Wealth International, Limited

Offshore News Digest for Week of May 28, 2007

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

Global Living & Business Taxes Asset Protection / Legal Structures Privacy Law Opinion & Analysis



There was a time in America when someone with a dream, ambition, and talent could make great things happen. It was a time when the government was not involved in every aspect of their lives, a time when you could start a business with an idea and little or no money, a time in which family and friends held a premium on your time.

Those days are gone. The days where the elderly were cared for by the younger generations is gone. Dad coming home at the end of his work day to his wife and family for dinner are gone. Mom having the option to stay at home with her children and take care of both are gone. The current U.S. is a country that is ruled by fear – and war-mongers. It is a place where precious little happens that the government, in some shape or form, is not involved. The government is in our business, schools, churches, and bedrooms.

If you receive too many packages in the mail – you go on a watch list. If you receive a wire transfer in excess of $3000.00 – watch list. Nearly everything you do has the potential to land you on a watch list of one sort or another. You have no privacy. I used to call people who held these types of beliefs weirdoes, nuts, paranoids, and all sorts of other things. I now call them brethren. I never paid attention to what was going on in our country. I was too busy earning a big, fat paycheck to care. As long as I was comfortable I turned a blind eye to the goings on of our government. I voted regularly, paid my taxes, and just kept on truckin’. Then September 11, 2001 happened and my whole life changed.

People were willing to give up any and all rights if it kept us safe, and our government exploited it to its utmost. First the Patriot Act, then the Patriot Act II, and now Bush’s Buddy list. None of the measures that are being taken are keeping us any safer than we were before. Not. One. Bit. We simply allowed the fear-mongers to exploit us and ram these new laws down our throats.

The other major problem in the U.S. is the sad treatment of our pensioners. They have been left trying to figure out if they are going to get their prescription medications or eat each month. That is why so many seniors have moved to other countries. Their Social Security dollars go much further and they can live quite comfortably on it elsewhere. Others, like myself, leave to other countries because we feel so strongly about the political situation in the States.

Whatever the reasons, great care should be given when making such a life-changing move. We need to consider our health, finances, and lifestyle before making the leap. Research on different countries should be done and if possible, contacts in those countries should be made. I can not imagine having done this without a good contact. It is possible to do without one, but it may be more difficult, especially if you are considering a move to a country where you do not speak the language.

Something else I find to be very important to consider is that cheap living should not be the first and foremost consideration unless you are very young, in excellent health, and willing to put up with a myriad of difficulties that many of us in our more advanced or advancing years simply would not wish to tolerate. If you are a middle-class American, you do not want to go to an undeveloped or Third World country. Yes, I have read the articles saying how you can live like a king or queen on your social security in one of these little island countries. The main price you pay for this is substandard living conditions, unless you you can afford to buy in a very exclusive area. By American standards, most houses in the Caribbean and South America are inexpensive. Just remember, inexpensive is relative.

My husband and I were living quite comfortably in Brooklyn, New York. Our first complaint was the amount of taxes we were paying. Between Federal, State, and local, I was only receiving about 43% of my earnings. Now, this big, fat salary was reduced to an OK income. It would not have been so bad except I saw my tax dollars being wasted in more ways than I could count. It seemed that only the very rich were prospering while the rest of us were in an ever steady state of declination.

Americans are also so stressed that they are taking pills for everything. I had to take sleeping pills at night just to shut my brain down enough that I could get a few hours sleep. My job had me jumping at all hours and I had little or no time to unwind and relax. No time for exercise. No time to prepare a fresh, healthy meal. I was becoming fatter by the second. This resulted in minor health problems that could have become major health problems had I not done something about it. When my husband and I went to Hawaii for our very first vacation in years, the first thing we noticed was how peaceful everyone was. Returning from Hawaii, we began to dream of something different.

We knew that living in Hawaii would be just as expensive as living in New York, and the end result would be that we would still be chasing the dime. That is not what we wanted. We began discussing the possibility of living in another country. Why not? We created a list.

The list began to grow and evolve over a few months time. We wanted to live in a developed nation. We ruled out European nations as they were too much like the States for our liking. We wanted a year-round warm climate, preferably with the ocean nearby. We did not want to have to worry about poisonous and other dangerous creatures, so that eliminated Australia and New Zealand. Another thing we considered was the educational system of the country and the disparity between the wealthy and the poor. We were looking for a country where there is a majority middle class. That really narrowed down the choices. Chile was at the top of the list.

Once we decided that Chile was probably the place we would choose for our new home, we began to look at different cities for climate and cost of living. We wanted year-round warmth with little variation in the temperature from season-to-season and little rain. That really narrowed down the choices! Arica was the only place that fit the entire bill. No heaters and no air conditioners are required. There has been no recorded rain in Arica. Ever. It is, after all, simply an oasis in the Atacama Desert.

The first thing you should know is that the bulk of your living expense will be housing. We have found a house with 4 bedrooms, 2 full baths, huge living and dining rooms, and a reasonably sized kitchen, front and rear patios, and within short walking distance to the beach for about $200.00 per month. Our immediate neighbors are a doctor, a lawyer, a policeman, and store owner. It is not a luxurious neighborhood, but it is very quiet, safe, and convenient.

If you love fresh fruits, vegetables, seafood, and chicken then you will be in heaven here. We have estimated our food bill to be about $1.50 per day - no, that was not a typo. The meat, fish, seafood, and produce is of excellent quality and superior in many ways to what we get in the States because nothing is fooled around with. It is all organic, nothing is genetically modified, or injected with hormones or antibiotics. You can still get your favorite junk food. Just be prepared to pay more for it than you will for fresh.

Costs of items vary. Things that are necessities are inexpensive and things that are luxuries are expensive. You should buy the best laptop or PC that you can afford before you come. If you require a printer, get that and plenty of ink refills as well. DVD players and VCRs are also on the expensive side here. If you buy them to bring along, make sure they are able to handle all formats. If you really have to have a television, your current TV may not be compatible. TVs are very expensive here.

Conversely, items such as refrigerators, stoves, washing machines (but not clothes dryers), and various other kitchen appliances are very inexpensive. They are smaller than those you find in the States because most of the kitchens are smaller. Of course, if you are buying fresh, you do not really need a large refrigerator. Broadband internet access is widely available, with pricing ranging from $15.00 to $40.00 per month, depending on whether you are using DSL, cable, or have a combination telephone service/DSL. Electricity, water, and gas are rarely included in the rents, and cost about $80.00 monthly, depending on how wasteful you are.

We brought our cat with us. The Chilean embassy’s web site stated that a health certificate from the veterinarian, no older than 15 days, certifying the animal to have rabies vaccinations no older than 6 months and no newer than 30 days as well as being free from parasites, both internal and external was sufficient. A friend, who brought her dog here told me that she required a certificate from a USDA veterinarian. She was right. This certification is required. Insist on one. I almost had my cat deported because of lacking one. The other thing we did was make sure our cat had in-cabin flight privileges.

You will never meet people who are more warm, friendly, and genuinely caring than you will here in Chile. We were here less than a week and had made enough friends to have a small dinner party. We really had no friends in New York. We had no time to nurture friendships as we were so busy working. Here, we can live more leisurely, meet people, socialize and finally enjoy life’s true meaning.

Arica is not for everyone. It is the desert, after all. If you prefer city life, then perhaps Santiago would be to your liking. If you want four seasons, then try the central lakes region, which is absolutely breathtaking. The choices are as vast and varied as this country is so, make your lists of priorities and do some research. Just remember to read all that is offered, as more than one perspective is a must. One man’s heaven may be another man’s hell.

Link here.


How to buy land in St. Vincent and the Grenadines without getting taken.

When my wife and I recently acquired a beachfront hotel in The Grenadines, many friends and relatives congratulated us on our decision to relocate to the Caribbean and focus on real estate development there, rather than development in America and Europe. Many considered our move to be the first step in living out the tropical paradise daydream and in some ways they were right. Although both of us chose to continue to work – my wife with the hotel, and myself with real estate development – we do consider ourselves fortunate to be able to live and work in our new tropical setting. We fall asleep to the sound of the waves rolling ashore, and wake up to a stunning view of the crystal clear ocean and the immaculate white sandy beach, so in that regard we are indeed living a dream. It is, however, a dream which is not, by any means, limited to a fortunate few individuals with deep pockets. There are numerous affordable opportunities to purchase your own little piece of paradise.

Not a day goes by without a guest expressing a serious interest in purchasing some land, an apartment, or a house on our beautiful island. St. Vincent and the Grenadines is a former British colony, and it remains a member of the British Commonwealth. As such, the legal system out here is dependable, with laws allowing foreign nationals to own land. Parcels are surveyed, the government keeps track of all titles and change in ownership, and all in all the real estate system is functioning fairly well. Combine that with stunning natural beauty, a friendly local population that you can easily communicate with, an almost crimeless society, a very comfortable climate, low property prices, a hurricane-free location (the last one passed in 1955), and one of the last spots of truly unspoiled Caribbean, and it is little wonder that our guests are enthusiastic about investing out here.

