Offshore Investors Are Like Osama bin Laden
by Mark Nestmann: Owe
the IRS Money? Pay Up or You Might Not Be Able to Renew Your Passport
and permanent residents who invest offshore resemble Osama bin Laden
more than they might wish to admit.
a very low profile at his estate in Pakistan. He had no telephone
or Internet service. He even burned his trash, rather than set it
out for collection. News reports claim (not that I believe them)
that even Pakistani intelligence authorities knew nothing about
his presence in their country.
But in the
end, the United States found him. Yesterday morning, a team of Navy
Seals broke into his barricaded home, assassinated him (along with
several other household occupants), and then unceremoniously dumped
his body in the Indian Ocean.
And just how
do offshore investors compare to Osama? Allow me to present my case
a decade, politicians of every ilk vowed to find and kill Osama.
Only a few months short of the 10th anniversary of 9/11/01, the
Obama administration scored a major political victory by fulfilling
are in an even weaker position than Osama. (In the 1980s, he actually
received CIA funding to fight the Soviet invasion of Afghanistan.)
In contrast, no politician would dare defend U.S. investors who
move money outside the United States. Indeed, for decades, U.S.
politicians have accused offshore investors of engaging in narcotics
trafficking, money laundering, tax evasion, and child sex slavery,
among other crimes.
environment of fiscal responsibility and shared
sacrifice, accusing offshore investors of tax evasion has
once again become politically expedient. A recent case in point
is the comment last week by Sen. Carl Levin (D-Mich.) that, the
revenues lost to tax havens might have all by themselves
resolved the [budget] problem.
Levin was referring
to his longstanding claim that tax evasion costs the U.S. economy
more than $100 billion annually. If Levin is correct, then the untaxed
(but taxable) income that the $100 billion represents would come
to about $350 billion annually. (This assumes these taxpayers are
all in the 35% tax bracket). Assuming an average rate of return
of 5% tax-evading Americans have nearly $7 trillion in untaxed assets
Now, if this
is true, then the amount of money Americans illegally keep offshore
represents a sum roughly equal to 50% of the entire U.S. economy
($14 trillion, according to a 2009 estimate by the OECD). Obviously,
Levins claim is preposterous. But whats positively frightening
is not a single mainstream financial journalist has criticized it.
Even the conservative Washington Times (where I saw the quote)
repeated it without questioning its authenticity.
Now, if the
mainstream media accepts such over-the-top claims as Levins
without a peep of criticism, is there any reason to think theyll
question any other claim of the alleged misdeeds of those impenitent
U.S. taxpayers who unpatriotically invest offshore?
Of course not.
And thats what makes the comparison with Osama relevant. The
mainstream media and mainstream America views anyone
who invests outside U.S. borders as the financial equivalent of
Osama bin Laden. Anything the government does to these treasonous
offshore investors is perfectly acceptable.
If Obama sent
SWAT teams into the homes of anyone suspected of having an unreported
offshore bank account, most Americans and the media would
support him. Warrantless eavesdropping? No problem, since offshore
investors are in essence financial terrorists. Withdraw passports?
Since offshore investors are supposedly costing the United States
$100 billion annually in tax revenues, why not?
My point is
that bad as things are now for U.S. persons investing offshore,
its likely to become worse in the days ahead, especially for
those who arent 100% tax-compliant. And if you do want to
be 100% tax-compliant? Thats not at easy to do, because Congress,
the IRS, and Treasury have made offshore tax and reporting obligations
a moving target. The one unmistakable trend is toward greater and
In my next
blog entry Ill describe what those requirements are, and offer
my best estimate of how theyll be enforced in years to come.
Stay tuned. And in the meantime, if you invest offshore, when you
look in the mirror, realize that the image looking back at you is
one of a financial terrorist.
with permission from The Sovereign
Mark Nestmann is a journalist with more than 20
years of investigative experience and is a charter member of The
Sovereign Society’s Council of Experts. He has authored over a dozen
books and many additional reports on wealth preservation, privacy
and offshore investing. Mark serves as president of his own international
consulting firm, The Nestmann Group, Ltd. The Nestmann Group provides
international wealth preservation services for high-net worth individuals.
Mark is an Associate Member of the American Bar Association (member
of subcommittee on Foreign Activities of U.S. Taxpayers, Committee
on Taxation) and member of the Society of Professional Journalists.
In 2005, he was awarded a Masters of Laws (LL.M) degree in international
tax law at the Vienna (Austria) University of Economics and Business
© 2011 Mark
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