US Patriot Act, Tax Tips and More


Here are two examples of why more legislation is not the answer.

While Merri and I were away from the mountains, one of our neighbors and the father of our helper here quietly passed in the night. Losing a loved one is always a sad affair, but in this case the IRS made it even worse. Our helper comes from a poor family and supports his family of six. He does the best he can on a low income supplementing from his garden and such. We think he is quite a man. Evidently the IRS did not agree. Somehow he did not look good enough to the IRS computers. No one can support six kids on that income was the attitude. So an examiner made an appointment to come out, wanted to see social security numbers, birth certificates, etc. An appointment was made before his father passed.

When it turned out that the funeral was to be on the appointed day of the examination, our helper called and asked to delay the meeting "No," was the examiner's crass reply. "I am going on vacation and want to get this over with." So he submitted to this indignation (which could easily have been dealt with by mail) on the day of his father's funeral. Merri and I wish we had been here as we have learned not to be intimidated by government agents. My attorney would have blistered some one's derriËre. No way that our friend should have been bothered in this inhumane way by the "kinder and gentler IRS".

The moral of this sad, true story is simple. There are bad and good people in every system. Since we know that power corrupts, and total power corrupts totally, we want to keep as much power out of the hands of government officials as we can. The bad ones in this system can really do some damage to a lot of good innocent folks who do not understand checks and balances.

We have seen examples of this again and again. McCarthyism comes to mind first, but we could look at example after example. We have been a great nation based on openness, tolerance, freedom and respect for our neighbors.

Yet the USA Patriot Act takes much of this away. This law turns businesses and the people that serve us into lookouts for the government and gives more government agents more power than ever before. This is a shame because a lot of these people can reduce our quality of life dramatically.

Yet this act was railroaded through Congress because it is supposed to give us more security.

Yet how much security do we really have? If you did not read this in the news (it seems to have missed most newspapers, but I picked it up because I happened to be in South Florida when the invasion took place), you may doubt it but it is true.

February 7th USA Today reports that as Tom Ridge was being appointed head of the new Inland Security Agency created by this new law, a group of the Cuban Coast Guard decided to defect to the U.S. They took off in their Cuban gun boat with Cuban flag waving, sailed across the straits and arrived in Key West unnoticed! Yet they wanted to be noticed! So they berthed their boat which still flew the Cuban flag and contained loaded weapons at the Hyatt Marina Hotel in Key West. While armed, roamed around Key West in their military uniforms looking for someone to whom they could surrender. (You can read this article at http://www.usatoday.com/news/world/2003-02-07-cuba-defectors_x.htm)

So much for security! This is just another sign of what makes the people of the United States so special. We are a nation where even though we know that there are many who misunderstand us, we open our borders. We are willing to accept those from other cultures, races and religions with open arms. The USA Patriot Act changes much of this, making neighbors suspicious of one another, closing our borders, treating good people from other lands in not so nice ways.

Yet what can we do? Letting our representatives in the government know of our concerns may help, but there may not be a political solution at this time.

How can we maintain our freedoms in this less free negative atmosphere? One way is to have an international business. Most of us are tied to the place where we live by habit, by tradition, family ties and by our income. If we have a way to earn income in more than one place, we are freer than before.

Having lived in many countries over the last 35 years, there are few governments that are as intrusive in their citizens' lives as the U.S. government has become. This is why I continue to place a heavy focus on my course International Business Made EZ

To this end, Merri and I are expanding the services we offer for those who would like to have an international business. In past months messages have shown numerous ways to earn money abroad that Merri and I have been using. We are adding a consulting service for readers who want individual help with creating or expanding their business abroad. For more on this send me a note at gary@garyascott.com

There are tax benefits to be gained from having an overseas business as well as the tax tip from tax attorney Carlos Kepke:

Tax Tip

A foreign trust is an excellent entity to use to hold shares in start-up businesses. Not only will utilization of a foreign trust afford asset protection benefits but also, and more importantly, it can provide significant United States ("U.S.") income tax (and estate tax) benefits.

A properly structured foreign trust, once perfected, owning shares in a start-up business will not have to pay U.S. capital gains tax on the sale of such shares.

For example, if the shares of a start-up business valued at say $5,000.00 were held by a foreign trust from the beginning and later sold by that foreign trust (if perfected) say for $500,000.00 – meaning that the business was successful – then the gain of $495,000.00 would not be subject to U.S. capital gains tax. This translates into a savings of about $100,000.00 in U.S. tax.

Perfected foreign trusts present a great opportunity for shareholders of start-up businesses. Shareholders should consider using foreign trusts for this purpose where there is an expectation of appreciation in the value of the shares. For more information, email carloskepke@webtv.net

Until next message may your global business be good.

Gary


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