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WHERE CAN YOU AFFORD TO RETIRE TAX FREE?           WHY ARE SO MANY OF THE MIDDLE CLASS LEAVING THE US & EUROPE?

Our December 30, 2005 Newsletter:
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Dominican Republic Real Estate, Panama Banking, Venezuela, Offshore Banking,  History of US Income Taxes, Plus Much More. . . .
John Schroder - Author of The Ascot Advisory News Letter Bulletin and Numerous Expatriate  Articles
DOMINICAN REPUBLIC REAL ESTATE:
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Quite a few clients have written in to ask about real estate on the North Coast (Sosua, Cabarete, etc.) recently and have asked about prices up in this part of the Dominican Republic.  So, to provide some information in this regard, we have asked Ms. Joanne Hammond, a Canadian Expatriate who happens to be an excellent realtor in this area, for some ideas about what is available.  Here is what Joanne says you can expect in terms of real estate prices:
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In Cabarete:  A brand new 2-bedroom villa (1,200 square feet) in a gated community across the street from the beach  - US$149,000
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Also in Cabarete: A 3-bedroom, 3-bath villa (2,000 square feet) on a 5,000 square foot lot with both mountain and sea views - US$100,000
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In Sosua: A 2-bedroom, 760 square foot condo, fully furnished - US$65,000
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For more information on these and other properties, please contact Joanne as follows:
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Ms. Joanne Hammond
Coldwell Banker - North Coast
Office Telephone: 809-571-2324
Her Direct Cell Phone: 809-657-4141
Her Email:  j.Hammond@coldwellbanker-northcoast.com     
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NEW BANKING SERVICE IN PANAMA:
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Through our office and legal staff in Panama we now are able to offer clients the ability to establish a bank account by mail in Panama, which is a brand new service for our clients.  Just as we offer with banking in the Dominican Republic, clients would receive bank account applications by courier or regular mail (which ever they prefer), which would be completed by the client and sent either directly to the bank, or to sent to the office in Panama (and hand delivered to the bank by one of our staff).  The three banks we work with in Panama are all well known and highly regarded banks, so clients can feel very comfortable in regards to the financial institutions they might be banking with.  However, the only thing is that the banks in Panama are a bit stricter in that they require at least two banking letters of reference from an existing banking relationship, and one professional letter of reference (as part of our service fee, one of our legal staff is willing to provide the professional local reference).  Should anyone have an interest, please feel free to send an email to: info@ascotadvisory.com (Panama Bank Account in the title would be sufficient for us to know what you are asking for).     
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READERS WRITE IN:
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What is the advantage in offshore banking or mutual funds if the earnings must be reported to and taxed by the IRS anyway?
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EDITORS REPLY:  This is an excellent question.  Why considering banking or investing in another country?  To be sure, clients have a variety of reasons for doing so.  With regards to taxation matters, it is very true that bank account interest and possibly investment income may be tax-free in a number of countries (either for non-resident or foreigners alone, or both local residents and foreigners alike).  It is also true that US Citizens are technically required to report such accounts and income for taxation purposes in the US.  However, since most banks and investment firms may not be required to report to their own local respective governments (simply because there is no taxation) they certainly are not going to do so to any foreign government.  So, then for US citizens, the issue of reporting becomes voluntary or pro-active on their own part in the sense that they themselves must do the reporting, since there is no one else or no other institution doing so.  But let us put aside the issue of taxation aside for the moment.
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Why do some people have an interest in holding assets abroad, or in another country?  For one thing, there certainly might be the chance to earn a higher rate of interest, or perhaps some investment opportunities not available in their own home country.  Certainly it is the case that the economy might be growing much faster in another country, and the need to capital that much greater (thus often enough higher interest rates to attract such capital). However, aside from this, it could be the case that some people simply want to secure their money away - putting their assets and funds out of harms way if possible.  In regards to the term of harms way, this could include frivolous lawsuits in their home country, or even something worse, such as a change in government even (that might put themselves and theirs family assets at risk).  Like a squirrel that stashes acorns in different locations in order to survive the cold winter when no food in available, so too it can be said that many people wish to insure they have funds available for a rainy day, safely tucked away elsewhere.
