In “Planet U.S.A”, the U.S.A. isn’t everything – it’s the only thing! The U.S. is of course also the world’s number one debtor. As was argued in a post yesterday, the U.S. is, through its attempts to increase the money supply, inflicting a vicious inflationary tax on the rest of the world. But, then again, they are the U.S. Therefore they can do what they want (or can they). How much longer is the rest of the world going to tolerate this? As one commentator noted, when it comes to other countries, the U.S. is kicking them in the banks. Of course, FATCA, the new Berlin wall of the financial system is a big part of this. Continue reading
New article from Bruce Ackermann of Yale University in LA Times. Call for increased enforcement of the Reid Amendment.
No comments posted yet on article.
The Saverin fall-out, as expected, has begun:
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
The plan would bar individuals like Saverin from ever reentering the United States again.
What does this mean? Can we never be free from these people? Is this implying that if you renounce citizenship now even with under the 2 million in assets that you will end up paying capital gains taxes anyway? And what is this about “re-imposing taxes on expatriates”? Does that mean that renouncing citizenship doesn’t do anything and…
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As you know the FATCA hearings on taking place in “Form Nation”. The U.S. is trying to impose FATCA on the world. Can the world’s biggest debtor tell the rest of the world what to do? A comment on an earlier post, about the U.S. seeking to impose FATCA on the world, had the following thoughts on debt:
The US is trying to make use of the old adage “you owe the bank $1000 dollars it’s your problem, if you owe the bank $100M its the bank’s problem”
However this is a short term strategy because the “bank” will eventually get itself out of that situation by crisis or planned divestiture. No country has ever solved its debt problems without giving up influence or power by not paying.
The Americans actually believe they owe so much to China that they won’t flinch. The creditor always has the upper hand eventually whether the debtor wants to believe that or not.
The day will come when they will decide the US is too much of a liability to support perhaps like the EU and Greece today. Debtors very rarely get the upper hand on creditors without paying a big price. The US should concentrate on improving its hand by domestic means and not rely upon China to flinch – they may not. Continue reading
A recent article in the Boston Globe (a response to the Romney tax disclosures) notes that:
“In fact, nearly half of US taxpayers will probably pay no taxes at all for 2011, including 24,000 in the top 1 percent of incomes, according to the Tax Policy Center, a think tank in Washington. Some low-income families even get back more than they pay because of the Earned Income Tax Credit and other programs.”
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You can pay the Exit Tax NOW, or the Estate Tax LATER!
Sir John Templeton was one of the world’s greatest investors. In 1955 he founded the Templeton Growth Fund in Toronto, Canada. Of course, it is now a PFIC. and PFICs are “tax cancer” for U.S. citizens. U.S. citizens who invest in it will be severely punished. A good explanation of how PFICs work is here. (If you are U.S. citizen you should consider selling all non-U.S. mutual funds.) In 1969, John Templeton renounced his U.S. citizenship and moved to the Bahamas. In so doing, he avoided the U.S. estate tax. Furthermore, at the time that he renounced, the U.S. did not have an “Exit Tax”. Continue reading