The world can be a funny place. As Americans put their money into Swiss banks, the Swiss (and other Europeans) are investing in the United States as the last bastion of free enterprise. Hong Kong's Chinese take out insurance policies by getting visas to Canada and buying up real estate in Vancouver and Houston. Australians grumbling about creeping socialism at home pull up stakes and move to the United States. While a recent book, The Australian Alternative (Arlington House), lauds the virtues of Australia as a place for Americans…to escape from creeping socialism at home!
While preferable, it isn't necessary to change the world to live in freedom. But like any other scarce commodity, freedom has a price which you may not be willing to pay. There are opportunities, though, wherever you look.
Take, for example, an acquaintance of mine who lives in Rumania and owns a dacha in Poland. He's Greek, with Australian citizenship, and businesses in various parts of the world. (Not including, of course, Rumania.) As a foreigner, he enjoys freedoms Rumanians do not have. And, naturally, he changes his money on the black market. "Where else in the world," he says, "can you live like a king for $100 per month?" (Indeed, how else?)
You could try Sri Lanka, where the government offers special privileges to foreigners residing there but with income from somewhere else. Or Vienna, Austria, where "everything's forbidden but you do it just the same."
Governments, you see, are subject to the laws of the market to a limited extent. From one point of view, though, your relationship to a government can be that of buyer and seller. Not that of subject and ruler.
If you are a foreigner.
To a government, its own citizens (including companies of whatever size) are people (or legal fictions) to be taxed, hampered, milked, and enslaved at every opportunity. Non-citizens (again including companies) fall into the same category—but with one important difference: they can leave. Governments rarely expropriate foreigners without compensation (even though they can) because such acts would destroy their "reputations." Other foreigners would go elsewhere.
Governments must offer foreigners market-style protection; otherwise, demand for that government's "services" dries up. This applies even to the government of the USSR. It desires to gain foreign exchange from selling tourism, thus it must assure foreign tourists that they can leave! Even the communist government of Vietnam has drafted the "most liberal" foreign investment code of any authoritarian government in Asia! (We have yet to see how it works in practice, though.)
There are two ways you can take advantage of this "competition" between governments. The first is to multinationalize yourself, the second is to multinationalize your assets.
To multinationalize yourself, you need to:
—be a citizen of country A;
—be a resident of country B;
—have your income derived in country C; and, to actually perform your work or sell your product in country D (or countries D-Z).
In addition, if you are a citizen of the United States you must change your citizenship-or never return personally to US soil—as the US government is the only government that taxes its citizens' incomes no matter where they live.
Of course, the price you have to pay is to leave your country of birth—a price which, understandably, many refuse to pay. There is, however, a second route which is to multinationalize your assets, but not yourself. This is the more dangerous. In the first instance, you can be completely open about what you are doing. To gain asset-privacy, you must do so in complete secrecy. It works this way:
—the ownership of your assets is in country A (either through a company you own—in secret—or via the services of a Swiss bank or some other intermediary);
—the physical location of the assets is anywhere but country A—and preferably not in your own country.
You can, however, by shifting legal ownership and control offshore, become an employee of yourself. While you remain a citizen of your own country, your assets become foreigners—and therefore receive the privileged treatment (and relative security from expropriation) that foreigners enjoy. You can own your business, your home, and your investments in this way, and by careful planning reduce and even eliminate most of the taxes you now pay.
The biggest problem with the second course is moving your current assets overseas in the first instance. It is difficult to do this in a way that does not alert your tax authority, especially if your current assets are substantial. But here is something for all self-generated people to consider who are starting out on their own.
It is nothing for the young (or older people for that matter) to spend a year or two traveling the globe. Nor is there any reason why such a person should not return to the country of his birth as the president of the US subsidiary of a young and aggressive Swiss/Liechtenstein/Cayman Island/etc. company. After all, if you're starting out in your own business, you're going to have to form a company somewhere along the line. It may cost a little more—but certainly not that much more—to have that extra insurance of being a foreigner right from the start. Similarly, any new expansion you may currently be considering could begin with that little extra bonus—and provide the vehicle for the transfer of ownership to current assets offshore.
The ultimate benefit of internationalizing yourself is that no matter how socialistic and authoritarian the country becomes, your assets will already be offshore. Regardless of the attractions of a "retreat" somewhere in the mountains, there will always be someplace in the world where freedom is the rule rather than the exception. You'll be ready—and financially able—to move there at a moment's notice.