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Certainly to put faith into one country, one passport, one banking institution, one investment and maybe even one currency - limits our ability to weather a variety of financial, economic and social storms.  Having the ability to secure your assets in another locale, in other kinds of investments and other currencies also offers a greater chance of options later on.  Like the insurance policy we buy for our home and property, hopefully we will never have to use it - but having it in the first place offers the chance for another kind of outcome that might not be the case if we do not have it at all.  Which is to say, it is difficult to predict what will happen going forward.  However, there are many things that have taken place, that if someone told you ten or twenty years ago, the government will do this or that, at the time you would say or think - no, the government would never do such a thing.  Yet they have.  How many people remember the IRA account and the ability for people to save US$2,000 per year - and deduct this amount in full regardless of income from their income tax or better said, taxable earnings amount?  Then, the politicians changed their mind later on and said you can only take the deduction IF your income is below a certain level.  What the heck is US$2,000?  Nothing really if that is the only retirement savings plan you have, yet in their infinite wisdom, the politicians canceled the tax benefits of this for most middle class people.  Some of our clients believe that one option being considered to solve the Social Security issue is to nationalize private pensions or better said, the idea that the government takes over existing private savings or pension plans and roll them into the Social Security system.  It sounds crazy, and one would tend to say, the government would never, ever do such a thing.  Maybe not, and then again - who knows?  The point is, there are many things that have happened that one might have thought to be unthinkable.  Will such things take place?  It is very difficult to say, but do you want to take the chance?  Personally, after looking back at ten, twenty and fifty years or more of political history, my conclusion is, that I would not.
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ANOTHER READER WRITES:
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Hi John - You wrote, taxes are not the entire problem, but rather the least of it all. I believe it was Benjamin Franklin who wrote, the power to tax is the power to enslave.  Now that might not be an exact quote but it certainly could be construed as truth.  The taking by force and coercion of ones economic means is the same as encouraging all of the other social and political problems you have stated before.  P.S. I see that you address the slavery issue further in your comments.
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EDITORS REPLY:  Well, I tend to think most people understand or realize that nothing is for free.  The building and maintenance of public roads, public schools, police, fireman, public sanitation systems and so on, are all services usually provided by government and it does cost money to do so.  The question is, how much money is needed really, and what are the politicians doing with that money - your money.  It does seem the more money they have, the more creative ways they find to spend it.  In fact, if you study the budget of the US Federal Government from 1930 through 2008 (projected), you will see that almost consistently, year in and year out minus a few sporadic years here and there over the span of more than 70 years, the politicians have almost always spent more money than they have taken in - and this applies to good years also, when the economy was not in recession or the country at war.  In addition, in terms of government spending for 2006, 12 percent alone of your tax money is spent on government debt interest (just to pay the interest on all that borrowed money), 15 percent is spend on the military, 20 percent on the social security administration and 25 percent on Medicare and Medicaid.  So, 72 percent is spent on these four items alone (not bridges, roads, books for public schools, etc.)  Here is some more information.  According to the 1999 US Bureau of Labor Statistics, as a percentage of the government budget comparing projected future costs or changes in spending from 1998 to 2008 - Medicaid costs are project to increase 200% and Transfer Payments (read Social Security and other related costs.) are projected to increase by 25 percent.
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I am not trying to be negative or critical, but one plus one equals two, and one minus three is a negative two.  It always was and it always will be.  Basic arithmetic has not changed.  They can tell you there is a new economy, that the laws of physics no longer apply, that pigs will start to fly in the new world order and whatever else.  However, the money has to come from somewhere.  Either it is going to come from you (out of your own pocket via higher taxes) or they are going to run the printing presses and pay for these expenses with new devalued money (which is really another form of hidden tax, meaning inflation and devaluation of the value of money - and your purchasing power as a consumer). I could not tell you for certain exactly what the politicians might end up doing, but I can tell you that wishful thinking and procrastination will not make these problems go away.  We can only take some educated and logical guesses based on what we know they have done in the past (and unfortunately the citizens that end up paying for the mess are usually not the people responsible for creating it in the first place, this is known as socializing the responsibility).
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Some current statistics about US government expenditures:
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http://www.kowaldesign.com/budget/percentages.html 
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Some interesting facts for you about the US tax system taken directly from the Treasury web site (see link below):
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On July 1, 1862 the Congress passed new excise taxes on such items as playing cards, gunpowder, feathers, telegrams, iron, leather, pianos, yachts, billiard tables, drugs, patent medicines, and whiskey. Many legal documents were also taxed and license fees were collected for almost all professions and trades.  The 1862 law also made important reforms to the Federal income tax that presaged important features of the current tax. For example, a two-tiered rate structure was enacted, with taxable incomes up to $10,000 taxed at a 3 percent rate and higher incomes taxed at 5 percent.  The need for Federal revenue declined sharply after the war (American Civil War) and most taxes were repealed. By 1868, the main source of Government revenue derived from liquor and tobacco taxes. THE INCOME TAX WAS ABOLISHED IN 1872.  From 1868 to 1913, almost 90 percent of all revenue was collected from the remaining excises (sales taxes, customs duties, etc.).
