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Tags: tax | haven | US | investor

Investors Need Tax Havens

Denis Kleinfeld By Monday, 08 July 2013 07:39 AM EDT Current | Bio | Archive

Tax havens serve two vitally important purposes to everyone lucky enough to have private investment capital.

First, they are a source by which foreign capital can be routed into the United States or other countries with tax efficiency.

Second, they represent a safe haven where investors' private capital can flee from overbearing governments of all kinds — democratic, republic, dictatorship, monarchy and just plain thugs and despots — and with a comfortable level of privacy, confidentiality and secrecy.

What is the world's largest tax haven?

If you guessed any country in the Caribbean, South Pacific, Asia, the Middle East, Africa, Central or South America or Europe, then you would be wrong.

Only the United States can lay claim to that title.

Ever since the French loaned money to the struggling revolutionaries who defeated the British to create the United States, to today where the Chinese are buying U.S. Treasury debt, the United States would not be able to maintain its economy without large inflows of foreign capital.

Foreign investors can invest in the United States virtually tax free — in structures that are legally protected from risks and, currently, with secrecy.

With fairly simple planning, a foreign investor can avoid tax on interest as well as gains from sale of securities — all protected by the legal system and effectively the government guaranteeing the solvency of the financial system.

As for secrecy, Delaware or Nevada are quite accommodating. In these states, a foreign company or individuals can form a limited liability company and open a bank account, but if the investor does its or his business outside the United States, there is no U.S. tax or reporting.

There are no investors — the people who actually create investment capital — who have any complaint against offshore tax-haven financial centers.

The United States is no different, as the United States is off the shore of most every other country in the world.

Which then should make you wonder, just who is blaming the existence of only certain targeted offshore countries for all the economic ills that the industrial and developed countries — tax havens in their own right — suffer.

The famous French economist Gustave de Molinari said in 1904:

"These associations, or political parties, are actual armies which have been trained to pursue power. ... It is nothing to a politician that the result is increased charges and heavier drains on the vital energy of the people. The unceasing competition under which they labor, first to secure office and next to maintain their position, compels them to make party interest their sole care, and they are in no position to consider whether this personal and immediate interest is in harmony with the general and permanent good of the nation."

Molinari commented about the failure of the press to expose this "abuse of the sovereign power to the detriment of those who consume those services."

He stated, "For the press has found it more profitable to place its voice at the disposal of class or party interests and to echo the passions of the moment rather than to sound the voice of reason. Nowhere has it been known to act as a curb on the governmental tendency to increase national expenditure."

To politicians, your capital is their means to advance their political goals. Notwithstanding their propaganda of serving the American people, the needs of the people are always subservient to the voracious needs of political advancement.

How can private investors protect themselves from becoming the spoils of war from the marauding armies of politicians fighting for power?

For that, investors need tax havens.

© 2024 Newsmax Finance. All rights reserved.

Tax havens serve two vitally important purposes to everyone lucky enough to have private investment capital.
Monday, 08 July 2013 07:39 AM
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