NASDAQ green lights seedless watermelons to join company boards

NASDAQ is one of the largest stock exchanges in the world and home to most of the biggest names in tech.

Companies worth a total of $17 TRILLION– nearly the entire size of the US economy– are listed on the NASDAQ exchange, including Google, Apple, Microsoft, Facebook, and Amazon.

You’d think the executives behind NASDAQ would be remarkably sharp people who understand what it takes to build and run a wonderful business.

But here we are again with another sign that the world has lost its mind.

NASDAQ has now joined with other woke warriors in trying to mandate that all of its listed companies meet minimum diversity requirements.

Specifically, the wonderful wizards of WOKEDAQ insist that every company should have at least one woman on its board, plus one person who is either an ethnic minority or LGBTQRSTUVWXYZ.

(I can only imagine how ridiculous annual reports will become once companies have to start disclosing details of the private lives of their new lesbian directors.)

WOKEDAQ justifies its position by claiming that “the benefits . . . of increased diversity are becoming more apparent. . .

I just love this statement. They’ve already taken it as a foregone conclusion that board diversity makes a better company.

I wonder if they’ve read any one of the dozens of studies showing that board diversity does not, in fact, improve a company’s performance.

The University of Pennsylvania’s famous Wharton School of Business, for example, analyzed dozens of studies of corporate diversity requirements that specifically demand women on company boards:

“Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse.

What a shocker! It turns out that the absence of a Y chromosome makes absolutely no difference in someone’s qualifications!

Could that possibly be because, deep down, we’re all made up of the same stuff… and someone’s sex organs and ethnicity are completely irrelevant when it comes to business and finance?

But WOKEDAQ can’t comprehend this simple truth.

What’s even more revolting is how WOKEDAQ defines terms in its proposal, like when they say that one Board Member should be an “underrepresented minority”.

Then they go on to define what constitutes an “underrepresented minority.”

It reminds me of the historic language from a past civilization that also used to be obsessed with ethnicity and sexual orientation– Nazi Germany.

At its annual rally in Nuremberg in 1935, the Nazi government drafted a strict legal code defining a Jew as someone who had at least three Jewish grandparents. It didn’t matter if you were a member of the Jewish faith; it was merely about your ancestry.

(I can only imagine some corporate board members will now feel compelled to take DNA tests so they can say, “Look! I’m 12% Native American! I’m still qualified to serve on the board!!”)

Ironically, being Jewish does not qualify as an underrepresented minority, at least according to WOKEDAQ’s definition.

In fact there are many other ethnicities, nationalities, orientations, and personal identifications that don’t fall under WOKEDAQ’s proposal.

If you’re a disabled veteran whose legs were blown off in Afghanistan, for example, your perspective isn’t diverse enough to be considered valuable by WOKEDAQ.

Ditto if you’re a refugee from Afghanistan who was orphaned by a US airstrike. WOKEDAQ doesn’t think your perspective is diverse enough either.

But if you identify as a seedless watermelon, WOKEDAQ is giving you the green light to join a corporate board and be showered with millions of dollars of stock options!

It’s so wonderfully progressive!

Honestly I cannot think of anything more insulting to a human being than to advance them, not due to their talent, but because of irrelevant identity features.

Competence and character should be the only things that matter. And those qualities exist irrespective of someone’s gender, ethnicity, and sexual orientation.

Focusing on how someone ‘identifies’ totally misses the point. The only question to ask is ‘Who is the best person to do the job?’

And if the answer turns out be a Board of Directors that is comprised entirely of pansexual, non-binary Wiccan martians who identify as seedless watermelons, then so be it.

But WOKEDAQ wants to judge you by the color of your skin, not by the content of your character. If your skin tissue contains a certain amount of melanin, you’re qualified. If not, you’re unqualified.

WOKEDAQ also thinks it matters whether or not you have a penis. And they they REALLY think it matters if you have a penis, but identify as someone without a penis.

They care who you sleep with, who you’re attracted to, and all sorts of things that are completely meaningless in terms of your value as a human being.

No one should EVER be regarded as more qualified, or less qualified, simply because of their ethnicity, gender, or sexual orientation.

But to WOKEDAQ, these are the qualities that matter: sex organs and skin color.

They don’t care whether your skills can create more value for the organization, or whether you even have any experience.

And they damn sure don’t care who the shareholders, i.e. the actual OWNERS of the company, choose as their elected leaders.

Ironically as I’m about to hit SEND on this missive, I’ve just found out that Alexandria Ocasio-Cortez is now selling horrendously overpriced $58 sweatshirts (plus shipping) that say “Tax the Rich.”

All proceeds are considered campaign contributions… so the Queen Marxist herself is relying on capitalism to promote socialism and keep herself in power, while one of the largest stock exchanges in the world tries to take away your right to choose your own company directors.

This pretty much sums up the world in 2020. And yet it only scratches the surface of how much more absurd everything is about to become.

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4 Reasons to Consider Portugal for Your Plan B

In September 1968, after four decades iron-fisted rule, Portugal’s de facto dictator, António de Oliveira Salazar, suffered a freak accident that caused a massive brain hemorrhage.

Miraculously he survived. But he never recovered from the injury, and his enemies seized on the opportunity to remove him from power.

Salazar had ruled since 1932. You don’t hear much about Salazar because, compared to his contemporaries like Hitler, Mussolini, and Stalin, he wasn’t so bad.

But his policies completely ruined Portugal’s economy.

In 1967, the last full year of Salazar’s rule, the per-capita income in Portugal was about $420 per person. That was, by far, the lowest in Western Europe, and less than 1/10th the per-capita income in the United States.

And, like Stalin, Mussolini, and Hitler, he maintained control using secret police, arbitrary arrests, media censorship, a ban on free speech, and suppression of political opposition.

But once Salazar was out of the way, everything changed. Portugal became much more free and economically liberated. The economy grew leaps and bounds, eventually catching up with the rest of Europe.

Today Portugal remains an advanced economy, with a vibrant culture, friendly people, and great weather. It’s also a lot cheaper than many of its European counterparts.

We’ve written about Portugal a lot as a prospective Plan B option–

For starters, Portugal has several attractive residency options. With legal residency, you can live, work, study, and invest in Portugal with no restrictions.

That’s a pretty solid backup plan these days, especially for Americans who are finding their passports hold little power to unlock doors to Europe due to COVID-19 travel restrictions.

One way to become a resident of Portugal is to take advantage of what I’d consider Europe’s best “Golden Visa” program.

Golden Visa Programs offer residency in exchange for an investment in the country, usually in real estate.

Portugal’s Golden Visa program allows you to obtain permanent residency for as little as €280,000 using a special discount if you buy a rural property in a sparsely populated area. Usually the program requires an investment of €350,000 or more.

Another way to become a resident of Portugal is through the D7 visa, where you just need to prove that you won’t be a burden to the local social system.

No investment is required with a D7 visa, but a single person needs to show around €10,000 saved in your bank account to qualify– more if you want to include a spouse and kids.

A second reason to consider Portugal is the “Non-Habitual Resident” (NHR) tax regime it offers residents for their first decade living in the country.

For ten years, you can be legally exempt from Portuguese taxation on your foreign (non-Portuguese) income, as long as you meet certain conditions.

And what’s really great is that both the D7 and Golden Visa residencies can lead to citizenship after five years– the quickest timeline in the European Union.

(With a second citizenship from Portugal, you will have an opportunity to live, work, study, invest, and retire not only in Portugal… but also in any of the 27 countries comprising the European Union.)

And if you go the Golden Visa route, you can obtain citizenship after visiting Portugal for only a minimum required average of seven days a year.

So you can essentially buy a home in Portugal, vacation there for a week each year, and after five years, you can apply for citizenship.

Now Portugal has added one more great feature to its lineup.

Portugal just updated its laws so that, effective immediately, any child born on Portuguese territory automatically becomes a Portuguese citizen, IF at the time of birth, at least one of the parents has been a legal resident of Portugal for one year or more.

It may sound strange at first, but having a baby in a foreign country which grants birthright citizenship is an amazing gift for your child.

It means they will always have more options and freedom. One country won’t be able to hold them hostage with a monopoly on their ability to travel across borders.

Remember, people pay millions of dollars for European citizenship, and you could give the gift practically for free.

About 30 countries offer this; the legal concept is called jus soli, or right of the soil. It means that any child (in most cases) born on the country’s soil will automatically obtain citizenship.

Most countries in North and South America follow jus soli, including Argentina, Brazil, Chile, the US and Canada to name a few.

