Latest / IMI Podcasts / The Mobility Standard #3: David Lesperance - The Bulletproof Backup Plan

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The Mobility Standard #3: David Lesperance - The Bulletproof Backup Plan · IMI Podcasts

• 0:05
  SPEAKER_03: Ladies and gentlemen, it's 7 p.m.
• 0:08
  SPEAKER_03: in Dubai, 3 p.m.
• 0:09
  SPEAKER_03: in Lisbon, 11am in St.
• 0:11
  SPEAKER_03: Kitts.
• 0:12
  SPEAKER_03: Welcome to the third episode of Investment Migration Insider's new podcast, The Mobility Stacker.
• 0:19
  SPEAKER_03: The podcast where we dissect current events, trends, and crucial questions related to investment migration.
• 0:26
  SPEAKER_03: I'm your host, Christian Nissen, editor of Investment Migration Insider.
• 0:31
  SPEAKER_03: And with me in today's episode, I have two co-hosts, Romelio Castanes and Ahmad Abbas.
• 0:37
  SPEAKER_03: Also, in this third episode of the Mobility Standard, we had the pleasure of hosting David Lesperant, an internationally recognized expert on what he himself calls backup plan, by which he means comprehensive structures aimed at protecting your person, your family, and your assets from anything from black swan events and natural disasters to avaricious politicians and criminals.
• 1:03
  SPEAKER_03: We asked David about a range of his favorite subjects, including what's really going on with Americans renouncing their citizenships.
• 1:12
  SPEAKER_03: Some say it's falling, others insist it's at an all-time high, but that the real numbers are being obscured.
• 1:19
  SPEAKER_03: What's the reality?
• 1:21
  SPEAKER_03: Also, what are the latest developments around wealth taxes around the world?
• 1:25
  SPEAKER_03: How are the rich protecting themselves against quickly rising tax burdens by investing in alternative citizenships and residencies?
• 1:34
  SPEAKER_03: As globalization increasingly goes into reverse, and a more regionalized, geopolitically less stable world emerges in the wake of COVID, what does a bulletproof backup plan look like?
• 1:46
  SPEAKER_03: If you want to keep being able to enjoy global freedom to travel and trade and settle, what flags do you need to plant and where?
• 1:54
  SPEAKER_03: Also, at the very same time that the highest earners have discovered they can work remotely, the states and countries in which they live have decided to raise taxes drastically.
• 2:06
  SPEAKER_03: A lot of them will be asking, why shouldn't I move to a lower tax jurisdiction?
• 2:11
  SPEAKER_03: What will the political reflex in rich countries be to that?
• 2:14
  SPEAKER_03: Is it the proliferation of citizenship-based taxation?
• 2:18
  SPEAKER_03: All of that and a lot more in today's episode.
• 2:22
  SPEAKER_03: I'd like to remind you that you can follow all of my stories on our website, iMydaly.com, and on our mobile phone apps, our free newsletters, as well as on your favorite social media network.
• 2:34
  SPEAKER_03: You can also follow this podcast on Spotify, Apple Podcasts, and most other podcast platforms.
• 2:40
  SPEAKER_03: With the preambles out of the way, let's get this show on the load.
• 2:49
  SPEAKER_03: Okay, I'd like to welcome to the show David Lesbrands, the man with the backup plan.
• 2:56
  SPEAKER_03: David, we are hearing different claims regarding the US expatriation trend.
• 3:02
  SPEAKER_03: Some say that fewer Americans are renouncing their citizenships, and others are claiming that they're reaching record highs, but that the numbers are simply underreported.
• 3:11
  SPEAKER_03: The only thing that's clear, it seems, is that a minority of those renouncing are included in the so-called expat list.
• 3:18
  SPEAKER_03: So, David, can you tell us what is really going on and what's driving renunciations among Americans?
• 3:28
  SPEAKER_02: The list that you're referring to is the quarterly expatriation list, which does not cover everybody who has given up U.S.
• 3:36
  SPEAKER_02: citizenship.
• 3:37
  SPEAKER_02: What it does include are what are called covered expatriates, those who've renounced their citizenship or their long-term resident alien status, but who have 2 million or more in worldwide assets as of the day that they do that, or they've had in the previous five years 171,000 average U.S.
• 3:58
  SPEAKER_02: tax liability, or who have not filed their will not certify that their taxes for the previous five years have been updated, which is actually quite rare.
• 4:09
  SPEAKER_02: The way that you accumulate all that information there is one part that is done by the State Department, the other part is done by the IRS, and by the time that is all gathered together, the list that is published is really looking at um events that occurred 18 to 24 months previously.
