Panama Investor Blog

U.S. government soon to know who buys gold and where they live

I'm sure many of my readers already are aware of this new law that is to take affect in January 2012, but for those who aren't aware and are  living in the U.S. it should be of interest. It is just another example of just how desperate that government is and to what lengths they will go to try and track every dime you spend and every move you make.  Those who buy gold believing that it is the ultimate protection in the event of a currency melt down may find they will be targeted just when they need it the most. What does this have to do with Panama? They don't have such reporting requirement here.

What makes matters worse is that this law was buried in the 906 page health care law and no one had an opportunity to review or debate it. As discussed in this report from Bob Bauman, gold purchases will be reportable making this one last area of freedom no longer viable. Best to load up before it takes affect!

From Bob Bauman;

Americans are already outraged by President Obama's new health care law. And now, many are up in arms about a little-noticed provision buried deep in the 906 pages of that law.
“The 2010 Patient Protection and Affordable Care Act” (Health Care Act, P.L. 111-148) contains a sneak provision (IRC §6041(h)) that is set to directly impact you.

This law requires any person engaged in a trade or business to file an IRS Form 1099, reporting all payments totaling $600 or more in a calendar year to any single person, other than a tax-exempt corporation (non-profit). No, they don’t care to know who donated $600 to a local animal rescue. Only that Joe Schmo sold you an old pick-up truck for $750 for your lawn service company.

He’d better pay tax on that transaction! And you are responsible for getting him the forms and, at the same time, submitting them to the IRS. And when you mail off your rent check for your equipment bay, guess what…Time to send the old 1099s to the IRS and your landlord.

But that’s not all! Even corporations are affected. That’s right. That John Deere lawnmower you just bought? Again, you’ll need to mail a 1099 to the IRS and John Deere.

Until now, IRS 1099 forms have been used to track and report miscellaneous income paid for services of independent contractors or self-employed individuals. Under current U.S. law, payments to corporations -- except those for medical or health care services -- are not required to be reported to the IRS. Now almost all corporations will be affected.

Small Businesses Outraged. Rightfully So.

Pat Heller, owner of Liberty Coin Service in Lansing, Mich., is mad, according to ABC News. He said, “I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability.”

And you know what less profitability means for the IRS? Less tax revenue.

Just think for a minute about every financial transaction between businesses and individuals or other businesses which exceed $600… That’s a whole lot of paperwork!

Hard on small business, hard on big business. That translates to, “hard on the economy.” Is this really the time to be creating extra hassles for small businesses struggling to stay afloat?

Every U.S. business, and individuals as well, will be forced to obtain the tax ID number and/or the Social Security number of everyone with whom they do more than $600 worth of business in a year. It takes effect on Jan. 1, 2012 -- and it applies to all U.S. business and private transactions.

Based on 2009 IRS data, about 40 million businesses and other entities will be subject to this 1099 debacle, at greatly increased cost and trouble. There’s only one word to describe the paperwork and reporting requirements: Draconian. Small-business owners are already complaining that the time and effort it will take to obtain this documentation will be a drag on business. That’s assuming that a lot of small transactions aren’t driven to the black market!

America: Land of the … Tax Evader

This provision is based on the IRS’s unproven belief that millions of Americans are evading taxes.The bureaucrats’ idea is that IRS computers can process hundreds of millions of Form 1099s, comparing them against each buyer’s Form 1040, to see if reported income and purchase numbers match.

Of course, this onerous restriction was never explained during the health care debate in Congress -- and if it had been it would have likely been defeated. But that’s what you get when you can’t determine what’s in a spending bill until it becomes law. Shame on Congress.

This is yet another example of legislators using sneak provisions in an inches-thick bill to impose policies that would otherwise have been rejected. The same tactic was used in March when the “HIRE Act” was adopted containing a potential 30% tax on offshore banking transactions by U.S. persons.

