. During EU accession negotiations, Cyprus was best placed among the 10 prospective members to meet the convergence criteria and be among the first to adopt the euro. But even after advancing its target date once, Cyprus is already struggling to meet the new 2007 deadline as spending spirals out of control and economic growth remains sluggish.

For new member states, there is a two-year waiting period before any country can apply to join the eurozone. Although the island’s growth rate of 2.0% is above the EU average, it is below the rate to which Cyprus has grown accustomed in recent years. A slump in tourism over the past two years has been a major contributor to the slowdown.

More on this story here.


Mauritius’s industry and financial services minister, Sushil Khushiram, wants to attract the right type of investors to an offshore financial center that does not want to be classified as a shady “tax haven”. “We want to distinguish ourselves from low-end, grubby-type, offshore financial centers. We are not after any funds of that kind,” he said. The kind of funds the former Dutch, French and British colony is after are the ones managed by institutions, hedge funds and investment holding companies. Unlike other offshore centers, Mauritius claims to be less keen on attracting assets held by rich individuals.

Experts believe a large pool of funds, most of which was traditionally kept in Switzerland, is looking for a new home due to a taxation agreement between Switzerland and the EU that could come into force next year. However, Mr. Khushiram says the republic’s good reputation -- recently enhanced by a positive report from the IMF and the World Bank -- relies on steering clear of funds that may be used for money laundering or other dubious activities.

And although many wealthy individuals invest in the funds Mauritius wants to attract, the minister argues that the country’s anti-money laundering laws will ensure Mauritius keeps its clean bill of financial health. In his three-city tour of Asia, Mr. Khushiram told investors in Shanghai, Singapore and Hong Kong that the main reason to register in Mauritius was its low tax rate.

More on this story here.


The EU is maintaining pressure on the US to drop tax breaks banned by the WTO, sticking to its promise to raise import duties on selected US products by 1% per month. Accordingly, tariffs on US imports increased last week from 5% to 6%. It had been hoped by many US lawmakers that alternative legislation would be ready for passage into law before the EU sanctions began to bite. However, the enabling bill recently stalled on the Senate floor after Democrats tried to attach an unrelated amendment concerning overtime rules, leaving its future somewhat uncertain.

More on this story here.


It has been a standard plank in the arsenal of Independence advocates. But the jury is out on whether full nationhood will foster national unity or help bring Bermudians together, judging from the findings of a recent survey of Bermudians. All were asked to put aside their position on Independence and consider only whether it could possibly bring about greater national unity. Rolfe Commissiong, political commentator and PLP supporter, says it could. “By erecting a national superstructure in terms of identity it can provide a model by which Bermuda’s three main ethnic groups -- blacks, Portuguese and whites -- can coalesce around thereby bringing greater national unity,” Mr. Commissiong said.

“Whatever ephemeral thing that Rolfe is looking for there will always be something more than he wants because the void he has will never be able to be filled. He will never be satisfied,” says Opposition MP Trevor Moniz. But he acknowledged that for some people Independence will be the ultimate high. “But it won’t do anything for me”, and it’s not because of any particular pride in being British. I have my own sense of my identity as an individual within my family, within Bermuda. I don’t need any more and I respect other people’s identity – I don’t expect it to be the same as mine.” And he said just as some people’s high hopes and expectations were dashed after the election of the PLP in 1998, so will it be with Independence.

More on this story here.


The Internet giants will stop carrying adverts for online casinos, blaming a “lack of clarity” in US regulations. U.S. prosecutors last month warned companies that running ads for offshore online casinos was equivalent to “aiding and abetting”. It is illegal to run an online gambling site from within the U.S. Yahoo said the ban would apply to U.S. websites only while Google self-denial hits all its sites worldwide. Some legal observers believe adverts for online gambling could be protected under free speech rights.

More on this story here.


Deputy prime minister Mary Harney announced that she was “amazed” at comments made by KPMG tax expert Paul McGowan with regard to corporate tax harmonization within the EU. Mr. McGowan suggested that Ireland should agree to an EU-wide minimum corporate tax level, in order to avoid becoming a victim of tax competition from the 10 new EU states.

The deputy prime minister announced that there was “no question of throwing in the towel” on corporate tax harmonization. She went on to add that “We have allies in Europe who think the same way about low taxes and I am confident that we will win the debate.”

More on this story here.


China issued a major ruling Tuesday on how Hong Kong chooses its leaders, saying the territory must submit proposed political reforms to Beijing for approval. Hong Kong activists immediately decried the decision. The Chinese government’s National People’s Congress issued the ruling in an interpretation of the Basic Law, Hong Kong’s mini-constitution. Officials said the committee’s interpretation was necessary given the wide range of opinions about the Basic Law and its use. They claimed the decision benefited the territory.

China’s intervention in Hong Kong affairs is the latest step in a three-month campaign against democratic politicians. “This is a top-down intervention from Beijing,” said Lee Cheuk-yan, a Hong Kong legislator representing trade unions. “This will intensify the already tense atmosphere in society.”

Mr. Lee said the interpretations eroded the “high degree of autonomy” that Hong Kong was promised for 50 years following its return to Chinese sovereignty in 1997. Other commentators said they violated the spirit of the “one country, two systems” formula under which Hong Kong’s special status within China has been protected.

More on this story here, here, and here. Hong Kong Basic Law full text here.

Has Tung’s role been usurped?

A law professor says Beijing’s decision to interpret annexes of the Basic Law suggests that it has relieved Chief Executive Tung Chee-hwa of his job as a spokesman for the central government. And National People’s Congress deputy Raymond Wu concurs, saying Beijing believes Tung is losing his grip on Hong Kong. “The central government believes it has already delegated a lot of power to you and that if it does not exercise its authority now and continues to give Hong Kong a free hand, it may go out of control,” Wu said in Beijing. He said that since Tung had lost his grip on Hong Kong, Beijing was losing its trust in the SAR.

More on this story here.

Hong Kong reformers protest election rule.

Hong Kong democracy advocates protested the Chinese government’s ruling on Tuesday that it would determine if and when the territory’s people could elect their local leaders. The decision, delivered as an interpretation of Hong Kong’s charter by China’s Congress, which is controlled by the Communist Party, crushed hopes that the former British colony could chart its own course toward democracy in coming years.

Opposition parties in Hong Kong attacked the ruling as an infringement on the 50-year period of autonomy China promised when it replaced Britain as Hong Kong’s sovereign power in 1997, and as a big step back for democracy. The Civil Human Rights Front, a broad coalition of pro-democracy groups, announced that it would hold a march on Sunday afternoon to protest Beijing’s decision.

More on this story here.

China acts to ease tensions with Hong Kong.

Seeking to ease tensions, the Chinese government dispatched a senior official to Hong Kong on Wednesday to reassure the enclave’s worried political activists that Beijing means them no harm. The envoy, Qiao Xiaoyang, deputy secretary general of the National People’s Congress Standing Committee, immediately launched into a round of formal meetings with Hong Kong’s intelligentsia, professionals and Legislative Council members. His swift arrival and willingness to discuss Hong Kong’s aspirations for full democracy were seen here as the beginnings of a charm offensive by the Communist Party leadership in Beijing after months of acrimony and name-calling.

More on this story here.

One country, one system.

China’s insistence that any political reform in Hong Kong will have to be approved first by Beijing has badly undermined the territory’s independence.

More on this story here.


On a balmy October day, the wife of an engineering tycoon leaped from her $96,000 BMW X5 in Harbin, a northeastern industrial city. Su Xiuwen angrily accused farmer Dai Yiquan of scratching her car mirror with his vegetable wagon. After slapping Dai, an enraged Su climbed behind the wheel and plowed into 13 onlookers, killing the farmer’s wife. At her trial, Su claimed she accidentally placed the automatic transmission in drive and had not meant to hurt anyone. A judge acquitted her of manslaughter but gave her a two-year suspended sentence for negligence.