• 4:29
  SPEAKER_02: So the last w list, which was issued this spring, was really looking at things that were happening in the third or fourth quarter of 2019.
• 4:38
  SPEAKER_02: And in 20, that third or fourth quarter was of course the Democratic primaries where you had Senator Warren and uh Senator Sanders talking about a wealth tax.
• 4:50
  SPEAKER_02: And we saw that that trend continued a pretty steep climb that had been occurring for the last few years.
• 4:57
  SPEAKER_02: Now I'm gonna go way out on a limb and say that in about another year or so, when we start seeing the results of what was happening in the second, third, and fourth quarters of 2020, you're gonna see that drop off a cliff.
• 5:14
  SPEAKER_02: Not because it wasn't a great desire to expatriate, but because all the embassies and missions where you have to have your renunciation or follow your your relinquishment of your green card were closed.
• 5:28
  SPEAKER_02: Now, one of the interesting things is um I have clients who are trying to expatriate right now, and one of the more trying um difficulties we have is actually getting uh appointments.
• 5:43
  SPEAKER_02: Uh I'm continuing to see that countries where vaccinated Americans can travel to, the U.S.
• 5:50
  SPEAKER_02: missions are still refusing to schedule interviews because they're claiming because of COVID.
• 5:56
  SPEAKER_02: Of course, that's not really a a valid reason.
• 6:00
  SPEAKER_02: If you have a child born abroad, you can register them, you can make an appointment for them, you make an appointment for other services that U.S.
• 6:08
  SPEAKER_02: citizen services have, but many of the embassies are not, in fact, scheduling those appointments.
• 6:14
  SPEAKER_02: So you have a huge backlog.
• 6:17
  SPEAKER_02: In fact, the U.S.
• 6:19
  SPEAKER_02: uh embassy in Bern is reporting they have 400 people that are on their waiting list to schedule appointments for renunciation.
• 6:29
  SPEAKER_02: You have to remember that's one of 307 U.S.
• 6:32
  SPEAKER_02: missions abroad.
• 6:34
  SPEAKER_02: What you're looking at is the numbers will not at all reflect either the demand or the people who are able to get to a U.S.
• 6:42
  SPEAKER_02: mission where they can get an appointment.
• 6:45
  SPEAKER_02: So until that really opens up again, you're going to see a drop-off because of COVID and inability to schedule appointments.
• 6:53
  SPEAKER_03: And so that would be interpreted as people being happy Biden got elected, right?
• 6:59
  SPEAKER_02: Exactly.
• 7:00
  SPEAKER_02: I mean, the the there was some press information when that list came out, you know, talking about, well, this was a uh a result of Trumpian.
• 7:12
  SPEAKER_02: Well, I'm sorry, but uh these this was all occurring long before that.
• 7:18
  SPEAKER_02: And you know, before and it was caused by COVID.
• 7:22
  SPEAKER_02: Well, you know, COVID wasn't even a uh twinkle in a bat's eye at the time that those events were happening that were sudden suddenly being recorded later on.
• 7:31
  SPEAKER_00: I recently saw the interview with Roger Vere, who was talking about uh American citizens uh renouncing their citizenship, and he claims that the US government one does not really give out the correct numbers, and he is an example of that.
• 7:47
  SPEAKER_00: They did not uh announce that he renounced his citizenship, and that he expects that you have about 100,000 US per uh citizens renouncing citizenship per year, which is a huge number.
• 8:01
  SPEAKER_00: You're talking about one million in ten years.
• 8:03
  SPEAKER_00: So where do you think that number comes from?
• 8:06
  SPEAKER_00: Does Roger Veer have a correct estimate?
• 8:09
  SPEAKER_02: Well, one thing I do want to say is Roger Veer's name did appear later on on the list.
• 8:14
  SPEAKER_02: Uh I actually sent to Christian the link to the uh section that it appeared.
• 8:20
  SPEAKER_02: Um he's an interesting character, uh, Mr.
• 8:24
  SPEAKER_02: Veer.
• 8:24
  SPEAKER_02: He's he's correct in the trends.
• 8:27
  SPEAKER_02: I think he may be overestimating a bit, but if we look at there's probably say 40 major embassies, and if we're looking at 400, that's that's 16 to 20,000 uh people who are actively renouncing.
• 8:46
  SPEAKER_02: But the more important trend that I'm seeing is for every client that I have that actually is renouncing, I have probably 10 families that are giving themselves the ability to renounce by getting an alternative citizenship and an alternative residence, what I call fire insurance.
