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Earlier newsletters answered the queries “What Exactly is an International Trust?”, “How to Manage Assets Through an International Trust” and how Offshore Risk Management is a valuable tool for protecting and preserving your assets in a litigation gone crazy society.
And although we have answered the question “Is Going Offshore Legal?”, in many respects there are global forces at work increasingly interfering with the free movement of people and money as examined in “How Border Controls Really Affect You.
Today we look at another international force and how it will affect your income and wealth…. more than you may realize.
During recent months it seems I have spent more time trying to sleep on international flights and in strange hotels than in my own bed: from Australia to Korea to Singapore to Kuala Lumpur, and then Australia to Tokyo and back again and then on to Auckland, New Zealand. This past week I spoke to an enthusiastic group at an International Living conference looking to New Zealand.
In between trips I am teaching an intensive - first of its kind - international post-graduate law course on asset protection at Bond School of Law, “the” top rated Australasia law school. Serving again as Adjunct Professor has been a delightful experience reminding me of my law school days gone-by.
My travels provided me time to reflect on the future of an old, taxing concept proposed in a new fashion in the name of international taxes that may surprise you.
Our current newsletter is thus titled:
A Taxing Global Future?
If the past sheds light on what the future holds - which it usually does - then what does the future hold for taxation at an international level?
First, for U.S. taxpayers pulling the yoke, recent IRS data confirms that the tax burden is disproportionately borne by high-income individuals. Ranked by income, the top 1% of tax filers pay 36.9% of all personal income taxes.
The top 10% accounted for 68.2% of all taxes paid. Even more relevant is that the top half of all taxpayers paid 96.7% of all personal income taxes. And those same taxpayers across the ditch are no better off.
The next time someone comments that tax cuts only affect the wealthiest half of taxpayers, point out that this same group pays 96.7% of taxes in the first place!
But back to the future.
Regrettably, many politicians seem to think that the answer to every alleged social and political problem is imposing higher taxes. Now, even the United Nations wants to create an International Tax Organization (ITO) with the power to interfere with national tax policies.

This crazy idea first surfaced in a U.N. report titled “High-Level Panel on Financing for Development.” The bottom line is that the U.N. bureaucrats are calling for the creation of a global tax commission.

An international tax organization would certainly mean higher taxes and bigger government…. and more headaches for you and me.
And U.N. officials have been quite open about their intentions.
The chairman of the U.N. panel endorsed the creation of the ITO indicating it would “take a lead role in restraining tax competition.” According to the misguided U.N. mentality, it’s unfair for one country to have lower taxes than another.

And no surprise is what surfaced next in the report: The U.N. also desires to levy its own taxes.
The original report looked at two options, a tax on currency transactions and a tax on energy consumption. This is only the tip of the iceberg as the U.N. has endorsed taxation of the Internet, particularly a tax on e-mail.

But the No. 1 bad idea belongs to a U.N. proposal to give governments permanent taxing rights over emigrants.
The U.N. thinks it is “unfair” when talented people leave high-tax socialist nations and move to freer countries offering better opportunities. The bureaucrats are proposing to let governments tax expatriates income earned in other nations.
These narrow-minded bureaucrats simply don’t understand that money and people go to where they are treated best.
While you might chuckle at the above proposals, the reality is that a good bureaucrat has never seen a tax he or she didn’t like.
You should worry about the U.N. plan as it is just one of several international bureaucracies working to undermine fiscal sovereignty and dictate higher taxes.
For example, the Paris-based Organization for Economic Cooperation and Development (OECD) targets “harmful tax competition” and the Brussels-based European Union enthusiastically backs “tax harmonization.”
And closer to home for U.S. taxpayers looking to leave U.S. soil, Congress in its infinite wisdom looks prepared to implement an “exit tax” for those adventurous souls looking to fresh horizons.
The new law would impose onerous taxes in addition to the current expatriation tax rules. U.S. citizens and tax residents who denounce their connection to the U.S. will have to recognize gains and otherwise be taxed on all assets as of their expatriation date.
You will be interested in knowing that the U.S. Supreme Court and the U.S. Constitution clearly provide for freedom to give up one’s citizenship. But Congress appears uninterested in the constitution or the Supreme Court standing in the way of new taxes.
Why to people expatriate from the U.S. in the first place, you ask?
There are many reasons. Perhaps they are returning to their roots, or to a new home of choice; some are international individuals; and others might look to find the “American Dream” offshore…they are not necessarily tax motivated, as Congress ‘mis’-represents.
And U.S. taxpayers living abroad are keenly aware that the U.S. tax system is unique in imposing a draconian tax on their worldwide income regardless of residency or source of income.
For those international taxpayers familiar with the dreaded AMT (alternative minimum tax) can you say: “Watch foreign tax credits disappear when AMT is calculated”?
I knew you could…. as this really boils down to paying taxes twice on the same income.
Simply stated, the U.S. is steadfastly unique in its ability to tax the income of its citizens and foreign residents - from cradle to grave - regardless of where the income is earned or where the individual is living.
For our clients, I generally recommend a U.S. domestic grantor trust for integrated international asset protection planning, offshore investing and pre-migration planning. This variety of international trust is “tax-neutral” and “user- friendly” and mitigates certain planning issues.
If you are interested, the above and many other examples are more particularly outlined in my books Offshore Living & Investing and How to Legally Protect Your Assets.
100 years ago the United States, Australia, Canada, the U.K. and most other major western nations were on the edge of a new prosperity in the world. These same countries had little or no national debt. Mom stayed home to raise the kids, and what followed was one of the most successful economic periods in history.
When the first U.S. national income tax became law in 1913, the entire Internal Revenue Code (IRC) fit into 173 pages.
The IRC contains over 60,000 pages and there are nearly 500 IRS forms, each with many pages of fine print instructions and schedules to be attached. What’s more, the IRS publishes and distributes over 8 billion pages of forms and notices each year which – if laid end to end - would circle the earth 28 times… imagine that!
And think for a moment how many tax dollars you pay every day, directly and indirectly, that didn’t exist 100 years ago, or even 20 or 30 years ago.
And now, pay taxes directly to the U.N.?
What happened to our brave new world?
As Shakespeare said: “Don’t shoot the messenger.”
Until next time.
David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)
For more information visit or email to David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”

David A Tanzer & Assoc., PC.

Vail, CO USA:
Tel. (970) 476-6100
Fax (720) 293-2272

Auckland, New Zealand:
Tel. (64) 9 353-1328
Fax (64) 9 353-1328

Brisbane, Australia:
Tel. (61) 7 3319 6999
Fax (61) 7 3319 6999

(Licensed to Practice Law in U.S. States & Federal Courts;
Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; &
Assoc. Member Queensland Law Society, AU - Foreign Lawyer)
(C) Copyright 2008 David Tanzer all rights reserved. The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.
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