Six months later, stoked by online discussion, the case has become a lightning rod for disgust at newly wealthy Chinese, who have prospered while millions of workers and farmers struggle to get by. “This society has become really unfair. With money and connections, you can arrange anything. And you don’t have to follow the laws,” said Zhang Ming, a security guard at a suburban Shanghai apartment complex catering to the newly wealthy. Some of the outrage in Su’s case followed allegations that her father-in-law was a powerful local official whose influence sheltered her from legal sanction. Investigators and officials denied she had any relationship to top officials or received special treatment.

More on this story here.


Dominica is unique among the Caribbean islands. Its rugged topography offers the adventuresome visitor a variety of challenging treats. It is impossible to go anywhere in Dominica without taking a little walk at the end of which is a stream, a viewpoint or some other natural site. Rivers, valleys, hills and mountains literally cover this “Garden of the Caribbean” where paint artists claim to be able to identify over a hundred shades of green.

Dominica’s Carnival is steeped in tradition. The local Kubuli beer is a favorite as are the fresh fruit juices and cool coconut water. And the food? Stuffed bakes, chicken in all styles, braff or pelau, fig and codfish or breadfruit and smoked herring.

More on this story here.

Business and second citizenship opportunities in Dominica.

The Commonwealth of Dominica is an independent English speaking island state situated between the French islands of Martinique and Guadeloupe. Dominica has a pleasant climate, particularly during the cool months from December to March. It is certainly one of the most beautiful countries of the Caribbean. Covering an area of almost 800 square kilometres, it supports a population of more than 65,000, including about 3,000 of the last surviving indigenous Carib people in the Caribbean.

Dominica offers good opportunities for investors and manufacturers. The workforce is well-educated, English speaking and friendly. Other advantages include tax breaks of up to 15 years, repatriation of profits, economical supply of electricity, and the possibility of tax-free entry of produced goods into the US market. Substantial European import benefits also apply. Due to the mountainous terrain only about a quarter of the island is cultivated, but the very rich soil produces substantial domestic and export crops. Organic agriculture is being encouraged and has great potential on this still untouched island.

The economy is largely based on agricultural exports including bananas, citrus, coffee, cocoa, coconut products and oil, tropical fruits, fruit juices and copra. Other exports are fish and various manufactured products including rum, soap, and timber. Due to a scarcity of white sandy beaches, Dominica never underwent the typical Caribbean conversion to a holiday island. However, tourism is an increasingly important sector of the economy, and luxury and eco-tourism are being encouraged.

Several independent nations have adopted programs which allow the acquisition of citizenship via a direct contribution to the state. Of those currently available, the Economic Citizenship Programme of Dominica is one of the most attractive. It has operated successfully since 1991, and it is based on a solid legal foundation in the Constitution of Dominica. For an individual (who can include spouse and up to two dependent children under the age of 18) a direct, one-time contribution of $50,000 has to be paid to the Dominica Government. As a citizen of Dominica you can live and work in Dominica at any time. You are not liable to taxation in Dominica on any income earned outside of Dominica. Most importantly, you will be able to travel on your Dominica passport without visa to more than 90 countries, including the U.K., Switzerland, Sweden, Hong Kong, and many others.

More information here and here.


The World Bank said too few people own too much of the economy and called on the government to mimic the United States’ great legal assault on its robber barons a century ago. In an exhaustive, 130-page study of the country’s top 1,297 companies, the bank found that just 23 individuals and groups hold 17% of all banking assets and control 35% of sales and 16% of employment in industry. All but one of the top five groups by sales are oil producers. “This is a fairly concentrated economy,” said Christof Ruehl, the bank’s chief economist for Russia and the main author of the report.

The nation’s wealthiest businessmen, commonly referred to as oligarchs, are less efficient asset managers than the owners of smaller businesses, the study found, although whether this is due to incompetence or because they acquired badly-run government companies was not clear. But by far the most inefficient industry owners are the federal government and its regional subsidiaries, who together account for a quarter of industrial sales and 11% of employment.

More on this story here.



About the time you reach for your 43rd cup of coffee and the tax forms start to dance menacingly in the air, you probably share a common daydream with most tired tax filers: What if I could just leave the country and be done with the IRS forever? Sweet dream. The problem is, unless you are well-heeled enough to afford top-drawer international tax advisers on both ends and start to plan your break years in advance, the IRS is going to have its hooks in you for 10 years after you trade allegiances.

Even if you manage the money limbo and escape with most of your assets, there is no guarantee you will be welcomed back into the United States even for a short visit, especially if you managed to land on the IRS list of folks who fled to avoid taxation. What is worse, if you fail to secure citizenship in another country before handing over your U.S. credentials, you could suddenly find yourself the proverbial man without a country, and you do not want to go there. “Anyone who gives up their citizenship in the U.S. without first establishing citizenship in another country is an absolute fool,” says Vernon Jacobs, an international tax adviser in Prairie Village, Kansas. “Even refugees are citizens of some country.”

Although the number of people who actually toss in their American citizenships each year has always been minuscule, when their net worth runs into the billions, Capitol Hill tends to take notice. As a result, Congress passed two laws in 1996 that amounted to an alley beating for would-be taxpatriates.

More on this story here.


This year the IRS intends to increase its enforcement efforts on the wealthy, crack down the promoters of tax schemes, pinpoint the misuse of off-shore accounts, and check for the failure of companies to file employment taxes and abusive corporate tax shelters. These efforts will attempt to turn the growing tide of mistrust in the tax system, which gained momentum in the 1990s, IRS Commissioner Mark Everson said.

In 2003, about 17% of Americans thought that it was OK to cheat on taxes, up from about 13% in 2002 and 11% in 2001, according to Everson. And 60% of people said they are less likely now than in the past to report their income taxes accurately and more inclined to take a chance on being audited. From 1996 to 2004 IRS enforcement ranks decreased by about a quarter, Everson said. The predictable result was less money taken in and fewer criminals prosecuted. “As a whole, 2004 will show a recovery of audits, more dollars collected, more investigations,” Everson said.

It is estimated the new IRS hires would generate several billion dollars in revenue by fiscal 2007, in part through audits of high-income taxpayers.

More on this story here, here, and here.


The US Treasury Department and the IRS issued guidance on certain kinds of abusive tax avoidance transaction in which corporations use partnerships to obtain inappropriate deductions for interest payments to related entities. Such transactions are now “listed transactions”, which means that participants in these transactions must disclose them to the IRS. In addition, promoters of listed transactions must keep lists of investors and, in certain cases, register those transactions with the IRS.

More on this story here.

Senate proposes new measure to combat leasing tax shelter.

A proposal put forward in a tax bill currently progressing through the Senate, will limit many firms in claiming billions of dollars in deductions from infrastructure leasing arrangements with local governments. Although the new measures will not prevent firms from benefiting from arrangements where companies lease back public assets such as bridges and dams whilst claiming large depreciation allowances, they will limit the amount that can be claimed in the initial stages of the lease, thus delaying the tax benefits to the firm.

More on this story here.


According to a report released by the US Government Accounting Office, during the 1996-2000 period, 71% of foreign-owned firms and 61% of US firms paid no income tax on profits from their US operations. The GAO suggested that companies may not report US income tax due to a variety of reasons, including operating losses, losses carried forward from preceding tax years, large tax credits and transfer pricing activities.

Some tax experts said yesterday that the study offered a misleading view of tax avoidance. Chris Edwards, director for fiscal policy studies at the Cato Institute, said the study overstated the percentage of nontaxpaying companies because it computed tax liabilities relative to a company’s total income, not to its net profit or earnings. Total income, he said, does not take into account what he called normal and often-significant corporate deductions, like salaries and interest.

More on this story here and here.


Tax scofflaws, beware! A pack of digital bloodhounds may be on your trail. State revenue agencies across the nation are hunting for tax evaders with new high-tech tools: computer programs that mine an increasing number of databases for clues on the finances of people and businesses. If your name is flagged, expect a letter or a call.