• 9:07
  SPEAKER_02: And then they map out a asset by asset because there's a deemed disposition.
• 9:13
  SPEAKER_02: Two events happen when you expatriate.
• 9:15
  SPEAKER_02: There's a deemed disposition for capital gains, and then there's a future taxation if you leave assets to U.S.
• 9:21
  SPEAKER_02: person heirs.
• 9:22
  SPEAKER_02: Um, and so I'm seeing a lot more families get themselves in the position of being able to expatriate, and they're watching very closely what is happening in the United States.
• 9:34
  SPEAKER_02: Ultra-millionaire tax, are we gonna see estate tax changes?
• 9:38
  SPEAKER_02: Are we gonna see capital gains tax changes?
• 9:40
  SPEAKER_02: And they're all kind of preparing themselves to kind of beat Chuck Schumer up the hill, depending on what bill ultimately is going to be put in front of uh President Biden.
• 9:50
  SPEAKER_02: You have to remember traditionally Americans were not looking for second citizenships or residences.
• 9:55
  SPEAKER_02: So they're not as well-educated a consumer base as people, for example, in the in Asia or the Middle East would be.
• 10:03
  SPEAKER_02: So a lot of them are starting really from ground zero and really need to be educated as to what's involved, um, what are the differences between the different options.
• 10:15
  SPEAKER_02: Um I have, can't tell you how many clients I have who gleefully tell me, oh, I have an Irish grandmother, I'll get an Irish passport, which is true, but they have this misconception that the dial 1-800 I am Irish and a leprechaun delivers the passport to them in the next day.
• 10:33
  SPEAKER_02: There's a process, and they have to remember that that they will get it, but their file will sit in a giant pile behind everybody in the UK who before and after Brexit also had an Irish grandmother or uh uh an Irish father who's also applied.
• 10:51
  SPEAKER_02: So the question is again, if you're in a race to beat Chuck Schumer up the hill, and you're looking at the difference between a 23.8% capital gains rate and a 39% capital gains rate, you know, looking at the three or four months of uh uh of processing time for a a Caribbean citizenship, that's a good insurance policy and and well worth the quote unquote premium to avoid the damage of that uh capital gains hit.
• 11:22
  SPEAKER_01: If that were to happen and someone pulls the trigger and renounces citizenship, does that mean that they have to leave the country or can they still uh continue to work here in the United States?
• 11:32
  SPEAKER_01: It seems to me that renouncing citizenship is the ultimate step.
• 11:38
  SPEAKER_01: Uh very hard to unwind that.
• 11:40
  SPEAKER_01: In fact, I think it's almost uh unheard of to be able to come back and say, hey, I changed my mind two, three years later.
• 11:48
  SPEAKER_01: I don't have any stats on that, but it it seems like a pretty definitive step.
• 11:51
  SPEAKER_01: And so how do your clients uh think through uh that step in in uh in its magnitude of not uh giving up that citizenship?
• 12:02
  SPEAKER_01: Does it mean that they have to leave the country, or how are they uh straddling that tax uh savings with uh abandoning uh the United States for good?
• 12:13
  SPEAKER_02: Let me start out when when the clients see the threat of increased taxation, I tell them to treat it as you would if you lived in a wildfire zone.
• 12:21
  SPEAKER_02: So what's the first thing you're gonna do?
• 12:23
  SPEAKER_02: You're gonna engage in fire prevention.
• 12:25
  SPEAKER_02: So you're gonna look at all the domestic solutions.
• 12:28
  SPEAKER_02: So you're gonna look at things like GRATs, for example, which the Zoom uh founder did.
• 12:33
  SPEAKER_02: You're gonna look at at gifting while you have a unified credit still at 11.7 million.
• 12:39
  SPEAKER_02: You're gonna look at things like estate freezes.
• 12:41
  SPEAKER_02: And for many clients, that'll be sufficient.
• 12:44
  SPEAKER_02: But they should also look at, considering the damage, they should also look at fire insurance, the alternative citizenship and residence, and map out.
• 12:53
  SPEAKER_02: Now, if they decide that they're gonna use their fire insurance and and trigger the fire escape plan and leave, the problem is not being able to come back.
• 13:05
  SPEAKER_02: You are a U.S.
• 13:06
  SPEAKER_02: taxpayer, or what's called a US person for tax purposes, if you are one of three things a citizen, which they've just renounced, a green card holder, which they don't you don't kind of revert back to junior membership in Club U.S.