We did extensive research before we made our decision, and we considered many other destinations in the process. After considering all of the above factors and many more, we came to the conclusion that in Union Island, we had found the right place for us. Although there are some magnificent properties available at unbelievably low prices in Union Island, prospective buyers should know the many pitfalls to be aware of before making any decisions. It is not entirely without risk to purchase real estate in The Grenadines, for a few different reasons, which I shall make clear in the following.

Your first challenge will be to identify properties, which are actually available. There is no real estate agent in Union Island, and as a general rule, you can be certain that the few properties that make it to a real estate agent from another island, are either greatly overpriced, or utterly worthless. Affordable land is in such high demand, that whenever it becomes available it is sold very fast, often to a tourist who happens to be in the right place at the right time. When we first came out here, I spent 5 weeks from morning to evening, looking at every property that might be for sale. I made a spreadsheet with all the properties, which allowed me to compare the different deals, and get a somewhat complete picture of the available properties, and the asking prices.

Identifying a piece of land, and agreeing with the seller on a price, is merely the first hurdle to overcome. Many people will claim to own land, without actually being the registered owner. A few buyers out here have lost whatever money they paid to the seller, without any land to show for it, because something went wrong in the process. Another issue to be aware of is that there is a lot of land out here that originates from a matriarch or patriarch, who might have been dead for generations. In some cases, one or more of the relatives will seek the title on behalf of the estate, and possibly also get it. Now, they will appear to a prospective buyer as the rightful owners, and will be able to show you the papers to prove it. However, you still cannot be sure that you will end up with their land. Your next challenge is that there are a few crooked lawyers out here, who will not tell you how things truly work, and who will be only too happy to prepare paperwork for you that may or may not hold water. Lastly, you may incur dishonest sellers, who will simply try to sell you land that is not theirs to sell.

The above warnings are not meant to discourage you from buying real estate here, but to warn you that it is not as simple as buying land in the States or in Europe. However, if you are willing to put in the time and effort, you may end up with an amazing property at a fraction of the cost in other tropical locations. Donald Trump has fallen in love with the area, and he is currently constructing a number of luxury villas in a resort on our neighboring island Canouan. We are only 5 minutes by speed boat from Canouan, and many of their visitors come to Union, where bargains can still be had – with a little effort and a lot of patience.

Link here.


The moment has finally arrived. You have completed your CELTA (or TEFL or whatever certificate) and you have been accepted to teach somewhere in Mexico. You have always liked Mexican food, you speak a little Spanish and your plane ticket has been arranged. You have passed the preparation course with flying colors and you are excited and enthusiastic about your new career. Your coursework for teaching English hinted that you should be prepared for a culture difference, and you feel confident that you are going to have a wonderful experience. But just how big could that culture difference really be?

Even my Peace Corps experience and my travels in many parts of the world did not prepare me for living in an entirely new culture – Mexico. I prepared myself by reading about culture differences, but the materials available consisted mostly of descriptions of different holidays and celebrations. I was not prepared for a different way of thinking and a different way of doing things. I now have the benefit of four years of hindsight to review the moments of angst when the culture differences became personal.

I came to Mexico to teach English at one of the most prestigious schools in Mexico with campuses in all the major cities throughout the country. It was with eager anticipation that I accepted the position and brought my somewhat reluctant, retired husband south of the border. Years of working in various technology capacities within the business environment of the USA had made me yearn for sunny skies and less pressure. Teaching English would certainly give me the ideal working environment. I had taken a CELTA course to acquaint me with the rigors of classroom environment and to back up my MBA in finding a well-paying job. I thought I had found it all.

The first few months in any new environment are the honeymoon period. This was no exception. My husband and I, in our halting Spanish, began to explore our new city. We were well accepted and viewed as objects of curiosity in our non-gringo neighborhood. As I began my work at the school, a different reality set in. It is with enlightened hindsight that I can now look at certain situations and understand the implications of what was happening at the time. Hopefully these insights will help others who are contemplating heading south to Mexico to teach English.

Link here.


Try to imagine, if you will, a cashless economy where there is no paper, no plastic, no coins – just mobile banking. Far-fetched? Now stretch your imagination a little. Imagine a virtual currency where pre-paid airtime is traded across national borders to exchange goods and services, cancelling conventional currency exchange and the associated costs from the equation as a prerequisite. Where at the touch of a button, value can be transferred from your bank, stored as airtime in your cellphone and used to purchase, say, a can of Coke from your local street vendor.

The very thought of those innovations in technology promises to reshape the trading system that underpins 21st century capitalism, multiplying its revolutionary impact on the lives of the poor, giving them facilities once available to the rich only. It is not the only currency in town, but mobile banking has already spawned a pseudo “cyber” currency in several African countries and emerging economies around the world.

Granted, as a trading system on a global scale, the phenomenon is in embryo, peculiar to less developed economies where banking services like ATMs and electronic banking are either remote or transferring money through banks is a slow, painstaking and expensive process. But it is growing at a breathless pace, says Gustav Vermaas. A few years ago Vermaas, whose payment processing company, Ventury, acts as an intermediary service provider between GSM networks, banks and end-consumers in Nigeria, Uganda and Tanzania by providing technological applications for airtime transactions, observed something unusual, purely by chance. More and more people were purchasing large amounts of airtime in Nigeria where Ventury has a contract with mobile phone operator Celtel to transact top-ups on prepaid phones.

At first, the transactions seemed fairly straightforward. “Instead of purchasing a voucher or scratchcard, people would purchase airtime using their phones. They would also, we discovered, trade airtime amongst themselves where, for example, someone with airtime worth 500 Naira sells airtime worth 200 Naira on to the next person in exchange for hard currency. The seller’s balance of airtime would be reduced by 200 Naira.”

This is not uncommon in Nigeria where MTN offers a similar service to consumers called DT. Then Vermaas noted unusually large top-up transactions in Nigeria where, instead of averages running at 200 Naira, individuals were purchasing top-ups worth 3000 to 5000 Naira. Very quickly the number of large prepaid top-ups were in bloom, which meant something was not quite normal. “It turns out that individuals were buying and selling airtime as a business. So you would go to Celtel and buy airtime worth 10,000 Naira then stand somewhere in a rural area where the logistics of getting hard cards is a nightmare and sell on the airtime.” That was the reason MTN Nigeria announced its prepaid top-up cards in Nigeria and the UK, allowing Nigerians living in the UK to buy airtime for members of family back home, as a convenient alternative to sending small amounts of money home.

Other big network operators and cellphone companies, including Vodaphone and Safaricom in Kenya, are investing heavily in the new market. The evolution of the system started out as a simple transaction to purchase airtime, strictly to make calls. Very soon, people in rural areas in just about every sub-Saharan African country were purchasing prepaid airtime from local vendors in cities and selling it on to merchants in rural locales, who in turn either rented the use of mobile phones to rural dwellers or sold the airtime on to them at a profit. That seems pretty normal on a continent where informal trading is everyone’s business. But the technological innovation did not stop there. The rate of airtime exchanging hands based on a relatively few large top-ups seemed an anomaly. “If so many people were topping up, why was this not reflecting on the system?” asks Vermaas.

When he investigated the reasons for this, he found something quite phenomenal. People were using airtime as a sort of virtual currency. “So instead of buying airtime off me, I would say I want to buy a can of Coke. You would say that costs 200 Naira. I would say would you take airtime, so instead of giving you 200 Naira in cash I would pay you with airtime.” Airtime had in effect become another means of exchange for goods and services, a “wallet in your phone” (or second currency) based on the stored value of prepaid vouchers.

Mobile banking had emerged on the scene. Suddenly banks, traditionally accustomed to the rarefied trade of the high-end formal market, woke up to the massive opportunity this presented to deploy mobile-banking applications which extend the formal financial service system to the poor – the unbanked – without customers having to incur the onerous administrative fees of ATM machines and point of service cash transactions. The critical mass to roll something like this out throughout the African continent was certainly a seduction. With over 3 billion mobile phone subscribers in the world, Africa is now the world’s fastest growing mobile phone market and, according to latest research, there are now more than 100 million mobile phones in use on the continent – one for every nine Africans. These are the unbanked who generally cannot afford the cost of formal banking services and infrastructure.

“It’s a bank in your pocket without the costs of banking tagged to it,” says Vermaas. “And it’s secure, contrary to fears by the South African government. Where governments don’t know where 90 percent of transactions are happening, this new system allows you to start drilling down into transactions using cellphone numbers. You can monitor financial transactions which correspond to money you have in the bank.” Ultimately, the opportunity is the gap provided by underdevelopment. “Mobile phones not only break down communications barriers but offer a tradable commodity that is needed by the unbanked. The technology is there – meaning half the battle is already won.”