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Under the Constitution, Congress could impose direct taxes only if they were levied in proportion to each State's population. Thus, when a flat rate Federal income tax was enacted in 1894, it was quickly challenged and in 1895 the U.S. Supreme Court ruled it unconstitutional because it was a direct tax not apportioned according to the population of each state.  Lacking the revenue from an income tax and with all other forms of internal taxes facing stiff resistance, from 1896 until 1910 the Federal government relied heavily on high tariffs for its revenues.  A tax was even imposed on chewing gum. The Act expired in 1902, so that Federal receipts fell from 1.7 percent of Gross Domestic Product to 1.3 percent.  While the War Revenue Act returned to traditional revenue sources following the Supreme Court's 1895 ruling on the income tax, debate on alternative revenue sources remained lively. By 1913, 36 States had ratified the 16th Amendment to the Constitution. In October, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. LESS THAN 1 (ONE) PERCENT OF THE POPULATION PAID INCOME TAXES AT THE TIME.
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Prior to the enactment of the income tax, most citizens were able to pursue their private economic affairs without the direct knowledge of the government. Individuals earned their wages, businesses earned their profits, and wealth was accumulated and dispensed with little or no interaction with government entities. The income tax fundamentally changed this relationship, giving the government the right and the need to know about all manner of an individual or business' economic life.
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World War I and the 1920's - The entry of the United States into World War I greatly increased the need for revenue and Congress responded by passing the 1916 Revenue Act. The 1916 Act raised the lowest tax rate from 1 percent to 2 percent and raised the top rate to 15 percent on taxpayers with incomes in excess of $1.5 million. The 1916 Act also imposed taxes on estates and excess business profits.  Driven by the war and largely funded by the new income tax, by 1917 the Federal budget was almost equal to the total budget for all the years between 1791 and 1916. Needing still more tax revenue, the War Revenue Act of 1917 lowered exemptions and greatly increased tax rates. In 1916, a taxpayer needed $1.5 million in taxable income to face a 15 percent rate. By 1917 a taxpayer with only $40,000 faced a 16 percent rate and the individual with $1.5 million faced a tax rate of 67 percent.  Another revenue act was passed in 1918, which hiked tax rates once again, this time raising the bottom rate to 6 percent and the top rate to 77 percent. These changes increased revenue from $761 million in 1916 to $3.6 billion in 1918, which represented about 25 percent of Gross Domestic Product (GDP). Even in 1918, however, only 5 percent of the population paid income taxes and yet the income tax funded one-third of the cost of the war.
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Editors Key Points:  The US did indeed have a flat tax in place in 1894, which was later abolished or declared unconstitutional by the Supreme Court.  When the income tax law was passed in 1913, less than 1 percent of the people were eligible to pay it and only 5 percent of the population in 1918.  They never capped the percentage of the tax or tax rate because the original debate or argument in 1913 was that the income tax would never, ever exceed 10 percent (yeah sure, good thinking guys).  What is the difference between today and 1913 or even 1918?  War? No, we had a few of those since then.  The answer can be found in the following three words: Democratic Socialized Welfare.  To be sure, 45 percent of the current federal budget today in 2006 now consists of what are called transfer payments (welfare and socialized pension programs).  So, almost half (and predicted to increase dramatically) of the government expenditures and budget is for socialized transfer payment programs.  You may argue that these programs are necessary and a good idea, but the question remains:  Have they really worked or achieved the goals claimed versus the costs to the citizens paying over the years?  After 70 years of such things, the percentage of poor remains the same and the middle class certainly are now struggling to maintain their own standard of living.  Not only that, this political idea of socializing responsibility onto the backs of every citizen means that today, individual citizens end up paying for other insolvent government insurance schemes such as bank bailouts (REFCO), mismanaged private company pensions (PBGC - Pension Guaranty Benefit Corporation, another government program admittedly insolvent), and a whole slew of other related things.  
