Is it “Un-American” to Go Offshore? The Thin Line Between Financial Patriotism and Financial Suicide
December 17, 2009 by Robert E. Bauman J.D.
For an extreme example of offshore phobia, take the case of White House National Economic Council Director Lawrence Summers.
When good old Larry was President Bill Clinton’s Secretary of the Treasury in 1994, he went off the deep end referring to American expatriates as “tax traitors.” He was subsequently made to apologize by his boss for that over-the-top comment.
This idea that it is unpatriotic for otherwise good Americans to have foreign bank accounts, own foreign investments and real estate and live in foreign lands has long been the unspoken policy of the U.S. Internal Revenue Service (IRS) and other government agencies. I know this from personal experience.
Specifically, I recall a conference of several hundred lawyers and bankers in Miami. The assistant to the U.S. Attorney General took the stage and publicly stated that anytime an individual had offshore accounts, he or she was assumed—by the Department of Justice—to be engaged in something that was probably illegal.
So much for the rule of law and the presumption of innocence.
But, as they say about us humans, “Old habits die hard.”
Americans Neglect a World of Opportunity
Despite the occasional financial excursion abroad, human nature dictates that most folks prefer to make and save money at home. We tend to be comfortable with the familiar and seemingly less threatening domestic economy of our home nation, even if the government is as near to bankruptcy as America and the United Kingdom.
In 2009, only 74 million, or about 26 percent of Americans, even had passports (and another million Americans living near the Mexican and Canadian borders had "passport cards")—yet this was a historically high percentage.
To be sure, Americans are happy with their home. That happiness—or perhaps complacency—might be the biggest stumbling block when it comes to considering all the possibilities… even when it comes to a simple passport.
But the anti-offshore arguments of the America Left seem to fit into this “America First” theme, and both that and “Buy American” are wrong-headed ideas. I love my country too much to believe such nonsense.
As one who believes in the principle of free international trade and its decided benefits for all parties, the political resurgence of “Buy American” under Obama and the Democrats should concern Americans.
Harry Binswanger, PhD., of the Ayn Rand Institute writes, "According to a recent poll, 80% of Americans think it their patriotic duty to give preference to American-made products. But ‘Buy American’ is wholly un-American in both its economics and its philosophy.
"America’s distinction among all the nations of the world is that it enshrined political and economic freedom.
“Although we have departed greatly from our original laissez-faire principles, to the whole world America still symbolizes capitalism. Americanism means understanding that a free market, domestically and internationally, is the only path to general prosperity."
The Practical Reasons
But beyond the principles involved there are good, practical reasons why Americans who are aware should now “go offshore” financially, with simple financial survival being first among them.
At a time when the U.S. government is deeply in debt (nearly $13 trillion in U.S. dollars)… with Obama’s pending plans for more taxes on high income earners… capital gains and estate taxes looming… and with major and minor banks teetering on the brink, prudence dictates offshore planning and activity.
So-called “patriotism” does not require us to commit financial suicide when there are reasonable escape exits to better places.
When people open their eyes to the rest of the world they find greater asset protection, stronger financial privacy, higher returns in carefully selected markets, more diversification of investments and, among currencies, increased safety and security, both personal and financial and deferred taxes on annuities and life insurance.
In contrast to Bank of America, CitiBank and AIG, the offshore banks and insurance companies recommended by The Sovereign Society aren’t exposed to the risky investments of third-world debt and Wall Street’s esoteric derivatives.
These banks are located in politically neutral countries that don’t employ interventionist foreign policy, making them much less likely to be terror targets.
Unfortunately, relatively few Americans are taking advantage of the fruits of global diversification. I think you owe it to yourself and to your family to at least consider the advantages of global banking and financial services. At the very least, you should hold a portion of your assets offshore… just in case.
For the very good reasons I have enumerated—and for self-interest as well—none of us can afford to be xenophobic in this 21st century.
P.S. You can learn all about the world’s foremost legitimate and legal offshore financial centers in my just published 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World.