• 13:21
  SPEAKER_02: Um, or you spend too many days in the United States and you trigger something called a substantial presence test.
• 13:29
  SPEAKER_02: Now, the substantial presence test it it's a percentage of two years last year and this year, but effectively think of it as 120 counting days.
• 13:37
  SPEAKER_02: And then you start getting cute.
• 13:39
  SPEAKER_02: Well, the day that you commute from Toronto to to New York is not a counting day.
• 13:46
  SPEAKER_02: So you can so I've got clients whose families are in Toronto who get up on Monday morning, fly into Newark, um, spend Monday, Tuesday, Wednesday, Thursday, Friday in the office, come back, and only Tuesday, Wednesday, and Thursday count towards the counting days for state and federal purposes.
• 14:05
  SPEAKER_02: Unfortunately, the city of New York says if you take a breath in any one of the five boroughs, that's a day for New York.
• 14:11
  SPEAKER_02: But that's a very good arbitrage of moving from U.S.
• 14:15
  SPEAKER_02: federal, state, New York State and City to only New York City tax.
• 14:20
  SPEAKER_02: Um the other thing is the substantial presence test only triggers a presumption.
• 14:26
  SPEAKER_02: That's a rebuttable presumption if you have established tax residence in a jurisdiction which has a tax treaty with the United States.
• 14:35
  SPEAKER_02: So you can take a treaty position, you can spend more than a hundred and twenty-odd counting days, less than six months.
• 14:43
  SPEAKER_02: So the problem is not getting in.
• 14:46
  SPEAKER_02: Now the Reed Amendment, which was brought in in 1996, has never had uh regulations in force, so it's a it's a toothless tiger.
• 14:54
  SPEAKER_02: The problem is not getting in.
• 14:55
  SPEAKER_02: I I like to say it's Homeland Security says, come on in, and the IRS is behind them whispering, and we hope you stay too well.
• 15:03
  SPEAKER_02: Um and so then the question comes as to on what basis are you coming in.
• 15:08
  SPEAKER_02: You can come in uh on a B1B2 status, you know, whether you need a visa depends on what passport you have.
• 15:16
  SPEAKER_02: Uh Canadian, you don't need a visa, or you may be in a U.S.
• 15:18
  SPEAKER_02: visa waiver program, or you may have a long-term B1B2.
• 15:23
  SPEAKER_02: Um, but if you want to do more than than what's allowed under the B1B2, then you're looking at things like E2s or L1s, which are non-immigrant work visa statuses.
• 15:39
  SPEAKER_02: Um and again, you're looking at in an expatriation, you'll have a whole family, only one of which may expatriate.
• 15:49
  SPEAKER_02: It's the same thing when you've got families, a lot of international families, of course.
• 15:53
  SPEAKER_02: The United States is an immigrant destination country, still very attractive for a lot of people.
• 15:58
  SPEAKER_02: So you may have some family members who come in on an EB5, which is going to lead to a resident alien status, which is going to make them U.S.
• 16:07
  SPEAKER_02: taxpayers, but they don't bring in the money, so they don't expose the family wealth.
• 16:12
  SPEAKER_02: So it's looking at the whole family and the family wealth and organizing it in that way to make it very efficient.
• 16:20
  SPEAKER_02: So you have access to the United States without exposing the worldwide family income and assets to U.S.
• 16:28
  SPEAKER_02: taxation.
• 16:29
  SPEAKER_02: Right.
• 16:30
  SPEAKER_03: Now, let me ask you this, David.
• 16:32
  SPEAKER_03: The pandemic, as I see it, has disproportionately impacted the middle and lower income classes, while the high earners, those who work typically in the knowledge economy, have been able to largely sail through it, and in a lot of cases, actually, they've become even richer.
• 16:54
  SPEAKER_03: And in that type of environment, the eat the rich mentality tends to gain popularity.
• 17:02
  SPEAKER_03: So that, coupled with historically large holes in the budgets in countries around the world following a year of stimulus, have driven a lot of countries, I think, to explore quote-unquote solutions like wealth taxes.
• 17:19
  SPEAKER_03: So I'm wondering if you could tell us a little bit about where the wealth tax trend stands right now and some of the other practical manifestations of what you call the populist backlash that you see on the horizon.
• 17:35
  SPEAKER_02: This is, of course, happening in the US, but it's also happening in a number of countries, or I should say most countries, where you are seeing people of means do what humans naturally want to do, which is protect themselves and their family.