In Massachusetts, for example, the state tax agency can scan a U.S. Customs and Border Protection database of people who paid duties on big-ticket items entering the country -- so anyone who fails to pay the state the required 5% “use tax” gets flagged. The state has also tried comparing motor vehicle registration data with tax returns, looking for people who might be driving Rolls Royces or Jaguars but declaring only a small income, Revenue Commissioner Alan LeBovidge said. “Activities that would have previously taken them years of work can now be done within seconds,” said an analyst.

The new tools have reaped hundreds of millions of dollars in increased tax collections, officials say. But the government’s growing sophistication at collecting and scrutinizing data about taxpayers is sounding alarms among privacy advocates. A definitive list of states using the technology is lacking, but Massachusetts, Texas, California, Washington, Virginia, Iowa and Florida are known to be leaders in the trend, which began in the late 1990s. The IRS is also using the techniques.

Tax officials say many of the databases they use have been available to them for years -- but it has never been so easy to integrate and analyze them. The Massachusetts system mixes databases from the IRS and Customs, along with state motor vehicle, incorporation and professional licensing records. The state tax agency says it uses other databases, but will not name them. Massachusetts and several other states claim, however, that their agencies did not buy information from the sometimes-controversial vendors that aggregate and sell vast amounts of personal data about individuals.

More on this story here.


The IRS urged employees to watch for, and businesses to avoid, payroll tax evasion. Federal law requires employers to withhold certain taxes from their employees’ paychecks and send the money to the IRS every three months. Taxes collected include federal income tax and Social Security and Medicare taxes. Businesses also must pay unemployment tax. Employers face criminal and civil penalties, including fines and prison, if they fail to pay employment taxes. “Failure to pay employment taxes is stealing from the employees of the business,” said IRS Commissioner Mark Everson.

An employee cannot contact the IRS to determine whether an employer remitted taxes withheld from paychecks. Workers can check paycheck stubs for lines reporting the withheld taxes, and employees also should see withholdings reported on their annual W-2 wage and tax statements. Employees whose employers do not pay the taxes or report them improperly might find it difficult later to claim their Social Security, Medicare or unemployment benefits.

More on this story here.


You have been looking forward to cashing in your share of the $3 trillion or so in tax cuts President George Bush has pushed through in the past few years, those “real and immediate benefits to middle-income Americans” (most people consider themselves middle-income these days) he has promised. But who can figure out this stuff? For millions of Americans who do their own taxes, the workload has vastly increased because so many of us have to fill out a second return, using a whole different set of calculations, to see if we have fallen prey to the alternative minimum tax (AMT).

Until now, the public debate over the Bush tax cuts has played out along predictable, partisan lines. The blather from both sides obscures the real, but largely hidden, agenda behind the Bush tax cuts. Bush has been open about each item he wants: lowering taxes on capital income, such as dividends and capital gains; creating two big new income-sheltering investment plans; eliminating the estate tax. But he has not been at all forthcoming about the ultimate effect of his program. If Bush gets what he wants, the income tax will become a misnomer -- it will really be a salary tax. Almost all income taxes would come from paychecks -- 80% of income for most families, less than half for the top 1 percent. Meanwhile taxpayers receiving dividends, interest and capital gains, known collectively as investment income, would have a much lighter burden than salary earners -- or maybe none at all.

By drastically favoring investment income over salary, fees and other “earned income”, Bush would make it harder for people who start out with nothing to earn their way up the economic ladder, because they would pay full taxes on almost everything they make, but he would shower rewards on people who have already made it to the top rungs.

More on this story here.

Who pays the taxes?

Just in time for tax season, the Congressional Budget Office has released new data on distribution of the tax burden. Contrary to popular belief, they show that taxes on the wealthy have risen over time and that the Bush tax cut in 2001 barely kept it from rising further.

The data show that those in the bottom quintile are only paying about half what they did 20 years ago: 5.4%. This is down from 6.4% the year before, owing to the Bush tax cut. Those in the top quintile did pay a little less in 2001 than they did in 2000, 26.8% versus 28%. But this is still well above the average tax rate they paid in 1984. Interestingly, those at the very top saw virtually no cut at all, even though liberals constantly say that they got the lion’s share of the 2001 tax cut. All of those in the middle three quintiles paid less in 2001 than they paid in 1984. In other words, between 1984 and 2001 average tax rates for the wealthy substantially increased, while at least 80% of households paid considerably less.

Unfortunately, all taxpayers pay a price for the steeply graduated tax system that has evolved. A new study by economists Steven Cassou and Kevin Lansing shows that a flat rate tax would add significantly to economic growth.

More on this story here.


Swedish prime minister Göran Persson has criticised tax policies in new EU member states, creating a political storm. In media interviews and most recently on a visit to Berlin, Mr. Persson argued that Sweden is not prepared to pay for new member states via EU contributions, when the people earning most in these countries are not taxed or taxed at a very low rate. “If they [the new member states] believe that we will tax heavily in Sweden, Finland and Denmark and send the money to Eastern Europe, where the upper-class does not pay taxes, this is not sustainable.” Mentioning Poland and Estonia as possible examples of such countries, he concluded, “they must also tax their best earners.”

More on this story here.


According to Tax Foundation calculations using the latest government data on income and taxes, Tax Freedom Day® in 2004 will be celebrated on April 11th, the earliest Tax Freedom Day for 37 years. April 11th is three days earlier than 2003’s Tax Freedom Day of April 14 and an amazing 21 days earlier than in 2000, when the boom and bubble pushed tax burdens to a record high, and Tax Freedom Day was postponed until May 2.

America Celebrates Tax Freedom Day®, by Tax Foundation President Scott Hodge and Senior Economist Scott Moody, traces the course of America’s tax burden since 1900, examines the composition of today’s tax burden by type of tax, projects the future course of Tax Freedom Day and compares tax payments to other typical consumer expenditures.

Tax Freedom Day is the day when Americans will finally have earned enough money to pay off their total tax bill for the year. Every dollar that’s officially called income by the government is counted, and every payment to the government that is officially considered a tax is counted. Taxes at all levels of government are included, whether levied by Uncle Sam or state and local governments.

More on this story here.


One could argue that helping Americans buy homes, prepare for retirement, send their children to college, or get ready to weather unexpected financial storms builds a strong country and is good federal policy. But what do all the asset-building tax breaks cost the federal government? And are they fairly distributed among the income groups in our society? In addition to helping middle-to-upper income folks with their skilled tax accountants, do tax breaks help low-income families build the assets they need to be self-sufficient, to achieve upward mobility?

A report just out from the Corporation for Enterprise Development sheds fresh light on those questions, and provides the first hard estimates ever on public costs to build private assets. Called “Hidden In Plain Sight”, the Ford Foundation-supported report totals up costs of the federal government’s major asset-building tax breaks and spending programs at $335 billion yearly -- with homeownership leading the way at $111 billion a year ($70 billion for mortgage interest deductions, $22 billion for property tax deductions and $18 billion for capital gain exclusions on the sale of primary residences). The nonprofit’s argument is that decades of add-ons to the tax code have produced few commensurate benefits for the middle class and poor.

More on this story here.


The Finance Bill, which was published yesterday, detailed Gordon Brown’s plans to enforce the clampdown on tax avoidance that he announced in the Budget. Under the proposed new rules, firms must register tax shelter schemes with the Inland Revenue before they are sold to companies or individuals, or they will be fined. Taxpayers will have to include this registration number on their tax returns or they will also pay penalties. The Treasury hopes the disclosure requirements will enable it to shut immediately the increasingly aggressive avoidance plans that are reputedly costing it billions of pounds a year.

However, professional firms claim that the Treasury has still not given an adequate definition of what constitutes an avoidance scheme. Many professional firms are worried that advice that they consider to be normal tax planning could be caught under the new rules. Edward Troup, partner in Simmons & Simmons, the City law firm, said that “This Bill is a complete cop-out. On the basis that these rules have been prescribed, the Treasury can designate anything it wants as a tax shelter.”