But Portugal is one of the rare desirable European countries, with a high quality passport, to offer it.

50 years ago, it would have been insane to try to move to Portugal; it was poor, backward, and dangerous. But today, it’s a fantastic option.

And this follows the pattern that we see with some other great Plan B destinations, like the former Soviet countries of Georgia or Estonia.

The world is constantly changing. But if you are willing to change with it, you can always stay one step ahead.

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Puerto Rico Act 20 & 22: Guide & Personal Experience (Copy)

Puerto Rico Tax Incentives:
Ultimate Guide & My Personal Experience
With Act 20 & Act 22

When I wake up and see the ocean in front of me, I have to pinch myself. 

Here I am, living in a beautiful place that’s part of the United States… yet I pay ZERO US federal income tax, only a 4% corporate tax for my businesses and ZERO capital gains and dividends tax. 

I’m still a US citizen, and this is all perfectly legal. 

I’m simply using the existing rules to live a comfortable lifestyle in paradise.

You too can have this type of lifestyle and tax advantages– especially if you are one of the many people now working from home and realizing, you can work from anywhere.

Impossible! How could these tax incentives be true?

I’ll be upfront. Sure, Puerto Rico has its share of challenges.

As COVID hit in March 2020, Puerto Rico issued one of the first, and one of the strictest, lockdowns in the US. And milder forms of draconian COVID measures have continued to harm the tourism and hospitality industries ever since.

And this isn’t Puerto Rico’s first rodeo.

As you probably recall, Hurricane Maria pummeled Puerto Rico in September 2017. It took a big toll on the island’s infrastructure, tourism industry, and caused about 130,000 people – nearly 4% of the population – to leave.

But Puerto Rico’s problems started well before Maria arrived.

The island has some serious economic issues. Puerto Rico has $74 billion in bond debt and another $49 billion in unfunded pension liabilities. Back in 2010, the unemployment rate was nearly 17%. And the unemployment rate didn’t drop below double-digits until 2018.

To deal with these kinds of issues, other governments would probably follow the usual playbook, starting with oppressive tax hikes. They would try to squeeze the remaining residents for more revenue.

But not Puerto Rico. They got creative.

The view from my balcony…

Smart, local leaders have responded to these challenges in a unique, promising way: They’ve created these amazing tax incentives to lure productive individuals and their successful businesses to the island.

Puerto Rico is a commonwealth of the US. That means that most things here fall under US federal law, like immigration and customs and border enforcement.

But Puerto Rico’s tax system is independent from the US. Puerto Rico has its own tax agency, like the IRS. That’s what makes Puerto Rico unique. It’s a part of the US, but tax-wise, it’s not. And that’s a big advantage…

The US is one of only two countries in the world – the other being the tiny east African country of Eritrea – that taxes its citizens on their worldwide income even if they do not live in the United States.

But Puerto Rico, with its independent tax system, grants you an exception.

If Puerto Rico is the only source of your income, the US government effectively says, “Okay. We won’t touch any income in Puerto Rico. We won’t even look at it.”

And since the island has extended these generous tax incentives, business owners, self-employed individuals, independent contractors, traders and investors who relocate to Puerto Rico have the opportunity of a lifetime.

If you’re a regular employee, don’t be discouraged. If you can work anywhere – which is practically everyone since COVID shut down offices – see if you can switch to be a contractor for your company. You’ll be able to enjoy the same tax privileges.

When successful businessmen and women, wealthy hedge fund managers, investors, etc. are running like mad to Puerto Rico, you know the government here is doing something right.

Let me share specifically what Puerto Rico is doing to attract these productive people.

But first let’s talk about…

What’s new in 2020?

In late June 2019, Puerto Rico completed a massive overhaul of their tax incentives, enacting the Incentives Code. 

The new law does NOT eliminate the existing incentives. It systematizes dozens of incentive acts – Acts 20 and 22 are just the most famous ones – that Puerto Rico has enacted over the years.

The law came into effect on January 1, 2020 and altered previous legislation. 

Act 22 is now part of Act 60, Chapter 2, Incentives for Individual Investors.

Unfortunately, it became more costly to comply with. 

The mandatory annual donation to Puerto Rican charity increased from $5,000 to $10,000. And within the first two years of living there you now need to buy a home in Puerto Rico.

Then in April, the Governor signed new legislation which raised the annual filing fee for Act 22 from $300 to $5,000.

On the bright side, conditions for Act 20, known as the Export Services Act–now part of Chapter 3, Incentives for Export Services– remained largely the same. 

Under the new rules, If your Act 20 company churns $3,000,000 (or more) of revenue a year, you will need to employ a full-time employee in Puerto Rico. And that single employee can be you actively managing your business.

The Acts themselves are not even called Acts anymore: For example, Act 20 became Chapter 3 of Act 60 of the Incentives Code – Exportation of Goods and Services. And Act 22 is now Chapter 2 of Act 60 the Incentives Code.

In this article, we outline the new requirements, but for easier understanding will keep calling them Act 20 and Act 22.

Puerto Rico has introduced two pieces of legislations that allow you to reduce your corporate and investment income taxes…

But let’s start with…

Act 20
(Chapter 3 of Act 60, Incentives for Export Services):
How to slash your company’s tax rate to only 4%

The first is Puerto Rico’s Act 20, known as the Export Services Act, available to citizens of any country.

It allows you to slash your corporate tax rate to only 4%.

Dividends paid to you personally from your Act 20 company also won’t be taxed AT ALL— but only as long as you are a bona fide resident of Puerto Rico.

The Export Services Act is interesting, because of its extremely broad legislation. Here’s the idea behind it…

You incorporate a business in Puerto Rico that’s providing a service. And that service is being sold to people outside of Puerto Rico.

Your service could be research and development, advertising, any kind of consulting, project management, accounting, legal services, information technology services, telemedicine, and much more.

Regardless of your particular specialty, your businesses’ service – provided to clients anywhere in the world – is considered “qualifying activity” under Act 20. So, your business is eligible for a special corporate tax rate of just 4%.

The key to obtaining this 4% corporate tax rate is that you’re providing a service or services exported outside of Puerto Rico.

A clinic providing healthcare services to only Puerto Rican residents wouldn’t qualify. But if you’re providing telemedicine consultations to patients in the mainland US, Europe, or Asia, then your business meets the “qualifying activity” criteria.

Even if your primary business doesn’t fit within the “services” space, there’s a way to qualify for the 4% corporate tax rate.

I know people here, for example, who sell products online through Fulfillment by Amazon (FBA), where Amazon’s customer service centers pack and ship their inventory.

Since marketing is a service, they set up a Puerto Rico Act 20 company to provide that marketing service. Their Puerto Rican Act 20 company exports its marketing services to their FBA business.

The marketing company in Puerto Rico only pays a 4% corporate tax rate, and their FBA business can write off these marketing expenses.

Other people I know have a manufacturing business incorporated overseas, and they also use these Act 20 companies to reduce their taxes.

Some of them use their Act 20 company to provide management services in Puerto Rico, or ‘shared services’ like payroll, accounting, etc. to their manufacturing business overseas.

These management and shared service fees are completely legitimate services to provide. 

And the setup is similar to the previous marketing services example. The Puerto Rican management company pays a 4% corporate tax, and the manufacturing business writes off the management expenses.

And remember, if you follow the proper rules, your Puerto Rican company won’t pay any US tax. So instead of a 21% corporate tax in the mainland US, plus another 20% dividend tax, all you’ll be paying in Puerto Rico is a measly 4% corporate tax. And zero in dividend tax.

This is an absolutely incredible deal.

The Act 20 legislation is very broad. Again, regular employees cannot benefit, but if you can arrange to work remotely (which should be easier than ever with COVID shutting down most offices), then you can transition to being an independent contractor operating out of Puerto Rico.

And as an independent contractor, you’ll now be exporting your services – whatever they may be.

If you have a skill where you can work anywhere – copywriting, digital marketing, telemedicine, investment management, consulting, design, coding, paralegal work, medical transcription, accounting, recruiting, etc. – then you owe it to yourself to check out Puerto Rico’s Act 20.

Note that the new Incentives Code introduced an employment requirement to Act 20 in 2020. 

If your Act 20 company churns $3,000,000 (or more) of revenue a year, you will need to employ a full-time employee – a resident of Puerto Rico – working a normal 8-hour day.  That single employee can be you, the business owner actively managing your business.

If your company earns less than that, there is no employment requirement at all, as before.

Keep reading to see how much it costs to set up and maintain an Act 20 company.