• 17:50
  SPEAKER_02: But the people of means have the ability to do that better than the vast majority of the population.
• 17:57
  SPEAKER_02: Governments have responded with stimulus and various deficit funding.
• 18:01
  SPEAKER_02: They're going to need more money.
• 18:03
  SPEAKER_02: And in a progressive tax model, the top taxpayers, whether you think it's fair or not, the top taxpayers produce a very large percentage of the total tax take.
• 18:14
  SPEAKER_02: For example, in the United States, the top 1% produce just under 40% of the total personal tax take.
• 18:22
  SPEAKER_02: And because the United States does not have a VAT that Canada and most European countries have, the United States is extraordinarily dependent on personal tax for its total tax revenue.
• 18:33
  SPEAKER_02: So they need more money.
• 18:35
  SPEAKER_02: And, you know, you can't get blood from a stone.
• 18:38
  SPEAKER_02: My clients recognize that a great percentage of the U.S.
• 18:43
  SPEAKER_02: population doesn't have any extra disposable income to contribute to the U.S.
• 18:48
  SPEAKER_02: tax coffers.
• 18:49
  SPEAKER_02: So it's got to come from them.
• 18:51
  SPEAKER_02: They recognize that, and that's fine.
• 18:54
  SPEAKER_02: But the conversation, if you l listen to the kind of political discourse, um has turned from let's get money for good stuff, recover from COVID, uh maybe medical coverage, infrastructure, et cetera, to let's take money from bad people.
• 19:12
  SPEAKER_02: Let's get billionaires shouldn't exist, you know, pandemic profiteers.
• 19:17
  SPEAKER_02: Um maybe I was still sleepy, but I don't remember the night that Jeff Bezos broke into my room and put a gun to my head and said, you know, you must join Prime or you're dead.
• 19:31
  SPEAKER_02: Um again, it just he had a perfect delivery model which was allowed people to continue to get the goods they wanted at a time of difficulty.
• 19:42
  SPEAKER_02: Uh same thing with um the founder of Zoom.
• 19:46
  SPEAKER_02: Now, wealth taxes is one of the manifestations of that.
• 19:50
  SPEAKER_02: And you're seeing now wealth tax proposals in Mexico.
• 19:53
  SPEAKER_02: Argentina has already brought it in.
• 19:56
  SPEAKER_02: Um the UK has proposed a one-time, of course, one-time taxes my clients rightly assume there's no such thing.
• 20:04
  SPEAKER_02: It's going to be permanent.
• 20:05
  SPEAKER_02: South Africa is considering it.
• 20:07
  SPEAKER_02: Uh, even Singapore has had some some talk about it, although I think the Singaporeans are smart enough to recognize the reason people come to Singapore is because they have a territorial tax, and a wealth tax is not going to really uh be there.
• 20:25
  SPEAKER_01: The feel safe that I you know take comfort in, although it might not be that uh bad anymore, is how difficult it is for anything to get done in Washington.
• 20:34
  SPEAKER_01: Uh and given how tenuous the majority in the Senate is with the Democrats, it's a 50-50 vice president ties uh tiebreaker, uh for anything of that sort, especially a wealth tax, which has never been done to my knowledge in the United States, to go through is is probably uh probably high, uh probably low, the the probability of that.
• 20:58
  SPEAKER_01: In terms of movement from the the coasts, that certainly is uh something that's happening.
• 21:04
  SPEAKER_01: I think California in particular New York both are uh I think optimistic that they'll just revert back once the pandemic is is over.
• 21:14
  SPEAKER_01: Uh but like we've talked about before, that's uh moving here to Florida or Texas is uh a good first step, but you really haven't solved your single country residency risk.
• 21:28
  SPEAKER_01: And if anything, the pandemic showed us is don't uh rely on other governments or other bureaucratic institutions for your travel freedom.
• 21:38
  SPEAKER_01: Uh being able to travel where you want, live where you want is something that you can take action on and not wait for uh the power of the US passport to come back.
• 21:48
  SPEAKER_01: It will.
• 21:49
  SPEAKER_01: Uh but how long will that take and what other what happens if another strain comes in or if some other uncontrollable event?
• 21:57
  SPEAKER_01: And so, yes, I agree with David that this.
• 22:00
  SPEAKER_01: Is about educate educating uh the American uh public that there is this asset class that's uh about empowerment, about uh guiding your own destiny, making your own decisions, and not depending on uh things out of your control in order to have freedom of movement, settlement rights, wealth protection rights, and for those reasons, uh residency and and and passports are an integral part of that type of planning.
