Tax – The Inevitable Outcome

Published on: April 21st, 2021

When the biggest economic crisis in history hits, the outcomes become predictable – debasement of debt and taxes …


  • JC
    Jey C.
    21 April 2021 @ 21:31
    Relocating, setting up a strategically selected domicile to operate from and renouncing US citizenship is increasingly a worthwhile endeavor at this point for any American with the minimum means. Get your kids out now before expatriation becomes impossible.
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:19
      Its also an incredibly expensive exercise Jay. The IRS conducts an exit audit and will charge you for renouncing citizenship. Better to arrange your life using corporations or trusts.
    • ji
      joe i.
      21 April 2021 @ 23:04
      Good point no one ever mentions people with children. It's always from an individual perspective.
    • WM
      William M.
      21 April 2021 @ 22:26
      And are you currently an American citizen Jey C.?
  • DH
    David H.
    21 April 2021 @ 21:34
    Isn't it necessary for a US citizen to abandon US citizenship to escape US federal tax, even if resident in Cayman or other jurisdiction? Will not the predicted growth in tax rates occur at the federal govt level?
    • PM
      Philip M.
      22 April 2021 @ 14:54
      *I am not a tax advisor*, but yes... you will likely pay some sort of exit tax for the US. I'm a US citizen who's lived abroad more than 20 years, and I still get to enjoy being taxed as if I never left. That said, there is a $100k allowance, and another $100k or so cost of living allowance (at least where I live). Above that, the US citizen pays the net difference in tax rates if the tax rate is lower. I have fantasies about changing that tax setup, but can't yet bring myself to go there. Bitcoin is taxed as property for US citizens, at the moment, so no tax until you spend it. I would guess that ends at some point with a juicy crypto property tax. Exact disclosures of crypto have been proposed for future US taxes. I bet we'll see that happen soon too.
    • WM
      William M.
      21 April 2021 @ 22:29
      Yes you can't escape the IRS, even abroad. One of only a handful of countries to tax their citizens while abroad. You can of course escape State and Local Taxes by essentially not having a residence in a State. I have heard talk from California and even New York coming up with an exit tax for people leaving the State (as in perceived to be running from "fair " taxation). So citizenship renunciation is currently the only way out.
  • JM
    Jake M.
    21 April 2021 @ 22:07
    what does CIO stand for? Sounds like it's some offshore service to help us reduce tax without actually moving offshore in person? If so, how can this work? By making your investment opaque to your government (possibly illegal)?
    • RP
      Raoul P. | Founder
      22 April 2021 @ 13:34
      Chief Investment Officer
  • TC
    Tash C.
    21 April 2021 @ 22:14
    Raoul, many Caribbean countries have citizenship by investment programs. e.g. St Kitts, Grenada. These are supposedly tax friendly. And the residency/citizenship are way cheaper than Cayman Island. What do you think of those? Would be great if RV could offer an in-depth guide comparing these programs.
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:21
      Very true. Puerto Rico also offers tax advantages for US citizens although the situation is quite complicated. I would definitely seek professional advice.
  • MH
    Malcolm H.
    21 April 2021 @ 22:24
    FYI, your Canadian tax rates ignore our substantial provincial income taxes. Toronto residents currently have a maximum combined federal/provincial tax rate of 54% applicable to incomes in excess of about US$200,000. We also have high taxes on capital gains (27%) dividends (40% to 54%), purchases of goods & services (13%), property, etc. There will be large increases next year. Those interested in low tax rates should look elsewhere.
  • WM
    William M.
    21 April 2021 @ 22:36
    Good paper Raoul. I retired to the People Republic of New York because the scenery is beautiful where I live and I was already "worried" about taxes anyway having followed other services that have been warning for years about taxes going up. Problem is my spouse of 35 years isn't going to play ball with any move to Florida (or Cayman) and would be "annoyed" with a move back to Texas. To be truthful, although very comfortable, I just dont have that extra million or two needed. I guess this is where you tell me I should have gone irresponsibly long BTC when you first said so. That would have got me that extra million I guess !!!!
    • ji
      joe i.
      21 April 2021 @ 23:20
      Well that's what will happen to the genuine New Yorkers we go down with the ship. The scenery is already changing with the seasons. Just 20 mins drive around downtown and midtown offer a nice glimpse into the cities future. Another year and the leaves will start falling off the trees and you will see into the woods...
  • RN
    Ryan N.
    21 April 2021 @ 23:01
    You don’t address the high cost of living in Cayman which can offset the tax advantage.
    • RT
      Remi T. | Founder
      22 April 2021 @ 17:03
      Above $100K yearly income you are better off in Cayman
    • RP
      Raoul P. | Founder
      22 April 2021 @ 13:34
      Yes, you need to have a larger income for it to have real benefits.
  • ji
    joe i.
    21 April 2021 @ 23:13
    I like the Taxes talk. Question: Living offshore during a physical crisis. We keep hearing this new narrative of Cyber threats. The grid along with the internet can go down and take the supply chains with it. How would living on an island that depends solely on exports handle such chaos if it were to last for several weeks or months even. Many people purchasing farms. There is a lot of variables within the next doom and gloom cycle we are all not taking into consideration. This time around will be something we cant look to the past for answers nor solutions this time around will be something that never happened before. Anything is possible.
    • CT
      Chris T.
      22 April 2021 @ 19:32