Link here.


Global consumers buying $25 Chinese-made DVD players usually assume Chinese labor is cheap because the country has a limitless supply of poor workers. But the morally cumbersome truth is that the Chinese government systematically prevents workers from being paid the full value of their labor. Chinese workers can join several state-controlled unions, but since the state and politically connected clans, or families, own most of the Chinese economy, official union representatives who work too zealously first get a warning smack on the wrist – and then worse. Ask Kong Youping. After Kong, a trade union official in Liaoyang, raised the ire of local officials by fighting doggedly for the rights of recently laid-off workers, he was sentenced to fifteen years in prison.

Link here (full article for subscribers only).


IMF has all kinds of ideas on how things should be done.

The IMF has published the conclusions of its Article IV consultation with Mauritius, completed on May 7. The IMF observed that loss of trade preferences in textiles in 2005, the reform to the EU’s sugar protocol for 2006-10, and higher international oil prices have brought about a permanent deterioration in Mauritius’s terms of trade, but that broad-based reforms have been initiated to address recent economic setbacks, and to raise growth to levels of the previous two decades. Real GDP growth is expected to reach over 4% in 2006/07, owing to a strong service sector outturn and slowing job losses in the textile sector.

“Executive Directors commended the authorities for the reforms introduced with the 2006/07 budget to adjust to the loss of trade preferences and reduce the fiscal deficit,” the IMF Executive Board commented. “While inflation needs to be reduced, and the current account deficit and public debt remain large, Directors considered that the economy is on the right track, supported by reforms to improve the business environment, simplify the tax system, liberalize trade, open air access, and advance economic restructuring, including the development of new sectors. Directors noted that labor market reform will be needed to support economic restructuring. They encouraged the authorities to maintain the reform momentum.

“Directors welcomed the authorities’ efforts to tighten monetary policy. This should help to reduce inflation and avoid entrenching inflation expectations. ... Directors noted that additional improvements in external competitiveness are needed to help restore external balance. Wage restraint, productivity gains, and labor market flexibility are key to achieve this. Directors considered that the flexible exchange rate regime has served Mauritius well, with rupee depreciation softening the negative effect of the terms of trade decline. They encouraged the authorities to limit foreign exchange intervention to smoothing excess volatility.”

Link here.



The era of tax-free e-mail, Internet shopping and broadband connections could end this fall, if recent proposals in the U.S. Congress prove successful. State and local governments this week resumed a push to lobby Congress for far-reaching changes on two different fronts – gaining the ability to impose sales taxes on Net shopping, and being able to levy new monthly taxes on DSL and other connections. One senator is even predicting taxes on e-mail.

At the moment, states and municipalities are frequently barred by federal law from collecting both access and sales taxes. But they are hoping that their new lobbying effort, coordinated by groups including the National Governors Association, will pay off by permitting them to collect billions of dollars in new revenue by next year.

If that does not happen, other taxes may zoom upward instead, warned Sen. Michael Enzi, a Wyoming Republican. “Are we implicitly blessing a situation where states are forced to raise other taxes, such as income or property taxes, to offset the growing loss of sales tax revenue?” Enzi said. “I want to avoid that.” A flurry of proposals that pro-tax advocates advanced this week push in that direction. Enzi introduced a bill that would usher in mandatory sales tax collection for Internet purchases. And during a House hearing politicians weighed whether to let a temporary ban on Net access taxes lapse when it expires on November 1. A House backer of another pro-sales tax bill said this week to expect a final version by July.

At the moment, for instance, Seattle-based Amazon.com is not required to collect sales taxes on shipments to millions of its customers in states like California, where Amazon has no offices. (Californians are supposed to voluntarily pay the tax owed when filing annual state tax returns, but few do.) Ideas to alter this situation hardly represent a new debate. Officials from the governors’ association have been pressing Congress to enact such a law for at least six years. With Democrats now in control of both chambers of Congress, the political dynamic appears to have shifted in favor of the pro-tax advocates and their allies on Capitol Hill. The NetChoice coalition, which counts as members eBay, Yahoo and the Electronic Retailing Association and opposes the sales tax plan, fears that the partisan shift will spell trouble.

One long-standing objection to mandatory sales tax collection, which the Supreme Court in a 1992 case left up to Congress to decide, is the complexity of more than 7,500 different tax agencies that each have their own (and frequently bizarre) rules. The pro-tax forces say that a concept called the Streamlined Sales Tax Agreement will straighten out some of the notorious convolutions of state tax laws. Enzi’s bill relies on the agreement when providing “federal authorization” to require out-of-state retailers “to collect and remit the sales and use taxes” due on the purchase. (Small businesses with less than $5 million in out-of-state sales are exempted.) It is “important to level the playing field for all retailers,” said Enzi. While it is too early to know how much support Enzi’s bill will receive, foes of higher taxation are marshaling their allies.

A second category of higher Net taxes is technically unrelated, but is increasingly likely to be linked when legislation is debated in Congress later this year. That category involves access taxes, meaning taxes that local and state governments levy to single out broadband or dial-up connections. If the temporary federal moratorium is allowed to expire in November, states and municipalities will be allowed to levy a dizzying array of Net access taxes – meaning a monthly Internet connection bill could begin to resemble a telephone bill or airline ticket with innumerable and confusing fees tacked on at the end. In some states, telephone fees, taxes and surcharges run as high as 20% of the bill.

These fees that states levy on mobile phones, cable TV and landlines run far higher than state sales taxes at an average of 13.3 percent, cost the average household $264 a year, and total $41 billion annually, according to a report published by the Heartland Institute. Jeff Dircksen, from the National Taxpayers Union, urged the Senate to “encourage economic growth and innovation in the telecommunications sector – in contrast to higher taxes, fees and additional regulation” by at least renewing the expiring moratorium, and preferably making it permanent. Broadband providers like Verizon Communications also want to make the ban permanent.

But state tax collectors are steadfastly opposed to any effort to renew the ban, let alone impose a permanent extension. Harley Duncan, the executive director of the Federation of Tax Administrators, said Wednesday that higher taxes will not discourage broadband adoption and his group “urges Congress not to extend the Act because it is disruptive of and poses long-term dangers for state and local fiscal systems.” If the moratorium expires, one ardent tax foe is predicting taxes on e-mail. “They might say, ‘We have no interest in having taxes on e-mail,’ but if we allow the prohibition on Internet taxes to expire, then you open the door on cities and towns and states to tax e-mail or other aspects of Internet access,” said Sen. John Sununu, R-New Hampshire.

Link here.

Senators seek to extend U.S. internet tax moratorium.

Senators Tom Carper (D-Delaware) and Lamar Alexander (R-Tennessee) have introduced legislation that would extend the current ban on Internet access taxes for another four years. The Internet Tax Freedom Extension Act of 2007 seeks to improve the existing moratorium by closing tax loopholes, and clarifying the definition of “Internet access” to better protect essential goods and services provided by state and local governments.

The Carper-Alexander bill alters the definition of “Internet access” to ensure that a consumer’s connection to the Internet, including email and instant messaging, remains tax-free. At the same time, the bill closes a loophole in the original 1998 moratorium that could allow an Internet Service Provider to bundle Internet access with other services and make them all tax-free. The Senators said that closing this loophole is important because it could harm the traditional tax base of state and local governments. In 2004, the last time Congress extended the ban, Congress exempted voice-over-Internet-protocol services from the moratorium because of fears that states and localities could lose billions of dollars in revenue as telephone services migrated to the Internet.

Link here.


House Ways and Means subcommittee chairman Richard E. Neal has released non-partisan data which he claims shows that the AMT disproportionately hurts working families and benefits the super wealthy. The Congressional Research Service (CRS) has studied the impact of the AMT, and deemed the reduction or elimination of promised cuts in the regular income tax by the AMT as the “take back” effect.

New data from the non-partisan Joint Committee on Taxation (JCT) shows the actual dollar impact by income group of this “take back” effect of the AMT. For tax year 2008, families earning between $100,000 and $200,000 will lose 47% of the promised tax cuts enacted in 2001 and 2003, including the rate reductions and marriage penalty relief, among other cuts.

The AMT, enacted in 1969, created a two-tier tax system to ensure that America’s wealthiest taxpayers did not evade income taxes altogether through the use of tax shelters, loopholes and deductions. AMT is not indexed to inflation, meaning that every year more and more U.S. taxpayers are falling into the AMT trap. Neal, who chairs the Select Revenue Measures Subcommittee, observed, “While some Members have trumpeted the tax relief to middle-class families, these new numbers show that the ‘check is still in the mail’ for most working families. This chart makes clear that families earning between $75,000-200,000 are footing the bill for the 2001 and 2003 tax cuts for the super wealthy.”