• 22:28
  SPEAKER_01: So I think uh with time Americans will make that that right call, like many have all over the world.
• 22:34
  SPEAKER_01: It is something that in a more decentralized world, right, folks are I mean, I think appreciate and take advantage of.
• 22:42
  SPEAKER_03: Yeah, uh Rogelio, I you said uh you called it a uh more decentralized world.
• 22:49
  SPEAKER_03: In many ways, I think that as the American-led global order that we've enjoyed basically since the end of the Cold War is drawing to a close because Americans are now energy independent thanks to the shale oil revolution.
• 23:08
  SPEAKER_03: Uh so they don't need to go to the Middle East to get their oil, so they don't really care so much what happens in that region, and they're more or less self-contained, and the Soviet Union is long gone.
• 23:20
  SPEAKER_03: So the Americans, as I see it, in a more or less bipartisan manner, are sort of losing interest in the rest of the world and leaving a lot of regions around the world free to pick up where they left off on many of the conflicts that they've kept at bay for the past several decades in order to remain on good terms with the Americans and keep access to their consumer markets and their capital markets.
• 23:50
  SPEAKER_03: I see Washington increasingly leaving longtime allies to fend for themselves or at least to pay for their own protection.
• 24:01
  SPEAKER_03: We've seen this in East Asia, Japan, South Korea.
• 24:05
  SPEAKER_03: Um, I think we're moving into a period where globalization to some extent is going into reverse.
• 24:12
  SPEAKER_03: And the pandemic, by very quickly closing borders that will only reopen gradually, uh, also expedited that de-globalization process.
• 24:26
  SPEAKER_03: And I think we'll see more regionalization rather than globalization.
• 24:31
  SPEAKER_03: I think it'll be a long time until I can travel as freely and as easily as I could in 2019.
• 24:38
  SPEAKER_03: So if we assume that this world of frictionless travel, safe and cheap global shipping, and an absence of military conflict among the countries within Washington's admittedly now much smaller sphere of influence is over, then what does a bulletproof backup plan look like?
• 25:01
  SPEAKER_03: If you want to keep being able to enjoy global freedom to travel and trade and settle, what are the flags that you need to plant and where?
• 25:12
  SPEAKER_03: Where do you need to live?
• 25:13
  SPEAKER_03: Where should you keep your money?
• 25:15
  SPEAKER_03: Where should you hold citizenships?
• 25:17
  SPEAKER_03: What does a bulletproof backup plan that gives you full coverage look like, David?
• 25:23
  SPEAKER_02: You have to look at resident citizenship and domiciles as you do any other type of asset class.
• 25:29
  SPEAKER_02: You look at it as a portfolio.
• 25:32
  SPEAKER_02: So some are cash cows, some are stars, some are dogs.
• 25:35
  SPEAKER_02: So you you need to look at each one of them and assess what's my ability to live, what's my ability to hold other assets, i.e., do to allow dual citizenship, uh, is there military service, is there taxation, and you hold a collection.
• 25:53
  SPEAKER_02: So the person in the future, I can see uh as many of the people in the this call have, is they they have assets in different jurisdictions.
• 26:03
  SPEAKER_02: So I have a NAFTA asset, for example, in Canada.
• 26:06
  SPEAKER_02: I have an EU asset.
• 26:08
  SPEAKER_03: Um I could very easily get an asset in another group, uh whether that was a a New Zealand, Australia, Asian countries or what are the principal blocks where you need to plant a flag?
• 26:24
  SPEAKER_03: You you mentioned uh NAFTA area, the NAFTA area, uh the EU, ASEAN.
• 26:31
  SPEAKER_03: What are the other ones?
• 26:33
  SPEAKER_02: I think those are the ones, those are the main kind of groups that you want.
• 26:38
  SPEAKER_02: Uh you want to be careful to always monitor to make sure there's not a military service issue or a banning of dual citizenship, so you have to kind of monitor things all the time.
• 26:49
  SPEAKER_02: Um you need to have something that has not just very good visa-free travel, but low kind of negative political drag on it.
• 27:00
  SPEAKER_02: Um again, I grew up in a family of my older sister and brother who were dual citizens.
• 27:06
  SPEAKER_02: So I remember vividly my brother did not put an American flag on his backpack when he did the kind of Trump through Europe summer.
• 27:16
  SPEAKER_02: There was a Canadian flag.
• 27:17
  SPEAKER_03: Um Yeah, I think it was Doug Casey who first said that uh nobody ever hijacks a plane threatening to kill all the Lithuanians.