More on this story here. Budget speach overview here.


Since the start of this year, German tax evaders have been able to legalize money they had shipped out of the country without facing prosecution. Three months on, experts reckon that no more than a few hundred million euros have flowed into tax coffers so far. If the return rate does not pick up, tax experts expect no more than €1 billion in additional tax revenue this year. Finance Minister Hans Eichel had budgeted €5 billion for 2003 alone.

The offer expires on March 31, 2005. Tax evaders who repatriate their money by the end of this year are charged a flat 25% tax; those who legalize their savings in the first three months of 2005 pay 35%. After that, the full tax rate will be reimposed -- and the charges. The amnesty applies to any income earned illegally between 1993 and 2002; older gains are exempt, and only a limited share of the untaxed income will be taxed, for example 60% in the case of income or corporation tax evasion.

Yet few Germans have made a declaration so far. Apart from the usual problem -- too much red tape -- the main reason is a proposed flat tax on interest income that was supposed to accompany the tax amnesty fell victim to inter-party wrangling. Experts reckon, though, that big bucks will only return to Germany if the owners know that they will not be taxed too heavily in the future -- all the more because the risk of being caught is fairly low, despite the regular discoveries of illegal money on the German border to tax haven Luxembourg. German banks argue that it will take a flat rate of 20% on interest and investment income to really lure savings back to Germany.

More on this story here.


House Republicans, under fire from the White House for writing a multi-year transportation bill that exceeded President Bush’s spending limits, quietly tucked billions of dollars worth of new tax breaks for business into the same bill shortly before the House passed it overwhelmingly last week. The tax provisions, which were added just before the bill went to the floor on Friday, provide relief to big companies from the alternative minimum tax (AMT). They increase from $25,000 to $100,000 the amount of capital improvements -- including investments in computer software -- that businesses can write off as annual expenses.

The corporate AMT, which was enacted as part of a broad 1986 tax reform, is intended to ensure that all corporations -- even those with extensive deductions -- pay some taxes. However, softening the impact of that law has been a top priority for some of the nation’s biggest companies. Among other things, the changes approved by the House would allow multinational companies with extensive offshore operations to fully use foreign tax credits to offset their tax liability.

Lobbyists for small-business groups had fought for the expanded write-off provisions, which would allow a company to deduct the costs of certain improvements and equipment in a single year rather than depreciate them over a number of years. But it was unclear whether many House members were aware they were voting on the business tax breaks when they approved the $275 billion, six-year transportation bill. The tax breaks are unrelated to the transportation measure, which funds new highways, mass transit and safety programs.

More on this story here.


Efforts by the IRS to modernize its computer system have “woefully under performed,” Alabama Republican Richard Shelby, chairman of a Senate Appropriations subcommittee, said. “Schedule slippages and cost overruns have been epidemic,” he said. “Now is an appropriate time to focus on reengineering efforts.”

The agency’s business-systems modernization (BSM) plan is in its sixth year of a 15-year upgrade, said Pamela Gardiner, acting inspector general for the Treasury Department’s Tax Administration. “The modernization program is an extremely complex effort since many of the IRS’s current business systems are a mixture of technologies that date back to the 1960s.”

The IRS hired Computer Sciences Corp. as its main contractor and vowed to focus for the time being on only its most critical projects, Gardiner said. CSC has missed several key deadlines, however, and the IRS has warned the company that future failures will force a reopening of the contract.

More on this story here.

The IRS has enough resources.

While Congress has provided the necessary resources for the IRS to carry out its mission, the IRS has squandered nearly $5 billion on failed attempts to upgrade its decades-old computer system in an effort to improve customer service and compliance activities. This clearly illustrates that money is not always the answer.

Long term, a strong enforcement capability supported by necessary funding will continue to be a key part of combating tax fraud. But it never will be enough. Our federal tax code is a large part of the problem. Our tax code and its regulations total more than 54,000 pages that are complex, confusing and costly to comply with. Comprehensive reform of the tax code itself could go a long way to reducing tax fraud by making the process simpler, and the system fairer, for all taxpayers. A less-complex tax code would provide fewer opportunities for cheaters and reduce the paperwork burden for all Americans.

Editorial here.



Protecting Our Legacy: A 21st Century Approach to Wealth Preservation & Restoring Liberty, by Ronald Holland, is a new online -- and soon to be published print -- book is not the usual “go offshore for all the wrong reasons” kind of book. Rather he presents an objective look at the potential benefits and risks to affluent investors when they invest offshore in major money centers. He also makes the case why terrorism threats against the United States and American markets make it prudent and necessary today to diversify outside these markets, the dollar and American financial institutions.

He urges existing and new offshore investors to be compliant, follow the reporting and disclosure rules and do their own due diligence on foreign products and financial firms in order to build safe, protected wealth outside their home country jurisdictions. He further describes the attacks on confidentiality and privacy since 9/11 and makes the unusual case that investors and offshore financial institutions need to go even further in know your customer and client rules than required by the US Patriot and Homeland Security Acts in order to protect financial institutions and clients.

Ron makes that case that offshore diversification and wealth preservation planning is far more important in this new century of lost privacy, reportable, transparent structures and full disclosure than ever before due to old traditional risks to wealth, new government and regulatory threats and the new terrorism threat to markets and financial institutions.

Book begins here.


Finance Minister Hans-Rudolf Merz has told Germany that banking secrecy is not up for negotiation in a new set of bilateral accords with the European Union. His German counterpart, Hans Eichel, said the EU simply wanted secrecy regulations eased to assist the fight against money laundering and tax fraud. Merz insisted that banking secrecy was strictly regulated and was non-negotiable. The issue has proved a major stumbling block to negotiations between Bern and Brussels on a second set of nine bilateral treaties. Bern is reluctant to sign any of the accords until it has secured an opt-out on items which it believes could jeopardise banking secrecy.

More on this story here and here.

Phishing scams hitting Swiss Banks.

Swiss banks are the latest targets to be hit by a wave of phishing scams. Over the last few days customers of the Swiss financial institution, Basler Kantonalbank, have been targeted by identity theft emails. The bank has posted up a warning on its web site explaining the problem. The latest bank to be hit is one of Switzerland’s largest regional banking organizations, with headquarters in Basel the bank has offices in Zurich, Olten and Geneva.

Traditionally, Swiss Private Banks, with their strict adherence to secrecy laws, have been seen as a safe haven for wealthy investors from across the world. Up until now phishing scams have been reserved for high street banks with unsuspecting home and casual users being primary victims. The number of major identity or “phishing” is on the increase among financial institutions, ISPs and multi-nationals in Europe, North America and Australasia. The mi2g Intelligence Unit, the world leader in digital risk, estimate that the identity theft problem is growing at 330% annually. A list of major banks that have been targeted by phishing scams so far follows.

More on this story here.


A new website -- Artists against 419 -- that has identified 53 fake banks and financial agencies, presumed to be Nigerian in origin. Most of these sites, with names such as Apextrustbank or Bondplc.com, are used in 419 advanced fee frauds. Some look truly plausible, until you notice their postal address. Since when is the Isle of Man located on Dominica? Unfortunately, some do look strikingly real. A couple are JavaScript-protected or use a 3rd party SSL service (security certificates) to give the impression they are legit.

More on this story here.


Many advisors and sophisticated clients have heard of the term “trust protector”, but very few know exactly what such a person or entity does or why they should have one in their trust. This article will help define what a trust protector is, outline the uses (and abuses) of naming a trust protector, and provide a general guideline for using them, focusing on standard domestic trusts.

It is difficult to precisely define the position of a trust protector. Black’s Law Dictionary does not have a definition for a trust protector. Neither do many treatises on trusts. The concept is certainly well-known, though, if not well defined -- especially in the foreign trust arena. Tax Management Portfolio describes the trust protector as a third party vested with powers to modify a trust that the grantor is unable or unwilling to retain personally, which may include the ability to change trustees, regulate trust investments, amend the trust, change beneficiaries, change situs or revoke the trust and cause funds to revert to the grantor. A trust protector is generally an individual, or a committee, with a special power over the trust or over the trustee, but with no day-to-day fiduciary responsibilities.

