Peter Schiff on Renouncing US Citizenship – Gold Videocast
In 2014, a record number of Americans renounced their United States citizenship for the second year in a row. Even though exit fees are rising, more and more people are willing to jump through hoops to escape the American tax man. Indeed, our Chairman Peter Schiff even relocated one of his companies to Puerto Rico last year to reduce its tax burden. From his new condo in Puerto Rico, Peter shares his insights into this new American diaspora and how you can opt-out of overbearing government without leaving your country behind.
Follow along with this full transcript:
Last year in 2014 a record number 3,419 US citizens renounced their citizenship and gave up their US passports. Unfortunately, that record’s not going to last. It’ll likely be broken this year, and again the following year. The reason is taxes. America has the world’s most oppressive tax regime, and the cost of staying compliant is going up. Many Americans living abroad find their US citizenship to be a liability rather than an asset, and they’re willing to spend a lot of money to renounce that citizenship. In fact, up until 2010, the form that you needed to fill out to give up your citizenship was free. In 2010 they imposed a fee of $450, which made the US the most expensive nation with which to renounce your citizenship. Yet people had no problem paying it. Last year, they increased the cost of that form to $2,350. Again, record numbers of people were willing to pay that just for the privilege of renouncing their citizenship.
Now the cost of that form is going to continue to rise with the benefits of giving up your citizenship. The Internal Revenue Service is going to continue to turn up the heat on Americans both here and abroad by making it particularly expensive to comply with those laws, especially now that the US government has enlisted or forced the help of foreign financial institutions in enforcing these tax laws. In fact, the United States is one of only two nations in the world that taxes its citizens on their global – their worldwide – income. In other words, it’s a tax on the privilege of being a citizen. The only other country that does it is a country in Northern Africa that basically nobody has heard of. Even in that country the tax rate on the global income of its citizens is just two percent, whereas in the United States you’re talking about upwards of 40% in a marginal rate of tax. Who knows how much higher that rate might go in the future?
The origin of this worldwide income tax system is in the Civil War. That’s where the income tax was first enacted, along with paper money. We got a lot of bad things that came out of the Civil War. Of course, freeing the slaves was one of the few good things that we got, but we also got the worldwide taxation. The motivation behind it is that when the war started, the Union was having a hard time getting volunteers. The Confederacy had no time and no trouble in encouraging people to volunteer for the cause. But the Union had to resort to constriction, and it was the first time we had draft in this country. A lot of people didn’t want to fight, and they left the country to avoid the draft. The idea of taxing Americans no matter where they lived was, in effect, a way to tax the draft dodgers. They didn’t want people to also dodge the income tax when they dodged the draft. The income tax applied to Americans even if they didn’t live here. But there was two rates– there was 3%, and the top rate was 5%. It wasn’t that bad compared to what we have now, but that’s where the concept originated.
When the war ended, the income tax ended shortly thereafter, and so too did paper money; the greenbacks disappeared. Unfortunately, both have since been resurrected, but in a much worse form. Now the marginal tax rate is not 5% max, it’s above 40%. Instead of the Federal Reserve notes we have now, the greenbacks during the Civil War days were redeemable in gold. They were backed by gold and they were redeemable in gold. Now the Federal Reserve notes are backed by Treasury debt, subprime mortgages, auto loans, and they’re not redeemable in anything.
The US government continues to turn up the heat. I said to American citizens, not only here, but living abroad, who knows how high the cost to buy that form to renounce your citizenship could go? It could go to maybe $10,000 or more. At some point America could be like a giant debtors prison where if you have a US citizenship you can never get rid of it. Now it’s not about dodging the draft, but it’s about dodging your share of the national debt. Americans today are born with an enormous burden – repaying the debts of prior generations. As many Americans decide that they can’t shoulder that burden, that they want to renounce their citizenship and look for more economic freedom in other countries, the cost of giving up that liability is going to get higher and higher. Of course, who knows how much higher income taxes may go in the future, which means the benefit of giving up your citizenship will be that much greater and there the cost of doing it that much higher. But there might be a point of political resistance where there’s no way for the government to try to collect the taxes it needs through taxation, through income taxes.