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http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml
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ANOTHER READER WRITES:
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John - Some of your recent reports have me wondering what the real world effect on the offshore banking world will be if the IRS continues to press for more information. Being somewhat interested in the Dominican Republic as a place of offshore retirement residency, I would like to know how much tolerance there is for tax authorities outside of D.R., coming into the country and asking for information.  While I have heard you say before, that it is best to come into the country without such entanglements, I find it impossible to know that several years might go by without knowing that the IRS will eventually look into some of my offshore dealings.  What do you think?
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EDITORS REPLY:  Well, I do think you are correct in the sense that a starved and hungry monster will certainly be expected to do some very desperate things when it is hungry.  The Indians in the Amazon jungle are smart enough to stay away from a jaguar they see in a river trying to catch fish, because if the jaguar is going after fish, he must be extremely hungry, extremely desperate - and extremely dangerous to be around.
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This can be a very difficult question to answer because the answer is predicated on knowing the future, or being able to predict behavior in the future.  All I can say is, many other governments in the world are NOT in agreement with a new world order or being forced to act as a tax collection agent for some new one world government either (if that is even the goal as some might believe).  These other countries have enough of their own problems to worry about, like trying to take care of their own citizens, etc. Which is perhaps to say, all roads do not lead to Rome.
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ANOTHER READER WRITES:
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I was interested in your thoughts about investing in real estate in Venezuela.  I have read about Hugo Chavez and have heard that certain freedoms have been taken away, however, I also have read that there are minimal taxes, and that foreigners can gain residency with a $50,000 investment.  Is it safe to invest in Venezuela or is there a possibility of losing investments (i.e. can the government take property away)?
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EDITORS REPLY:  I respect Chavez as a patriot, or in the least as one political leader who in the least seems willing to defend the sovereignty of his own country, which can be hard to find these days.  On the other hand, I do not necessarily respect his political or economic leanings. Venezuela certainly can be an inexpensive option in terms of cost of living and so on.  Gasoline is cheap and electricity is cheap as are other costs.  However, it does concern me that there is a restriction on the movement of capital and once you get your money in, it could be the case you could not get it out.  This certainly bothers me.  Also, the problem is you really do not know what may end up being the final agenda or action of the current political climate.  I mean - if the political mood were such, it is not too difficult to imagine the government doing a number of things.  You asked if the government could take your property away?  The US government takes the private property of its own citizens away constantly, and this is supposedly the most free, and most democratic nation on earth.  Imagine any other.  Would I live in Venezuela?  I have visited Venezuela and I could probably live there (although the humidity in Cartegena is unbelievable).  Would I keep my life savings inside the country?  I would wager to say that the jury is still out on that one and while Venezuela might be an option as a place to live, tying up any large amounts of liquid assets carries a degree of uncertainty. 
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ANOTHER READER WRITES:
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John: In my recent e-mail to you I did forget to include a question I've been meaning to ask.  Since I am strongly considering moving to the DR within the coming years and I do own a firearms collection, do you have any knowledge regarding ownership of firearms in the DR?  What would I have to do to arrange their transport into the island in accordance with the law?  Is such a thing even an option?  If you are not able to answer these questions, can you direct me to a person or entity that can help me?  I thank you in advance for any answers you might be able to provide.
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EDITORS REPLY:  Once you obtain Permanent Residency status, then at that moment you certainly may apply for a gun permit, and many people do have both fire arms and a legal permit to carry one (there is one permit which is both a permission to own and carry concealed rolled into one).  However, you will probably end up paying some sort of custom duty on it and I could not say off hand what it might be.  But, I would not suggest you import a crate load of weapons though (the government might certainly get the wrong idea regarding your intent).  One or two personal firearms should be fine, with the proper permits and so on before hand.
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ANOTHER READER WRITES:
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Dear John - Can you please provide current interest rates on US and Pesos with an opening account of 40k. If at all possible can you provide the interest rates for the same in Panama also?