Act 22
(Chapter 2 of Act 60, Incentives for Individual Investors):
How to reduce your capital gains tax to ZERO

The second piece of legislation is Act 22, the Individual Investor Act.

If you’re an investor based in the US, you’re paying a top 20% tax on dividends and capital gains, potentially the 3.8% Obamacare surcharge tax (for those married filing jointly with over $250,000 in annual income) and a host of state and local taxes.

But if you pack up and move down to sunny and beautiful Puerto Rico, then all your future capital gains on stocks and bonds… become tax free. And the new Incentives Code explicitly includes gains on crypto too.

Additionally, any dividends, interest, and royalties you may receive from Puerto Rican sources will also be tax-free.

That’s right. The IRS won’t touch any of your investment income.

If you’re expecting big capital gains in the future, you need to seriously consider Act 22. Gains on stocks, bonds, crypto… you will have after your move to the territory, will be tax-free.

And if you are sitting on significant gains already, Puerto Rico may still help you. If you spend more than ten years as a resident there, your tax obligation on the portion of capital gain you accrued while still living in the US will also go down… to 5%.

That’s an incredible deal.

Please note that the new Incentives Code made Act 22 more expensive in 2020.

First, in order to qualify for Act 22, you need to make an annual donation to official charities in Puerto Rico, and in 2020, the donation amount increased from $5,000 to $10,000.

And under the new rules, within two years of obtaining your Act 22 decree, you will need to buy a property in Puerto Rico and use it as your primary residence (you can’t rent it out). You will need to keep it throughout the validity of your Act 22 decree.

(There is no minimum purchase price requirement.)

The annual filing fee also increased from $300 to $5,000.

Traveling or moving to Puerto Rico is very easy…

Traveling to Puerto Rico is just like traveling from state to state. Let’s say you get on a plane in Miami and fly to Puerto Rico’s capital of San Juan. When you arrive, you don’t have to go through immigration or customs. You just get off the plane and go on your way… because technically, you never left the US.

The same goes for moving. 

Moving to Puerto Rico is just like moving from California to Texas or from New York to Florida. You arrange the movers and off you go. No customs or border patrol to deal with. No hassles or headaches like when you move from country to country.

Puerto Ricans also enjoy the same travel and moving benefits as Americans. Again, that’s because they ARE Americans.

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Taxation examples in different scenarios…

Here are a few examples of how much tax you would pay in different scenarios.

If you are living in the US while operating your Act 20 company in Puerto Rico…

You’ll pay a 4% corporate tax to the Puerto Rican government and a GILTI tax of up to 21% to the US government. (Can be lowered to 10.5% in certain cases.)

GILTI is a new tax that came into existence with Trump’s Tax Reform of 2018 and the IRS considers Puerto Rico a foreign country for GILTI tax purposes.

Since you are not a bona fide resident of Puerto Rico you also can’t take advantage of the dividend tax exemption.

So, if you pay out dividends they will likely be considered qualified dividends by the IRS and taxed according to your tax bracket. That can be up to 20%, plus the 3.8% Obamacare surcharge tax and a host of state and local taxes. 

Because of the GILTI tax our opinion is that, for most people, an Act 20 company only makes sense if they actually become Puerto Rican bona fide residents.

If you are a bona fide resident of Puerto Rico while operating an Act 20 company…

On the corporate side, you’ll pay a 4% corporate tax to the Puerto Rican government and you will escape the GILTI taxation by the IRS for your Act 20 company. Dividends will also be tax-free.

On the individual side, you’ll pay yourself a small salary that’s taxable at normal Puerto Rican tax rates, comparable to mainland US tax rates.

Don’t think that you can pay yourself $1 per year. Your salary has to be reasonable.

But you don’t have to pay yourself mainland US wages, either. You’ll find that wages in Puerto Rico are much lower than the US mainland, so you can pay yourself a commensurate regular salary. We advise you to check with your accountant on this rate.

And you can take the rest of your compensation as a qualified dividend, taxed at… 0%. Yes, imagine that. You can take all this money that you earned and put in your pocket tax-free.

But you’ll continue to pay the usual US taxes on investment income.

You can learn more about how to become a bona fide resident of Puerto Rico in the Act 22 section.

And if you also take advantage of Act 22…

You’ll pay the same taxes on your Act 20 company’s profits and dividends as in the previous scenario.

But you’ll also pay ZERO on your future capital gains on stocks, bonds and crypto.

Any dividends, interest, and royalties you may receive from Puerto Rican sources will also be tax-free.

How to qualify for Puerto Rico’s tax incentives

Why you need to apply for Acts 20 & 22 NOW

I cannot emphasize this enough…

YOU SHOULD STRONGLY CONSIDER ACTS 20 AND 22 TODAY. 

That’s because I don’t expect Puerto Rico’s incentives to last for much longer. The Bolsheviks that may come to power soon in Washington, DC hate win/win scenarios. They want “the rich” to lose, even if Puerto Rico loses too.

The good news is that Act 20 and Act 22 are essentially a contract with the Puerto Rican government that lasts 15 years.

So even if they shut down the programs to new applicants, people who already have their tax incentives established will be grandfathered under the old rules.

That should be a pretty strong motivator to get down here and at least check it out.

And if more Bolsheviks continue rolling into power, you can count on much higher taxes in the Land of the Free… which makes Puerto Rico even more compelling.

And even if you’re not ready to move to Puerto Rico right now, if you think there’s a chance that you might move there some time in the next few years to take advantage of these tax incentives, you can still set up an Act 20 company today.

The company can’t be completely dormant. But as long as it has some basic commercial activity, you can lock in today’s incentives, and then move down in a few years’ time to really boost your tax benefits. 

One thing to keep in mind – The IRS considers Puerto Rico a foreign country for GILTI tax purposes. 

The tax came into existence with Trump’s Tax Reform of 2018. If you stay in the US while operating your Act 20 company in Puerto Rico, you will need to pay GILTI tax on your company’s income.

How to set up an Act 20 company

I’ve already covered that your Act 20 company must be a service-based business that exports some type of service to global customers…

Obviously, your first step is to have a business that meets this requirement. 

If you don’t have an existing business that meets the criteria, remember, you still have options to qualify under Act 20. For example, you can structure a marketing or management company that provides these services.

Then, you must apply for a decree. You do it by submitting an application at the Single Business Portal of the Office of Industrial Tax Exemption (OITE) of Puerto Rico to obtain a tax exemption decree, which will provide full details of tax rates and conditions.

All-in, it takes the Puerto Rican government at least four to five months (in normal, non-COVID times) to approve your tax exemption (which they’ll retroactively date to when you applied).

Alternatively, you can use an attorney to help navigate Puerto Rican bureaucracy.

Expect the attorney fees to start at around $8,000, which includes incorporation and the Act 20 tax exemption filing. I paid around $15,000 for mine, using one of Puerto Rico’s top firms.

And if you go with one of the official promoters of the Act 20 program, then you will essentially pay only the government-related fees of around $2,000. The promoters later get a small cut from the 4% corporate tax you will be paying to the government.

So if you are moving a simple business to Puerto Rico (and not some complicated international structure) then the cheapest way to open an Act 20 company would be through such an official promoter.

You can either set up an LLC or a corporation. I personally set up an LLC. But for tax purposes, it needs to be a corporation, so I elected my LLC to be treated as a corporation. To do this, you simply need to check the box on  IRS Form 8832.

Additionally, you’ll pay a few hundred dollars per year to maintain the company, between accounting fees and renewal costs.

Looking for a reliable service provider in Puerto Rico?

If you are a member of our flagship international diversification service, Sovereign Man: Confidential, we can give you a reference for both an experienced attorney and a reliable, official promoter we have worked with.

Just get in touch with us through the member site.

And please keep in mind that we take absolutely no commissions, kickbacks or anything of the sort from the providers we refer our members to.

It’s a huge part of my personal moral code, and I just think it’s the right way to do it. 

While this is extremely rare in the financial industry where commissions and kickbacks are the norm… I would never put myself in a position where my interests and the interests of our members are not 100% aligned.

Additionally, we always do our best to pass the commissions our referred providers ordinarily pay to promoters as additional discounts to our members.

For example, one of the service providers we have a relationship with usually charges $1,500 to file an Act 22 application, but our members get a $500 discount on that.

How to file for Act 22’s tax incentive

In 2020, the conditions to apply for Act 22 have become more stringent.

In order to qualify for Act 22, you need to make an annual donation to official charities in Puerto Rico. And in 2020, the donation amount increased from $5,000 to $10,000.