The JCT examined the impact of repealing the 2001 and 2003 enacted tax cuts with and without the impact of AMT. Results showed:

Neal added, “Indeed, those families who thought they were doing pretty well, at $200,000 to 500,000 in earnings, really take it on the chin losing 63% of the promised Bush tax breaks. ... No wonder suburban soccer moms are not seeing the impact of the ballyhooed Bush tax relief in their pocketbooks while the super-rich are taking 97% of their $65 billion in tax cuts to the bank.”

The Democrats have flagged the AMT problem as one of their major legislative priorities, but, despite widespread bipartisan support for a full repeal of the system, the question remains as to how lawmakers would fill the huge revenue hole that would come about by rolling back or scrapping the tax. House Democrats have reportedly come up with a compromise plan that would exempt everyone who earns less than $250,000 from the AMT. However, top Republicans are concerned that Democrats would offset the revenue loss with increases in marginal tax rates, or by raising the top rate of AMT.

Link here.


Senator Hilary Rodham Clinton, one of the many candidates to have put themselves forward as potentially the next Democratic president of the U.S., has proposed that tax breaks should be cut for large corporations and that President Bush’s tax cuts rolled back for the wealthy, to restore income equality in America. In a speech, she called for a return to shared prosperity and tax fairness, while expanding access to quality education and healthcare for all Americans.

“I believe that one of the most crucial jobs of the next President is to define a new vision of economic fairness and prosperity for the 21st century – a vision for how we ensure greater opportunity for our next generation,” Clinton said. “I consider myself a thoroughly optimistic and modern progressive. I believe we can grow our economy in the face of global competition – and in a way that benefits all Americans. I believe we can curb the excesses of the marketplace – and provide more opportunities for more Americans to succeed.”

Clinton outlined her “Nine Point Plan” which includes leveling the playing field and reducing special breaks for big corporations, eliminating incentives for American companies to ship jobs and profits overseas, reforming the governance of corporations and the financial sector, and restoring fiscal responsibility to government by rolling back income tax cuts. “When the president’s irresponsible tax breaks for high-income Americans expire, we will return to the income tax rates for upper-income Americans that we had in the 1990s, rates that were consistent with a balanced budget and economic growth,” she said. “And let’s take a hard look at corporate tax reform. It’s simply not fair that as corporate profits have skyrocketed, the percentage of taxes paid by corporations have fallen. ... It is time we restored the balance and required corporations to pay their fair share. Under the law, after all, they are citizens of the United States, with many of the responsibilities, I would argue, that goes with citizenship.”

Link here.


The U.S. Senate Finance Committee has released a bipartisan staff proposal on basis reporting of securities transactions, for the purpose of public discussion. The staff discussion draft deals with information reporting by brokers of customer basis in securities transactions. Taxpayers are to determine their capital gain or loss on an asset for tax purposes by subtracting the basis amount, generally the cost of an asset, from the gross proceeds when selling the asset.

A substantial number of securities transactions are reported incorrectly to the IRS because the basis amounts in the securities are either understated or overstated. The IRS estimates that in 2001, the tax gap associated with all capital gains was about $11 billion. The staff discussion draft targets the portion of the capital gains tax gap that relates to publicly traded securities.

The Government Accountability Office testified in 2006 that as many as 7 million individual taxpayers who sold securities in 2001 may have misreported capital gains or losses, and around half of those taxpayers did so because they misreported their basis. In addition, the GAO found that of those who misreported their capital gains or losses from securities transactions, about 64% underreported their income, and 33% over-reported their income. The proposal requires brokers to report to their customers the basis amount of the securities that are sold, as they are already required to report the gross sales proceeds. The information would also be reported to the IRS. Basis reporting has been recommended by the Administration, the GAO, the Joint Committee on Taxation and others as a way to reduce taxpayer burden and to improve the rate of voluntary tax compliance.

Link here.


Senate Finance Committee Chairman Max Baucus (D-Montana) has called on the IRS to step up efforts to identify tax-exempt charities and nonprofit organizations with possible links to terrorist activities. In a letter to Treasury Secretary Henry Paulson, Baucus questioned why the IRS has been so slow to implement computerized tracking systems, and why it uses only a limited terror watch-list to screen tax-exempt groups.

His questions were prompted by a new report from the Treasury Inspector General for Tax Administration (TIGTA), which found that the IRS’s current system for screening tax exempt organizations’ filing information offers only minimal assurances that potential terrorist-related activities are being identified. As a result, the report suggested, there is a significant risk that organizations with suspected terrorist links will not be reported to government agencies fighting terrorism.

TIGTA investigators found that the IRS has no real system for screening nonprofits for terrorist connections. They found that the main criterion used by IRS personnel in screening nonprofits is to look for “Middle-Eastern sounding names”. The TIGTA report found that the IRS uses a manual process and a limited terrorist watch list from the Department of the Treasury to screen tax-exempt entities for connections to individuals or groups with possible links to terrorism.

Link here.


The U.S. government has charged four current and former partners of big-four accounting firm Ernst and Young with tax fraud conspiracy and related crimes arising out of tax shelters promoted by the firm. According to the indictment, unsealed in the U.S. District Court in Manhattan, the defendants and their co-conspirators concocted and marketed tax shelter transactions based on false and fraudulent factual scenarios to be used by wealthy individuals with taxable income generally in excess of $10 or $20 million to eliminate or reduce the taxes they would have to pay the IRS.

The indictment charges four individuals in 8 separate counts, including conspiracy to defraud the IRS, tax evasion, making false statements to the IRS, and impeding and impairing the lawful functioning of the IRS. The government stressed that at this stage, E&Y itself is not under investigation. All four individuals allegedly worked in a group set up by E&Y in 1998 to develop tax shelters, which was first named VIPER (Value Ideas Produce Extraordinary Results), and later renamed SISG (Strategic Individual Solutions Group).

The charges allege that from 1998 through 2004, the four defendants and others participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters. The conspirators also sought to deceive the IRS about the bona fides of those shelters and the circumstances under which the shelters were marketed and sold to clients.

The charges allege that in order to encourage clients to participate in the shelters, and to shield the clients from substantial penalties that could be imposed if the IRS disallowed the claimed tax benefits, the defendants worked with law firms to provide E&Y’s clients with opinion letters that claimed the tax shelter losses or deductions would “more likely than not” survive IRS challenge, or “should” survive IRS challenge. The government said that the defendants and their co-conspirators were motivated by taking a slice of the highly lucrative tax shelter market in which other accounting firms were already participating, and to prevent its high-net-worth clients from taking their business – including, potentially, the highly prized audit business associated with some of these individuals – to its competitors.

“This prosecution further demonstrates our commitment to hold accountable tax professionals whose deceit costs this country untold millions in tax revenues,” commented U.S. Attorney Michael J. Garcia. “The conduct charged in this Indictment far exceeds the bounds of legitimate tax planning and reflects flagrant disregard of the law.”

Acting IRS Commissioner Kevin Brown stated, “According to today’s indictments, these individuals conspired to defraud the government through a series of fraudulent tax shelter products. They sold these products to high-income clients seeking to diminish or eliminate their tax liabilities. The IRS and the Department of Justice will continue efforts to combat illegal tax shelter activity and ensure the integrity of our tax system.”

In a statement yesterday, Ernst & Young said the four indicted men were part of a small group within the firm, disbanded years ago, that was responsible for developing the transactions in question. “None of the individuals was part of the firm’s management,” it said. “Ernst & Young has cooperated with the government from the beginning of its investigation. We have voluntarily made many changes and enhancements to our tax practice.”

Link here.


The Canadian government has announced two new initiatives, a Taxpayer Bill of Rights and a Taxpayers’ Ombudsman, to ensure that the Canada Revenue Agency (CRA) is more accountable to Canadians. “When it comes to taxes, this government not only believes in strong accountability, but fairness,” said Finance Minister Jim Flaherty. “We have introduced the Tax Fairness Plan and the Anti-Tax Haven Initiative. Our next important step is introducing a Taxpayer Bill of Rights and a Taxpayers’ Ombudsman, which will ensure fair treatment of all taxpayers by the CRA.” The Taxpayer Bill of Rights includes 15 rights, plus 5 new commitments for small businesses. Under the Bill of Rights, taxpayers’ rights would include the right to:

  1. Receive entitlements and to pay no more and no less than what is required by law.
  2. Privacy and confidentiality.
  3. A formal review and a subsequent appeal.
  4. Be treated professionally, courteously, and fairly.
  5. Complete, accurate, clear, and timely information.
  6. As an individual, not to pay income tax amounts in dispute before an impartial review has been conducted.
  7. Have the law applied consistently.
  8. Have the costs of compliance taken into account when administering tax legislation.
  9. Expect the CRA to be accountable.
  10. Expect the CRA to warn taxpayers about questionable tax schemes in a timely manner.
  11. Be represented by a person of the taxpayers’ choice.