      Look at Puerto Rico as a prime example. When a big Cat 4/5 hurricane hits your tiny island, the grid/internet/water/food supply chain etc WILL go down. I've lived through many of these storms - and it SUCKS. You'll need to be self-sufficient because the cavalry ain't coming to the rescue. Backup solar + batteries, water filtration system, greenhouse/land for growing food, satellite internet at a minimum. Maybe the tax savings will help pay for it?
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:22
      Depends on the Island. Some are near self-sufficient in some of lifes basics. The problem is spare parts for equipment.
  • TC
    Tash C.
    22 April 2021 @ 00:00
    I'm considering renouncing my US citizenship and get a passport of one of the small island countries. But I find myself having some psychological resistance to the idea. Though I'm having a hard time coming up with concrete reasons of why renouncing citizenship is bad idea. I'm trying to figure out if this is psychological or if there are tangible downside. Appreciate others' views on this.
    • AB
      ANDRE B.
      26 April 2021 @ 19:35
      Harry, you do realize that after 8 years of green card it's the same as if you were a citizen, should you decide to renounce the green card, right?
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:26
      Renouncing US citizenship is expensive. Not just in terms of the legal work but because the IRS will conduct an exit audit and present you with a tax bill. Its one of the reasons I have resisted becoming a US citizen. Greencards have most of the benefits and without the irrevocability of citizenship. Much of what most want to achieve can be done by simply using companies or trusts to arrange ones business affairs, There is a reason why Senator Romney only paid an effective tax rate of 14% the year before running for President.
  • MG
    Miguel G.
    22 April 2021 @ 09:46
    Hi Raoul, I have dual citizenship in Mexico would you consider that to be a tax friendly country or do you think that would be a parallel move from the U.S.?
    • MG
      Miguel G.
      23 April 2021 @ 09:02
      Thanks for your input Harry, much appreciated.
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:28
      Can I have a go at answering this? I think Mexico stands between tax friendly and tax unfriendly. I think taxes are quite high but they are not difficult to arrange ones affairs to avoid. Plus effective tax rates are quite low because enforcement is quite low. But Mexico is also relatively socialist. So the potential liability in future may climb.
    • MG
      Miguel G.
      22 April 2021 @ 09:47
      Really enjoyed this in focus btw I think your on the money with front running this wave of higher taxes in the developed countries.
  • sf
    santiago f.
    22 April 2021 @ 10:15
    Moving to a new country is like starting a new life. Not for everyone. Most people would rather die poor at home than rich alone, I guess. Besides, Cayman and the likes can absorb only so many people. Small islands can only oppose big countries’ wishes to the extent they do not stand against their strategy.
  • NF
    Neal F.
    22 April 2021 @ 13:01
    For what it is worth, I run an RIA and the number of clients asking that we assist them in obtaining permanent residence with a path to citizenship via various country Investor Immigration Programs is high. We could probably justify adding to staff and making it a revenue line item. Some is politically driven, others seem to be urban unrest/deficit/tax driven.
  • AT
    Aleem T.
    22 April 2021 @ 15:12
    Have moved myself & my family from the UK to Dubai, as also agree higher taxes are coming in the West. Am Long BTC /ETH thanks to Raoul. Only part I am torn on is whether to sell my London Residential Investment Properties, which currently are a large part of my net worth.. On the one hand higher taxes, regulations and possibly rent & capital controls (if you believe Ray Dalio) are coming,.. on the other hand as the GBP gets debased being leveraged long hard assets like residential properties in London will probably do well in debased GBP terms.... APPRECIATE THE GROUP'S THOUGHTS OF WHAT TO DO. Thank you.
    • HM
      Harry M. | Real Vision
      22 April 2021 @ 15:31
      The thing about property is that it cannot move - hence "immobilare" in Italian. Right now the UK is very politically resistant to higher property taxes, But higher taxes are inevitable and property has the advantage that it does not run away when you try and tax it. So I would expect property taxes to rise, particularly one high value property. Your best hope is of hiding behind the UK middle class that holds most of its wealth in property. So perhaps better to hold several lower value properties than one ultra high value property going forward. For what little my opinion is worth.
  • GP
    Geoff P.
    22 April 2021 @ 16:12
    It's an interesting discussion. I think the only real chance they have at raising taxes is via class warfare. The economy will simply not handle meaningfully higher taxes... ever. I think MMT will be favored for as long as possible until taxation becomes a way to pacify an angry mob (it is possible UBI can prolong this process longer than we think). By then the real risk isn't the taxes. It's capital flight. The only reason hyperinflation is not a thing with MMT is that there is no capital flight. That will change. When it does, we'll see too many productive assets and too much capital leave the country. You know what happens next. There is nowhere to run.
  • LO
    Leonard O.
    23 April 2021 @ 07:45
    Raoul - any flash update on the btc and eth position? BTFD?
    • RP
      Raoul P. | Founder
      23 April 2021 @ 14:46
      I haven't ever sold a single coin. The update is always keep averaging in.
  • JP
    John P.
    23 April 2021 @ 12:33
    pretty good timing. a day before the Tax announcements. Also the whole Coinbase will be short term bearish for BTC also working out. In a groove, Raoul!
  • RM
    Russell M.
    23 April 2021 @ 20:14
    Intriguing, Raoul, is it possible to ask you something directly offline?
  • RA
    RAMI A.
    24 April 2021 @ 06:07
    Good stuff.. I see echoes of your latest conversation with Diego Parrilla.