First, why do people consider having such a person or power? In three words, control, flexibility and security. Foreign Asset Protection Trusts have long used trust protector provisions because people are naturally reticent about naming a foreign trustee and prefer provisions to enable changing the trustee and changing jurisdiction to a country more favorable to debtors/defendants. Remember that generally you cannot be trust protector of your own trust and still have any asset protection benefits, despite what many offshore “experts” claim. If the courts find that you keep unlimited power over the trust or trustee, they will naturally consider the funds to be under your control.

More information here.

Peter Protector in Trust Neverland -- The Real Story of the Trust Protector

The authors of this article write that the definition of of a protector could be condensed to “A protector is a powerholder.” They warn that the “nascent superflexibility” of the position carries with it the potential to reverse the traditional concept of a settlor thoughtfully establishing a trust in favor of a protector who undertakes his own periodic spring cleaning and revision of trust provisions. “Thus, planners and settlors should be extremely discrete and circumspect in the granting of powers to the protector, and should understand the consequences of each protector power.”

Besides legal protection, tax, and other consequences, the nature of the relationship between the protector and the trustee is of paramount importance -- in particular is the former deemed to be a fiduciary? They reasonably conclude that “[T]he thoughtful drafting of provisions to govern the protector is not for the uninitiated.”

Complete article here (PDF file).


Could you benefit from a structure that disguises your ownership of real estate? If you own rental properties and have been sued by your tenants, or you are otherwise a target for litigation, this structure should be of particular interest. And in this age of the Internet, potential litigants no longer need to go down to the county courthouse or recorder’s office to find out who owns a particular property. They just need to conduct an instantaneous computer search to locate all property you own in the United States.

Fortunately, there is a better way to own real estate, called the land trust. The concept is particularly popular in American states that have specific statutes enabling such trusts, e.g., Illinois and Florida. Most other states recognize the land trust under common law as a revocable or living trust. As with any trust, in a land trust, the trustee -- generally an attorney, law firm or bank -- holds legal title to all trust property. However, in a land trust, the named beneficiaries retain use of the property and any income it generates. In addition, the trustee can act only when it receives written instructions from the beneficiaries, who maintain complete control at all times.

From a privacy standpoint, a trust is superior to business entities such as corporations or limited liability companies. There is generally no requirement to register the trust. Nor are there public records of officers, directors and shareholders. The trustee keeps control of the trust records and the identity of the beneficiaries in a secure location and will not reveal this information without a subpoena. No one knows about your beneficial ownership except you, your attorney and the trustee. You can convey property you own in your name into the trust, but it is better to have the seller convey it directly to the trustee. This avoids having real estate records ever showing that you owned the property.

Advantages include privacy, limited asset protection (because you maintain control of the assets in a revocable trust, your beneficial interest in it is subject to creditor claims), ease of multiple ownership, and probate avoidance. Important: Form a land trust only after seeking legal advice to insure that it can be used in the state where you intend to purchase property and that the trust will not be required to register as “doing business” in that state. Registration greatly reduces the privacy advantages of the trust.

More on this story here.


Volunteers have been calling senior citizens across the country whose names recently turned up on so-called sucker lists seized from crooks caught by the FBI. Special Agent Dan Bolick of the FBI’s Los Angeles field office said he heard his worst case last week when he spoke to a wealthy older woman who had lost between $5 million and $10 million to telemarketers since her husband died 12 years ago. She most recently lost lots of money on a Canadian lottery scam.

“Mooch list” is con artist jargon for special lead sheets garnered by legitimate marketing companies, but later sold outside of those companies. The lists and notes are compiled and sold to unscrupulous people looking to gain access to a person’s checkbook. Sometimes, scam artists do not try to sell their leads anything at first. An initial conversation might be the setup to gain trust and more personal information.

Bolick allowed the state Attorney General’s Office and the local AARP to use the lists, which his office collected, to call people with warnings about popular scams. A decade ago, before the FBI cracked down, Los Angeles was one of the biggest cities for telemarketing scams, Bolick said. Now, the crooks have gone north to Canada, where it is harder for American authorities to track them down.

More on this story here.


The Crown will not be appealing a decision by a judge that search warrants given to fraud detectives investigating whether a “sham” trust was used to allow a non-Bermudian to buy a luxury house were invalid. Last month Mr. Justice Ian Kawaley ruled that the search warrants should be quashed. Supreme Court heard testimony that Police believed six people had been involved in a conspiracy to defraud the Bermuda Government of $660,000 in sales tax through the use of trust to buy a $3 million house.

More on this story here.


Federal authorities announced the indictment of seven people accused of operating a decade-long tax fraud conspiracy that allegedly cost the government $68 million in revenue. As often happens with tax-fraud cases, the charges were announced one week before the April 15 deadline for filing federal income taxes. The indictment outlines an alleged plot to sell sham domestic and foreign trusts through a company called Aegis Co. based in the Chicago suburb of Palos Hills. The buyers were approximately 650 wealthy taxpayers living throughout the country, according to the indictment. Authorities said the idea of the trusts was to hide hundreds of millions of dollars in income.

The indictment seeks the forfeiture of more than $4.1 million from four of the defendants, as well as the forfeiture of three Lincoln limousines and a Lotus automobile. The customers have not been charged with any wrongdoing. The indictment names six of the seven defendants, who it says organized, promoted and sold off-shore trusts, primarily to self-employed individuals for fees ranging from $10,000 to $75,000 per package.

Prosecutors said money was typically moved out of businesses and into trusts in countries such as Belize and Antigua or to bogus charitable trusts. The money was later slipped back to the business owner through fraudulent loans, gifts and ATM transactions. In one case, an Aegis client went on a Hawaiian vacation that was used as a tax writeoff because the client was “looking for charities to contribute to,” IRS Commissioner Mark W. Everson said.

More on this story here and here.



Millions of visitors from some of the United States’ closest allies soon will have to be fingerprinted and photographed before entering the country, U.S. officials said. Officials said the requirements of the U.S. VISIT program will be expanded this fall to cover about 13 million travelers each year from 27 countries, including Australia, Britain and Japan, whose citizens are allowed to travel within the United States for as many as 90 days without a visa. The program -- an effort to track down criminals, suspected terrorists and travelers who overstay visas -- began January 5 and now applies mainly to about 19 million visitors each year from Central and South America, Africa and Asia.

The expansion, which will take effect by September 30, means only diplomats and travelers from Mexico and Canada will not be fingerprinted and photographed when they enter the United States through 115 airports and 14 seaports, said Asa Hutchinson, undersecretary for border and transportation security at the Department of Homeland Security. The new requirements, which will add about 15 seconds to a journey, will also apply to the 50 busiest border crossings by December 30, he said.

Officials with foreign airlines and U.S. airports said the program has not caused major delays for passengers. But they worry that imposing the fingerprinting requirement on 13 million more passengers could clog customs and immigration lines and delay flights.

More on this story here and here. Canadians exempt from new U.S. security rules -- story here.

Blair flies in to ask Bush to delay fingerprinting of British holidaymakers.

Tony Blair will fly to the United States next week to ask George W. Bush, the president, to delay for a year the introduction of fingerprint and photograph checks on British visitors to the US. The Prime Minister is expected to meet Mr. Bush at his family ranch for a private summit held during Parliament’s Easter recess.

The main item on their agenda will be Iraq and the handover of power to a transitional Iraqi authority on June 30, against the background of continuing terrorist attacks which have led to the deaths of US and British soldiers and civilians. Senior ministers said, however, that Mr. Blair would also seek to press Mr. Bush to exempt British citizens from the stricter security checks which are being introduced at US airports.