And now it will be split into two parts: The first $5,000 will go to one of the charities specifically approved by the government, and the second $5,000 will still go to the charity of your choice in Puerto Rico (as before).

And under the new rules, within two years of obtaining your Act 22 decree, you will need to buy a property in Puerto Rico and use it as your primary residence (you can’t rent it out). You will need to keep it throughout the validity of your Act 22 decree. 

On the bright side, there is no minimum purchase price.

And as noted before another significant cost was added in April 2020 when new legislation raised the cost of the filing fee for Act 22 to $5,000 (previously just $300).

To get started,  you can hire an attorney to file the paperwork for Act 22, or, you can file yourself through Puerto Rico’s Single Business Portal

I’m well-versed in legal matters, but I still used an attorney. 

Expect to pay about $1,500 to $5,000 in legal fees (or just $995 if you are a member of our flagship international diversification service, Sovereign Man: Confidential, and use one of our trusted service providers). 

It should take Puerto Rico at least three months to process your application, but it could take up to ten months, especially with COVID disrupting normal work. When approved, they’ll retroactively date your residency so you get the tax benefit from when you applied.

After you are approved you have one year to enter Puerto Rico, otherwise, you will lose the decree and will have to reapply.

And to be exempt from US federal income taxes you have to become a bona fide Puerto Rican tax resident.

The three tests to become a bona fide Puerto Rican tax resident

The Internal Revenue Code has specific guidelines for what qualifies individuals as bona fide residents of a US possession. 

And as a resident, you’re eligible for the Act 22 exemption and you will escape the GILTI taxation by the IRS for your Act 20 company.

In Puerto Rico, the US says you have to check the box in three categories. Or, in other words, you must pass three tests:

1. Personal presence test

To satisfy the first test, you must meet any one of the following five conditions:

1) Be present in Puerto Rico for at least 183 days during the tax year.
These 183 days don’t need to be consecutive, you can make multiple trips to the US or elsewhere during the year. (To be on the safe side, we recommend you spend at least a few days more than 183 in Puerto Rico.)

2) Be present in Puerto Rico for at least 549 days (aggregate) during a 3-year period. And during each year of the 3-years, you need to be present in Puerto Rico for at least 60 days.

For the math to work, you will still need to spend at least 183 days during your first two years in Puerto Rico. However, this method potentially allows you to spend as little as 60 days in Puerto Rico in the 3rd year. 

3) Be present in the United States for 90 days or less during the tax year.
At first, this condition seems easy to meet, but remember that you still must meet two other tests – tax home and closer connection (we explain both further down).

4) Earn less than $3,000 in wages, salaries, or professional fees in the United States, AND spend more time in Puerto Rico than on the mainland during the tax year. This option may not work for you if you will be traveling to the United States to meet clients, perform some work… meaning that you will have US-based wages or professional fees.

5) Have no significant connection to the United States during the tax year.
The IRS considers that you have a significant connection to the United States if you:

  • Have a permanent home in the US (rental property is OK), or
  • Are registered to vote in the US, or
  • Have a spouse or a child under the age of 18 whose main home is in the US (unless the child is in school in the US or has legally divorced parents).

2. Tax home test

This one, too, is relatively straight forward.

To pass the tax home test, your tax and business activities need to be located in Puerto Rico. If your primary business activities are located anywhere else in the world, you won’t pass this test.

Now, the IRS defines ‘tax home’ as your regular place of business or employment.

So by setting up an Act 20 company, you go a long way in proving that your primary business activity is in Puerto Rico.

You can still travel to the United States, or elsewhere, to attend conferences, meet your clients, etc. As long as your main business (or consulting) activity happens in Puerto Rico, then you should be fine.

3. Closer connection test

The final test is more qualitative, and it’s similar to the ‘significant connection’ criterion I mentioned with the physical presence test.

Remember, you’re proving to the IRS that you’re not liable for US federal taxes on your qualified income.

So, consider these questions:



  • Is your family with you in Puerto Rico or back home in the mainland US?


  • Are you renting an Airbnb in Puerto Rico or do you have an apartment or house?


  • Are your personal belongings (car, furniture, jewelry) in Puerto Rico?


  • Do you participate in social, political, cultural, charitable organizations in Puerto Rico?


  • Where do you bank?


  • Do you have a Puerto Rican driver’s license?


  • Are you registered to vote in Puerto Rico?

You don’t have to do everything we outline in the table above, but you should do as much as you reasonably can. If the IRS runs an audit on you, they need to leave convinced that you treat Puerto Rico as your primary home. 

While I search for a house or apartment to buy, I’m renting a beautiful place that’s right on the beach.

I have a Puerto Rican driver’s license and I bought a car here. And for the first time in my life, I’m actually registered to vote. 

View from my rental apartment in Puerto Rico

When I fill out an IRS Form 8898, all these things I’ve done count for the closer connection test. I can check those boxes on the form and say, “Yes, IRS. I’m living in Puerto Rico and it’s my legitimate home base.” 

If all this sounds too good to be true…

It’s not.

I’ll admit that a few years ago when my friend and fund manager Peter Schiff mentioned Puerto Rico’s tax incentives, I initially had my hesitations. 

Hesitation #1: What if the government breaks its promises?

My primary concern was what would happen if the Puerto Rican government breaks its promises.

You, too, might have this concern. After all, we are talking about a promise made by a bankrupt government.

But I assure you not to worry about the Puerto Rican government breaking its promise. For one, the government needs productive people – and their tax revenue – more than productive people need Puerto Rico. So, there’s an advantage there for individuals.

And second, Puerto Rico issues a binding contract between the government and individuals who qualify for the incentives. The government is contractually obligated to honor its commitments well out into the future.

There’s also a growing case law that prevents the Puerto Rican government from breaking contracts.

For example, over the last few years, there was a famous case involving Walmart in Puerto Rico. Puerto Rico had extended a special tax incentive. But the government felt like Walmart wasn’t keeping up its end of the bargain. So, the government sued Walmart for additional tax revenue that wasn’t part of the contract.

The case went to court here in Puerto Rico. And the government lost. The Puerto Rican judge who ruled against the government said the government must honor the signed contract.

And if in the future, the Bolsheviks in Washington will press Puerto Rico to end the incentives altogether, all current participants will be grandfathered under the old rules according to the contracts signed.

So, with that hesitation answered, let’s move on to the next one…

Hesitation #2: I’m not a multi-millionaire. Can I still qualify?

YES.

There are plenty of wealthy people here. But I also know people in Puerto Rico who make $60,000 per year and are doing well.

Also, there are expensive areas around the capital of San Juan. But there are also pockets of San Juan perfectly suited for middle class people. 

And if you get out to the west and southern coasts or to the island’s interior, your tax savings and a lower cost of living means a nice life here.

Hesitation #3: Is it worth it?

There’s no better risk-adjusted return than saving money on taxes.

Otherwise, to achieve an extra 30% return on investment, you’ll have to take some serious risk. Or break the law.

But saving on taxes means no investment risk. Instead of handing over that money earmarked for Uncle Sam, it’s now earmarked for your pocket.

And if you compound tax savings over years and decades, that’s a life-changing amount of money. For example, after several years, just your tax savings would be enough to buy a house.

And Puerto Rico’s tax incentives are not just helping the Act 20 and 22 individuals get wealthier…

You can help boost the Puerto Rican economy

All this capital injection is also doing wonders for the island’s economy and for fellow Puerto Rican residents. 

For starters, Puerto Rico is able to recapitalize its banks. The surge in deposits allows banks to make additional loans for long-term projects. And this translates into more economic activity and job creation.

Puerto Rico is also generating economic activity from its newcomers’ spending. 

For example, a new arrival needs a car, which means a sales commission for the car salesman. And this salesman celebrates by going to dinner with his or her spouse. They may leave a big tip for the waiter or waitress, and so on down the line…

I saw a study that each individual who moved to Puerto Rico has created eight jobs.

I’m incredibly proud to be a part of Puerto Rico’s turnaround story. It’s a win-win. I get to keep the money I earned through hard work, and I can invest in Puerto Rico or spend as I wish.

And that’s the power of just my tax savings. Multiplied by the number of newcomers, we’ve got the opportunity to really make an impact here in Puerto Rico.

Puerto Rico is not the only way to save on Taxes for Americans
Consider this incredible incentive too…

If you are sitting on unrealized capital gains – stocks, real estate, art, crypto… – Opportunity Zones may offer amazing tax benefits.

It’s a brand-new program that was buried inside President Trump’s 2018 tax reform legislation.