The government also announced that it is creating the position of the Taxpayers’ Ombudsman to enhance accountability and service to the public, and to provide taxpayers with assurances that they will be treated fairly and with respect. The Ombudsman is expected to be operational by late 2007, and will operate independently and at arm’s length from the CRA. Taxpayers who are unsatisfied with the action or response from the CRA may request the Taxpayers’ Ombudsman to undertake an independent review.

Link here.


Britons will effectively have to work until June 1 this year just to pay off what they owe to the government in taxes, according to the Adam Smith Institute, the free market think-tank. Tax Freedom Day shows just how long we spend working for the Treasury, rather than for ourselves. Overall, the ASI says that the government takes more than 40% of national income – meaning that the average UK resident has to work a full five months of the year solely to pay their tax bill.

The ASI calculates Tax Freedom Day by taking the UK’s net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more.

Chancellor Gordon Brown’s 2007 budget did nothing to move Tax Freedom Day either backwards or forwards this year, but TFD has been getting steadily later in the year, according to the ASI’s calculations, falling a full week later now than it did back in 2002. The Institute has been calculating Tax Freedom Day since 1991, and has figures for it going back to 1963 – when Tax Freedom Day was more than a month earlier, falling on 24 April.

Tax Freedom Day in the U.S. comes a full month earlier than it does in the UK, falling this year on April 30, according to the Tax Foundation. Nevertheless, the Tax Foundation’s President Scott A. Hodge says that Americans will still spend longer paying for government (120 days) than they will paying for food, clothing and housing combined (105 days).

Link here.


HMRC is set to crack down on tens of thousands of UK investors owning buy-to-let properties and who have not paid the correct amount of tax, it has been reported. According to a report in the Times, HMRC has identified 80,000 landlords who may have claimed too much tax relief, failed to declare the full amount of rent received from a property, or not declared a capital gain on the sale of a property.

The paper also reported that HMRC will target so-called “ghost landlords”, property owners who have not declared themselves to the tax man, in its new campaign to extract more tax out of UK taxpayers and investors. It will supposedly use information from banks, tenants and letting adverts to find those evading their tax responsibilities. Landlords must pay income tax at rates up to 40% on their rental income. However, it is thought that HMRC is also targeting the many property owners who may have incorrectly claimed deductions for mortgage repayments. While current law allows property owners to deduct the entire monthly mortgage repayment on an interest-only mortgage, the rules stipulate that they cannot deduct payments that go towards reducing the capital borrowed and it is thought that many property owners may have unwittingly deducted such payments unaware that their mortgage has an element of capital repayment.

HMRC has dismissed reports that it is preparing a crackdown on buy-to-let investors as “scaremongering of the worst order.” Nonetheless, tax experts are urging property owners who may not have declared their full income or capital gains to consider taking advantage of HMRC’s offshore disclosure facility – which allows investors with offshore accounts to disclose to HMRC any income and gains not previously included in their tax returns. But for a limited period, the amnesty will allow taxpayers to come forward and make a full disclosure of all undeclared liabilities, not just those connected with an offshore account.

Link here.


Prime Minister Bertie Ahern’s long-governing centrist Fianna Fail Party, which looks set to form a new coalition government following elections last week, has pledged to maintain the economic policies which have helped Ireland achieve some of the highest rates of economic growth in Europe in recent years. Fianna Fail won 78 seats in the 166 member parliament, but failed to obtain the minimum 83 seats needed to form a government. However, FF is soon expected to reach a deal with one of the minority parties, allowing Ahern to govern for a third successive term. Ahern is thought likely to favor a deal with the Progressive Democrats, coalition partners in the previous government, who were reduced to 2 seats from 8 in the election, and several of the five remaining independents.

Ahern, currently the EU’s longest-serving leader, was widely tipped to be ousted from power after dismal opinion poll showings in the lead-up to the vote, but a dramatic last-minute turn-around in the opinion polls from 35% support to 42% in the final week of campaigning sees Ahern clinging to power for what will be his final term – he has already announced his intention to step down when he reaches his 60th birthday, an event which will coincide with the next general election.

Fianna Fail’s economic reforms have led the transformation of Ireland’s economy from a high-unemployment, high-tax and low public investment country to a modern, low-tax and high investment economy. Until 1998 the standard rate of corporation tax in Ireland was 32%, but following the Irish Government’s agreement with the EU for a general rate of 12.5% to apply from 1st January 2003, the rate applied to trading income fell in stages between 1999 and 2003.

Although the 12.5% rate has come under fire from several quarters, most notably from those within the EC intent on creating some form of harmonized European corporate tax base, it is viewed by the Irish government as a cornerstone of the Republic’s economic success, and is unlikely to be surrendered without a long and bitter fight. “We recognise the vital role played by low taxes in our economic success,” Fianna Fail said in its manifesto. “We guarantee that the 12.5% rate of corporation tax will not be changed.” The party has also stated that it will “resolutely oppose" any attempt to introduce tax harmonization within the European Union, either directly or through technical measures.”

Although economic growth has moderated somewhat in recent years, growth exceeded 10% during the 1990s, hitting a peak of 12% in 1999, and earning the country the moniker of the “Celtic Tiger”. Since 1994, GDP growth has averaged 6.7%, easily outpacing Ireland’s main EU partners like the UK, Germany and France. Figures for last year also indicate that the economy is heading back on the path to strong growth. In its next five year term, Fianna Fail has said that it will continue to lighten the tax and regulatory burden on individuals and businesses.

Link here.

UK rejects proposal to equalize Northern Ireland’s corporate tax rate with the Republic’s.

The UK Treasury has poured cold water on a proposal to equalize Northern Ireland’s corporate tax rate with the Republic’s successful 12.5% rate. According to a report in the Financial Times, a team appointed by Chancellor of the Exchequer Gordon Brown headed by former HM Revenue & Customs chief Sir David Varney unequivocally rejected the idea in a meeting with local politicians and business leaders last week.

Citing one of the Treasury officials on the visit, the FT reported that Varney “absolutely dismissed the idea” of a 12.5% corporate tax rate for Ulster. The rate of corporate tax in the UK has been 30% for a number of years, although this is being reduced by 2% as a result of Gordon Brown’s last budget.

It is believed that the UK Treasury is concerned that cutting corporate tax in Northern Ireland to the same level as the Republic would give UK-based businesses an easy way to avoid tax through transfer pricing, whereby they would channel profits through an Ulster-based subsidiary without carrying on any economic activity there. A reduction in corporate tax in one part of the UK and not others may also fall foul of EU state aid rules.

The Treasury’s reluctance to reduce Northern Ireland’s corporate tax is likely to disappoint political and business representatives in the province seeking economic regeneration following three decades of civil turbulence. “Growing prosperity north of the border generates growing prosperity south of the border, and vice versa if the conditions are right. We are making the conditions right by facilitating the ready movement of goods cross border, and our shared EU Membership has been integral to this. We must now take the next steps ourselves towards facilitating the ready movement of labor and services,” Institute of Chartered Accountants in Ireland (ICAI) Vice-President Jim Aiken argued.

Link here.


The ITI has called for political, business and representative groups to unite against moves to harmonize European taxes. ITI made the call on a day when the German Presidency of the EU hosted a meeting in Berlin on the subject of the Common Consolidated Corporate Tax Base or CCCTB.

Mark Redmond, CEO of the ITI said moves towards a common means of paying corporate taxes in the EU is bad for Ireland and bad for Europe. “The more you harmonize taxes, the more tax rates will rise, the more compliance costs will rise and the more unemployment will rise. The proposals put forward to date remain vague. They fail to come clean on the burden they will bring on both domestic and international businesses and they fail to address the widely held belief that it will mean higher corporate tax rates by the backdoor,” he warned. “Taxation policy has been central to the Irish success story and attempts to wrestle control on tax policy away from individual Member States should be fiercely resisted. A common tax rate is bad for Ireland and bad for Europe.”

Redmond said the proposal to widen CCCTB to the financial services sector was worrying. In 2006, IFSC companies alone contributed €1.1 billion ($1.5 billion) in tax revenues to the Irish exchequer. Redmond also said the proposal to establish an overall EU Revenue Authority would mean another costly bureaucratic layer for business to grapple with.

The CCCTB would enable companies to follow the same rules for calculating the tax base for all their EU-wide activities, rather than in accordance with the existing 27 systems, thereby, simplifying procedures, improving efficiency and reducing compliance costs, the EC has argued. However, despite assurances that no plans are in the pipeline for harmonizing tax rates, several member states have raised objections to the possibility of any kind of harmonization of any elements of EU member state tax regimes.

Link here.