Washington decided to introduce the checks after it became clear that the countries for whom US visa restrictions are waived will not meet an October 2004 deadline to issue biometric passports to their citizens.

More on this story here.

Is the US right to fingerprint allies?

“What do you think about America expanding their US-VISIT program? Do you object to being photographed and fingerprinted?”, the BBC asked its readers. A wide variety of responses followed.

More on this story here.

Swiss criticize tougher US border checks.

Swiss travellers to the United States can expect to be photographed and fingerprinted under a tightened border security program. The move affects millions of citizens in 27 countries who are allowed to travel in the US without visas for up to 90 days.

“Visitors will be treated like criminals,” said Eugen David, a center-right Christian Democrat parliamentarian. David suggested on Swiss radio that US citizens should also be fingerprinted and photographed when they enter Switzerland. Politicians from the center-left Social Democrats and center-right Radicals have also attacked the tighter entry restrictions. Both parties have called on the justice minister, Christoph Blocher, to raise the issue with the EU.

More on this story here.

EU denies tit-for-tat response over US fingerprinting plans.

The EU’s executive said it was not planning a tit-for-tat response after the US government announced plans to fingerprint and photograph all foreign visitors, including Europeans. Washington said that from September 30, it would eliminate an exemption given to citizens of 27 mainly European nations from enhanced US border security requirements that took effect in January. “For the moment nobody is thinking about reciprocating,” Pietro Petrucci, a spokesman for EU justice commissioner Antonio Vitorino, told reporters. “To avoid our citizens from needing a visa to go to the States is of the essence for us.”

More on this story here.


The Transportation Security Administration is examining the use of radio frequency identification-tagged airline boarding passes that could allow passenger tracking within airports, a proposal some privacy advocates called a potentially “outrageous” violation of civil liberties. Anthony “Buzz” Cerino, communications security technology lead at the TSA, said the agency believes the use of boarding passes with RFID chips could speed up the movement of passengers who sign on to the agency’s “registered traveler” program. This would permit them to pass through a secure “special lane” during the boarding process. Cerino did not say when or if the TSA would push for introduction of the RFID boarding passes or how such a project -- likely to require a massive, networked infrastructure -- would be funded.

Katherine Albrecht, founder and director of Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), a privacy group that has fought the use of RFID tags by retailers and other organizations, called the idea a potentially “shocking and outrageous” violation of civil liberties. She called the use of RFID to track people a “nightmare scenario” that uses technology to invade privacy. “Are they going to track how long I spend in the ladies room?” Albrecht asked, adding that the TSA idea is “why people are so upset about the technology.”

More on this story here.


Safeguarding your DNA is a huge 21st century privacy issue, says author George Annas. So why is the government sitting on its hands?

More on this story here.


A group of British MEPs, backed by British union Amicus which campaigns against offshoring, is taking its concerns to the Employment and Social Affairs committee of the EC. They want regulation to prevent unauthorized access of personal details being processed abroad. The Data Protection Act requires company’s maintain servers within the EU but allows that data to be processed anywhere.

Although none of the offshore operations of UK-based companies has been accused of security lapses, there are increasing concerns that the lack of data protection in countries such as India and China leave them open to abuse by unscrupulous staff.

Criminals are believed to be trying to bribe Indian call center workers to get access to customer credit card details. Call center workers have been offered up to a year’s wages for credit card numbers, according to the Evening Standard.

More on this story here and here.


Radio-frequency identification is too powerful a technology and Wal-Mart and its suppliers are too cozy with the U.S. Department of Homeland Security for the companies to be trusted with the data gathered from radio tags on consumer goods, say a civil rights lawyer and a privacy law expert. But the companies, led by Procter & Gamble, are opposing RFID legislation, and want consumers to allow them to keep RFID tags active after checkout, and to match shoppers’ personal information with particular items.

ACLU lawyer Barry Steinhardt said companies could use RFID tags to profile their own customers and share their information with the government -- violating the companies’ own privacy policies. The U.S. Department of Homeland Security, meanwhile, is working with companies like Wal-Mart and Procter & Gamble to develop RFID to monitor America’s consumer supply chains. Homeland Security may find the combination of live tags and customer profiles hard to resist when investigating suspected terrorists, or as a means to monitor entire groups of people, said the privacy expert.

“The surveillance potential for RFID is huge,” said Scott Blackmer, a lawyer and board member of the International Security, Trust and Privacy Alliance. Investigators in divorce cases and criminal investigations already regularly subpoena E-Z Pass automatic toll records, which come from RFID readers, to figure out where an individual’s car was at a particular time.

More on this story here.


Everyone in Britain could be forced to have identity cards within 5 years under a fast-track plan by David Blunkett which is backed by Tony Blair and gaining support within the Cabinet. Last month’s bombings in Madrid and last week’s arrest of suspected Islamic terrorists in Britain have persuaded more ministers that compulsory ID cards will have to be introduced much sooner than they originally envisaged. The Government announced last November that it would phase in voluntary identity cards from 2007-08 and decide in 2013 whether to make the scheme compulsory.

Ministers were told that in several recent arrests, police found people with papers giving them multiple identities, and the politicians stressed the importance of making sure the ID cards could not be forged. “The argument has moved on from concern about civil liberties to making sure we get the logistics right,” one said.

More on this story here, here, and here.

ID cards: a guide for technically-challenged PM’s

Why is the UK sleepwalking into an ID scheme that has not been discussed, but that is nevertheless somehow moving ahead at full steam? And, for that matter, why is Europe doing so? The United States? The world? One of the other major components of Blunkett’s standard “we might as well do it anyway” presentation is the incontrovertible fact that Europe has standardised biometrics for ID roadmapped, and that the US will be requiring biometrics on passports shortly. But there is one little nagging question -- how did biometrics become the accepted, logical, inevitable international standard for ID in the first place?

Well, it’s obvious, is it not? If your fingerprints are found at the scene of the crime, then you almost certainly did it, didn’t you? And similarly, other apparently unique characteristics such as your iris, your DNA and so on can prove conclusively who you are, where you are, and where you have been.

Given that the alleged free world is already barreling down this route with little or no sign that anybody has paused to think it through, we do not hold out a great deal of hope that they will do so now, meaning they are all going to have to learn the hard and expensive way. But just in case there is the odd politician out there still prepared to consider the possibility that it does not stand to reason, we here propose a short, readily-understood Register explication of why it does not, and why, if we do not wake up very soon, we will end up spending several billion on proving to ourselves it does not.

More on this story here.

Are fingerprints really infallible, unique ID?

How unique are your fingerprints? It is general held (as er, we confidently stated just yesterday) that your fingerprints being found at the scene of the crime tied you up with it pretty conclusively, but a report published earlier this year by New Scientist claims that there is little scientific basis for the infallibility of fingerprints, and that the only research indicating that there is, is fatally flawed. This could have major implications for the criminal justice system, and could undermine the basic premise of planned ID sytems in the UK, US and Europe.

More on this story here.


Pundits and policy-makers are arguing over the legal implications of the FBI’s recent petition to the FCC about how to implement the Communications Assistance for Law Enforcement Act. But the Bureau’s push to get broadband providers covered under CALEA, which currently applies only to telecom carriers, stands to benefit more than just government spies: a domestic eavesdropping industry stands waiting to sell Internet wiretapping tools and services to cable and DSL companies.

What makes CALEA particularly ripe for profit is the law’s stipulation that networks must be built with backdoors that meet exacting federal specifications. Experts estimate that CALEA compliance has cost three to five billion dollars since the law’s passage in 1994, and if the FBI gets its wish this figure will balloon again as cable companies and DSL carriers scramble to comply.

More on this story here and here.


Datastrip’s DSVII-SC (Smart Card Edition), a handheld contact/contactless ID card reader with an integrated fingerprint sensor for matching a live fingerprint to a stored biometric template, was recognized as the best new biometric product of the year in the Security Industry Association’s New Product Showcase at the ISC West conference last week. The reader is designed for secure mobile identity verification in locations where there is no physical door structure to accommodate stationary equipment.

