We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are

Life, Liberty and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

Thursday, December 14, 2006

Beware of the New Congress

I haven't had much to say about the takeover of the U.S. Congress by the Democrats. But as a former Republican member of the U.S. House of Representatives myself, I think the GOP got what it deserved.
The congressional Republican Party of today -- deficit spenders, big government advocates, destroyers of civil liberties, pork barrel experts -- bears no relationship to the principled conservative party I knew 25 years ago. What the late presidential candidate George Corley Wallace said years ago, is now confirmed: "There's not a dime's worth of difference between the Democrat and Republican parties."

But mark my words. The control of the 110th Congress by the Democrats could expose one of the remaining major differences between the parties: their attitudes towards free trade and unrestricted offshore financial activity.

Get ready for major assaults on offshore finances from the likes of Senator Carl Levin (D-MI), Senator John Kerry (D-MA), and Rep. Charles Wrangle (D-NY), the new chairman of the tax writing House Ways and Means Committee. Republican mavericks such as Iowa's Sen. Charles Grassley (R-IO) probably will join in the offshore bashing.

The leftists Democrats will have the power to write radical new laws tempered only by the hapless President George Bush's shaky veto pen. The Democrats now have free reign to create all kinds of anti-offshore legislation. If they have their way, you can expect restrictions on offshore investments, banking, and even more massive reporting of all offshore financial activity.

Whatever complaints one may have about the six years of the Bush administration, (and we have had many), in the area of offshore financial activity by Americans, the government has supported relatively free movement of global capital. With the major exception of the horrendously unconstitutional, so-called PATRIOT Act (which both Levin and Kerry had a major hand in drafting), Bush and his executive branch appointees squashed the worst of the harebrained proposals that would have restricted foreign investment, cash transfers and other offshore business.

Congressman Wrangle has long advocated a radical Nazi-like "exit tax" on Americans who move abroad and want to end their citizenship. Relinquishing citizenship is a constitutional right that has been upheld by the U.S. Supreme Court repeatedly. Wrangle and his ilk assume anyone who acquires a new citizenship and leaves the U.S. behind is motivated by tax dodging. Several times he has introduced bills that would impose a 50% tax on all assets of a U.S. person as of the date the person ends his citizenship by expatriation. Look for this confiscatory proposal to resurface in 2007.

Another proposal floating around leftist political circles would repeal centuries of financial privacy accorded domestic and foreign trusts. This proposal could strip the financial privacy from modern corporations and other entities, such a limited liability companies and family foundations. Using the boogeyman of "terrorism money," these anti-privacy worthies argue that secret beneficial ownership of all legal entities and financial accounts should be abolished completely.

All this means you should plan now for your own offshore investing, banking, and other activity - while you still can.

Don't get me wrong. I have been around Capitol Hill long enough (25 years, man and boy), to know that what I have outlined here is a worst-case scenario. Even George Bush, the champion tax cutter, is smart enough to block some of these proposed legislative atrocities.

But 2008 is a presidential election year - and what happens if Hillary or Barack Obama moves into what's left of the White House?

Better get an offshore move on now.

That's the way that it looks from here,


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