Dear International Friends,
The recent message we sent about a new reporting law for non U.S. banks drew many responses. Most were about how to maintain privacy such as the note from a reader in Australia below.
“Dear Gary, With technology and communications growing at the rate it is, I'm sure to get caught if I evade tax. But I have heard that one way to maximise privacy is to spread your cash and assets over dozens of institutions in dozens of countries. Accounts kept below a critical figure, which changes from state to state, aren't likely to draw attention.”
Here is my reply.
“Our privacy can be affected by at least five factors: population, global business integration, technology, skill and luck. As the world becomes more crowded, privacy will inevitably become more difficult to attain. As our economic community increases its integration, the need for global agreement becomes more compelling. A global economic community cannot let even one country that is linked into the global circuit act as a shelter for criminals. As this argument for equal global taxation, tariffs, etc. grows, modern technology will make it easier for governments to enforce full disclosure laws. Fourth, most investors do not understand privacy well enough to effectively circumnavigate laws, (such as the reader above who gave away his plan for attaining privacy with name and address over a public forum).
Fifth I can relate numerous stories over the past three decades where investors lost their privacy simply because they happened to have the bad luck of choosing an attorney, CPA or bank that was investigated by a government. When governments search, they often cast wide nets and go beyond just the criminal they desire. They backtrack and look at many of the bank's (or attorneys, accountants, etc.) customers in the hopes of finding others who are hiding wealth. You may be very skilled at keeping your money in an unobtrusive way, but still lose privacy through pure bad luck.
I know a American tax advisor in the Bahamas who unknowingly took on a client who turned out to be a drug dealer. The advisor spent time in jail and the Feds looked carefully at all his clients. Dozens of investors who banked in the very private Isle of Man had their names and address exposed to the IRS because a U.S. attorney started a class action suit and inaccurately claimed that Manx institutions were hiding fraudulently obtained sums. A Bahamian newspaper exposed that one of the local Bahamian banks was secretly owned by the CIA. Many private Panamanian accounts were exposed when the U.S. invaded Panama City. These stories of bad luck privacy loss go on and on.
These stories and the facts above support my belief that we will continue to see an erosion of privacy as we know it. I believe keeping a low profile is more important, but only when every effort is taken to assure your privacy is gained in legal ways.
DO NOT DEPEND ON BANK PRIVACY TO HIDE WEALTH. THIS IS NOT PRACTICAL NOR SAFE.
This is why our goal at this site and our International eClub (https://www.garyascott.com/eclub/) is to help you gain useful, credible, information and contacts.
The reader's idea of spreading money into many banks may actually be harmful to his privacy in at least two ways. First the more places one banks the greater the risk of having a bad luck loss of privacy. Second, even if one gains privacy, the time involved looking after multiple accounts, the loss of income (smaller accounts usually pay less) and the costs (fees from multiple accounts) may offset any benefits.
This is why the eClub has three advisors, Joe Cox, Leslie Share and David Melnik who are highly experienced international tax attorneys who can answer member questions and help members arrange their affairs in private ways that do not break laws. You can reach these advisors at their eClub addresses below;
- Joe Cox
- Leslie A. Share
- David Melnik
WARNING! THERE IS AN EVEN MORE IMPORTANT REASON WHY PRIVACY CAN BE HAZARDOUS TO YOUR WEALTH.
Factors of Wealth
We recently began looking at the reasons 733 millionaires (interviewed by Dr. Thomas J. Stanley for his book “the Millionaire Mind”) cited as being the `most important factors in attaining their wealth. Not one of the top twenty five factors mentioned reducing taxation or gaining privacy.
We should not discount the importance of privacy or tax avoidance, but should realize these factors are low priority and only become significant after accumulating significant wealth.
THE DANGER IS IN ALLOCATING SO MUCH TIME AND ENERGY ON THESE FACTORS THAT YOU NEVER GET AROUND TO NAMING ANY MONEY IN THE FIRST PLACE. My experience is that my clients with little wealth spend lots of time on these subjects. The really wealthy readers focus more on providing good, competitive products or services. Privacy and tax reduction come after the wealth.
According to Dr. Thomas the two most important factors that 733 millionaires chose are “BEING HONEST WITH ALL PEOPLE” and “BEING WELL DISCIPLINED”.
With these thoughts in mind Merri and I just held our first Inspired Investing course here at Merrily Farms. Though we had a top tax attorney, the main teachers were,keepers of ancient wisdom from India (Dr. D.S. Dixit a Vedic Pundit from Kampur), Ecuador (Taita Yatchak, a Taita Yatchak from the Andes) and North America (White Bear, a Cherokee Medicine Man). Though finance and investments were part of the agenda our focus was on how to be develop honesty and discipline. I'll send more about this meeting (and our first upcoming course for eClub members we'll hold during the leaf change this fall) in a later message.
The course focused on traditional aspects of wealth, but also strived to delve into deeper factors (such as how to be more honest in an increasingly dishonest world and how to build discipline) that are not covered by traditional investment advice.
Successful investors and businessmen focus first on the positive aspects of building wealth through service rather than on keeping what they have so I have asked our elub advisors to share ways they use to build wealth. I'll be sharing these in upcoming messages and will end here with a wonderful story about the power of honesty.
Our friend Taita Yatchak (http://www.littlehorsecreek.com/flew up from Ecuador to help us inaugurate the center here at this recent meeting. We sent him a ticket to Miami and arranged for a friend to meet him with a ticket on up to North Carolina. At Immigration the officer asked Taita Yatchak where he was going in the U.S. Don Alebrto said, “North Carolina”. “Where,” the agent asked. “I do not know”, Taita Yatchak replied. “A man is meeting me with a ticket.”
The agent snapped back, “who is the man”. “Rudy,” Taita Yatchak said in his soft, sweet tone. “Rudy who,” he was asked?
“I do not know”.
The immigration officer then told Taita Yatchak he would have to fly back to Ecuador if he did not have a full name and address to give.
Here was Taita Yatchak's reply. “Sir, I have many friends in New York and Miami. If you wish I can give you any of their names and address, but the truth is I am flying to North Carolina and a man named Rudy is waiting for me with a ticket. Would you like me to give you the truth or would you prefer a lie?”
“I see your point,” the immigration officer said as he signed Taita Yatchak through. This true story may have been the most important lesson we received at the course. When we tell only the truth, we gain a inner force and wisdom that have incredible power in every aspect of life including gaining and keeping wealth. Such honesty also brings an ease that helps us enjoy our wealth as well. This is our goal in sharing with you, to help make, keep and enjoy your wealth more. Think about this simple message. The wealth you save could be your own.