An exercise in total fiction: Sponsors claimed the Form 1099 provision will expose what the IRS thinks is a vast ocean of uncollected income taxes … and will supposedly help to pay the trillions the health care law will cost. Without any proof, they predict the 1099 requirement will raise $17 billion over the next 10 years. And this was the law that Obama insisted would impose no new taxes.

But Now for the Really Scary Part…

Precious metals such as coins and bullion fall into this new 1099 category and U.S. coin dealers are among those most outraged by the new law. And it’s on privacy buffs’ and freedom lovers’ radars for another reason.

Those who remember history recall that Americans’ freedom to own gold (except for jewelry, dental, and numismatics) was made illegal after 1933, when President Franklin D. Roosevelt issued an executive order prohibiting gold ownership. Those who value their right to own gold note the obvious:

The 1099 reporting rule will tell IRS agents who owns gold and where they live.

Bob Bauman
Legal Counsel
The Sovereign Society

Shadow Government Statistics

Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences?  The problem lies in biased and often-manipulated government reporting. Now you can see many of the true numbers at this great site, Shadowstatistics.com

Check it out, here is a sample.

Are you disloyal for renouncing U.S. citizenship?

Not according to Lew Rockwell. This from his Website.

Renouncing U.S Citizenship

Llewellyn H. Rockwell, Jr.

Let's be clear about something. A person who decides to give up his US citizenship is not guilty of disloyalty to America; quite the opposite. He could very well be more loyal to American principles than the regime is willing to tolerate.

It also does not mean that he is giving up hope for liberty; he may have great hope for liberty, in a different way and in a different place.

In any case, the rise of emigration, expatriation, and citizenship renunciation is a trend that is not going away. It is rising and will get more significant. In some ways, it is completely expected. When regimes over-control, over-tax, over-regulate, they gnaw at the innate sense of the right to be free. When this gets worse and worse, people tend to look around for better environments.

We've all known people who talk about it openly. It is becoming cocktail conversation, the once-unthinkable now standard fare. It's not just an impression. State Department records show that 502 people gave up citizenship in just the last quarter of 2009. That is more than twice the total for 2008. That might not seem like a lot but what stands out here is the trend line, which is soaring. I also hear reports of year-long bureaucratic delays in approval, and, of course, plenty of people leave without permission.

The driving factors here are not cultural or social; they are economic. The US government is making it ever more difficult for Americans living abroad, taxing them wherever the bureaucrats can find them. The government makes it very difficult even to hold a bank account in the US unless the account holder can point to a US residency (thanks to the Patriot Act). And when the government finds a reporting error on income earned overseas, it can charge a 50% penalty.

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Even when a person gives up US citizenship, and establishes citizenship with a freer country, the US government can still haunt him with continuing tax obligations and demands for military service. There is, at the least, a vast exit penalty. Any regime that would do things like this inspires people to want to stay at arm's length.

Far more frightening is the sense that financial calamity is around the corner. A look at the data seems to suggest that. Vast reserves are sitting in the banking system, waiting to be unleashed to create what could be total destruction of the dollar. The deficit is rising so fast that it is hard to chart.

The jobs situation is terrible, especially for young people (and adults often make decisions based on what is best for their kids' future). Personal income is falling and falling. Investment is not recovering after its cliff dive in 2009. The social welfare state is broke. Private debt is rising even though lending has not restarted.

The policies of the fiscal and monetary authorities are absolutely terrifying. The Fed is keeping rates at zero. The government is spending and spending beyond belief. Tax receipts are falling as never before, unleashing the greedy hand of the predator state to extract every last dime.

And look at what the US congress and president are doing about this terrible mess: they are working to socialize health care, start a war with Iran, impose tariffs on China, and otherwise tax, regulate, inflate, and control more more more. An economy that is heavily capitalized and driven by the entrepreneurial spirit can stand a surprising amount of abuse. But that reserve capital is being drained away into new bubbles, and the entrepreneurial spirit is being crushed at every turn.