• 27:26
  SPEAKER_02: Yeah.
• 27:27
  SPEAKER_02: And so, you know, looking at that, and also, you know, the the you you also have to look at, just as you have asset classes that will change throughout your lifestyle, um you'll throughout your your lifetime, this the same is true.
• 27:42
  SPEAKER_02: So where you are going to be going to college may be different than where you are a young adult, to where you were raising children, to where those children are in university, to where you're retiring.
• 27:52
  SPEAKER_02: So, you know, you need to look at the at the residence and citizenship.
• 27:56
  SPEAKER_02: Now, with regards to money that you referred to, one of the things I always tell tell clients is is we can separate, you know, where you are physically doesn't need to be where your money is.
• 28:06
  SPEAKER_02: So I I call it separating your ass from your assets.
• 28:10
  SPEAKER_02: And so you you and and with today's world um of things like fintechs like transfer-wise, or you you know, you can go online and and see what your your portfolio is, depending on whether you know you have a trust in de facto deserve control issues, you can buy and sell 24 hours, 365.
• 28:31
  SPEAKER_02: So you no longer need to be in a specific location.
• 28:34
  SPEAKER_02: And one of the things about the pandemic is, you know, we all know that kind of uh classic New York poster of the island of Manhattan and New Jersey kind of looks offshore and the rest of the world's very small.
• 28:47
  SPEAKER_02: And there were people who the biggest hurdle to an expatriation, etc., for an American was they couldn't conceive of overcoming life inertia.
• 28:58
  SPEAKER_02: They were so ensconced in Silicon Valley or in Manhattan, and COVID drove them out to put that body in motion.
• 29:07
  SPEAKER_02: The Newtonian law is, you know, a body in motion tends to stay in motion.
• 29:11
  SPEAKER_02: So as they're sitting in the Hamptons listening to Bill de Blasio, they start saying, Well, I've already got a winter place in Miami or in Palm Beach, I'm gonna change residences.
• 29:24
  SPEAKER_02: And so that's that's a fire prevention technique, and we're seeing a large number of them go.
• 29:30
  SPEAKER_02: And you don't again, you have to look at these are the super contributors.
• 29:34
  SPEAKER_02: So you're gonna see an enormous drop-off, you already are, in New York City tax receipts.
• 29:40
  SPEAKER_02: And so that's where the first wave of it, you're seeing people move to places like Florida and and Texas.
• 29:48
  SPEAKER_02: Um, and those kind of bodies in motion tend to stay in motion.
• 29:52
  SPEAKER_02: So a lot of those people are now much more open to the well, gee, I never thought I would leave Manhattan, but here I am, I'm spending a lot of time in Florida.
• 30:02
  SPEAKER_02: Okay.
• 30:03
  SPEAKER_02: Could I limit my time to 120 or 162 days of the year?
• 30:11
  SPEAKER_01: And now a word from our sponsors.
• 30:14
  SPEAKER_01: Hi, my name is Rogelio Casceres, and I'm the CEO and founder of the Global Residency and Citizenship Group.
• 30:20
  SPEAKER_01: Headquartered here in Miami, Florida, we're the only U.S.-based investment firm that provides a globally diversified platform of mobility assets acquired through venture capital, real estate, and private equity investments, both here in the United States as well as in over 20 destinations around the world, including Canada, the Caribbean, Europe, Australia, and New Zealand.
• 30:48
  SPEAKER_03: So now you have a situation wherein, at the very same time that the highest earners have discovered that they can work remotely, the states and countries in which they live right now have decided to raise taxes drastically.
• 31:04
  SPEAKER_03: And to my mind, there's no question that a lot of those high earners will be asking themselves, well, why shouldn't I move to a lower tax jurisdiction or to a lower tax state within the same country?
• 31:18
  SPEAKER_03: What do you, David, what do you anticipate that the reaction will be among governments now that their higher taxes are driving more and more of their uh tax cattle, so to speak, to jump the fence and go to places where they're treated better?
• 31:36
  SPEAKER_03: You think this will drive a proliferation in, for example, citizenship-based taxation, where they say, yeah, yeah, we know you live overseas, but to stay a member in this club, uh, you have to pay your dues.
• 31:50
  SPEAKER_03: Um is citizenship by citizenship-based taxation the natural political reflex, you think?
• 32:00
  SPEAKER_02: The problem with citizenship-based taxation, it worked for the United States because of a uh because the US dollar right now is the is the de facto world currency.
• 32:14
  SPEAKER_02: So they had leverage and they had 30 to 40 percent of the world's equity markets.
