| Since the 1920's personal income tax has been | | | | This leaves her with about US$118,000 to do as |
| steadily rising in most western countries, as their | | | | she pleases, be that a donation to her favorite |
| citizens slowly yet surely move further down the | | | | charity, or whatever. |
| road to serfdom. | | | | Realize the US$120,000 does not include stamp |
| Based on OECD statistics (2006) the average | | | | duty on the sale of her investment property, |
| income tax paid throughout OECD countries by a | | | | goods and services taxes, local council rates, |
| worker on the average wage is about 37% of | | | | petrol tax etc. The US$120,000 therefore, is |
| gross salary. | | | | direct tax alone. |
| When you realize these figures do not include | | | | Some individuals are definitely not getting value |
| indirect taxes such as local council rates, goods | | | | for their tax dollars in high tax countries, and it is |
| and service tax, stamp duty on property, | | | | usually the productive that bear the burden of |
| customs etc., it is conservatively estimated | | | | income redistribution schemes. The higher your |
| workers on the average wage throughout OECD | | | | income, the higher your tax burden, without any |
| countries are losing some 40% of their LIFETIME | | | | additional benefits over those paying no tax at all. |
| earnings in tax. | | | | In stark contrast to drowning in a stormy see of |
| Given most of the countries in the Middle East are | | | | tax, anyone aspiring to a tax free lifestyle will find |
| tax-free, it is an irony that those working in the | | | | it is well worth the effort. |
| Middle East under monarchy, have greater financial | | | | In general terms the strategy is as follows: |
| freedom that those working in most of the | | | | 1. Accumulate sufficient funds to be able to live |
| western countries of the world under democracy. | | | | off the income derived from capital. |
| A professional woman working in a typical | | | | 2. Invest the funds in income producing |
| western country recently completed her 12 page | | | | investments via a tax haven, where not only |
| tax return, with the help of 3 instruction booklets | | | | income tax but also capital gains, inheritance tax |
| totaling about 300 pages. It resulted in a tax bill of | | | | etc. are zero. |
| some US$70,000 in direct tax alone. | | | | 3. Arrange your affairs such that you are not |
| She is 50 years old, married without children and | | | | resident in any country long enough to be liable |
| visits the doctor at most once a month. Because | | | | for tax. Alternatively, arrange residence in a tax |
| of the dubious state of the public hospital system, | | | | haven where income from offshore investments |
| she additionally pays for medical insurance to | | | | is tax free. |
| cover private hospital care. | | | | Even if the tax-free lifestyle is not for you, at a |
| Thanks to rising property prices over the last 4 | | | | minimum you can consider locating your funds |
| years, she will make some US$200,000 in capital | | | | offshore, such that they are potentially free of |
| gains on an investment property she owns. Of | | | | taxes at a later date. If not for yourself, then at |
| the US$200,000 she will lose some US$50,000 in | | | | least consider this option for the sake of your |
| capital gains tax. | | | | heirs. |
| Because her net worth will disqualify her for a | | | | Given the rising trend in taxes thus far in most |
| government pension in retirement, it all amounts | | | | western countries, it is highly likely tax will be |
| to some US$120,000 in tax for a trip to the | | | | more rather than less in the future. It is bad |
| doctor once a month! | | | | enough now; do you really want to be around |
| If she took out international medical coverage | | | | when it gets worse? |
| with a reputable health insurer, she would pay | | | | In fact why not visit and make this year's tax |
| about US$2000 per year in premiums for | | | | return your last? |
| comprehensive health care in private hospitals. | | | | |