Under China’s new Corporate Income Tax Law, due to come into effect on January 1, 2008, holding companies for Chinese investments should be based in tax-treaty countries in order to escape double taxation, says Danny Po of PricewaterhouseCoopers in Hong Kong. Mr Po. says that while under the current regime, known as the Foreign Enterprise Income Tax (“FEIT”) law, withholding tax of 20% on dividends from foreign investment enterprises to their foreign owners is exempted altogether or reduced (for other passive income) from 20% to 10%, the new CIT Law states that the standard WHT rate will be 20%. It is silent on whether or not the existing withholding tax exemptions will be kept intact.

In addition, the new law will contain a generalized anti-avoidance provision which may catch income or capital flows to overseas investors, plus new rules to clarify corporate tax residence which may cover firms whose executives habitually spend time inside China. Mr. Po said venture capital investors can still consider setting up an enterprise inside China to take advantage of sectoral tax incentives which are expected to be introduced under the new CIT Law.

Link here.



The purpose of this article is to present a number of strategies that may allow a greater number of readers to take their dreams and desires and turn them into reality. Although the strategies may be “outside the box” for some, they are worth considering as they open opportunities otherwise unavailable. Many are fully aware that many of the opportunities we see today may not be available in the future as the economic sins of the U.S. begin to be atoned for. We fear what will happen in the future as the dollar’s buying power falls and limited global resources become more expensive. With that in mind many of us believe time is of the essence.

So what is this Strategy? The same one many rich individuals use regularly, joint ventures. When one is faced with not being able to reach a goal by themselves then it may be wise to network with others in order to attain it. For those of us with limited capital or current obligations joint ventures are a great option – if not the only one. It is the goal of this article to introduce you to the concept of joint ventures and hopefully offering you ideas and information you need in making your dreams a reality.

Benefits of Strategic Joint Ventures

There are a vast number of beneficial reasons for considering strategic joint ventures as a way of investing internationally. Besides making the project viable in the first place, JVs are a great way to share risk, expense, management, and operations of an international venture.

Having a number of people with different types of knowledge, skills and expertise also benefits a project as it offers valuable resources and information from different perspectives. JVs can also be organized to diversify opportunities. Where an individual may have only been able to do one simple project, a group effort could offer opportunities in numerous diverse projects. This should be of great interest to those not interested in retiring or escaping to one location or activity for the rest of their days.

Another valuable benefit of a JV is the educational and experiential lessons it can provide. For many of us, investing in foreign lands and cultures is quite “foreign”. Thus if your long-term goal is to have a foreign business or lifestyle there is a great deal to be learned in the relative safety of a joint venture and hopefully under the tutelage of others who may have more experience. A JV can make it easier psychologically to take that first step into the world of international investing.

There is much to be said about having your own business or project, having control of every aspect, and at the end of the day the understanding that it was you who either succeeded or failed. But this is strictly academic if you cannot even get started in the first place.

Those considering JVs as a way of entering into the global investment arena need to be aware of and prepared for a number of issues or challenges. First, any venture with more than one person will have issues surrounding personalities and communication. Like a marriage, there will be misunderstanding, conflicts, control issues and all the rest of those little nuances that make humans so interesting. There will be issues with the coming and going of individuals within the venture. How the assets can be used or distributed. How to protect against liability issues. And so on. Many of these issues can be avoided by creating clear expectations and contracts from the start, working hard to keep communication open and transparent in all aspects of the venture, and being selective about who you network with in the first place.

One of the issues anyone considering a venture will face is how to legally set up the project in the most effective and efficient way possible. Numerous issues will come into play here as there will most likely be several country’s laws and legal issues to consider. There are issues regarding the formal operation of the venture and how to effectively limit liabilities both emanating from the venture and the individuals involved. The venture could be organized as an LLC, Partnership, Corporation or Trust depending on the circumstances surrounding the project. These issues are best addressed with an attorney.

For anyone thinking of starting or joining a joint venture it would be wise to consider doing so on a small scale with the idea of keeping it simple. In is easy to go a bit overboard and get carried away. By keeping everything small and simple you can avoid many of the problems faced by business ventures everywhere – trying to do far too much, far too quickly, with far too little money. Small and simple lowers risks while keeping the expectations realistic among the team members and ultimately much happier. Choose those you plan to network with wisely as you will be working with them for what could be a very long time.

Link here.


Claimants ask Swiss to look through legal structures, lift bank secrecy in this case.

A Geneva court has blocked the release of some of CHF7.6 million ($6.2 million) held in a Swiss bank accounts by former Haitian dictator Jean-Claude “Baby Doc” Duvalier. The order came just days before a previous freeze by the Swiss authorities was due to expire, and which would have allowed members of Duvalier’s family to begin withdrawing funds from the accounts starting June 3.

The request for the order was lodged on behalf of two Haitian individuals, a priest and a taxi driver, who were persecuted under the Duvalier regime. The plaintiffs were trying to have a 1988 U.S. court ruling, which ordered the Duvaliers to pay them $1.75 million in damages, recognized in Switzerland. According to the plaintiff’s lawyer, Marc Henzelin, the latest court decision affects only one account, held with the Geneva branch of UBS in the name of the “Brouilly Foundation” in Liechtenstein. The Brouilly Foundation is owned by a Panama-based company, which in turn is owned by members of the Duvalier family.

It is believed that another account is held by Duvalier in the Swiss city of Lausanne, but a lack of information has prevented Henzelin from mounting a legal challenge there. The Swiss government has been urged by lawyers acting for the plaintiffs to extend an asset freeze on all Duvalier accounts in Switzerland, and to lift banking secrecy on the details of those accounts. While the Swiss government has been very reluctant to lift the veil of banking secrecy in such cases, Henzelin said that it has nevertheless been quick to seize assets of ousted dictators in the past. “I think the [Swiss] government has done a lot compared with others,” Henzelin said. “Not many countries have seized assets unilaterally like the Swiss in the Marcos, Mobutu, Abacha and Duvalier cases, but [the Swiss government] has not wanted to touch the sacred cow of banking secrecy.”

Duvalier and his followers have been accused by Haiti’s new government of siphoning off state funds during their reign, but the money in question has been caught up in legal wrangling ever since the Duvalier regime was ousted in 1986.

Link here.


Representatives of the European Union’s overseas territories have agreed that they must work more closely together to maintain the good reputations of international finance centers (IFCs), and to deal with international challenges. Following the Outlook for Financial Services Regulation Conference, which concluded in the British Virgin Islands recently, the members of the Overseas Countries and Territories Association of the European Union (OCTA) concluded that building good centers attracted good business and was important because IFCs play a key role in the stabilization of the world economy.

The conference aimed to encourage discussion and understanding between international organizations and overseas countries and territories with finance centers, and those considering establishing such centers. However, conference participants noted that different standards were still being applied to so-called “offshore” centers such as the BVI and the Cayman Islands from the standards set for “onshore” centers such as the U.S. and the U.K. The territories maintain that their centers are in some cases more compliant in meeting international regulatory standards set by bodies such as the OECD, but often they are not given the recognition they deserved for such compliance.

Recent reports examining the regulation of offshore financial centres would appear to back up these conclusions. A study undertaken by Camille Stoll-Davey of Oxford University found that in key areas such as a willingness to exchange tax information or to identify who is behind companies or trusts, OECD member countries do not operate to a higher standard than offshore financial centers and in some cases they operate to a lower standard.

Another report, by the Center for Freedom and Prosperity, has criticised a new campaign against tax havens by the U.S. Congress. In it, Andrew Quinlan points out that the U.S. Senate’s hearing on offshore tax evasion included not a single person representing the interests of taxpayers, and was designed to blame so-called tax havens for the tax gap. Offshore jurisdictions are routinely vilified, he says, largely because they are perceived as a threat by politicians. “[T]he supposed problem is relatively trivial,” the CFP study said.

The participants at the BVI suggested that there is an uneven playing field between small, offshore territories and large onshore economies. Without a level playing field, the territories said, they were at a competitive disadvantage, and the very objectives that regulatory standards seek to achieve were undermined.

The conference was attended by representatives from Anguilla, Aruba, Bermuda, BVI, Cayman Islands, French Polynesia, Greenland, Isle of Man, Mayotte, Montserrat, Netherlands, and the Netherland Antilles. Other organizations represented included the Financial Action Task Force (FATF) and IMF.

Link here.


Isle of Man-based companies have won 10 awards out of a total 14 award categories in this year’s International Investment Fund and Product Awards, and in four awards five local companies were “highly commended”. Notably, AXA Isle of Man, Fairbairn and Royal Skandia were declared winners in two categories each, while Anglo Irish Bank (Isle of Man), Lloyds TSB Offshore, HSBC Bank and Britannia International each won a category. Other Island businesses that were recognized and “Highly Commended” include Bradford & Bingley and Kaupthing Singer & Friedlander International.