Through the program, you can sell your appreciated assets, defer capital gains tax, and invest the proceeds into one of 9,000 designated distressed communities across America.

Most of Detroit and Baltimore is an Opportunity Zone… and even parts of Manhattan.

Your investment in real estate, an existing business, a new business, etc. located in an Opportunity Zone can grow completely tax-free for decades.

The program is still new, but it is already a huge success with billions of dollars pouring into America’s distressed communities.

You can learn more about Opportunity Zones and my personal experience with it in this in-depth article.

Frequently Asked Questions

If you don’t have time to read the full article, here are the most frequently asked questions we get…


What’s new in 2020 for Puerto Rico’s Tax Incentives?

In late June 2019, Puerto Rico completed a massive overhaul of their tax incentives, enacting the Incentives Code.

The new law does NOT eliminate the existing incentives. It systematizes dozens of incentive acts – Acts 20 and 22 are just the most famous ones – that Puerto Rico has enacted over the years.

The law came into effect on January 1, 2020 and altered previous legislation.

Act 22 became more costly to comply with. The mandatory annual donation to Puerto Rican charity increased from $5,000 to $10,000. And within the first two years of living there you now need to buy a home in Puerto Rico.

The annual filing fee (just for Act 22) also increased from $300 to $5,000.

On the bright side, conditions for Act 20 remained largely the same. Under the new rules, If your Act 20 company churns $3,000,000 (or more) of revenue a year, you will need to employ a full-time employee in Puerto Rico. And that single employee can be you actively managing your business.

The Acts themselves are not even called Acts anymore: For example, Act 20 became Chapter 3 of Act 60 of the Incentives Code – Exportation of Goods and Services. And Act 22 is now part of Act 60, Chapter 2 – Individuals.

Continue reading the full article to learn about my PERSONAL experience with Puerto Rico’s tax incentive and learn how you too can dramatically slash your taxes.


What is Puerto Rico’s Act 20?

Act 20 is known as the Export Services Act, now Chapter 3 of Act 60 of the Incentives Code.

It allows you to slash your corporate tax rate to only 4% and dividends paid to you personally from your Act 20 company to ZERO.

The key to obtaining this 4% corporate tax rate is that you’re providing a service or services exported outside of Puerto Rico.

The Export Services Act is interesting, because of its extremely broad legislation. So, even if your primary business doesn’t fit within the “services” space, there’s a way to qualify for the 4% corporate tax rate.

Continue reading the full article to hear examples of how different businesses take advantage of this incentive to slash their taxes.


What is Puerto Rico’s Act 22?

Act 22 is the Individual Investor Act, now Chapter 2 of Act 60 of the Incentives Code.

If you’re an investor based in the US, you’re paying a top 20% tax on dividends and capital gains, potentially the 3.8% Obamacare surcharge tax (for those married filing jointly with over $250,000 in annual income) and a host of state and local taxes.

But if you pack up and move down to sunny and beautiful Puerto Rico, then all your future capital gains on stocks, bonds and crypto… become tax free.

Additionally, any dividends, interest, and royalties you may receive from Puerto Rican sources will also be tax-free.

That’s right. The IRS won’t touch any of your investment income.

Click here to read the full article and learn more about how to slash both your investment and company’s taxes with Puerto Rico’s incentives.


I’m not a multi-millionaire. Do Puerto Rico’s tax incentives still make sense for me?

Yes. There’s no better risk-adjusted return than saving money on taxes.

Otherwise, to achieve an extra 30% return on investment, you’ll have to take some serious risk.

But saving on taxes means no investment risk. Instead of handing over that money earmarked for Uncle Sam, it’s now earmarked for your pocket.

And if you compound tax savings over years and decades, that’s a life-changing amount of money. For example, after several years, just your tax savings would be enough to buy a house.

There are plenty of wealthy people here. But I also know people in Puerto Rico who make $60,000 per year and are doing well.

Also, there are expensive areas around the capital of San Juan. But there are also pockets of San Juan perfectly suited for middle class people. And if you get out to the west and southern coasts or to the island’s interior, your tax savings and a lower cost of living means a nice life here.

Continue reading the full article to learn about my PERSONAL experience with Puerto Rico’s tax incentive and learn how you too can dramatically slash your taxes.

Conclusion

Here’s what I encourage you to consider…

Book a flight and get down here as soon as possible. Puerto Rico is only a short flight from cities on the US east coast. So, you can even take a weekend trip. (Although, if you can, I recommend spending several weeks on the ground before you move down.)

And something you can do immediately is sign up for our free Notes From the Field daily dispatch.

I frequently travel around the world to find exciting business opportunities, discover risks in our financial system and economies, and offer solutions, like Puerto Rico, that make sense no matter what happens next.

Puerto Rico is now my official home base, so I usually check in from Bahia Beach – just east of San Juan – and from time to time, I also write about what’s developing here.

I’m really optimistic about Puerto Rico’s future. And I’m excited that I can legally maximize my tax savings in such a beautiful place.

Think what we’re doing makes sense?
Get to know us more…

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It’s free, it’s packed with information, and best of all, it’s short… there’s no verbose pontification here – we both have better things to do with our time.

And while I appreciate all the visitors who stop by our website, I provide special bonuses to our email subscribers… including free premium intelligence reports and other valuable content that I only share with them.

It’s definitely worth your while to sign-up, and if you don’t like it, you can unsubscribe at any time with just one click.

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How easy it is to be “dangerous”

Early in the morning around 3am on March 24, 1603, Queen Elizabeth I died after ruling over England for more than four decades.

Her successor was proclaimed only hours later– James Charles Stuart, who at the time was serving as King of Scotland.

James was known as a religious hardliner. He became obsessed with hunting down witches during his reign in Scotland, and even personally supervised the torture and execution of young women who had been accused of witchcraft.

And almost immediately upon being crowned King of England, he issued harsh warnings to anyone who wasn’t strictly following the faith.

England had established its own church back in 1534– known as the Church of England– and James (as the titular head of the Church) made it clear that he would not tolerate any religious dissent.

Yet there was a growing movement of people across England who had become disillusioned with the Church. They believed in the principal tenants of Christianity, but they didn’t believe in the Church’s rituals, politics, or hierarchy.

These people called themselves Separatists, and they were forced to gather and worship in secret.

One large group of separatists was based in the small town of Gainsborough in central England. Coincidentally, one of them was my great-great++ grandfather, a local noblemen who held secret worship services in his home.

They were eventually caught. And in late 1607, the Separatists had to flee England.

This was no small task at the time; emigrating required a special permit, which they were unable to acquire.

But eventually the Separatists were able to sneak into Amsterdam, which had a great deal more freedom. And after gathering people and resources over the next decade, they ultimately hired a ship– the Mayflower– and sailed across the ocean to build a new life for themselves.

I thought of this story when I read a few days ago about various religious groups in the US and United Kingdom being forced to gather in secret to hold worship services.

One group in England congregates in a barn. Another gathers in open fields, the location of which is revealed by SMS only an hour before the services begin.

This sounds like some underground church service in China or North Korea… or the harsh restrictions under King James more than 400 years ago.

As one churchgoer told the Guardian newspaper, “The fact that we have to sneak around to worship God, in fear of criminal prosecution, is alarming.”

It’s similar in the Land of the Free. If you belong to the Catholic church or Jewish faith in states like New York or California, for example, the governor-dictators there have decreed that you are no longer free to worship.

Such is life now in western civilization: you can now be considered a danger to the public for what you believe.

If your faith requires that you gather to worship, you’re considered a danger to public health and subject to arrest–

— unless, of course, you belong to the Holy Church of Black Lives Matter, in which case you are free to burn, assault, loot, and riot your way to salvation, mask-free, with no restrictions whatsoever.

And it’s not just religion.

If you’re one of the tens of millions of people who did not vote for Joe Biden because you have different ideological beliefs, the new ruling political elite considers you an intellectual danger to society.

Not only that, they “have a list” and want to ban you from serving in office, on company boards, and from “polite society”.

Similar hate is reserved for those who express different opinions about social justice issues. For example, if you dare to commit the blasphemy of saying that everyone’s life matters, people will claim to feel ‘unsafe’ around you, i.e. you’re dangerous.

Talented people have been fired for this, or canceled by the Twitter mob. Or had their businesses ruined, or their property torched.

The big tech companies have also resorted to extreme censorship to thwart the free flow of information that they deem, in their sole discretion, to be dangerous.

And we can already see the writing on the wall with regard to Covid vaccines.

There are dozens of vaccines in the works, and a few that have already received provisional approval.

