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Old 11-30-2009, 05:59 PM   #121
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Hi Samclem,

I do think the broad trends going forward are, in fact, knowable, and some things are a question of when, not if.
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Old 11-30-2009, 08:54 PM   #122
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I just want to get through the next few years without losing a significant chunk of money in some typical asset allocation model that suggests one put money into things that are clearly not going to do well in that timeframe.

Does anyone have an asset allocation theory that doesn't involve physical gold under that scenario?

Whew! Why is this so complicated?
My approach is to include gold and silver certificates, cash flow generating real estate, preferred shares, and ultimately real return bonds....oh, and some venture capital....no more than 5-10% of each.....in a portfolio that includes equities, fixed income and cash (which allocation is increasing), with broad geographical diversification and minimal exposure to the US$. I hope I'm right. Otherwise, I might just as well have bought some artwork. At least I would enjoy looking at it!

I think traineeinvestor's post is really well considered.
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Old 12-01-2009, 12:39 AM   #123
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I think traineeinvestor's post is really well considered.
I agree, and thanks for your ideas, too.

One thing caught my attention in traineeinvestor's post:

Quote:
9. if you are going to surrender your US citizenship, do it sooner rather than later (the same with changing states in the US) - a difficult process may get harder going forward.
Now that's a shocking thought! Is it possible that the U.S. could begin to restrict people in terms of where they live? Where can I find more information about this??
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Old 12-01-2009, 01:50 AM   #124
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One thing caught my attention in traineeinvestor's post:


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9. if you are going to surrender your US citizenship, do it sooner rather than later (the same with changing states in the US) - a difficult process may get harder going forward.








Now that's a shocking thought! Is it possible that the U.S. could begin to restrict people in terms of where they live? Where can I find more information about this??
Thanks for the feedback

To clarify, I was not suggesting that the US government would attempt to restrict where people live or freedom to travel generally to any greater extent than it does at present.

I was refering to the fact that the US taxes its citizens on a worldwide basis - even if you don't live in the US you still have to file tax returns and pay taxes to the US government (subject to some allowances). The US is one of the very very few countries in the world which tax their expatriate citizens on this basis.

My understanding is that legitimately surrendering a US passport to exit the US tax net is currently a difficult and lengthy process. (Apologies, but as I am not a US citizen I have never inquired about the details and am more than willing to be corrected by anyone who has a better understanding.)

If you are expecting tax obligations to increase it would not be suprising if the laws were changed to make it a harder and more protracted process for US citizens to remove themselves from the US tax net in this manner. I have no actual knowledge as to whether such changes are contemplated.

I make no comment on whether anyone would actually wish to surrender their citizenship in order to reduce their tax bill.
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Old 12-01-2009, 02:27 AM   #125
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And you turn in your passport don't forget to pay the "exit tax" to Uncle Sam...
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Old 12-01-2009, 03:13 AM   #126
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1) Societe Generale clearly states that this is not a forecast, but a mere exercise aimed at exploring the possible dangers we are facing.
That's correct. They present three scenarios, so you can take your pick. If you're bearish, like I am, you'll be very interested in the bear scenario, as I was, after weighing the alternative views.

BTW, I just learned that Sir John Templeton passed away back in July. A big loss. He was very instrumental in my thinking about investments, and I admire him greatly. Mostly, I learned not to shy away from bad news--it's extremely valuable from an investment perspective, as there's money to be made under any circumstances. Here's a nice summary of the lessons we can learn from John Templeton.
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Old 12-01-2009, 03:31 AM   #127
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I can't find the post in which I originally posted the link to the Societe Generale report. Does anyone have it?
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Old 12-01-2009, 03:33 AM   #128
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Found it! http://www.zerohedge.com/sites/defau...20scenario.pdf
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Old 12-01-2009, 03:46 AM   #129
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And you turn in your passport don't forget to pay the "exit tax" to Uncle Sam...
If you have over $2M in assets, with the first $650K exempt....
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Old 12-01-2009, 04:04 AM   #130
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Traineeinvestor, thanks for the heads up on the "exit tax". Very informative.... and I really appreciate your insights....

What about the "changing states" part of your post? Are you referring to the petition circulating in California that would tax people at something like 55% of their assets if they leave?
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Old 12-01-2009, 04:25 AM   #131
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Given the media's bias towards sensationalism, it is not surprising that the media chose to focus exclusively on that particular scenario. However, it does not make that scenario any more likely than the two other, less bearish scenarios.?
Did you notice the title of the report?

"Worst-case debt scenario: Protecting yourself against economic collapse"

Not surprising that's what the media chose to focus on.
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Old 12-01-2009, 06:05 AM   #132
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What about the "changing states" part of your post? Are you referring to the petition circulating in California that would tax people at something like 55% of their assets if they leave?
I was not aware of the petition you refer to. Given the media attention on people leaving high tax states to live in no or low tax states, I'm not surprised. Hopefully it will fail - the implications would be horrific on a number of fronts. Much like my comment on surrendering US citizenship (or a green card), it was intended to anticipate the possibility that revenue hungry governments at the state level will make it harder for people to escape the state level tax net.