More on this story here.


A member of the military, a retired Presbyterian minister and a college student are among seven U.S. citizens who have joined the first nationwide, class-action challenge to the government’s “No-Fly” list filed today by the American Civil Liberties Union. “[T]hese passengers have no idea why they have been placed on the No-Fly list and no way to clear their names,” said Reginald T. Shuford, an ACLU senior staff attorney who is lead counsel in the case.

The ACLU lawsuit was filed in federal district court in Seattle. Named as defendants in the lawsuit are Department of Homeland Security Secretary Tom Ridge and Transportation Security Administration Director David M. Stone and their respective agencies. The No-Fly list is compiled by the TSA and distributed to all airlines with instructions to stop or conduct extra searches of people suspected of being threats to aviation. Many innocent travelers who pose no safety risk whatsoever are stopped and searched repeatedly.

The ACLU is asking the court to declare that the No-Fly list violates airline passengers’ Constitutional rights to freedom from unreasonable search and seizure and to due process of law under the Fourth and Fifth Amendments. The ACLU is also asking the TSA to develop satisfactory procedures that will allow innocent people to fly without being treated as potential terrorists and subjected to humiliation and delays.

More on this story here and here.


At a town hall meeting billed as a forum for citizens to voice their concerns, Ridge was met with more questions about Bush administration policies that allegedly damage Americans’ freedoms at home and their reputation abroad than about homeland security. Ridge told the audience of about 350 people that terrorists seeking targets likely will look to places such as Seattle -- a large city, with international ports near the Canadian border. And Ridge declared that “we will not give up any freedom” to secure the country from terrorists.

But that assertion was quickly challenged by a skeptical audience split between members of the public and such public servants involved in homeland security as high-ranking police, firefighters and public-health professionals. One man got to his feet and held aloft a sign dubbing the U.S. Patriot Act as a “threat to U.S. democracy” before it was ripped from his hands.

More on this story here.


By now, anyone who uses a PC knows about viruses and the need to defend against them. Spyware, programs that snoop on your online activities and send the info to third parties without your knowledge, is another class of software that requires your attention. As usual, the cure requires buying and running still more software. Spyware comes in several varieties of varying nastiness. Adware tracks your Web surfing activities and reports back to agencies, which use the data to send you ads supposedly tailored to your interests. Worse are key loggers, which can record everything you type and report personal data, including user names and passwords, to identity thieves.

Your first line of defense against spyware is to be careful about what software you install and to pay close attention to the options offered during setup. For example, I let the Google Toolbar send data because I find it invaluable and I trust Google. But I say no to most everything else. How do you protect yourself against sneaky spyware? Running a firewall is always a good idea, though the approach fails when spyware succeeds in hiding itself inside a program, such as Internet Explorer, that is authorized to send data. The best solution is to get additional protection by adding a program that is specifically designed to detect and block spyware. Many are available, but be careful of free products because there are reports that some actually contain spyware.

More on this story here.


RFID tags -- essentially a microchip on an antenna that transmits data via radio over short distances -- are widely seen as a next-generation form of barcode that will slash costs through new efficiencies within commercial supply chains. To date, RFID has mainly been used within warehouses, but the prospect of fine-grain control over every single item in every single store is driving retail interest. But consumer and privacy groups warn that the unique serial number transmitted by each RFID tag could be used to surreptitiously track people or goods. They fear shoppers may unwittingly broadcast information about their purchases and even the brands of clothing they are wearing as they shop.

RSA Labs demonstrated a prototype blocker that enables people to “enforce” their privacy by blocking unauthorised scanning. RSA’s Blocker Tag works by “shielding” chips within close proximity, but the blocker does not interfere with normal RFID. RSA’s chief scientist, explained that the tags “work by creating a hostile environment for scanners that are not authorised to read information from legitimately purchased items.”

More on this story here.


Your tax records, your bank and financial data, your medical files, your legal cases, your social security number are all private, confidential information. Once upon a time, the workers who came in contact with this information worked exclusively in the United States. But increasingly, Americans who process this important data are being laid off and their jobs are going to workers in Russia, India, New Zealand, South Korea, Pakistan, Thailand, Mexico, the Philippines, Israel, China and Ireland.

Confidential tax materials, X-rays and MRI scans, doctors’ notes, loan applications, credit information, bank records, income statements, and social security numbers are shooting around the globe. What happens if that overseas worker steals your identity or sells your information? Unfortunately, American law carries no weight outside the United States. Scam artists can have a field day when privacy information is dumped offshore.

Information critical to homeland security is also at risk. For example, one company is offshoring engineering information about California’s power grid. What if these blueprints of facilities and technical specifications fall into the hands of terrorists? Sue the company after the fact? California Senate Bill 1492 would ensure that no work involving information that is private, confidential, privileged or essential to homeland security is performed at a worksite outside of the United States.

More on this story here.



The concept of dual nationality means that a person is a citizen of two countries at the same time. Each country has its own citizenship laws based on its own policy. U.S. law does not mention dual nationality or require a person to choose one citizenship or another. Also, a person who is automatically granted another citizenship does not risk losing U.S. citizenship. However, a person who acquires a foreign citizenship by applying for it may lose U.S. citizenship. In order to lose U.S. citizenship, the law requires that the person must apply for the foreign citizenship voluntarily, by free choice, and with the intention to give up U.S. citizenship.

Claims of other countries on dual national U.S. citizens may conflict with U.S. law, and dual nationality may limit U.S. Government efforts to assist citizens abroad. The country where a dual national is located generally has a stronger claim to that person’s allegiance. However, dual nationals owe allegiance to both the United States and the foreign country. They are required to obey the laws of both countries. Either country has the right to enforce its laws, particularly if the person later travels there. Most U.S. citizens, including dual nationals, must use a U.S. passport to enter and leave the United States. Dual nationals may also be required by the foreign country to use its passport to enter and leave that country. Use of the foreign passport does not endanger U.S. citizenship. Most countries permit a person to renounce or otherwise lose citizenship.

More information here.

Dual citizenship under Canadian law.

The present Citizenship Act allows a Canadian citizen to acquire foreign nationality without automatically losing Canadian citizenship. Since February 15, 1977, a Canadian citizen may retain Canadian citizenship, unless he or she voluntarily applies to renounce it and the application is approved by a citizenship judge. The present Act thus makes it possible to have two or more citizenships and allegiances at the same time for an indefinite period.

Consequently, you may have the rights and obligations conferred by each of these countries on its citizens. Whenever you are in a country that recognizes you as a citizen, its laws take priority over the laws of any other country of which you are a citizen. International treaties may, however, allow exceptions to this rule.

More information here.


Rarely has an issue so deeply divided Republicans as the USA Patriot Act, which is pitting conservatives critical of the law against President Bush’s call to reauthorize it in an unusual election year intraparty debate. The issue puts several Republicans in the peculiar position of defending Sen. John Kerry, the likely Democratic presidential nominee, who opposes parts of the act as threats to constitutional protections.

“Kerry isn’t a supporter of terrorism any more than I am, just because we both raised some questions about whether some things in the Patriot Act go too far,” said former Rep. Bob Barr, a Georgia Republican who thinks aspects of the law violate personal privacy.

“The Fourth Amendment is a nuisance to the administration, but the amendment protects citizens and legal immigrants from the government’s monitoring them whenever it wants, without good cause -- and if that happens, it’s the end of personal liberty,” Mr. Barr said.

More on this story here.


Ruthie Jordan is the 79-year-old former teacher and lawyer who figured in the mistrial of Dennis Kozlowski and his fellow Tyco defendant, Mark H. Swartz. I toast her with the ultimate accolade from movies of a bygone era: She’s a swell dame. Jordan’s swellness is documented by her admitted willingness to have hung the Tyco jury simply because she felt the government had failed to prove criminal intent. The prosecution certainly proved that Kozlowski was a pig, a CEO who had used company funds to throw his wife a $2 million birthday party and had spent $6,000 for a shower curtain. These excesses -- so excessive that the word is insufficient -- made Kozlowski the poster boy for corporate greed and, casting directors take note, someone who looked the part. All this made it all the harder for the brave Ms. Jordan to say “no!”