“The success of Isle of Man-based companies at this prestigious awards ceremony is a clear reflection of the strength of our on-island institutions and of their commitment to providing clients with expert services and products,” commented Manx Treasury Minister Allan Bell. “These awards also endorse the Isle of Man’s financial services industry, the leading segment of our thriving economy, and further enhance the Isle of Man’s reputation as a centre of excellence. Across all sectors the Island pays particular attention to quality of service, value for money, innovation and speed of response, enabling it to be positioned at the forefront of the global arena.”

Link here.



Hasan Elahi whips out his Samsung Pocket PC phone and shows me how he is keeping himself out of Guantanamo. He swivels the camera lens around and snaps a picture of the Manhattan Starbucks where we are drinking coffee. Then he squints and pecks at the phone’s touchscreen. “OK! It’s uploading now,” says the cheery, 35-year-old artist and Rutgers professor, whose bleached-blond hair complements his fluorescent-green pants. “It’ll go public in a few seconds.” Sure enough, a moment later the shot appears on the front page of his Web site, TrackingTransience.net.

There are already tons of pictures there. Elahi will post about 100 today – the rooms he sat in, the food he ate, the coffees he ordered. Poke around his site and you will find more than 20,000 images stretching back three years. Elahi has documented nearly every waking hour of his life during that time. He posts copies of every debit card transaction, so you can see what he bought, where, and when. A GPS device in his pocket reports his real-time physical location on a map.

Elahi’s site is the perfect alibi. Or an audacious art project. Or both. The Bangladeshi-born American says the U.S. government mistakenly listed him on its terrorist watch list – and once you are on, it is hard to get off. To convince the Feds of his innocence, Elahi has made his life an open book. Whenever they want, officials can go to his site and see where he is and what he is doing. Indeed, his server logs show hits from the Pentagon, the Secretary of Defense, and the Executive Office of the President, among others.

The globe-hopping prof says his overexposed life began in 2002, when he stepped off a flight from the Netherlands and was detained at the Detroit airport. He says FBI agents later told him they had been tipped off that he was hoarding explosives in a Florida storage unit. Subsequent lie detector tests convinced them he was not their man. But with his frequent travel – Elahi logs more than 70,000 air miles a year exhibiting his art work and attending conferences – he figured it was only a matter of time before he got hauled in again. He might even be shipped off to Gitmo before anyone realized their mistake. The FBI agents had given him their phone number, so he decided to call before each trip. That way, they could alert the field offices. He has not been detained since. So it dawned on him: If being candid about his flights could clear his name, why not be open about everything?

Elahi says his students get it immediately. They have grown up spilling their guts online – posting Flickr photo sets and confessing secrets on MySpace. He figures the day is coming when so many people shove so much personal data online that it will put Big Brother out of business. For now, though, Big Brother is still on the case. At least according to Elahi’s server logs. “It’s really weird watching the government watch me,” he says. But it sure beats Guantanamo.

Link here.


Mexico is expanding its ability to tap telephone calls and e-mail using money from the U.S. government, a move that underlines how the country’s conservative government is increasingly willing to cooperate with the U.S. on law enforcement. The expansion comes as President Felipe Calderon is pushing to amend the Mexican Constitution to allow officials to tap phones without a judge’s approval in some cases. Calderon argues that the government needs the authority to combat drug gangs, which have killed hundreds of people this year.

Mexican authorities for years have been able to wiretap most telephone conversations and tap into e-mail, but the new $3-million Communications Intercept System being installed by Mexico’s Federal Investigative Agency will expand their reach. The system will allow authorities to track cellphone users as they travel, according to contract specifications. It includes extensive storage capacity and will allow authorities to identify callers by voice. The system, scheduled to begin operation this month, was paid for by the U.S. State Department and sold by Verint Systems, a politically well-connected firm based in Melville, N.Y., that specializes in electronic surveillance.

Although information about the system is publicly available, the matter has drawn little attention so far in the U.S. or Mexico. The modernization program is described in U.S. government documents, which suggest that Washington could have access to information derived from the surveillance. Officials of both governments declined to comment on that possibility.

Calderon has been lobbying for more authority to use electronic surveillance against drug violence, which has threatened his ability to govern. Despite federal troops posted in nine Mexican states, the violence continues as rival smugglers fight over shipping routes to the U.S.-Mexico border, as well as for control of Mexican port cities and inland marijuana and poppy growing regions. Nonetheless, the prospect of U.S. involvement in surveillance could be extremely sensitive in Mexico, where the U.S. historically has been viewed by many as a bullying and intrusive neighbor. U.S. government agents working in Mexico maintain a low profile to spare their government hosts any political fallout.

It is unclear how broad a net the new surveillance system will cast. Mexicans speak regularly by phone, for example, with millions of relatives living in the U.S. Those conversations appear to be fair game for both governments. Legal experts say that prosecutors with access to Mexican wiretaps could use the information in U.S. courts. U.S. Supreme Court decisions have held that 4th Amendment protections against illegal wiretaps do not apply outside the U.S., particularly if the surveillance is conducted by another country, Georgetown University law professor David Cole said.

Calderon recently asked Mexico’s Congress to amend the country’s constitution and allow federal prosecutors free rein to conduct searches and secretly record conversations among people suspected of what the government defines as serious crimes. But others argued that the proposed changes would undermine constitutional protections and open the door to the type of domestic spying that has plagued many Latin American countries. Colombian President Alvaro Uribe last week ousted a dozen generals, including the head of intelligence, after police were found to be wiretapping public figures, including members of his government. “Calderon’s proposal is limited to ‘urgent cases’ and organized crime, but the problem is that when the judiciary has been put out of the loop, the attorney general can basically decide these however he wants to,” said John Ackerman, a law professor at the National Autonomous University of Mexico. “Without the intervention of a judge, the door swings wide open to widespread abuse of basic civil liberties.”

Link here.



Jersey’s Council of Ministers is considering extending the controls which exist to prevent the jurisdiction being used by money launderers or for financing terrorism. The review is part of the preparation for next year’s review of Jersey’s performance as a financial centre conducted by the International Monetary Fund (IMF). The IMF review will be testing for active compliance with international standards. The proposals in the consultation papers suggest how changes could be made in Jersey to bring the Island’s regulations into line with those standards. Representatives of the IMF will visit Jersey, Guernsey and the Isle of Man in 2008 and will assess how each complies with international standards in anti-money laundering and countering the financing of terrorism.

The first of two consultation papers sets out proposals which would require a number of business sectors to comply for the first time with laws which prevent Jersey businesses being used by people seeking to launder money or finance terrorists. The business sectors that would be affected are:

The second consultation paper proposes a legal framework which would establish a mechanism for the supervision of these businesses. Businesses which are already required to comply with these regulations, but whose compliance is not currently overseen by a supervisory authority, will become subject to oversight by such an authority. These businesses include money service businesses (bureaux de change, money transmitters and cheque cashers), issuers of electronic money, lenders, certain traders in financial instruments, money brokers, and persons who provide safe custody services.

Commenting on the proposals, Martin De Forest-Brown, the States Director of International Finance said, “It is imperative that Jersey gets a good result from the IMF review next year. We have established an excellent reputation as a well regulated international financial services centre and we must continue to be vigilant and flexible, ensuring that we take all necessary steps to maintain our position.”

Link here.


The parent company of Antigua-based BetonSports has pleaded guilty to federal racketeering charges, U.S. Attorney for the Eastern District of Missouri, Catherine L. Hanaway announced. The U.S. Department of Justice revealed that, “As part of the plea agreement, [Ms. Hanaway] agreed that as long as the company lives up to its obligations under the plea agreement, including supplying witnesses and evidence in the pending cases against co-defendants, no further criminal prosecution will be brought in this District relative to its participation in the Kaplan Gambling Enterprise between July 2004 and the present date.”

“This plea, combined with the terms of the civil junction, should put an end to the BetonSports illegal gambling empire,” added Hanaway. “BetonSports, PLC is presently the corporate parent, based in the United Kingdom, of the companies comprising the vast illegal internet gambling operations described in the indictment. BetonSports, PLC had been failing to appear and answer the criminal charges in the indictment and Judge Jackson had imposed sanctions against the company. This plea constitutes a submission by the company to the U.S. justice system.”

According to the DoJ, by pleading guilty to the racketeering conspiracy charge, BetonSports admits that it conducted an enterprise through a pattern of racketeering acts, including repeated mail and wire fraud, operated an illegal gambling business, laundered money and admitted to multiple state gambling felony charges. The company faces a fine of up to $500,000 or more, as the maximum fine can be double the financial gain from or loss caused by the enterprise. It also faces possible forfeitures, and is subject to a permanent injunction, which requires it to repay money received from U.S. gamblers held by the company as of June 1, 2006.

As noted in the plea agreement, at the present time there is no intention to charge any past or present individual BetonSports PLC director, other than those already charged.

Link here.