• 32:20
  SPEAKER_02: So they were able to go to every financial institution in the world and say, you start giving us up the names of a of everybody, uh, which was the qualified intermediary regime, UBS thought they'd be cute, and that's when we got FATCA, which is really QI on steroids.
• 32:37
  SPEAKER_02: But, you know, a bank in Singapore is not gonna, you know, if Canada says, well, you know, we're not gonna give you access to Canadian dollar correspondent banking accounts, okay.
• 32:48
  SPEAKER_02: Um, you know, we're not gonna get let you access the Canadian equity markets uh for all your your f other clients.
• 32:56
  SPEAKER_02: Okay.
• 32:57
  SPEAKER_02: They just don't have the leverage.
• 32:59
  SPEAKER_03: Um, so you're saying that the reason the US is able to enforce things like citizenship-based taxation and FATCA is that the US dollar is the world's reserve currency and banks around the world need access to things like correspondent banking relationships in the US and access to capital markets.
• 33:21
  SPEAKER_03: But then I have to ask you, David, because if you look back at what's happened to the US dollar just in the last year, I think something like 20-25% of all the dollars now in existence were issued in the last 12 months alone.
• 33:38
  SPEAKER_03: So what happens today the US dollar is no longer the world's reserve currency, uh, which is increasingly likely each time you print more money.
• 33:50
  SPEAKER_03: Uh, when a few years from now it's Bitcoin, for example, that takes on that role.
• 33:55
  SPEAKER_03: What does that do to American leverage over the global financial system and by extension, their ability to enforce citizenship-based taxation?
• 34:07
  SPEAKER_02: Oh, it it it it uh undermines it a great deal.
• 34:11
  SPEAKER_02: Uh, I see that decreasing the ability for the United States to enforce citizenship-based taxation.
• 34:18
  SPEAKER_02: And and you have to remember, the United States first brought in citizenship-based taxation when they first brought in taxation in the Civil War, so that you couldn't have people who would run run abroad.
• 34:30
  SPEAKER_02: Um they then brought it back when they temporarily brought back the income tax to pay for the first world war.
• 34:37
  SPEAKER_02: But they didn't really have a means to find people or to enforce it until in the late 90s they sat back and said, you know, we're tired of negotiating with Switzerland, you know, where where they said, Well, the government of Switzerland, we want you to get your banks to give all this bank information.
• 34:55
  SPEAKER_02: Um, and Switzerland, well, what are you going to give us in return?
• 34:58
  SPEAKER_02: Well, we'll decrease the you know the tariff rate on cuckoo clocks and chocolate, and Switzerland said, No, I don't think so.
• 35:05
  SPEAKER_02: But what happened was somebody in the United States said, Hey, if we cut off, not we don't have to deal with the Swiss anymore, we can go to each financial institution, whether that's a UBS or a Vaglin or a PicTay, and and each one at whatever they are in the food chain and say, you sign an agre you institution sign an agreement with us called a qualified intermediary agreement by this date.
• 35:31
  SPEAKER_02: And if you don't, we're gonna cut off your access to the US markets for all your clients, including your Saudis who want to invest in Apple and every everybody.
• 35:42
  SPEAKER_02: Plus, we're gonna ban U.S.
• 35:44
  SPEAKER_02: correspondent banking relationships.
• 35:46
  SPEAKER_02: Well, every financial institution said, well, we've got to have access to the US, so they signed all of this.
• 35:52
  SPEAKER_02: But that's the that's the kind of peak of the ability for the US to find US persons and to enforce.
• 36:01
  SPEAKER_02: Well, they're still gonna be able to identify US persons, but the their ability to have leverage over those institutions or exchanges, if you're going for Bitcoin, is gonna be less and less.
• 36:17
  SPEAKER_03: That's it for today, folks.
• 36:18
  SPEAKER_03: But we'll be back soon with another episode of the Mobility Standard.
• 36:23
  SPEAKER_03: In the meantime, I encourage you, the listener, to send us the questions you have about investment migration.
• 36:29
  SPEAKER_03: If we're able to answer them, we'll do so during our next episode.
• 36:33
  SPEAKER_03: I want to thank my co-hosts, the inimitable Ahmad Abbas and the illustrious Aurelio Caseres, and remind you to follow our work on imidail.com, the world's number one publication for investment migration, home to the internet's greatest collection of investment migration data, real estate, expert opinion, and the intelligence you need to be a successful investment migration professional.
• 36:55
  SPEAKER_03: Thank you for listening.