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EDITORS REPLY:  As I have stated earlier, interest rates had come down in the Dominican Republic for US Dollar accounts or deposits, and for a very legitimate reason (and not a negative one, but rather one of basic economics).  The bank interest rates for deposits in Panama have always been slightly higher than in the US, but not by much at times.  Right now in Panama, you can probably expect more or less the same rates as they are in the US.  In the Dominican Republic, slightly higher, but we are talking about perhaps 2 or 3 percent for US Dollar savings accounts, and maybe up to 5 percent for US Dollar certificates of deposit.  The highest rates will be found for US Dollar commercial paper, whereby it could be possible to get up to 6 or 7 percent.  Some private lenders are offering as much as 10 to 15 percent in the Dominican Republic, but I honestly question this high spread when normal rates are half than that.  Peso accounts and deposits are another matter, and peso rates have always been higher than US or Euro denominated accounts.  Depending upon the bank, you might find anywhere from 4 up to 7 percent on savings accounts, and anywhere from 7 up to maybe 12 or so for certificates of deposit.  The highest bank rate I have seen recently for Pesos certificates of deposit has been 16 percent   The central bank was recently offering 20 percent for one year deposits in Pesos, but that was for a one or two year time deposit.  Generally speaking though, keep your eye on US Dollar rates outside the US simply because as rates do go up in the US, this will certainly put pressure for rates to go up elsewhere as competition increases for these deposits (the money will go to the higher rates, and thus force rates to go up elsewhere).
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ANOTHER READER WRITES:
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In regards to the previous newsletter: Two Items. Puerto Rican Residents, Citizens of the US, do not pay Federal taxes, and property taxes are negligible. Income taxes are high but everybody dodges them. We don't get to vote for president either, but considering the typical candidate, that is a possible positive.
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I liked your list of the current faults that exist in the US political and societal sphere, but the comment about not being able to say Merry Christmas is utterly absurd, and undermines the other good points you make. That concept is simply the latest crap from the right wing and fundamentalist cults, a bunch of lunatics that cry persecution at every turn while in fact they are busy screwing up the country even more than it already is.  To each his own opinion, but that small blemish on your list should be addressed, unless you sincerely believe it to be true, in which case, I'd like to hear more about it.  Yeah, I know about the ACLU and about judicial decisions regarding the Ten Commandments and religious displays, AND I LIKE THEM. I LOVE the separation of Church and State. We should have more of that in PR, where all political events begin with a prayer - A Christian prayer of course.  I was once a Catholic. I do believe in some concept of the Almighty {but tend more toward the agnostic} and I welcome and accept that trend in the general population if only to keep the masses cowed by the fear of God. But I have no interest in having State sponsorship of any particular religion. I fail to see how that has ever been a good thing.  As to the war on Christmas, come on, my friend. What a joke!! But, that silliness aside, thank you very much for another great letter.  We have free Noni in PR also.  I'd like to hear more about the reason why that fellow had to get the hell out of Panama on a mental problem dodge, if possible. You may forward my email to the respondent who was left high and dry.  Thanks again and MERRY CHRISTMAS!  Ever hear of Mithras?
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EDITORS REPLY:  Well, first and foremost I do believe that a secular government or one that does not espouse any particular religion is a good idea.  To use another term, the separation of church and state, and a government that allows people to practice their own beliefs freely as well.  However, I am going to give you something to think about because this entire issue is about Private Property Rights and Right of Association, and has in fact absolutely nothing to do with religion (even though that is the smoke screen or cover argument).  To explain this a bit further, there are some municipalities both in the US and the UK that have now banned the type of public banners put up in the past that say: Merry Christmas.  In other words, it has often been the case that a group of local merchants or the local business owners association has paid for and put up a banner across main street or in the business district that might say something like: The Town of Pokeeville Wishes You a Merry Christmas or Merry Christmas from The Pokeeville Businessmen Association (or some other variation).  This has been a tradition, for lack of a better word, that has gone on for years and years - yet all of a sudden the local town council says they will not permit a sign that has the word Christmas in it.  I ask you why?  Are you really offended?  Are you offended when you enter into an area that is predominantly Chinese, and the local businessmen put up a sign that says: Happy Chinese Year in the Chinese Language (which means you probably cannot read it anyway)?  How about a predominantly Jewish area whereby a local public banner says: Happy Chanukah?
