APENL VI – Obama Admits (Unwittingly) US Socialism Progressing Towards Communism

I just came across this little gem, http://www.bloomberg.com/news/2014-07-24/obama-to-make-campaign-pitch-on-corporate-tax-avoidance.html and had an extra 30 minutes to kill, so thought I’d highlight the stupidity being spewed by the leader of the “free” world.  When I first read it, I just had to laugh.  It somehow brought on a high school flashback to a valley girl saying “eeewww, like, gahg me with a speeewwn”, as it made me feel a bit queasy.  Then it started to sink in just exactly how idiotic, and dangerous it is for the President of the United States of Amerike to say such a thing.

To flush it out a bit, and so that no one can accuse me of taking him out of context, he actually said, according to Bloomberg – “President Barack Obama attacked companies that use cross-border mergers to escape U.S. taxes, accusing them of being “corporate deserters who renounce their citizenship to shield profits.” And, “the president called for a new “economic patriotism” from companies. He also decried those that use corporate inversions to benefit economically by being in the U.S. while adding to the tax burden of middle-income families.”

Again.  With jaw dropping.  Wow….First of all Barry, let me explain something to you.  The US is a capitalist society and economy.   Or at least it used to be.  “economic patriotism”? hahahahahahahahaha.  The former America wasn’t built on doing business with Uncle Sam in mind.  It was built by taking risks and making investments and being flexible and innovative in order to maximize profits.  Shareholders demand that.  You idiot.  Tell me please, how did you get this job?  Corporations aren’t adding to the tax burden of middle-income families.  You are.  Corporations aren’t “escaping” taxes, but rather legally “avoiding” them in accordance with the IRC as currently written.

I know you’re busy, so let me help you get your bony head around that Barry.  According to the Merriam Webster dictionary-“Capitalism – a way of organizing an economy so that the things that are used to make and transport products (such as land, oil, factories, ships, etc.) are owned by individual people and companies rather than by the government”.  See that Mr. President?  That means without you.

Businesses do not exist in order to support governments.  They exist despite them.  Let’s look at the opposite side of the coin.  Again by Merriam Webster: Communism “a way of organizing a society in which the government owns the things that are used to make and transport products (such as land, oil, factories, ships, etc.) and there is no privately owned property”.  Ok, so Amerike isn’t quite there yet, but certainly no longer a capitalist society.  How about socialism?—“a way of organizing a society in which major industries are owned and controlled by the government rather than by individual people and companies”.  Bingo.  The only difference between socialism and communism being a mixture of ownership and control, rather than 100% ownership by government.  Good thing we sacrificed our way of life to “win” the cold war.

Therefore, if you started a company in a once capitalist society, like the former America, and suddenly found yourself entangled in socialist policies obviously intended to wrest control of your own business away from you, you might well want to look for a new home.  I repeat, “economic patriotism”?  What the hell is that even supposed to mean?  Not that long ago I wrote an article touching upon the unfairness of the laws which currently allow corporations to go “offshore” and save $billions in taxes, while the same body that gladly makes that possible, Congress, are ruthlessly chasing after middle class individuals for making the same prudent decision to “shield their profits” as the moron in charge says.  See that discussion here.   Obviously no blame justified for the corporations who take advantage of the rules that favor them over individuals, but a lot of blame afforded to Congress for allowing it.

Therefore, I do agree wholeheartedly in tax reform.  First, leave expats alone, like every single other country in the world. Or should we be “patriotic expats”?  Maybe send a check to Washington with hand over heart?  Is there a yellow ribbon tied around the white house oak tree for me?  Second, reduce the tax code to about 400 pages.  Down from its current 80,000 or so.  No more incentive to move offshore.  By anybody.  Here’s an old idea that still makes sense. How about a national sales tax?  Therefore effectively progressive, as one could assume that the more one earns, the more they would spend, and would therefore pay more taxes than lower earners.

Here’s just one of many taxation schemes that make much more sense out there in the world.  In Colombia there’s a 16% VAT (sales tax for you gringos), in addition to a myriad of other taxes, like real estate, gasoline, on and on, but the income tax doesn’t kick in until one hits the top 5-10% or so of earners.  If you don’t hit that level of earnings, nor have assets above a certain level, there’s no requirement to report.  That’s right.  No tax returns for the majority of citizens.  The VAT gets collected at POS, and remitted by the receiving business on a monthly basis along with a 1-page form signed off on by a quasi-tax agent, which is what Colombian CPA’s really are.  So simple I could explain the basics in a single, short paragraph.