Based on all these facts, the sense of impending doom is hard to avoid. And consider that most people are thinking only about today, this month, and this year. But among the rich and entrepreneurial we find a class of people who specialize in thinking outside the box, and for the very long term. It is among the ranks of these people that we are seeing the renunciation trend take hold. The smart money is giving up on the US political system.

What precisely is a person actually giving up when he walks into a US consulate and signs the renunciation oath? The right to vote? Yes, but just how much value are we supposed to place on the right to choose between dumb and dumber, and to have your vote cancelled out by the guy behind you in the line? No living person has ever swung a significant election. It is hardly a surprise that people put so little value on going through the motions of democracy.

There is much to give up in a cultural and social sense. It is not a decision to be made with a light heart. It is final and scary for that reason. What compels many people to do it now rather than wait is the sense that at some point, it might not be possible to renounce citizenship. As the controls grow ever tighter, so will the regulations on those who try to escape.

Every socialist and fascist regime in history has put up walls to prevent flight by people and capital. This is why people and capital are flying now, while they still can. In so doing, they are inspired by the writings of the American revolutionaries. The difference is that they have decided that living in the land of the free and the home of the brave means not being a slave of the US government.

The way to stop the brain and capital drain is readily at hand. Relinquish controls. Stop taxing people abroad. Adopt laissez-faire. Reinstitute freedom. Reject militarism and nationalism. Only that path will inspire optimism in the future of this country. Until that happens, we can expect this trend to continue, and to advise the young and successful families who ask us, to get out while the getting is good.

Why the Capital Gains Tax Should Be Abolished

Well done video by my friends at The Center for Freedom and Prosperity. President Obama plans to raise capital gains just at the wrong possible time. Panama has just lowered capital gains which should boost employment and investment. 

Policing for Profit

We hear on this blog and other Panama websites about property seizures and sequesters etc. that cost foreigners a lot of time and money to battle. But thanks to one of my readers, he shared this interesting article about how law enforcement in the U.S. has seized over one billion dollars in 2009 often without filing charges against the citizen who's property they take. According to this report, the state is the real thief. Hat tip Mike.

This should wake you up!

Excerpts from Institute For Justice.

Police and prosecutors’ offices seize private property—often without ever charging the owners with a crime, much less convicting them of one—then keep or sell what they’ve taken and use the profits to fund their budgets.  And considering law enforcement officials in most states don’t report the value of what they collect or how that bounty is spent, the issue raises serious questions about both government transparency and accountability.

According to the Institute for Justice—whose fight against eminent domain abuse raised that issue to national prominence—civil asset forfeiture is one of the worst abuses of property rights in our nation today.  The Institute for Justice today released a first-of-its-kind national study on civil forfeiture abuse.  The report—Policing for Profit: The Abuse of Civil Asset Forfeiture (http://www.ij.org/PolicingForProfit)—is the most comprehensive national study to examine the use and abuse of civil asset forfeiture and the first study to grade the civil forfeiture laws of all 50 states and the federal government.

Check out which states are the worst.

More American Give Up Citizenship-New York Times

This time New York Times picks up the theme of U.S. citizens expatriating. Seems many U.S. citiznes abroad are having problems keeping foreign bank accounts.

Excerpt: Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

Stringent new banking regulations — aimed both at curbing tax evasion and, under the Patriot Act, preventing money from flowing to terrorist groups — have inadvertently made it harder for some expats to keep bank accounts in the United States and in some cases abroad.

Some U.S.-based banks have closed expats’ accounts because of difficulty in certifying that the holders still maintain U.S. addresses, as required by a Patriot Act provision.

“That Americans living overseas are being denied banking services in U.S. banks, and increasingly in foreign banks, is unacceptable,” Ms. Maloney said in a letter Friday to leaders of the House Financial Services Committee, requesting a hearing on the question.

