Action Plans and Contingency Options You Can Implement
- Yes, you can step away from a rotten system… here’s how.
- You still have many options to improve your financial situation.
Following the re-election of Barack Obama, a surge in secessionist sentiment embarrassed the Administration and unnerved the mainstream media. Nearly 1 million Americans across the country signed petitions to the White House demanding the right of their state to secede from the union.
Of course, the White House won’t do anything with these petitions but dismiss them, and secession by force of arms doesn’t appear to be viable at this time in any of the 50 states (Texas produced the most signatures). But that doesn’t mean you can’t develop your own “secession” plans to opt out of some of the financial and political restrictions on your wealth and freedom.
You won’t be able to achieve absolute freedom. But you can increase it on a relative basis in particular areas by thinking like a rebel.
Secede from the Dollar
The Obama dollar is destined to lose value, with an outside chance of a total collapse, on his watch. President Obama can’t stop you from seceding from the U.S. dollar in your investments and even in your commerce, at least to a large extent.
You are required to denominate your wealth in dollars for tax purposes, but you are not required to hold your wealth in dollars. You can hold it in any currency or combination of currencies you’d like. You can hold it in precious metals or any other tangible assets and legally use them for barter. You can venture into speculative “e-currencies” such as Bitcoins, which are unconnected to the banking system – though their future legal status is in jeopardy (Senator Charles Schumer is vowing to ban transactional platforms based on non-dollar, non-traceable methods of payment).
From a practical standpoint, you can convert your 401(k) or IRA to hard assets (gold, silver, real estate, etc.) and/or foreign assets (stocks, bonds, currencies, etc.), be as completely out of the dollar as you’d like, and not have to worry about currency conversion or tax liabilities until you actually take money out.
Secede from the Banking System
Why rely entirely on U.S. financial institutions for your banking and investing needs? You need not be held captive to the risks and restrictions inherent in the U.S. banking system. A world of opportunities in safe, sound, and innovative banks exists outside the U.S.
The reasons people open foreign accounts include currency diversification, access to international financial products and services that aren’t available in the United States, and greater privacy protection. It has become more difficult for U.S. citizens to open foreign accounts in recent years thanks to a host of new U.S. regulations. A lot of banks won’t even deal with U.S. citizens anymore, and those that do will probably demand a lot more paperwork than they used to – limiting (but not eliminating entirely) the privacy advantages.
Offshore banking expert Simon Black suggests opening an account with HSBC Hong Kong as a “shortcut” into offshore finance. Because HSBC has branches in the United States and all over the world, you can open and access an account in just about any major country. You may be able to open an account in Hong Kong, for example, by contacting a branch in that country, then finalizing the paperwork at a U.S. branch. Though you may get the run around about whether you can open a foreign account as an American, Black says that if you are persistent “it WILL happen.”
Caution: If you hold more than $50,000 in aggregate assets within foreign accounts, you must report this on your tax return. Failure to do so risks getting you in hot water with the IRS.
Secede from Your State
If you can’t change your state’s politics, you can change your state. One movement, called the Free State Project, seeks to get freedom-minded people to move to New Hampshire (which has no general sales tax and no income tax on wages) to agitate for liberty. The movement hasn’t had much effect on statewide elections as of yet, but it has raised the ire of local politicians.
New Hampshire State Representative Cynthia Chase (D-Keene) was quoted in January as complaining, “Free Staters are the single biggest threat the state is facing today. There is, legally, nothing we can do to prevent them from moving here to take over the state, which is their openly stated goal. In this country you can move anywhere you choose and they have that same right. What we can do is to make the environment here so unwelcoming that some will choose not to come, and some may actually leave. One way is to pass measures that will restrict the ‘freedoms’ that they think they will find here.”
Talk about vindictive! Unfortunately, it’s an attitude often held – even if rarely expressed so candidly – by bureaucrats and politicians toward citizens who dare to seek more freedom.
Be that as it may, New Hampshire does still top the list of the freest state rankings, as assembled by the Mercatus Center in 2011. Its rankings are based on taxes, regulations, civil liberties, and other factors. There’s nothing that officials in high-tax, high-intrusiveness states can do to prevent freedom-minded citizens from fleeing to relatively freer jurisdictions.
A cautionary note about New Hampshire: its economy is dominated by Massachusetts, which is on the list of least free states, and New Hampshire’s post-2012 political landscape is left-leaning. It has become a reliably blue state in national elections, the only one on the list of five freest.
5 “Freest” states
5 “Least Free” states
Business owners especially should take note of incentives for “seceding” from high-tax states. As our sister publication Money, Metals, and Mining (January 2013) notes, “Some states will provide low taxes or even no taxes for certain types of businesses at times, to reestablish themselves in their jurisdiction. California, for example, has such huge demands on businesses that many have decided to leave the state and move elsewhere. Illinois is another example; in January 2011, Illinois increased the personal income tax by 67% and the corporate tax rate by 9.5%.”
Drastic Option: Secede from the United States
Leaving the country entirely is a more drastic step that not everyone will or should consider taking. But you should at least know that it can be done, so you can consider it as a contingency plan in case worse comes to worst.
Some people expatriate for career or business reasons. Others do it for lifestyle reasons. And increasingly, people are doing it for retirement (some countries, such as Panama, offer special incentives to lure in retirees, especially those with wealth).
The vast majority of Americans who expatriate remain U.S. citizens. But over the past year, larger numbers of wealthy Americans have taken the step of renouncing their citizenship. When young Facebook billionaire Eduardo Saverin announced last year that he was doing so, he got demonized and threatened with punitive taxes by members of Congress. Expats of means now face an “exit tax” (after using up their $600,000 exclusion) among other obstacles.
The obstacles to expatriating and opening foreign accounts will probably only get more severe in the years ahead, as the financially desperate federal government seeks to avert capital flight and the loss of precious tax revenue. Now’s the time to think about exercising some of the options that do still exist, before they disappear.