The most likely source of funding will be through inflation, where the government will simply print the money and spend it into circulation to meet its obligations. Although, it’s not actually meeting them, because it’s repaying them in money that doesn’t buy very much. The inflation tax is going to be one that no American could avoid if they own US dollars, but it’s one tax that you can avoid, and you don’t have to renounce your citizenship. You don’t have to buy an expensive form or pay a tax to renounce. All you have to do is renounce your dollar by holding gold or silver. If you hold real money that the Federal Reserve can’t create, they can’t tax you through inflation.
My advice to Americans who are still living in the United States? You don’t have to renounce your citizenship to avoid or dodge the inflation tax. You just have to renounce the dollar. Obviously not in its daily use; you certainly can spend dollars and transact in dollars. But when it comes to your savings, when it comes to putting away money because you want to access its purchasing power in the future, you need to renounce the US dollar, and you need to save in real money – gold or silver. Something that the Federal Reserve just can’t print into existence at will, something that has real value, and something that you can count on to preserve its value into the future. The cost of renouncing your dollars and acquiring gold and silver is very low.
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When I hear the words Puerto Rico I always think of West side Story and the song that says, “My hearts devotion. Let it sink into the ocean.”
Can I buy the form now and use it in the future? looks like the best investment out there.
Good video. I’m in total agreement about renouncing the dollar by holding your savings in something else. Physical gold and silver are great alternatives but I’d like to suggest another. Crypto currencies are becoming better understood everyday as a means to maintain control over your funds outside the reach of governments. Bitcoin is the first example of this but the problem is price volatility. There are now other options like BitGold and BitSilver that take advantage of the tech behind bitcoin but maintain price stability of particular assets like gold.
There are several options in this space and they are not all equal. Many like bitreserve and Eric Sprott’s gold backed bitGold.com offer gold backed digital currencies but these both have counterparty risks and are subject to the same government confiscation as EGold was and the Liberty Dollar (both were shut down and there reserves seazed). The only fully decentralized option with no counterparty risk is with BitShares BitAssets. These assets are 200% to 300% collateralized and only you have access to them. No government or other third party can take them from you. Please take a moment to better understand what this means and how it works. http://bytemaster.bitshares.org/article/2014/12/18/What-are-BitShares-Market-Pegged-Assets/
There is also good incentive for gold and silver distributors to utilize these BitAssets and earn interest on there holdings and Offer tighter spreads. http://bytemaster.bitshares.org/article/2015/01/22/Use-Gold-and-Silver-with-BitShares-to-bypass-Fiat-Regulations/
Here is an excellent introduction to some of the above concepts regarding BitShares https://www.youtube.com/watch?v=vqTbfbn7Vco&index=1&list=PLjgfpSQFJTLpKmTGCG8FjvDFbfst6F-x5 (series is a work in progress)
I think Peter Schiff is right, but it would be ridiculous to keep gold on U.S. soil where it can be easily confiscated — Hong Kong and Switzerland are much safer.
That’s a fair critique, Dimi. SchiffGold offers a variety of international storage options for investors interested in this strategy. https://schiffgold.com/services/vault-storage/
Yeah…with the bleak economic outlook its a wiser decision to pull the roots and settle somewhere else.
Europe is not a viable place to stay also. The best place would be Asia Pacific…
Believe it or not its better to run to Israel than to stay in US
If you don’t have the gold/silver or whatever the asset is, in your physical possession then I wouldn’t see it as a safe bet. Diversify is better. I guess you could have some in hong kong too if you were that worried. Keep physical metals close, have a little bit coin or whatever crypto currency you like, have cash in hand 3 months salary out of the banks. Buy farmland, have a good garden as food prices will sky rocket if inflation happens.
You still have to pay capital gains tax on precious metals which the government calls investments. What happens if they raise the percentage on capital gains tax or, if as James Rickards speculates, they put a 90% excess profits tax on gold?
Oh….Frank Abelard, my man…If the U.S. gov’t does anything like that, only fools (like those who turned in their gold, under president Roosevelt) might stupidly sell gold “overtly” and not on some version of a black market. Just think of it….first the U.S. gov’t forced the use of a money system on us that is a total fraud….forcing us to lose a huge percentage of it’s value/buying power…then takes even more when we want out of the fraud fiat system….? People will roll out the guillotines on Pennsylvania Ave. before they bend over like that….Bank on that reality…!!!