Mr. Wilson, joining her request, said that pleas from expats for relief “continue to come in at a startling rate.”

Read the whole story here...

Mexico hopes to get under medicare in order to get 5 million U.S.retirees

In a study about residential tourism I commissioned about 5 years ago, the economist predicted that if Panama were to have 30,000 retirees move into the country (about 1% of the population), the foreign investment produced would exceed that of the canal each year. Now in this article from the Miami Herald tells us about Mexico's plan to offer health care for foreign retirees in order to get more of them to move there. The Mexican President plans to work with the U.S. administration to certify Mexican hospitals and get them under medicare.

They already have a million U.S. expats living in Mexico and want to get to 5 million. Lets see, because of the overburdened welfare system we have in the U.S. (which illegal immigration plays a part of), Americans are forced to seek health care abroad where it is 70% cheaper and the cost of living is lower. What's wrong with that picture?

Excerpt: President Felipe Calderón is likely to propose the first steps toward expanding U.S. retirement benefits and medical tourism to Mexico when he goes to Washington on an official visit May 19, according to well-placed officials here. If not then, he will raise the issue later this year, they say.

``It's one of the pillars of our plans to trigger economic and social well-being in both countries,'' Mexico's ambassador to the United States Arturo Sarukhan told me. ``We will be seeking to increasingly discuss this issue in coming months and years.''

The U.S. Census projects that the number of U.S. retirees will soar from 40 million now to nearly 90 million by 2050. Already, 5 million American retirees live abroad, of whom 2.2 million are in the Western Hemisphere -- mostly in Mexico, the Dominican Republic and Brazil. Another 1.5 million live in Europe and 850,000 in Asia.

The key to luring more U.S. medical tourists and retirees to Mexico and other Latin American countries will be getting hospitals in the region to be certified by the U.S. Joint International Commission, which establishes that they meet U.S. hospitals' standards. There are already eight Mexican hospitals certified by the JIC and several others awaiting certification.

According to Mexican government estimates, healthcare costs in Mexico are about 70 percent lower than in the United States. And from my own experience, those estimates are right: As I reported at the time, when I was hospitalized in Mexico two years ago for an emergency operation, my hospital bill was indeed about 70 percent lower than what it would have been in Miami.

Demography, geography and economics are pointing in that direction. With the U.S. population getting older, a record U.S. budget deficit, rising U.S. healthcare costs, and Mexico and other Latin American countries badly needing more tourism and investments, this should be a win-win for everybody.

Read more: http://www.miamiherald.com/2010/04/17/1584887/mexicos-big-hope-get-5-million.html#ixzz0mWQj9HlP

Time.com; Why More U.S. Expatriates Are Turning In Their Passports

Hat tip to Franklin and Susan for this interesting article from Time.com

Chicago native Ben loves his country and is proud to be an American. Yet the longtime resident of Melbourne has just relinquished his U.S. citizenship. "This is not something I did lightly or happily, but I saw no other choice," says Ben, a businessman who became an Australian citizen two years ago.

His words resonate with another American expatriate, John, a business owner based near Lausanne, Switzerland, who like Ben asked that his last name be withheld for fear of alienating his family in the U.S. "Giving up my U.S. citizenship is a genuine option," says the Ohio native, who recently received his Swiss passport and is considering relinquishing his American one. "I am at a breaking point — being American costs me time [and] money, but mostly aggravation." (See 50 authentic American experiences.)

For U.S. citizens, cutting ties with their native land is a drastic and irrevocable step. But as Overseas American Week, a lobbying effort by expatriate-advocacy groups, convenes in Washington this week, it's one that an increasing number of American expats are willing to take. According to government records, 502 expatriates renounced U.S. citizenship or permanent residency in the fourth quarter of 2009 — more than double the number of expatriations in all of 2008. And these figures don't include the hundreds — some experts say thousands — of applications languishing in various U.S. consulates and embassies around the world, waiting to be processed. While a small number of Americans hand in their passports each year for political reasons, the new surge in permanent expatriations is mainly because of taxes.