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The following idea or comments may seem radical to you, but I tend to believe if you think about this deeply enough, you will see past the false arguments of church versus state.  The nature of government is to constantly expand its power and influence over its citizenry.  What do politicians do each and every year?  They get together so they can figure out what new laws or regulations to pass prohibiting you from doing something that before was not prohibited.  In addition, in terms of socialism (democratic or otherwise) one of the main unstated goals is to separate the individual from traditional social ties or community ties, and have the state as the replacement for that.  In other words, the socialist doctrine is to have the individual beholden to and loyal to the state, not to family, not to local community, not to religious affiliations, etc.  Why?  These community, family and social ties are threats to the state and its hold or sway over local citizenry.  So, the object is to suppress them, blot them out if possible, and this has already succeeded to some extent.  If you are Irish and want to form an Irish social club for other Irish people, the state (government) says you cannot do that in the sense you cannot prohibit non-Irish persons from joining, no?  If you form a social club for men, the state says you must permit women to join, no?  So then, the goal of the socialist state is to break down the right to affiliate with whomever you wish (and this right in turn of course in theory give you the right to prohibit members that do not fit the profile or requirement for membership).  But what is the real problem with that?  If you are a man, do you really want to join a woman's social club?  If you are Chinese, are you really that offended by a club exclusively for people of Irish decent?  Of course not (unless you have something mentally wrong with you) and in fact you would either join a Chinese club that already existed or create your own social club for Chinese people if that is what you wished.  Yet, the state claims they are prohibiting the exclusivity of such things (or the rights of people in a predominantly Christian area to put up a sign that says Merry Christmas) in order to combat discrimination and to promote equal rights, freedom, etcetera and so on.  Some will use the argument of the separation of church and state, but that argument certainly cannot fly in the UK (considering the Anglican Church) and with regards to the US, we all know politicians get up in front of microphones every day inside a public building and use the phrase God Bless American until blue in the face.   
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What is the other goal of the socialist welfare state?  To meet or reach its goals, little by little over time until one day the people wake up and have no idea what has happened to them (because otherwise, if it were shoved down their throat by force all at once, they would reject it and rebel, so better to spoon feed them).  Let us examine how they do this using eminent domain as an example.  First the government says they have the right to confiscate your private property for the good of the general welfare, supposedly for beneficial public works projects only - such as schools, bridges, public roads, etc.  Sure, some people are ticked off about this, but over time they buy into this idea or argument.  Now that the population is lulled into this concept, the state can dare take it further and claim the right to confiscate property because the property does not generate enough tax revenue, and turning it over to a developer by force would result in higher property taxes for the town, and thus this now constitutes a newly defined public good.  The same general idea holds true for the right of association and the true right to private property.  Which is to say, the right of someone to erect an announcement on their own private property, or on a public thoroughfare done so by the popular consent of the people living in that general vicinity.
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If you honestly think the US government especially is really concerned about the church versus state issue, you are kidding yourself.  I do and can agree that a secular government can indeed demonstrate impartiality towards one particular religious belief by not displaying symbols or announcements on state property.  Yet, one blatant contradiction or proof of hypocrisy of this is the use of the Christian Bible in the courtroom and in the swearing in ceremonies of politicians.  What good does it do really?  People take an oath with their hand on a religious text and then proceed to tell lies, cheat and steal anyway.  No my friend, this has nothing to with religion or secular government.  Instead, it has everything to do with the power of the state, reduction in true private property rights of the citizenry AND the imposing of the will of a small marginalized minority over the majority.  In fact, on the last part, you will notice that government seldom attacks or restricts the minority, and rather attacks the majority under the premise they are protecting the rights of the minority? Why?  Simply because the minority, or the issues supposedly of concern to the minority, gives them legitimacy to go after the larger group, which is a potential threat to public sway, opinion and allegiance.  Oh, and by the way, a belated Merry Christmas to you too.
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ANOTHER READER WRITES:
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Hello John - I just read an article about Santo Domingo in Escape from America Magazine.  I have a childhood friend who moved there a few years ago, and she told me what a great retirement place it is.  I've lost touch with her, so let me ask you this, if you don't mind.  What about high-speed Internet services on the island?  If it is available in the urban centers, then what about up on the mountains?  My friend advised me that the weather in the mountains is best, so I'd want to look at land at slight elevation, but then what would I run into as far as Internet connections go?  Unfortunately, my retirement home must have good Internet connection, as well as being out of an urban environment.  A tough combination in low-economy places - Your advice in this matter would be greatly appreciated.
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EDITORS REPLY: Certainly DSL service, high speed cable modems and even T-1 lines are available, not to mention traditional 56k dial-up.  However, you make a valid point in that DSL may not be available in all areas and it most probably will not be in a very rural area.  If you have cable access where you are living (Telecable Nacional) then you stand a good chance of having high-speed Internet access via your cable connection (cable modem).  Cost for both is about equivalent to US$45 per month.  Otherwise, I would say you would be stuck with dial-up.  I have heard of some people that have installed satellite dishes and were able to hook up with a satellite connection, so you may wish to investigate that as another option as well (although I hear it can be a problem on a cloudy day).
