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SOVEREIGN MAN

Redux: They’ll even go back in time to steal your money…

[Editor's note: Simon is still out in the jungle and should be back on Monday. Meanwhile, we wanted to pass along a note he wrote over a year ago warning that governments would go back in time to pass retroactive tax hikes and regulatory changes. He was right. Since this letter last summer-

* The US government passed a retroactive estate tax hike
* The Spanish government passed a retroactive wealth tax
* The state of Illinois passed a 66% income retroactive tax hike
* The US Financial Crimes Enforcement Network issued offshore reporting guidance retroactive to 2010

The list goes on...]

July 13, 2010
Bath, England

It’s no secret that the government– any government– has nearly unlimited authority to do whatever they want, whenever they want. They can bend the rules, spin reality, and use their national constitutions like a roll of cheap, single-ply toilet paper.

Lately, governments have been unafraid to increase the size and scope of their powers, making drastic changes often with near immediate effect.

For example, UK Chancellor George Osborne shocked British investors several weeks ago when he announced that capital gains tax rates would increase for many Brits effective midnight that same evening.

Not to be outdone by Chancellor Osborne, the United States Congress has actually gone back in time and made retroactive changes to tax and reporting regulations.  There are some recent instances of this in 2010′s controversial HIRE Act.

Even better, Canada’s Legislature amended the Retail Sales Tax Act earlier this year to be retroactive effective May 1997. The amendment specifically affected certain companies which had to come out of pocket for 12-years worth of tax that they had previously been exempt from. Ouch.

Today marks another example of the government showing us how quickly it is willing and able to make changes.  Effective today, the United States Department of State is increasing fees for consular services across the board– things like visas, passports, and notary services.

The state department made this announcement just two weeks ago; the thing that caught my eye and sparked this letter today is their new $450 fee for renunciation of US citizenship.

This is a brand new fee that has never been imposed before.  Apparently the number of Americans queuing up at embassies around the world to renounce their citizenship is exploding so rapidly that the State Department had to formalize the process and tack on a fee… this, of course, on top of the 30% exit tax.

With all of these examples, there’s really one single point that I want to drive home today: you can only kick the can down the road for so long…

By that I mean, these examples show that governments are constantly finding creative new ways to increase their domain and grow their tax revenue.  We cannot count on any level of stability– what’s accepted and allowed today can change tomorrow.

The only thing we can really count on is the pace of change– how quickly and how drastically governments will reshape the system to suite their own needs at our expense.

All of these changes have an effect. Some are large (retroactive tax code changes, an overnight revaluation of a currency) and some are small (higher fees for a passport). As we go forward, though, you can expect these changes to be more surprising, more swift, and more painful.

It’s easy to kick the can down the road and say, “well I’ll take action later when things start to get really bad.”  This approach might work for a while, but the logic will abruptly run out only once it’s too late.

Protecting yourself and your assets– moving some money to a foreign jurisdiction, scouting out locations for a new home overseas, exploring second citizenship opportunities, etc.– can be accomplished by investing some time and energy right now and making it a priority.

I really want to encourage you to make every effort to start this process as quickly as possible. Put it on the calendar, call it a midsummer resolution… whatever works.  I don’t want you to be one of the people who wakes up one day and is completely enslaved by capital controls or a military police state.

Also bear in mind that whenever you step outside of your home country, wherever that may be, there is literally a world of opportunity waiting for you.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

If you liked this post, please click the box below. You can Download our Free 17 page Report The 6 Pillars of Self Reliance.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • http://www.facebook.com/profile.php?id=9214474 Mike Gropp

    I am a 24 years young American living abroad. I don’t have a nest egg to sneak out of the Eagle’s Nest, but as I build one it will be built and kept abroad.

    Are you remotely interested in diversifying abroad?
    Instead of reading snippets here and there of all the benefits of which you probably know little, ask yourself what are the benefits of keeping investments in the US?

    What is the current state of the US economy, government, and system of law: debt, unemployment, freedoms, currency, taxes, legal issues, regulations, real estate, jurisdictions, power allocation, State presence/demeanor (police, TSA, EPA, etc. etc.), education, immigration?

    What policies got us there?

    Are these policies going to change soon and drastically in any enduring way?

    You may not know much about foreign investment/countries, but don’t you know enough about the US’ current situation to know that you should learn more? Don’t get so focused on the data point, you miss the trend.

    The US may still be one of the most free places in the world by some standards, but what has been and looks to be its trajectory? I think you know the answer; so what about the bigger question upon which your financial future hinges: what will you do TODAY?