Considering that an estimated 3 million to 6 million Americans reside abroad, the number of renouncements is small. But expatriate organizations say the recent increase reflects a growing dissatisfaction with the way the U.S. government treats its expats and their money: the U.S. is the only industrialized nation that taxes its overseas citizens, subjecting them to taxation in both their country of citizenship and country of residence. (See "U.S. vs. UBS: A Fight Over Secret Swiss Bank Accounts.")

"Their income and wealth are generated largely outside the U.S., so why does the U.S. get a slice of that?" says Phil Hodgen, a California-based international tax attorney who helps Americans in the expatriation process. "More and more people see no long-term benefit to retaining U.S. citizenship."

Additionally, the U.S. government has implemented tougher rules requiring expatriates to report any foreign bank accounts exceeding $10,000, with stiff financial penalties for noncompliance. "This system is widely perceived as overly complex with multiple opportunities for accidental mistakes, and life-altering penalties for inadvertent failures," Hodgen says.

These stringent measures were put into place to prevent Americans from stashing undeclared assets in offshore banks, but they also make life increasingly difficult for millions of law-abiding expatriates. "The U.S. government creates conflict and abuses me," says business owner John. "I feel under duress to understand and comply with laws that have nothing to do with me and are constantly changing — almost never in my favor." (See the best business deals of 2009.)

John says that since he moved to Europe 25 years ago, U.S. tax regulations have become more and more burdensome. "Every time I turn around, I get smacked in the face with some new restriction as a result of being a U.S. citizen abroad," he says. And because the U.S. government requires other countries to abide by its banking and financial rules when dealing with expatriates, Americans living abroad are often denied services because of the increasingly complex legalities and logistics involved in serving U.S. customers. Many U.S. expats report being turned away by banks and other institutions in their countries of residence only because they are American, according to American Citizens Abroad (ACA), a Geneva-based worldwide advocacy group for expatriate U.S. citizens.

"We have become toxic citizens," says ACA founder Andy Sundberg. Paradoxically, by relinquishing their U.S. citizenship, expats can not only escape the financial burden of double taxation, but also strengthen the U.S. economy, he says, adding, "It will become much easier for these people to get a job abroad, and to set up, own and operate private companies that can promote American exports." (See "British Citizenship: Points Off for Protest?")

Relinquishing U.S. citizenship is a fairly simple process: after filling in a few forms, and in some cases, paying an exit tax (based on the applicant's worldwide income and assets), the former citizen receives his canceled passport in the mail. But the decision can be difficult. "Cutting my ties with America hasn't been easy," says Ben, who as a foreigner can now spend only 90 days a year in the U.S. "My family and friends think I am a traitor. But the financial burden was killing me."

Read more: http://www.time.com/time/world/article/0,8599,1983238,00.html?hpt=C2#ixzz0lhE13vCv

Panama bribe lands U.S. citizen in jail

This is an important article because it is the first time I have heard of a U.S. citizen being prosecuted and convicted in a bribery case in Panama. Now, what about those he bribed here in Panama? Will we see justice served here as well or will it be business as usual?

Va. man sentenced for Panama bribes

By the Associated Press

April 20, 2010

RICHMOND, Va. - A Virginia man will serve seven years in prison for bribing Panamanian government officials to win a contract to maintain buoys and lighthouses outside the Panama canal.

Charles Paul Edward Jumet pleaded guilty in November to conspiracy to make corrupt payments to foreign officials and lying to investigators about the scheme. The plot involved paying $212,000 in bribes between 1997 and 2000 to secure $18 million in contracts for his Virginia Beach firm Ports Engineering Consults.

At his sentencing Monday, U.S. District Judge Henry Hudson also ordered the 53-year-old Fluvanna County resident to pay $15,000 in fines.