California has been quietly raking in serious money, as much as $669 million one year, by taking over unclaimed cash, stock, bonds and even the contents of safe-deposit boxes. When the owners have had no contact for three years with the bank or business holding their financial assets, the goods are turned over to the state under the unclaimed property law. But after a 6-year legal battle, a federal court panel ruled last month that the state has not been doing enough to track down the owners after taking the property.

Following an order from the 3-judge panel, U.S. District Judge William Shubb in Sacramento is scheduled to consider ways to improve the search for owners, which could sharply reduce the state’s annual windfall. New state Controller John Chiang, changing the longtime policy of his office, announced that he is sponsoring legislation to reform the unclaimed property program. “Restrictions in the law over the past two decades have created a ridiculously ineffective program for reuniting owners with their lost or forgotten property,” Chiang said.

The court ruling is a victory for Sacramento attorney William Palmer, who has filed at least eight lawsuits regarding unclaimed property in the past six years. “I ran it like a Napoleon campaign, where you have little armies that move independently until you find your field, and that is where you fight,” Palmer said. The suit that produced the federal ruling, Taylor v. Westly, contended that Intel stock improperly taken from a man living in England and sold by the state for $200,000 was later worth $3.9 million. Palmer argued that the state has deliberately limited attempts to find the owners of unclaimed property as a way to boost revenue for California’s general fund.

The total collected under the unclaimed property law enacted half a century ago has grown to more than $5.1 billion from about 8.2 million individuals and organizations. The state has contracts with three firms to locate the unclaimed property of California residents held by out-of-state firms. In the past, the state has attempted to manipulate revenue from the unclaimed property program by imposing or waiving penalties on banks and other businesses that miss deadlines for reporting unclaimed property. During a severe state budget crunch, lawmakers shortened reporting periods to temporarily boost revenue from the program.

It is not clear how much increased notification efforts would reduce state revenue from the unclaimed property program. Currently, the state does three things to notify owners when their property is seized. The controller’s Web site has a link that allows searches by individual name, business and property ID number. The controller runs an annual notice in newspapers saying the state is holding unclaimed property that may belong to the reader, without listing names.

But California can send a notice to the owner only if a Social Security number check of state income tax records shows a more current address than the one listed for the property holder. Chiang said that under current law, his office is unable to notify more than 80% of unclaimed property owners. He is prohibited from spending more than $50,000 a year to notify the public. The bill sponsored by Chiang would lift notice restrictions and create a program to locate property owners, replacing a small unit closed in 1982 that leafed through phone books. “Just think of the people we can contact today using Internet search engines and private and public databases,” Chiang said.

The legal principle allowing the state to take unclaimed property is “escheat”, which is said to have originated in feudal England when the property of someone who died without a legal heir reverted to the local lord. “The unclaimed property law was enacted to prevent holders of unclaimed property from using your money and taking it into their business income,” the controller’s Web site says.

Link here.


The federal government is undertaking the most ambitious set of studies ever mounted under a controversial arrangement that allows researchers to conduct some kinds of medical experiments without first getting the patients’ permission. The $50 million, 5-year project, which will involve more than 20,000 patients in 11 sites in the U.S. and Canada, is designed to improve treatment after car accidents, shootings, cardiac arrest and other emergencies.

The three studies, organizers say, offer an unprecedented opportunity to find better ways to resuscitate people whose hearts suddenly stop, to stabilize patients who go into shock and to minimize damage from head injuries. Because such patients are usually unconscious at a time when every minute counts, it is often impossible to get consent from them or their families, the organizers say. The project has been endorsed by many trauma experts and some bioethicists, but others question it. The harshest critics say the research violates fundamental ethical principles.

Link here.



If statism is primarily an emotional reaction, it cannot be opposed with logical argument alone.

About a year and a half ago, I started recording libertarian podcasts in my car during my drive to and from work. It seemed like a fun way to kill the time in traffic, and it also gave me a chance to help clarify my thoughts with regards to various issues that people had written to me about after my first articles were published on Lew Rockwell. At first, my podcasts were largely concerned with the economics of anarcho-capitalism, and details regarding the implementation of my theory of Dispute Resolution Organizations (DROs), and how they could replace existing state functions.

I was impressed at how quickly this turned into a very involved philosophical conversation. At first, a few thousand podcasts a month were downloaded – then, this figure began to rise inexorably. In March of 2007, over 200,000 Freedomain Radio podcasts were downloaded, and tens of thousands of videos were viewed. The Internet is a wonderful medium for philosophy, because it can instantly distribute ideas to hundreds of thousands of people, and through message boards, can stimulate fascinating discussions on the resulting topics. Plus, philosophy was originally an oral art form, designed to be spoken and discussed, not just read.

The rigor of this new philosophical conversation was far beyond anything I had experienced before. As a community, we certainly talked about economics, politics and contemporary events, but it quickly became evident to me that where there is disagreement on fundamentals, there can be no real agreement on details – and that, relative to metaphysics, epistemology and ethics, politics is a mere detail. So, with the help of the listeners, I began to define the methodologies that we could use to help determine truth from falsehood – largely based on the scientific method, empirical observations and rigorous logic. And we made great progress, or so it seemed.

Then my wife, a practicing psychotherapist, said something extraordinary to me after reading one of my tracts on moral philosophy and the evils of the state. Looking up, she said, “It all starts with the family.” We mulled this over for some weeks, and then I decided to expand the conversation from philosophy to psychology and, in conjunction with my wife, began to trace our susceptibility to statism from our very first experiences of family life. In a series of podcasts, I put forth the proposition that the state is merely an effect of the family, and thus in order for libertarianism to really take root and flourish within society, what was required was not only a reevaluation of man, state and society, but a rigorous moral examination of the most essential social unit – the family.

This is when the conversation really began to take off! I received hundreds of e-mails from people about their experiences of authority within their own families, within the school system, within churches and other cultural institutions, which in general supported the role that our personal experiences with authority plays in our later susceptibility to impersonal authority, in the form of the state.

So far, this new direction seems to be really bearing fruit. If our adult susceptibilities to political hegemonies are rooted in our childhood experiences of authority, this helps explain why decades of talking about the evils of the state has done precious little to prevent the growth of the state. If statism is primarily an emotional reaction, or psychological defense mechanism, rather than a rational deduction, then it cannot be opposed with logical argument alone, but rather must be patiently undone through empathy and introspection.

Link here.


We are at the brink of the police state, the Orwellian 1984 surveillance and control society, and on top of this horror there seems to be an environmental disaster approaching. All kinds of bad things seem to be happening in the not so distant future.

The war on drugs seems to be losing, it might not work as good as we thought and if we do not do anything about it, it might fail. The war on terrorism seems hopeless. No matter how much money is spent, how many laws are enacted, or how much controls are enforced, the terrorists might always be one step ahead of us. The war in (on) Iraq is not going too well. Unless more troops are sent there and more money invested in stifling resistance and wiping out insurgents the war might be lost.

Government spending is increasing rapidly and the national debt is increasing even faster. Unless things change we might end up a bankrupt nation. Public schools seem to be unable to educate our children. The number of people not learning how to read in our schools is increasing – if nothing is done things might become very, very bad. The quality of public health care might turn into a right-out nightmare if we do not do anything.

There is one common denominator in the above paragraphs is that they are all about horrors that might become real in the future. Not a single one of them discusses the outright and obvious failure of each and every one of these policies and issues – they all might fail, they are approaching failure, they could go wrong if nothing is done.

How come we as humans always tend to realize the real risk of horrors tomorrow, but not understanding the horrors that are already upon us? We are not at the brink of an Orwellian police state – it is already here. The wars on drugs, terrorism, poverty, and Iraq are not approaching failure – they have failed, and failed good.

If we cannot even see what we are in the midst of, then how can we expect to learn from the experience of previous years, never mind previous generations? We are doomed to have history repeat itself simply because we always aim for the future. We never stop to ponder what we really have and what mess we are in, our minds are fixed on what might be. This is a huge problem, not only because we as individuals might lose the greater part of our lives simply because we are not living it – we are living only in dreams of the future.

The real problem is political. Politics cements and reinforces the illusion of life being in the future rather than in the now . It forcefully teaches that the uncertainty of the future can only be managed by government. It is in the interest of political power to keep people from seeing the horrors of today. Whatever is happening in the now can be settled in the future ... a little more power granted government, and the future is safe. If people only think of the future, government plan to bring order and control to a seemingly chaotic and uncertain existence makes the size of government expand.

We are not at the brink of a police state – habeas corpus is already gone. We are not about to lose the wars on drugs and Iraq – they are already lost, and were probably lost even before they started. We are not, as a nation, about to get broke – we are so deep in debt that it is already quite impossible to “do something.” The school system has already failed. The quality of health care and health care systems has al. There is no time to plan to do something. It is well past time to act.

Link here.
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