To me, this is also an individual choice: if people want the vaccine, good for them. But there will be countless citizens who have concerns about an unproven vaccine devoid of any long-term studies.

These concerns are completely reasonable. Yet we’re already seeing signs that you’ll be regarded as a public danger if you don’t get vaccinated.

There’s even a term for it already: “vaccine resisters”.

Joe Biden told George Stephanopoulos in last month’s softball Q&A love-fest that “we should be thinking about making [vaccines] mandatory,” though he acknowledged that enforcement would be difficult.

Not really. Enforcement of mandatory vaccination will come down to the private sector closing ranks and refusing to serve anyone who doesn’t get pricked.

Australia’s Qantas Airlines is the first to say that you won’t be able to fly certain routes unless you’re vaccinated. Based on their policy, Australians won’t be able to leave the country without being vaccinated.

The airline industry is notoriously monkey see, monkey do. So it’s likely only a matter of time before Delta, Air Canada, British Airways, etc. follow along.

More importantly, an old Supreme Court precedent from 1905 (Jacobson v. Massachusetts) established clear authority for the state to mandate vaccination, or severely penalize those who refuse.

(“Pro choice” apparently only applies to abortions, not to the Covid vaccine.)

At a minimum, anyone who doesn’t receive a vaccine can at least expect to be ridiculed and shunned by people who you thought were your friends; they’ll say you’re ‘endangering’ them.

Who knew you could be so dangerous without even trying?

But this is the world we’re living in. And as I frequently point out, why it’s so important to have a Plan B.

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And the Emmy Goes to…

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, risks to your prosperity… and on occasion, inspiring poetic justice.

And the Emmy Goes to the Governor of New York Andrew Cuomo

Andrew Cuomo, the Governor of New York, recently released a book he allegedly wrote called, “American Crisis: Leadership Lessons from the COVID-19 Pandemic,” congratulating himself for being an amazing leader.

So the first time I saw the headline that Cuomo had won an Emmy, I thought it was a joke, poking fun at the Governor for his self-aggrandizing book.

But this is not The Onion: Cuomo, will receive an Emmy award for his 111 televised COVID-19 briefings this spring.

The academy, which typically awards Emmys to actors in TV series, said Cuomo’s leadership had people around the world tuning in– “New York tough became a symbol of the determination to fight back.”

The fact that New York has the second highest per-capita COVID-19 death rate of any state hasn’t stopped the praise for this Dear Leader.

That is why Cuomo clearly deserves the Emmy. He must be a good actor to convince so many people that his utter failure in leadership should be celebrated.

Click here to read the full story.

Just One Liar Triggered a Lockdown for Millions

Authorities in South Australia don’t think you should blame them for a sudden, strict, six day lockdown that affected 1.7 million Australians.

Blame the pizza guy!

A new Covid patient claimed he contracted COVID-19 from a pizza box.

This led authorities to fear that the virus had mutated to become more easily transmissible, which prompted their draconian response to lock everyone down again.

It turns out the man was an employee of the pizza shop, and picked up the virus while working alongside an infected coworker.

The state’s senior officials blamed the pizza guy, claiming he lied to them, and this is why the lockdown took place.

Yep. Blame it on the pizza guy. Clearly we can’t hold government officials responsible for the decisions they make, the hysteria they create, or the freedoms they destroy.

Obey.

Click here to read the full story.

Suicides in Japan Jumped 39% in October

More Japanese people died by suicide in October alone than have died from COVID-19 throughout the entire pandemic.

In 2019, Japan saw its lowest suicide rate ever recorded during the 40 years it has kept track.

Then suddenly in July 2020, the suicide rate began to skyrocket again. Gee I wonder why.

October 2020 saw a 39% spike in suicides compared to October 2019.

17,000 people have died by suicide this year in Japan, while fewer than 2,000 have died from COVID-19.

Click here to read the full story.

Katy Perry Gets a Big Bowl of Hate for Urging Political Tolerance

Pop singer Katy Perry was delighted with how the Presidential Election has shaped up so far.

But rather than stoke more division, she Tweeted, “The first thing I did when the presidency was called is text and call my family members who do not agree, and tell them I love them and am here for them.”

In other words, she reached out with kindness to people who have different opinions than she has. And that seems like a perfectly mature and tolerant thing to do.

But not to the Twitter Mob!

Twitter jumped on the singer immediately for refusing to hate people with opposing political views.

Apparently she doesn’t realize that 70+ million Americans are guilty of thought crimes and need to be ridiculed, shamed, and exiled.

Click here to read the full story.

Solomon Islands Considers Banning Facebook

In the name of national unity, the Solomon Islands is looking to ban Facebook.

The Prime Minister announced that “Cyberbullying on Facebook is widespread, people have been defamed by users who use fake names, and people’s reputations that have been built up over the years [are destroyed] in a matter of minutes.”

“We have [a] duty to cultivate national unity and the happy coexistence of our people … [Facebook] is undermining efforts to unite this country.”

Personally I think Facebook is atrocious. But it’s up to individual people to decide whether or not to use it.

And surely it must be a total coincidence that a few weeks ago, Facebook was instrumental in spreading leaked documents that showed how COVID-19 economic relief funds had been misspent by the Solomon Islands government.

Click here to read the full story.

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Another hallmark of the Soviet Union: separate rules for the peasants

[Editor’s note: This letter was written by Viktorija, our Sovereign Woman.]

My experience with ridiculous government overreach began literally on the day I was born.

It was more than three decades ago, in the tiny Soviet Socialist Republic of Lithuania, back when the Soviet Union still existed.

As my mother tells the story, she and my father hurried to the closest hospital when her contractions started. But the hospital administration staff informed them that they were not allowed to give birth there.

Apparently we weren’t registered with that municipality. So the bureaucrats turned my parents away and ordered them to drive to the correct hospital that matched their records.

Unfortunately, my parents were nearly out of gas.

Gasoline was in very short supply at the time and considered a major luxury; the Soviet Union was near collapse, and people routinely had to wait in line for more than a day just to fill up a few liters of gas.

So, my parents were without any means to drive to the ‘correct’ hospital. And that’s when they resorted to what most people ended up doing back in Soviet times: bribery.

They went back to the hospital that turned them away, and paid off the nurses and administrators to let them give birth there.

And poof, shortly thereafter, I came into the world.

My mother is full of these stories about Soviet times; in her youth, she worked at a clothing store… and almost all of the inventory was Soviet-made garbage.

On rare occasion, though, a new dress would come in that was made in Western Europe. My mom would immediately hide it, and sell it to special customers who were willing to pay much more. That was the only way she could afford to buy enough food that month.

Anything foreign, in fact, was considered a major luxury.

Vehicles were fairly common in the Soviet Union, but they were all pitiful Soviet brands like Zaporozhet, Moskvitch, or Volga. Even just seeing a Mercedes was a dream come true.

Travel was the same. If you were lucky enough to have any money, you were allowed to travel. But only inside the Soviet Union… so you could look forward to a fancy vacation to Azerbaijan.

Only big bosses with special connections were allowed to travel outside of the Soviet Union. But for most of us in the proletariat, visiting Paris or London was an unimaginable luxury.

It’s funny how the things that we consider luxuries tend to change over time.

As children we used to get really excited about a new toy, which, in adulthood, probably seems rather trivial to us now.

And I remember the first time I saw someone with a cell phone. It was the size of a suitcase, but I thought he was the wealthiest man in the world.

Now everyone has smart phone; it’s not even close to being a luxury anymore.

I’ve been to some of the poorest countries in the world—places like Myanmar and Eswatini (formerly known as Swaziland, in southern Africa). And even there, people have smart phones connected to the Internet.

This was inconceivable 15 years ago.

Most people still consider ‘luxuries’ to be things that require a lot of money– private jets, fancy cars, and expensive champagne.

But as corny as it may sound, I believe one of the biggest luxuries right now is freedom.

Covid-19 lockdowns around the world have taught us how precious freedom is, and how easily simple things like going outside, breathing fresh air, and the ability to travel, can be taken away from us by people who refuse to follow their own rules.

Frankly this was another theme of the Soviet Union—the big bosses had one set of rules for themselves, and the rest of us peasants had another set of rules that we had to follow.

You see this all over the Western world now, with politicians who can’t be bothered to adhere to their own lockdowns, but require everyone else to isolate from friends and family.

It’s easy to be angry about this. But it’s more effective to do something about it.

Unlike expensive luxuries like fancy handbags and supercars, freedom doesn’t require suitcases full of cash. It requires rational thinking, the right information, and the will to take action.