Another executive, John Warwick, also pleaded guilty. He's scheduled to be sentenced May 18.

Record Number of Americans Ready to Expatriate

Thanks to Mike for sharing this article from whiskeyandgunpowder.com

International Living promotes a cheap lifestyle abroad and spends a great deal of time and copy trying to convince folks that there is a $30k home on a beach somewhere waiting for them. The main reasons most of these folks are considering leaving the USA have more to do with seeking a low cost of living rather than protecting significant assets, but it does highlight the fact that many thousands are seriously considering packing up and moving abroad.

Apr 12th, 2010 | By Dan Prescher | Category: Featured, International

In a survey of readers on March 22, 2010, InternationalLiving.com found that nearly 96% of respondents said they are more likely to move out of the United States than they were last year.

More than 500,000 readers of the company’s free Daily E-letter were asked a single question: Are you more open to moving outside the United States than you were 12 months ago?

A stunning 95.6% of those who responded said they were now more willing to make the move and leave the U.S.

“We suspected from record attendance at our global conferences this year that something big was happening to attitudes in the U.S.,” said Jackie Flynn, publisher of InternationalLiving.com.

“The economy is faltering,” said Flynn, “unemployment is at record levels, the health care debate nearly caused a civil war, and there are real wars being fought on two fronts in the Middle East. The cost of living is going up so fast that people are being priced out of their retirements. It’s no wonder our readers are getting serious about moving abroad.”

One such reader is Elaine Yakos-LeBron, an advertising executive in her early 60s from Washington D.C.

“I attended an InternationalLiving.com conference several years ago, after my husband died,” said Yakos, “but when I got back to the States, with the economy down the tubes, I was lucky to keep my job and not be laid off. I dropped anything to do with moving or buying abroad. I just focused on work.”

But then, Yakos said, she decided to attend the InternationalLiving.com Ultimate Event V, held this past February in Quito, Ecuador.

“After losing over a third of my money in the market,” she said, “I’d had enough. I told my financial advisor that he should be ashamed of himself for making more on my money than I was.”

Yakos was impressed with what she learned at the InternationalLiving.com conference. She also realized she wasn’t alone in looking for options outside the U.S. Nearly 400 people, mostly Americans, were there with her.

Along with attending the conference, Yakos spent some time touring Ecuador. It wasn’t lost on her as she was driving along Ecuador’s sunny Pacific coast that there was four feet of snow on the ground back home.

“I don’t have deep pockets, and I’ve been hit by the downturn like everybody else,” said Yakos. “But I’ve always wanted to live where the weather is great and I can hear and see the surf. I learned that I can do that in a place like Ecuador because it’s so affordable.

“After the conference I went to Manta and made a deposit on a condo overlooking the water. I’m a little nervous, but I’m also excited. I now have a lovely place to vacation, and when I do get ready to retire, I’ll have the life I want.”

Elaine Finnegan, InternationalLiving.com events director, said Yakos’ story isn’t unique, and that record attendance at global conferences and seminars so far in 2010 bears out the survey results.

“At our Ultimate Event in Ecuador last February we had the largest crowd for any event in our 30-year history,” said Finnegan. “Nearly 400 people just like Elaine Yakos-LeBron flew all the way to Quito for a four-day conference about living and investing abroad. That’s unprecedented, yet it seems to be continuing.

“We’ve already broken last year’s attendance record for our Live & Invest in Panama event coming up April 18-20,” said Finnegan. “For the first time, we’ve actually had to cap registrations. Our International Real Estate Investment Forum in Toronto June 3-5 is already half full, and we haven’t even started advertising it yet.

“There seems to be a groundswell of discontent in the U.S.,” said Finnegan, “and we’re seeing a record number of people who are ready to vote with their feet and get out while they can still afford to do so.”

Regards,
Dan Prescher
Whiskey & Gunpowder