Peter, Thanks for the perspective from the days of the Civil War.
This adds to what I have learned from other sources about the subversion of personal and state sovereignty during, and as a result of the Civil War. The states created the federal government to serve their collective common purposes, and only those purposes, per the 10th Amendment. The citizenship that many are renouncing currently, is citizenship of the corporate United States, imposed on those who submit, or are not aware of their original citizenship of the Constitutional united States of America, lower case u intentional.
While the Civil War draft was certainly very constrictive of the liberties of those called to military service, the draft is a conscription, rather than a constriction, per se.
[…] threaten your retirement. Peter Schiff announces that in 2014, a record number of Americans renounced their United States citizenship for the second year in a row due to the high American income tax rates. At 39%, the United States […]
Peter, you said that Federal Reserve Notes are “not redeemable in anything”. You are correct. In 2003 the 12 Federal Reserve banks agreed among themselves that they will refuse to honor their statutory obligation to redeem Federal Reserve Notes on demand in “lawful money” (coins authorized by Congress). See Section 411 of Title 12 of the United States Code.
The U.S. monetary system has become a criminal conspiracy and you can discover that fact for yourself by telephoning any Federal Reserve Bank. Those banksters will confirm that they will not redeem Federal Reserve Notes on demand in lawful money of the United States.
The banksters will try to trick you into believing that a Federal Reserve Note can be redeemed with a Federal Reserve Note. You can discover that this is a lie by speaking to the Federal Reserve Agent at any Federal Reserve Bank. The Agent is authorized by law to accept lawful money (U.S. coins) as collateral for the issuance of Federal Reserve Notes. However, the Agent can not and will not accept a Federal Reserve Note as collateral for the issuance of a Federal Reserve Note because, as the Agent will tell you, a Federal Reserve Note is not lawful money (it is only a “legal tender” in so far as it is redeemable for lawful money).
The banksters will try to trick you into believing that lawful money and legal tender are the same things. They will also try to trick you by conflating the redemption of Federal Reserve Notes with the retirement (cancellation and destruction) of Federal Reserve Notes that are no longer fit to be circulated. However, redemption and retirement are totally separate legal processes. So don’t let them trick you.
Please expose their trickery and their conspiracy to violate Section 411.
There is several people I listen too and Peter is one of them.
This is my plan to stay here in the USA. I’m to old to make a move ( 77 ). 8 acres of good ground with a nice garden, chickens, goat for milk. Canning supplies up the gazook. Fish out of the river at the back of my property and over 13,000 oz. silver in a safe place. Two pensions that will probably go away or won’t be worth salt. But for now I still have them so I will continue to buy silver while it is cheap. That’s it folks. If I was young I would get the hell out of Dodge. I feel sorry for folks who have no clue what’s coming. Good luck all.
[…] Reprinted from SchiffGold.com. […]
The real diaspora are the expats, the vast majority of whom don’t renounce their citizenship (a v ery lengthy, very expensive, & very difficult process). A lot of my friends (we’re in Costa Rica) have businesses here, take the $200k Foreign Earned Income Exclusion, as well as other structuring strategies, and keep most of their own money.
Gold is easily purchased and held, without worrying if, during a financial collapse, “Can I get to HK to retrieve my gold?”
Being an American is great, and it has very little to do with being a US subject. The US is done.
“If you like your counrty, you can keep your country…”
That would be conscription, not constriction that the Union used to get soldiers to join. Deadly force was used against protesters, but it didn’t involve the use of tourniquets.
[…] Reprinted from SchiffGold.com. […]
[…] Peter Schiff on Renouncing US Citizenship – Gold Videocast – Peter Schiff’s Gold N…. […]
I would like Peter’s opinion on real estate and leverage to acquire such.
If dollars become worthless, would borrowers be paying back useless currency?
Are there any clauses in typical mortgages that banks could use to protect themselves in such a scenario?
There is a provision I once read about that protects the banks from having/holding a Note based upon worthless inflated dollars……those banks and the Washington PIMPS who sell out to them, cover their ASSesssss but never ours…..! Bank on that reality…!!!
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