“I feel very strongly ... that even ugly people deserve justice,” Jordan told the New York Times and CBS News. “Even people who have bad habits deserve justice. People who have repellent lifestyles. Even greedy people -- if they are greedy. Even people who have so much they don’t know how to spend it, and still want more. Even they deserve justice when it comes to whether or not they committed a crime.” Those words, maybe translated into Latin, ought to be carved above the entranceway of every courthouse in the nation.

I know not if Jordan is right. From what we know, the other jurors disagreed and would have voted to convict Kozlowski and Swartz. Even the question of criminal intent is an interesting one. What do we do with chief executives whose sense of entitlement is so gargantuan that they think nothing they do is criminal? That, though, is a matter for another column. This one only wants to praise Ruth B. Jordan.

More on this story here.



Fifty years ago, a remarkable libertarian came out with a landmark book, The Income Tax: Root of All Evil (text and PDF). Its author was Frank Chodorov who saw raging about him -- what’s new? -- interventionism, welfarism, political mischief and corruption galore, an ongoing mangling of the limited government model of the Founding Fathers. Hence the “all evil” in his subtitle, which he described to me privately as “the rape of society.”

But what was new, then and now, goes beyond many a neocon’s plea today for a renewed Taxpayer’s Bill of Rights or a flat-rate income tax. Instead, Chodorov called for radical surgery: outright repeal of the Sixteenth (Income Tax) Amendment of 1913. Then Uncle Sam was suddenly armed with a tax supercannon, one financing the federal takeover of America, one sinking states’ rights mainly via “grants-in-aid” (read payola) to states and localities.

The Chodorov call for repeal of the Sixteenth Amendment was seconded by J. Bracken Lee, governor of Utah, who introduced the book and noted how the states were losing “more and more of their autonomy,” how the federal income tax empowered Washington “to bribe the state governments, as well as its citizens, into submission to its will.” Submission then and now, if now much more so.

More on this story here.


The leaders of what is assumed to be the free world are constantly praising democracy and encouraging nations across the globe to adopt this method of popular rule. But does democracy truly free the individual from the evils of the state, or simply replace a tyranny of a few with a tyranny of the many? If history and the present state of humanity are any indication, then democracy is grossly overrated and doomed to fail (if it has not already).

Can Americans be counted on to stand up and fight oppression against themselves or their neighbors? When it comes to answering this question, the evidence is clear and insurmountable. The federal income tax instituted in 1913 absconds productive citizens’ earnings, redistributing their money on slothful and connected persons. Social Security forces the American masses into the world’s largest Ponzi scheme, and property taxes turn most Americans into the equivalent of serfs. In recent times, Americans have failed to react effectively to restrictions of their individual rights. They have actually cheered the violation of the rights of those who have done nothing wrong except perhaps cause envy amongst the majority. Thomas Paine’s Common Sense rings on dead ears in today’s America.

More on this story here.


Samuel Adams once observed how “it does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.” I do not know how irate he is, but Dr. Ron Paul (R-Texas) is surely among the leaders of a tireless minority in our time. If liberty by some chance does return to American soil in our lifetimes, we will doubtless have Dr. Paul to thank for having laid part of the groundwork over the past couple of decades. On April 2, Dr. Paul spoke to a crowded conference room in Columbia, South Carolina. The event, entitled “An Evening With Ron Paul,” was hosted by the South Carolina Libertarian Party.

Dr. Paul suggested that as central government attempts to expand, spending money it does not have, the looming financial crisis will eventually force it to scale back both its overseas and domestic efforts. “One day we’re going to wake up, and have less warfare and less welfare … because we’re going broke!” He noted our skyrocketing national indebtedness. “Time is short, and we don’t know when the crisis is coming,” but “[w]hen we run out of money, we will have to come home.”

The bottom line, for Dr. Paul, is the U.S. Constitution. He refuses to vote for any piece of legislation that is not explicitly authorized by the Constitution. Of course, Dr. Paul’s words often fall on deaf ears among his colleagues. The suspicion of concentrations of power on which this country was founded is just about gone. Beginning one step at a time, first with Lincoln, then with the Progressive movement, the rise of the Federal Reserve banking system and the IRS, the first world war, and continuing into the Roosevelt era, more and more people have assumed that expansionist government is good, and not a menace to a free people. Yet mounting evidence suggests that expansionist government is simply in over its head. Whatever the central government touches, it ruins.

I should note in closing that although “An Evening With Ron Paul” was well-publicized in the sense that press releases were sent out to all local media well in advance, not a single representative from any mainstream media outlet showed up. The mainstream media, of course, simply blacks out events such as this.

More on this story here.


At any given time in the life of a nation, events and circumstances offer its leader the opportunity to articulate and clarify key ideas that define its substance and govern its destiny. Woodrow Wilson (b.1856, d.1924) was such a figure, on both a national and international scale. During his two terms as President of the United States, Wilson inalterably changed the face of not just the United States, but of the world. The community of nations of today represents a world still spinning on a Wilsonian axis.

When Wilson took office in March of 1913, the U.S. was a gold-standard nation, developing inwardly and filling its own continent with people, industry and capital. Since Colonial times, U.S. development had focused on westward expansion across the continent. The U.S. in 1913 had few historical precedents or cultural proclivities for international adventurism, and in fact was experiencing a bad case of indigestion of the modest fruits of the Spanish American War, a sore spot with the voters.

When Wilson left office in 1921, he had involved the nation in Europe’s Great War, and was in no small personal measure attempting to dictate the world’s peace. Under Wilson’s stewardship, the federal government was large and getting larger, the U.S. currency was beginning a long slide into debasement, and no American could even buy a legal drink at a bar. No one can truly understand the issues of the modern era without knowledge of the man who mid-wifed it into existence. It is not too much to say that the 20th Century was Wilson’s Century, and that we live in Wilson’s World.

Woodrow Wilson said that he wanted to put government “at the service of humanity.” But when you distill things to a basic essence, Wilson bequeathed his nation, the world, and “humanity” the legacy of federal credit, national debt, a large centralized government, and an imperious, if not crusading, international moral ideology built and financed thereon. What is more, Wilson’s legacy has lasted for nine decades and today seems immutable. None who are alive can remember or recall first hand any time when this world of ours worked otherwise. And when things change, and change they certainly will, most people will be trapped in a Wilsonian paradigm and not understand what is happening.

Part I here, Part II here (scroll down to Byron King pieces in both pages).


The Crisis is a collection of articles written by Thomas Paine during the American Revolutionary War. In 1776 Paine wrote Common Sense, an extremely popular and successful pamphlet arguing for Independence from England. The essays collected here constitute Paine’s on-going support for an independent and self-governing America through the many severe crises of the revolutionary war. General Washington ordered that the first essay be read to the troops at Valley Forge, on Christmas eve, shortly before the crossing of the Delaware.

More on this story here.


I recently received an email from a reliable administration source. This highly reputable source tells me that between campaign fundraisers, watching Major League baseball games, and vacationing at his Texas ranch, his top advisors told President Bush of the Sadr Offensive and the deteriorating situation in Iraq via conference call. On being informed that many poor US foot soldiers were dying or dead, he listened on in silence. “Mr. President, what will we do?” he was asked. According to this official, President Bush hesitated for a second, then smirked, “Let them eat lead.”

Marie Antoinette was born a princess, the daughter of Maria Teresa, Empress of Austria. Making use of her family connections, she eventually became Queen of France. George W Bush the son of President George Bush Sr. was also born into a politically powerful family. Making use of his family connections, he eventually became President of the United States. The striking similarities between Marie Antoinette and George Bush go on and on.

More on this story here.
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