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ANOTHER READER WRITES:
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John - In the first section of your newsletter concerning taxes, a reader wrote in that a person who has a U.S. Passport is liable to pay taxes on worldwide income.  This is not a true statement because simply holding a U.S. Passport may not by itself identify you as a U.S. Citizen.  The provision in the US Code allow citizens AND non-citizens to hold U.S. Passports.  The criteria is allegiance, not citizenship:
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http://www.law.cornell.edu/uscode/html/uscode22/usc_sec_22_00000212----000-.html
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Now, the actual U.S. Passport application only has checkboxes for U.S. Citizen and not U.S. National. What the Feds want you to sign under penalty of perjury is that you are a U.S. Citizen.  However, you can substitute U.S. National for U.S. Citizen in your passport application if you are someone who fits the criteria as a U.S. National.  A U.S. National is someone who is born in a non-federal area in one of the 50 states of the Union (which is most people).  However, with the "programming" that most people have gone through in their understanding of the common definition of United States (vs. the legal definition), most people believe they are U.S. Citizens at birth.  The existence of a non-citizen U.S. National is consistent with definitions in TITLE 8 U.S.Code Chapter 1 Subchapter I, Section 1101 at 21 and 22: (21) The term "national" means a person owing permanent allegiance to a state.  (22) The term "national of the United States" means (A) a citizen of the United States, or (B) a person who, though not a citizen of the United States, owes permanent allegiance to the United States.
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I personally changed all references of U.S. Citizen to U.S. National on my passport application.  That application was approved and my passport issued without incidence.  All this may be confusing unless you understand that the U.S.A. is a republic (not a democracy) of 50 independent states (each of which is foreign to the other).  In addition, the U.S. Department of State provides for a process to get a certificate of Citizenship or Non-Citizen National Status as indicated in: TITLE 8 U.S.Code CHAPTER 12 > SUBCHAPTER III > Part II >> 1452  In most instances an unmodified U.S. Passport application will be used as prima facie evidence that the individual is a U.S. Citizen (along with your applications for a social security card, state license, voters registration, IRS Form 1040 (Not 1040-NR which actually references U.S. National), etc., etc. etc.  A couple excellent references to this topic can be found at the following links:
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http://famguardian.org/TaxFreedom/CitesByTopic/USNational.htm
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http://famguardian.org/Subjects/Taxes/Articles/DomicileBasisForTaxation.htm
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EDITORS REPLY:  Thank you for writing in and the information.  You might be technically correct and I have no doubt in my mind that you have very valid arguments for this position.  However, I tend to be skeptical regarding what the law or regulations say and what one can actually get accomplished, or if one can even be taken seriously in a court of law regarding any of the related issues that might arise.  For example, perhaps you can go through the paperwork and declare yourself a national rather than a non-citizen, and at least for yourself you do believe this offers some benefit for taxation purposes.  However, the powers that be certainly have the guns, the manpower and jail cells.  Being right or correct according to the law does not in and of itself guarantee a positive outcome, or in the least, free oneself from harassment just the same.  So, here is what the nice folks at the IRS have to say, and remember, they have the capacity to place you in the pokey so I would not want to waste my time personally fighting such issues (I would just as well rather do something else, and you probably already know what I might advocate which is certainly less stressful):
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THE IRS SAYS:
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A. Contention: Taxpayer is not a citizen of the United States, thus not subject to the federal income tax laws.
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Some individuals argue that they have rejected citizenship in the United States in favor of state citizenship; therefore, they are relieved of their federal income tax obligations. A variation of this argument is that a person is a freeborn citizen of a particular state and thus was never a citizen of the United States. The underlying theme of these arguments is the same: the person is not a United States citizen and is not subject to federal tax laws because only United States citizens are subject to these laws.
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The Law: The Fourteenth Amendment to the United States Constitution defines the basis for United States citizenship, stating, "all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." The Fourteenth Amendment therefore establishes simultaneous state and federal citizenship.  Claims that individuals are not citizens of the United States but are solely citizens of a sovereign state, and not subject to federal taxation have been uniformly rejected by the courts.
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B. Contention: The "United States" consists only of the District of Columbia, federal territories, and federal enclaves.
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Some argue that the United States consists only of the District of Columbia, federal territories (e.g., Puerto Rico, Guam, etc.), and federal enclaves (e.g., American Indian reservations, military bases, etc.) and does not include the "sovereign" states. According to this argument, if a taxpayer does not live within the "United States," as so defined, he is not subject to the federal tax laws.