You might be eligible for a second passport, practically for free, simply because you have ancestors from a certain country (including my native Lithuania!)

And having a second passport or second residency is a huge step towards being able to take back your freedom. It means that, no matter what rules are imposed, you’ll at least have another place you can go.

That optionality is now more important than ever.

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Didn’t We Learn This Lesson 400 Years Ago?

Exactly 400 years ago, 102 Pilgrims were staring down what promised to be a brutal winter, after first coming to shore, and setting up a tiny village in Plymouth, Massachusetts.

The industrious, God-fearing Pilgrims decided to pull together and pool their resources and efforts to better survive winter. They created a commune, and elected a Governor to call the shots.

By the spring of 1621, half of the Pilgrims had died from starvation, disease, and exposure.

One of the Pilgrims, William Bradford, explained in his journal that communal living “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.”

Young single men found it unjust that they had to do all the hard work, but received no more reward for it. And wives “deemed it a kind of slavery” to be forced to do chores for men besides their husbands.

Clearly, this little experiment in collectivizing society had failed. So they reversed course, and tried something new; every man for himself.

This might sound harsh, or even counterproductive. But on the contrary, Bradford explained:

This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use… The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.

400 years later, it seems leaders have forgotten the lesson.

We are entering winter grappling with COVID-19, a lockdown-stunted economy, and as I noted Monday, millions of hungry Americans relying on food banks to survive.

And tyrannical governments seem to be doing everything they can to stop us from responding to these problems as we see fit.

We’ve been told to abandon any sense of reason, trust the experts, and “listen to the scientists”.

But this month, New England Journal of Medicine published the results of a study to test the theory that extreme lockdowns are effective at controlling the spread of COVID-19.

The study, which enforced a strict quarantine and social distancing regimen on Marine recruits, found there is no correlation between strict lockdowns and reduced COVID-19 transmission.

In fact the control group, which went about life as normal, had a lower percentage of COVID infections (1.7%) compared to the test group under strict lockdown (2%).

So, will Governors “listen to the scientists”?

Hardly. Several states are going so far as to attempt to cancel Thanksgiving– or at least place a strict limit on the number of family members you can invite to your own home to share a meal.

Oregon recently decriminalized hard drugs– invite five people over to smoke crack, and you’re all good. But if you are caught sharing a Thanksgiving meal with seven family members, you could face 30 days in jail and a $1,250 fine.

California says you can host no more than two other families, but everyone must stay outside, with guests seated six feet apart, in all directions.

The state of California will graciously allow your houseguests to enter your home… but only to use the bathroom.

(Meanwhile, the Governor of California, Gavin Newsom, was caught dining out maskless with about a dozen friends for a lobbyist’s birthday party.)

But these are just the latest authoritarian escalations, which should surprise no one.

Since March, Governors have simply been ruling by decree to shut down businesses, define who is an essential employee, and stop people from earning a living, even though courts have deemed these lockdowns unconstitutional.

But governors are ignoring the courts and imposing lockdowns anyway.

And we see the results– 11 million out of work, record consumer debt, corporate debt, and government debt, and a pandemic that has still not been controlled, despite the restrictions.

It took a 50% death rate from disease and hunger in Plymouth in the winter of 1620 to convince the Pilgrims that controlling people wasn’t saving lives, or creating prosperity.

But individual liberty accomplished what authoritarianism and communism could not.

Now more than ever people need the freedom to make their own decisions, to decide for themselves if they want to open their businesses, earn a living, and have family over to share a Thanksgiving meal.

And if those basic freedoms which we all took for granted just one year ago seem out of reach, take one more lesson from the Pilgrims.

They hopped in a tiny wooden boat, and crossed the Atlantic at great personal risk just to have a shot at building a free life by their own design.

Today, it is not nearly as dangerous or difficult to find greener pastures.

Just removing yourself from a city goes a long way, as does settling amongst neighbors who aren’t ready to turn you in to the Gestapo for celebrating Thanksgiving.

But also, don’t be afraid to look overseas.

When people think that your personal liberty is a threat to them, it makes sense to at least consider the possibility that at some point, your home country may no longer be right for you.

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People going hungry = Record high stock prices

New York City is up 33% this year. St. Louis is up 66%. In Oregon it’s up 100%.

I’m not talking about real estate prices, local budget gaps, or even property tax rates.

These are the startling increases in the number of people across the country, and the world, who are in need of food.

Food banks across the Land of the Free are experiencing an enormous surge in demand from people looking to feed their families, many of whom are experiencing such economic hardship for the first time.

The director of a local food bank in western Massachusetts, for example, recently said, “I thought I had seen the worst during the Great Recession [of 2008-2009]. But what we have experienced since March due to COVID-19 has really overwhelmed us.”

I saw a video last week showing thousands of cars “stretching as far as the eye can see” in line to receive free food from a local food bank in my hometown of Dallas, Texas.

Similarly, Miami had a “massive food bank line stretched for two miles.”

You can see the same thing in big cities like New York and LA, to quieter towns like Erie, Pennsylvania, and across the world.

In the small town of Dorset in southwestern England, food banks have handed out an astonishing 1.2 million meals over the past few months, shattering all previous records. And local officials say that was just the tip of the iceberg.

It’s obvious there are millions upon millions of people who are suffering immeasurably because of Covid lockdowns.

Yet amazingly enough, the stock market is at an ALL TIME HIGH.

More than 11 million people in the US alone are still unemployed. 2.7 million homeowners are in forbearance (meaning they’re not paying their mortgages). Millions more are relying on food banks to feed their families.

Consumer spending (which makes up 70% of US GDP) is still well below where it was before the pandemic.

And according to Standard and Poors, corporate profits of the S&P 500 are down 48.96% compared to this time last year.

Plus there are entire industries– retail, travel and tourism, commercial real estate– which have been completely vanquished. And it’s unclear if they’ll ever fully recover.

Lockdowns have already restarted across the country, and Joe Biden’s advisors are suggesting that the entire nation should lock down for 4-6 weeks early next year.

(Ironically these same advisors are calling to #defundthepolice while simultaneously demanding the police enforce their ridiculous lockdowns. They also want to raise taxes on businesses, but that’s another story…)

Yet, again, the stock market is at an all-time high, higher than it was before the pandemic when corporate profits were at record highs and the unemployment rate was at a record low.

Somehow lower profits + lower consumer spending + higher unemployment + ravaged economy + soaring demand for food banks = record high stock prices.

I don’t think you need a PhD in finance to understand that this makes absolutely no sense– the stock market is completely disconnected from any sort of reality.

It’s no longer about productivity, innovation, profitability, or the health of the economy.

The market has become nothing more than a casino, and investors merely gamblers, placing bets on how much government stimulus money will be sprinkled around the economy, or how much more money the central bank will print.

It’s as if as if trillions of dollars of wealth didn’t evaporate this year. Or that all of the lost value can just be conjured out of thin air by the Federal Reserve.

That isn’t even close to the same thing.

Real wealth comes from production and value creation. It doesn’t come from a central banker conjuring trillions of currency units out of thin air with the push of a button.

And wealth certainly isn’t created when governments go into debt to pay people to NOT work.

I’m not saying any of this to be pessimistic; there are obviously a lot of signs of improvement, and the economy is in better shape than it was six months ago.

But even if Covid did suddenly and miraculously disappear off the face of the Earth, there would still be the legacy of trillions upon trillions of dollars of new debt to contend with.

Consumer debt, corporate debt, and government debt have all soared to all-time highs due to Covid.

But debt is not wealth. Going into debt means borrowing from future prosperity in order to consume today. Debt has to be repaid eventually, and serviced. This is the opposite of wealth.

Yet no matter how high these debt burdens grow, the stock market keeps charging higher.

Even more bizarrely– there’s a decent chance this trend will continue as long as the Fed keeps interest rates at record lows to fuel the stock boom (which they probably will).

And that’s the nature of asset bubbles: as long as central banks print money, asset prices have support to move higher. It’s basically free money for investors.

Now, there’s certainly nothing wrong with grabbing some of that free money that the Fed keeps pumping into the stock market.

Just make sure you’re keenly aware of the risks that you’re assuming. Because if 2020 has taught us anything, it’s that everything can change in an instant.

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The ACLU and College Professors are Encouraging Book Burnings

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, risks to your prosperity… and on occasion, inspiring poetic justice.

ACLU and Professor Team Up to Encourage Book Burnings

Abigail Shrier has committed the ultimate sin: she has a different opinion than the woke mob. And that is an unforgivable transgression.

