ASSET PROTECTION IS NEITHER IMMORAL NOR UNPATRIOTIC
by
Adam Starchild
First, it is imperative that we establish exactly what
purposes financial havens are created for, and the political
implications. Offshore investing is a highly effective method of
asset protection and growth. But who really wants to protect his
assets and reduce his taxes? The question may seem stupidly
naive. Who doesn't want to keep more of what's his? But this
sort of answer, derived from the cynical "everyone is selfish"
notion is not what we are looking for.
Asset protection through the use of international financial
strategies requires considerable initiative, alertness,
determination, and dedication. Not that it doesn't pay. Sad to
say, the net gain from each hour dedicated to protecting your
wealth is almost certain to be higher than the net gain from an
hour of productive employment. Thanks to "progressive" taxation,
this goes double for someone in a relatively high tax bracket.
There is also a psychological dimension that must not be
neglected. Most people derive a "clean" feeling from making a
living through their work, but feel that there is something
"dirty" about "scheming" to reduce their taxes.
Heavy taxes, whether used to provide luxury for a ruling
elite or to support welfare schemes, always have the effect of
penalizing individual initiative and productivity, reducing
investment capital and thus the resources required for economic
growth, reducing the standard of living, and forcing individuals
to hide things, both activities and incomes, from the government
and from one another. Heavy taxation is, therefore, a danger to
the future of the high-tax countries.
Internationalizing assets assumes at the outset that the
investor has assets that are available for investment. It also
assumes that a viable means of doing so exists in the
contemporary scheme of world business; and ideally, a plan exists
that includes short- and long-range investment goals.
To consider the question of the morality of tax avoidance,
it is first necessary to set forth a working definition of the
word morality. In the context of taxation, morality is not
considered an absolute, but a concept which, like the tax laws
themselves, is subject to interpretation. One person might argue
quite convincingly that it is morally wrong to tax a working
widow with children to help provide the day-to-day support for a
war veteran who is able to work but prefers not to; and still
another person can argue just as convincingly on behalf of the
veteran. Others would argue the libertarian position that all
taxation is theft.
The morality of taxation changes with the times. Prior to
World War I, when taxes were comparatively low, though certainly
not popular, most workers and small businessmen were exempt from
the controversy by virtue of low incomes. During times of
national emergency, particularly during and directly following
World War II, tax avoidance was frowned upon even by those who
were looking at larger tax liabilities each year. But as
progressive tax rates brought taxes higher and higher each year
in highly industrialized and populated nations, the attitudes of
taxpayers underwent a gradual, but definitive change.
Today, even the individual worker for which the tax system
is supposedly designed, can see that a tax system in which higher
income brackets produce progressively higher tax rates is
stultifying to individual initiative and productivity.
Investors feel not only duty-bound but morally obligated to
use the legal tax avoidance measures available to them. Whether
the tax loss to the nation is through using domestic tax shelter
strategies, or through the use of an international financial
center, the avoidance principle is exactly the same. From a
purely pragmatic viewpoint, legal tax avoidance by an investor
may not be the road to wealth, but simply a means of economic
survival for himself and his family.
The "losers" in this business of tax avoidance are presumed
to be the heavily industrialized, heavily populated, and heavily
taxed countries of the world. If two nations could personify
this description, they would be the United States and Great
Britain. Yet the attitudes of these governments toward tax
avoidance is ambivalent to say the least. The United States, for
example, actually established itself as a tax haven for
foreigners by not imposing a withholding tax on interest paid to
foreigners on their U.S. bank deposits, and allowing foreigners
to buy, hold, and sell U.S. securities without incurring a
capital gains liability.
There are, of course, economic reasons to justify these tax
rulings (a reversal of the ruling on interest paid on bank
deposits would remove billions of dollars from U.S. banks.) This
being the case, we can say that there is no external threat to
tax avoidance from free world nations. The United States and
Switzerland are both involved in the business of providing a
haven for foreign investors to protect their assets. The
citizens of each frequently use the other for international
diversification, and neither is likely to try to put the other
out of business.
The one clear answer is self-protection. But how? There is
a way -- a very elegant solution that is completely legal,
completely secret, and risk-free.
About the Author
For twenty years Adam Starchild has been writing books about
these subjects, and they are published by a variety of publishers. They are
also available in many bookstore or public libraries.
For more information on asset protection, see Asset Protection &
Becoming Judgment Proof .
Copyright © 1995 by Adam Starchild
The Libertarian Library has reprinted this article with the permission of the author.
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