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The Law: The Internal Revenue Code imposes a federal income tax upon all United States citizens and residents, not just those who reside in the District of Columbia, federal territories, and federal enclaves. In United States v. Collins, 920 F.2d 619, 629 (10 th Cir. 1990), cert. denied, 500 U.S. 920 (1991), the court cited Brushaber v. Union Pac. R.R., 240 U.S. 1, 12-19 (1916), and noted the United States Supreme Court has recognized that the "Sixteenth Amendment authorizes a direct non-apportioned tax upon United States citizens throughout the nation, not just in federal enclaves. The courts have uniformly rejected this frivolous contention.
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http://www.irs.gov/businesses/small/article/0,,id=106504,00.html
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Editors Note:  The courts reject it, the IRS rejects it, and the people with the guns and keys to the pokey reject it - so, what possibly chance of a positive outcome are you going to have with this?  When any government refuses to honor and obey its own laws or regulations, or constantly reinterprets them to their own will or liking with every change in the wind despite what ever literal translation might exist, the result is that you a fighting a downhill battle.  Some people have said to me - you are wrong to suggest that the answer is simply consider relocating and living some place else.  The argument is that one should try to change the system from within, posing these arguments, writing to elected officials, and so on.  This in my opinion is all well and good, BUT only when there is an environment of a willingness to examine these things seriously and without prejudice.  Do you honestly think anyone in government, or its various agents such as judges, are willing to attack the status quo?  Do you honestly believe anyone with power is willing to accept a reduction in that power because it is the right and correct thing to do for the long-term welfare of the citizenry?  History of mankind and various forms of government have proved otherwise.  I salute your courage and your idealism, but I think you are wasting your time.  However, if you can find a group of men with the integrity, intelligence and will to reverse the damage and return to the original ideals of Jefferson, Voltaire, and Alexis DeTocqueville, please let me know. So far, with the noted exception of congressman Ron Paul (who is grossly outnumbered by the way), I have yet to find them.     
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ANOTHER READER WRITES:
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Hi John - Something you might be interested in reading regarding Benjamin Bernanke - Chairman in waiting of the US Federal Reserve.  As has been exhaustively documented ever since he was nominated by President Bush to succeed Alan Greenspan at the end of January 2006, Benjamin Bernanke's lifelong study, the issue upon which he has fixed his professional career, is the cause of the 1930s Depression and the Fed's role in making sure that it never, NEVER happens again. From his studies, Mr Bernanke is sure that with proper Fed "supervision", a credit expansion need never end. He is convinced that given the full powers of the Fed, which he will have when he takes control, he can saw off the monetary branch and remain suspended in mid air, impervious to the forces of economic gravity.  Mr Bernanke, like the vast majority of his professional economist colleagues, has made very sure that his focus remains fixed on the orthodox explanations for what happened to the world in the 1930s.  He is a leading light of the economist's version of the "flat earth society", never letting any incontrovertible evidence to the contrary deflect him from doctrine.
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And such incontrovertible evidence abounds. The notion of a "flat earth" was exploded more than 2000 years ago in Alexandria in Egypt, where a man named Eratosthenes derived the circumference of the globe to well within 1 percent accuracy using basic geometry. It was confirmed in 1522 when Magellan's expedition returned to Spain after the first recorded circumnavigation.  And although economic "booms and busts" have an even longer history than the controversy about the shape of the earth, the modern orthodoxy, which purports to explain how to perpetually foster the boom while making sure the bust never happens has much more recent beginnings. The "bible" of economic interventionism is Keynes' - The General Theory Of Employment, Interest And Money - published in the middle of Mr Bernanke's "Great Depression" in 1936.  One of the tragedies of the twentieth century is the fact that EVERYTHING in Keynes' 1936 work had been conclusively refuted in the twenty-five years BEFORE his book appeared. This was the work of the Austrian economists in general and of their dean, the greatest economist of the twentieth century - Ludwig von Mises - in particular. Von Mises began the demolition in 1912 with The Theory of Money and Credit. He continued the process with the publication of Socialism in 1922. After that, von Mises wrote voluminously on the fallacies of controlling economic conditions by manipulating money and credit. His major contributions in this area were written between 1923 and 1933. They were collected in a book called On The Manipulation Of Money And Credit in the late 1970s.
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EDITORS REPLY:  Thanks for the information and for taking the time to write, but you are preaching to the choir.  Can I hear an Amen?
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