Shrier’s new book is called Irreversible Damage: The Transgender Craze Seducing Our Daughters, and she discusses some very strong views, such as that children shouldn’t be coaxed into taking life-altering hormones.

This is a controversial topic for many people, and they can choose to support or argue against Shrier’s opinions.

But that’s not how the woke mob works. They don’t use logic and debate to engage in intellectual discourse.

Instead, they simply rage– what Isaac Asimov described as “the last resource of fools.”

So naturally Twitter is jumping all over this book and trying to cancel it.

Target– the mega retail chain with stores all over the Land of the Free, already buckled, and decided to pull the book because apparently it’s full of hate speech.

(Never mind that Target continues to sell White Fragility, which is also full of hate speech that accuses roughly half the country of being White Supremacists…)

But more surprising is that Chase Strangio, a deputy director with the ACLU, is one of the Twitter mobsters.

Strangio recently Tweeted, “We have to fight these ideas… Stopping the circulation of this book and these ideas is 100% a hill I will die on.”

Remember, Strangio is with the ACLU, where the ‘C’ and ‘L’ stand for ‘Civil Liberties’. And last time I checked, civil liberties include freedom of speech. How quaint.

Also joining the mob is a Professor of English from the University of California’s Berkely campus, who encourages people to steal and burn the book.

That’s right, our cultural overseers are now advocating literal book burnings in the Land of the Free.

Click here to read the full story.

How to Be a Hero in Germany: Do Nothing

A new ad from the German government opens with an old man telling his story about how he survived the winter of 2020… back when he was 22.

The commercial is meant to be a comical way to encourage people to stay home to contain COVID-19.

The producers filmed the spot to make it look as if a Veteran of World War Two was being interviewed about doing something actually heroic– for instance, risking his life to save a village of defenseless civilians.

But the ad says that all it takes to be a hero in the winter of 2020 is to do nothing: “Absolutely nothing. Being as lazy as raccoons.”

Sure it’s a joke… but it’s also not.

People actually think they are heroes for being lazy, while shaming anyone who dares to live their lives without fear.

Click here to read the full story.

State Universities of New York Threaten to Hold Students Hostage Over COVID

The system of New York State Universities announced a policy that all students on all campuses must test negative for COVID-19 before LEAVING campus to go home for the holidays.

If students test positive, they will be FORCED to quarantine on campus for 14 days, at the responsibility of the University.

And since campuses close just prior to Thanksgiving, that means students who test positive could be held hostage in isolation on the holiday, prevented from going home to see their families.

One question: HOW IS THIS NOT KIDNAPPING????

Click here to read the full story.

Great idea #593,291: Let’s Tax the Wind

Argentina’s government has been an endless supply of terrible ideas, from wealth taxes to full-blow asset confiscation. Their latest idea? Taxing the air– more specifically the wind.

Companies which sell wind power will have to pay 4.5% REVENUE (not profit) tax to the municipality for the privilege of using the air.

Remember when governments were talking about fossil fuel taxes to encourage energy companies to stop drilling and start investing in renewable energy?

Gee I wonder what’s going to happen with this one…

Click here to read the full story.

“Defund Police” politician calls police over dispute with Lyft driver

The City Commissioner in Portland, Oregon, Comrade Jo Ann Hardesty, has strongly voiced her support for defunding the police.

So you’d think she’d be the last person to ever call the cops.

But Hardesty was recently in a Lyft and got into an argument with her driver over some petty issue over the windows being up or down.

Apparently the argument escalated, and the driver pulled into a gas station and asked Hardesty to exit the vehicle.

Now, instead of resolving the matter like a grown adult, Hardesty– an elected official– decided to call 911 (i.e. a number reserved for EMERGENCIES).

The 911 dispatcher explained to Hardesty that no crime had been committed; if the Lyft driver wanted to cancel the ride, that was his right.

But Hardesty insisted that the dispatcher send the police, i.e. the very people she wants to defund… because apparently this petty dispute constituted an emergency.

Of course there is room for police reform. But Hardesty is absurdly hypocritical to call the police for such a trivial reason… and then demand that they be defunded.

Click here to read the full story.

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Panama rolls out new residency options

If the idea of packing up and leaving has crossed your mind lately, you certainly aren’t alone.

With so many people across the globe staring at a new wave of COVID lockdowns, higher taxes, more chaos in their cities, etc., heading out for greener pastures is a really attractive proposition, especially now that so many people are able to work from home.

Even if you’re not ready to make a move just yet, you might be concerned about the direction of your home country. And in that case, you certainly want to at least start considering your options.

If you ever did have to leave, where would you go? That’s a question you want to answer way in advance, and not wait until you’re packing your bags. So if you ever do feel the need to make an abrupt exit, all the groundwork will already have been laid.

That’s why legal residency in a foreign country is such an important part of a Plan B; it means that no matter what happens in your home country, you’ll always have another place to go. And in Covid times, that makes even more sense.

This year we saw governments all over the world lock down their borders, shutting themselves off to foreigners.

But if you had legal residency (or citizenship) in that country, in most cases you were still allowed in.

For example, here in Chile, the government closed down its borders to all foreigners early in the pandemic. But anyone with Chilean citizenship, or legal residency, was still allowed to come and go.

Citizenship is still the ultimate insurance policy. In many respects, legal residency still provides a ton of similar benefits, but it can be easier and cheaper to obtain.

And just like you can have multiple citizenships, you can also have a portfolio of residencies which gives you the option to live, work and travel in a multitude of countries.

There’s nothing stopping you, for example, from having legal residency in four different countries at the same time.

We’ve talked about Panama a LOT over the years; it’s already one of the easiest places in the world to obtain legal residency.

For most people, Panama’s “Friendly Nations visa” is the best approach. And since 2012, this visa has allowed citizens from 50 countries to easily obtain residency.

There are a number of ways to do it, but probably the easiest option is to demonstrate economic activity by registering a corporation in Panama, opening a bank account, and depositing about $10,000 into it.

Friendly Nations include countries such as the USA, Canada, Brazil, Japan, Australia, and many European countries. You can find the full list of Friendly Nation countries here.

But if you aren’t a citizen of one of those countries, Panama has introduced a few new options to obtain residency by making an investment in the country.

[I expect these options are aimed towards Russian and Chinese citizens, but they’re open to anyone.]

One option is to invest a minimum of $300,000 in Panamanian real estate; this approach is similar to, say, Portugal’s ‘golden visa’ program.

$300,000 is the minimum, but you can spend more obviously. You can even finance the property with a local bank, as long your down payment is at least $300,000.

The real estate investment must be held for at least five years, after which you can sell it and pocket any gains.

(Note that after October 16, 2022, the investment requirement increases to $500,000.)

Panama will also issue permanent residency to foreigners who deposit $750,000 in a Panamanian bank in a fixed deposit (like a CD) for five years.

Personally I would be against that option; Panamanian banks have serious reputational issues and in my mind it’s not worth the risk of parking significant cash there.

Another option for permanent residency in Panama is to invest $500,000 in Panamanian stocks via a licensed brokerage firm, again, for a minimum of five years.

Each of these options also requires another $10,000 in fees for the main applicant, plus $2,000 per dependent.

Of course, each of these options is much more expensive and requires much more capital than the Friendly Nations Visa.

But if you’re looking for a way in to Panama and don’t qualify under the Friendly Nations Visa, you could consider these investment options. There are definitely some interesting opportunities in Panamanian real estate, so that may be the most reasonable option to consider.

One nice thing about the new investment options is that you can do it all through a power of attorney, without actually ever setting foot in Panama. So there’s a fair amount of flexibility.

Each of these options can be completed within as little as 30 days of submitting the proof that you have complied with the requirements.

(If you want to learn more, we go into even more depth about the newest Panama investment visa options here.)

The overall trend around the world certainly seems to be countries opening up to foreigners who want residency and citizenship.

We have highlighted a number of countries actively trying to attract foreign remote workers by offering easy temporary residency, like Estonia, Georgia, Barbados, and Bermuda.

And then there are economic citizenship programs that have become even cheaper, like St. Kitts and St. Lucia.

And now these new options to obtain residency in Panama.

A lot of governments have finally realized that they need to roll out the red carpet to foreign investors and highly mobile workers, so this is a positive sign.

Just remember that these programs can and do change. And on occasion they’re even cancelled—which recently happened with Cyprus’s Citizenship by Investment program.

So I’d encourage you to not procrastinate. You will want to consider taking action before anything changes, and before your Plan B becomes your Plan A.

Insurance is only worthwhile if you have it before disaster strikes.

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