  • Bruce bailey

     CONCERNING THE STATEMENT http://www.sovereignman.com/expat/redux-theyll-even-go-back-in-time-to-steal-your-money/trackback/ Written 9/24/11: “The state department made this announcement just two weeks ago; the thing that caught my eye and sparked this letter today is their new $450 fee for renunciation of US citizenship.This is a brand new fee that has never been imposed before. Apparently the number of Americans queuing up at embassies around the world to renounce their citizenship is exploding so rapidly that the State Department had to formalize the process and tack on a fee… this, of course, on top of the 30% exit tax.”AS PER U.S. DEPARTMENT OF STATE LAW AND POLICY, Renunciation of U.S. Citizenship, A. THE IMMIGRATION & NATIONALITY ACT:That section of law provides for the loss of nationality by voluntarily performing the following act with the intent to relinquish his or her U.S. nationality.B. ELEMENTS OF RENUNCIATION:A person wishing to renounce his or her U.S. citizenship must voluntarily and with intent to relinquish U.S. citizenship:1) appear in person before a U.S. consular or diplomatic officer, 2) in a foreign country (normally at a U.S. Embassy or Consulate); and,3) sign an oath of renunciation.C. REQUIREMENT – RENOUNCE ALL RIGHTS AND PRIVILEGES:A person who wants to renounce U.S. citizenship cannot decide to retain some of the privileges of citizenship, as this would be logically inconsistent with the concept of renunciation. Thus, such a person can be said to lack a full understanding of renouncing citizenship and/or lack the necessary intent to renounce citizenship, and the Department of State will not approve a loss of citizenship in such instances. D. DUAL NATIONALITY / STATELESSNESS: Persons intending to renounce U.S. citizenship should be aware that, unless they already possess a foreign nationality, they may be rendered stateless and, thus, lack the protection of any government. They may also have difficulty traveling as they may not be entitled to a passport from any country. Even if they were not stateless, they would still be required to obtain a visa to travel to the United States, or show that they are eligible for admission.E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION:Persons who wish to renounce U.S. citizenship should also be aware that the fact that a person has renounced U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations. In addition, the act of renouncing U.S. citizenship will not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad. F. RENUNCIATION FOR MINOR CHILDREN:Parents cannot renounce U.S. citizenship on behalf of their minor children. A person under the age of eighteen must convince a U.S. diplomatic or consular officer that he/she fully understands the nature and consequences of the oath of renunciation.G. IRREVOCABILITY OF RENUNCIATION:Those contemplating a renunciation of U.S. citizenship should understand that the act is irrevocable and cannot be canceled or set aside absent successful administrative or judicial appeal. an applicant who renounced his or her U.S. citizenship before the age of eighteen can have that citizenship reinstated if he or she makes that desire known to the Department of State within six months after attaining the age of eighteen.CONCLUSION:Renunciation is the most unequivocal way in which a person can manifest an intention to relinquish U.S. citizenship. Please consider the effects of renouncing U.S. citizenship, described above, before taking this serious and irrevocable action. If you have any further questions regarding this matter, please contact: Email: ASKPRI@state.gov
    CONCERNING THE STATEMENT http://www.sovereignman.com/expat/redux-theyll-even-go-back-in-time-to-steal-your-money/trackback/ Written 9/24/11: “The state department made this announcement just two weeks ago; the thing that caught my eye and sparked this letter today is their new $450 fee for renunciation of US citizenship.
    This is a brand new fee that has never been imposed before. Apparently the number of Americans queuing up at embassies around the world to renounce their citizenship is exploding so rapidly that the State Department had to formalize the process and tack on a fee… this, of course, on top of the 30% exit tax.”
    AS PER U.S. DEPARTMENT OF STATE LAW AND POLICY, Renunciation of U.S. Citizenship,
    A. THE IMMIGRATION & NATIONALITY ACT:
    That section of law provides for the loss of nationality by voluntarily performing the following act with the intent to relinquish his or her U.S. nationality.
    B. ELEMENTS OF RENUNCIATION:
    A person wishing to renounce his or her U.S. citizenship must voluntarily and with intent to relinquish U.S. citizenship:
    1) appear in person before a U.S. consular or diplomatic officer,
    2) in a foreign country (normally at a U.S. Embassy or Consulate); and,
    3) sign an oath of renunciation.
    C. REQUIREMENT – RENOUNCE ALL RIGHTS AND PRIVILEGES:
    A person who wants to renounce U.S. citizenship cannot decide to retain some of the privileges of citizenship, as this would be logically inconsistent with the concept of renunciation. Thus, such a person can be said to lack a full understanding of renouncing citizenship and/or lack the necessary intent to renounce citizenship, and the Department of State will not approve a loss of citizenship in such instances. D. DUAL NATIONALITY / STATELESSNESS:
    Persons intending to renounce U.S. citizenship should be aware that, unless they already possess a foreign nationality, they may be rendered stateless and, thus, lack the protection of any government. They may also have difficulty traveling as they may not be entitled to a passport from any country. Even if they were not stateless, they would still be required to obtain a visa to travel to the United States, or show that they are eligible for admission.
    E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION:
    Persons who wish to renounce U.S. citizenship should also be aware that the fact that a person has renounced U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations. In addition, the act of renouncing U.S. citizenship will not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.
    F. RENUNCIATION FOR MINOR CHILDREN:
    Parents cannot renounce U.S. citizenship on behalf of their minor children. A person under the age of eighteen must convince a U.S. diplomatic or consular officer that he/she fully understands the nature and consequences of the oath of renunciation.
    G. IRREVOCABILITY OF RENUNCIATION:
    Those contemplating a renunciation of U.S. citizenship should understand that the act is irrevocable and cannot be canceled or set aside absent successful administrative or judicial appeal. an applicant who renounced his or her U.S. citizenship before the age of eighteen can have that citizenship reinstated if he or she makes that desire known to the Department of State within six months after attaining the age of eighteen.
    CONCLUSION:
    Renunciation is the most unequivocal way in which a person can manifest an intention to relinquish U.S. citizenship. Please consider the effects of renouncing U.S. citizenship, described above, before taking this serious and irrevocable action. If you have any further questions regarding this matter, please contact:
    Email: ASKPRI@state.gov

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