Back to Barry’s message.  “You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers”.  Now that’s moving into dangerous territory.  What companies, and what handouts is he referring to? And from whom?  He seems to be talking about the banks which now report directly to Washington, yet none of those have moved offshore as I understand.  In fact, they fall into that definition above, of communism, as they’re effectively now owned by the government, thanks to a buy-out with your tax dollars.

Here’s the real kicker— “I don’t care if it’s legal, it’s wrong,” Obama said. “It sticks you for the tab to make up for what they’re stashing offshore.”

I’m speechless.  Obviously I could use the same argument about paying taxes to a place where I haven’t been for 13 years, nor would ever return to, but it wouldn’t even get off the ground, let alone fly.  Is he trying to incite a revolution?  Tear down the rich companies.  They’re stealing from you.  The meek shall inherit the earth.

Although he says some truly idiotic things, his overall message is absolutely right.  Total shredding of the IRC, and soon there afterward the IRS, somewhat like what’s been done to the Constitution that he swore, twice, to defend.  Learn from the so-called 3rd world.  A national sales tax collected at POS and remitted monthly with a 1-page form.  Yeah few CPA’s and tax attorneys would have to find a productive means of survival.  So what?  Unfortunately, what he’s really saying is that Congress should add a few thousand more pages to the IRC, and take away the ability of US corporations to legally avoid taxes.  Good idea.  No wonder there’s currently a race on to see how many major US corporations (employers) can get to safe offshore territory by the end of 2014.

Here’s a concept for you to kick around.  What if the quickening pace of big corporations bolting for the exit door isn’t really even about taxation at all?  But, instead about that term “control and ownership” which I alluded to above while contrasting capitalism with socialism/communism?  When the big corporations, who are tuned in very well to Washington, start scrambling for the exits, one should take heed.  Maybe it’s about retaining ownership of the business (freedom), more so than saving taxes.  The rapid degeneration of Amerike could go from the current socialism into something even more akin to communism very quickly.  That typically requires totalitarianism in order to maintain control.  That means no more travel documents.  Just licenses granting the connected few the ability to come and go as they please.  The rest of you poor saps could be trapped, either physically or financially.

A guy wrote to me recently saying that since he simply couldn’t afford to leave, that he fully expected to end up in a FEMA camp.  Based on the 4-5 messages exchanged, I didn’t sense any sarcasm nor attempts at humor.  He was quite serious.  Nor did he sound at all unstable.  A bit desperate, maybe, but quite sane.  I’ve been receiving more and more similar sounding messages from behind the curtain lately.

Even if you currently have the means to escape, that could erode extremely quickly if you maintain them in USD or EUR, and in the jurisdiction controlled by dangerous maniacs like Barrack Obama.  There are currently in the US enough tax-deferred retirement account to wipe out the currently reported national debt.  $15-20 Trillion, some say.  After seeing to what lengths the USG will go to in order to possibly pull in $800 Million/year, enough to pay 1 hour and a half of the federal budget, to what lengths would they go to grab your IRA or 401(k) with a few mouse-clicks of a few bureaucrats?

Of course I’m referring to FATCA, where they will alienate the entire world against the USG and the USD for an amount of revenues that don’t even approach the implementation and compliance costs.  SO, pass a midnight emergency bill, or just have the bone head in charge sign an executive order, and convert your retirement account to US government bonds?  That a soiopathological no-brainer.

By the way, that’s just one more step closer in the transition of Amerike from socialism to communism.  You think that you own your IRA?  You’re about to find out who really owns it.  Then you can forget your plans of a possibly affordable retirement in a “third world” country.  You’ll no longer be able to afford it.  In fact, at that point, you’ll be in the new third world country.

Move your IRA out of harm’s way today.

Paul worked for several years with Big 4 CPA firms in both the US and Saudi Arabia, and then spent many years as a multi-national corporate Controller and CFO in places like Florida, Riyadh, Abu Dhabi, Cairo, and Medellín. In his second, free life, he has found a natural home in the offshore industry following almost 2 decades as a permanent expat from the former America.   Contact him to learn more about the realities of economical offshore asset protection paul@assetprotectionexperts.ch

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