Living in HK, I have several US colleagues and friends - all of whom try to bring their state residency to an end when the migrate to Hong Kong for anything more than a short period of time. Why pay a tax if you have no legal obligation to do so?
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Old 12-01-2009, 10:20 AM   #133
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Thanks for the feedback

To clarify, I was not suggesting that the US government would attempt to restrict where people live or freedom to travel generally to any greater extent than it does at present.

I was refering to the fact that the US taxes its citizens on a worldwide basis - even if you don't live in the US you still have to file tax returns and pay taxes to the US government (subject to some allowances). The US is one of the very very few countries in the world which tax their expatriate citizens on this basis.

My understanding is that legitimately surrendering a US passport to exit the US tax net is currently a difficult and lengthy process. (Apologies, but as I am not a US citizen I have never inquired about the details and am more than willing to be corrected by anyone who has a better understanding.)

If you are expecting tax obligations to increase it would not be suprising if the laws were changed to make it a harder and more protracted process for US citizens to remove themselves from the US tax net in this manner. I have no actual knowledge as to whether such changes are contemplated.

I make no comment on whether anyone would actually wish to surrender their citizenship in order to reduce their tax bill.
The ability to renounce US citizenship and stop paying taxes exists today (with limitations and time frames) if you are prepared to jump through the hoops. It is only "really" onerous if you are leaving with substantial (millions) unrealized capital gains.

The real issue, if it occurs, is not the ability to move outside the country, or taxes for that matter. It is capital restrictions (capital exiting the US and the dollar).
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Old 12-02-2009, 05:32 AM   #134
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I guess the real question is "the real issue for whom"?

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The real issue, if it occurs, is not the ability to move outside the country, or taxes for that matter. It is capital restrictions (capital exiting the US and the dollar).

For whom is this an issue? Is it an issue for you? For the average american? For the person exiting overseas? Capital leaving the U.S. is an issue for the U.S., but is it an issue for the person leaving? Not sure what you're referring to...
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Old 12-02-2009, 05:37 AM   #135
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Living in HK, I have several US colleagues and friends - all of whom try to bring their state residency to an end when the migrate to Hong Kong for anything more than a short period of time. Why pay a tax if you have no legal obligation to do so?
This is a good question... was it difficult on patriotic terms, at least? Did they have no plans to return? Wondering what the cost, even in emotional terms, are of surrendering U.S. citizenship....
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Old 12-02-2009, 06:11 AM   #136
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Living in HK, I have several US colleagues and friends - all of whom try to bring their state residency to an end when the migrate to Hong Kong for anything more than a short period of time. Why pay a tax if you have no legal obligation to do so?









This is a good question... was it difficult on patriotic terms, at least? Did they have no plans to return? Wondering what the cost, even in emotional terms, are of surrendering U.S. citizenship....
I was refering to bringing state residency to an end not national (i.e. US) citizenship so they would not have to pay state income taxes. Apologies if that was not clear.
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Old 12-02-2009, 07:53 AM   #137
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I was refering to bringing state residency to an end not national (i.e. US) citizenship so they would not have to pay state income taxes. Apologies if that was not clear.
What is meant by "state residency"? Sorry for being obtuse.
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Old 12-02-2009, 11:59 AM   #138
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I guess the real question is "the real issue for whom"?




For whom is this an issue? Is it an issue for you? For the average american? For the person exiting overseas? Capital leaving the U.S. is an issue for the U.S., but is it an issue for the person leaving? Not sure what you're referring to...
Generally speaking, the issue will affect anyone who wants to convert dollars into another currency (or could even be into commodities-like gold). Clearly, if you still reside in the US it is less of an issue as your expenses are in dollars. However, if you leave the country that is no longer the case.

The basic idea is to stop a run on the currency.
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Old 12-02-2009, 12:07 PM   #139
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I was refering to bringing state residency to an end not national (i.e. US) citizenship so they would not have to pay state income taxes. Apologies if that was not clear.
I would have thought that as long as you do not maintain a residency in a particular state (i.e. you are in any one state more than six months) you can legally not pay state income taxes.

I suppose it may get more complicated when you have to deal with drivers licenses, etc (you still have a tie to a particular state administratively). But living in Hong Kong I would have thought you could deal this with an international license, for example.

Obviously this is much different than renouncing citizenship.
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Old 12-02-2009, 03:50 PM   #140
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I would have thought that as long as you do not maintain a residency in a particular state (i.e. you are in any one state more than six months) you can legally not pay state income taxes.

I suppose it may get more complicated when you have to deal with drivers licenses, etc (you still have a tie to a particular state administratively). But living in Hong Kong I would have thought you could deal this with an international license, for example.

Obviously this is much different than renouncing citizenship.
State residency is complicated. Most do not clearly define how residency is established or ended. High tax states like California and NY often place the burden of proving non-residency on the individual, especially when income is higher immediately after leaving. Folks leaving those states to live abroad but without changing domicile of their financial accounts face serious tax challenges and do not always prevail.
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