Choose Your Own Escape Route

In the quest for more practical freedom - to get bureaucratic bludgers off your back and reclaim your life and money - there is, as they say, "more than one way to skin a cat". And the starting point for such a freedom strategy is always about finding ways to hang on to more of your own money. Money is your primary freedom tool - so the more of it you can keep, the more freedom-related choices you'll be able to make.

With that in mind, here are four ways you can escape from your incarceration as a tax slave and increase your practical freedom. Four different routes you can choose from.

The fundamental assumption here is that your money belongs to you. And so finding ways to keep it is a perfectly moral quest, though increasingly deemed an "illegal" one by our "masters".

Each route is likely to suit a different psychological type, providing a possible solution to your own freedom quest - one that's compatible with your own personality and circumstances.

1. Structuring: This is the strategy of choice for most people (who think about such things), as it provides many benefits - without disrupting your lifestyle too much. It's also designed for those who want to stay on the "right side of the law".

Structuring simply means utilising certain legal strategies, in conjunction with various entities - trusts and corporations etc. - to minimise one's tax to the extent of what is possible, without breaking the law. This is like walking a tightrope of course, because the law is infinitely elastic and changeable. However, it is certainly possible to arrange one's affairs in such a way that you don't have to lose sleep at night, worrying as to whether the "man from the government" will come knocking at your door.

This strategy does require the assistance of legal professionals if you want to do it right. The more money and other assets you have - the more you need to get the structuring right. However, there are some basic moves you can make that are generally applicable, and will give you some obvious advantages.

The downside is that effective structuring is often only available to those with considerable assets. For such people, the cost of setting this up is negligible - and can be done by hired hands. It is, of course, the tax reduction and asset protection strategy of choice for the wealthy.

2. Un-Tax: This strategy has become more commonly known as the "sovereignty" option, where you rely on constitutional or other legal precedents to opt-out of the tax system - becoming, in effect, a tax-protester.

This strategy is mainly promoted in the USA, and is essentially about seeking and employing a legal/constitutional defence for opting out of the tax system.

This tactic can be likened to the famous image of the Chinese student standing in front of the tank in Tiannamen Square - a defiant refusal to cooperate with the authorities. That, of course, is a very positive analogy, as the tank in question did actually stop!

There are risks of course, as your "tax rebellion" is plain for the authorities to see - and act on if they wish. You also need to have a head for legal argument. For to be effective in this way requires that you have a considerable amount of knowledge of the basis for your rebellion. That will demands a lot of reading and research on your part.

Personally, I'm very sceptical regarding this option, as I believe that in many cases, the authorities have not bothered to act - and therefore the strength of the various cases has not been tested fully in court. However, it is certainly true that if enough people were to apply this strategy, then it would move into the realm of civil disobedience, and would very likely succeed in undermining the tax authorities - which largely function only by virtue of society's voluntary compliance.

The other obvious weakness of this strategy is that it pits you, as an individual, against an armed opponent. For at the end of the day, the state has the guns - and will use them to force your compliance, or lock you up trying.

The downside is that ending up in jail is a real possibility - especially if you go around making a loud noise about your activities. It's one of those ideas that would work if everybody did it. But they don't, and won't.

3. Disappear: This is the total privacy strategy - where, instead of becoming a "challenger" of the system in direct confrontation with the authorities, you simply make plans to disappear off the government's radar screen, so they don't notice you any more.

There are various levels of privacy you can aspire to - the most obvious one being to become "unfindable" by never disclosing your residential address. You just use a PO Box number or maildrop, and when asked for a physical address, you simply quote the street where your mailbox is!

To become completely private, you would also need to close all your domestic bank accounts, work from a cash base only, and get rid of all your debts. You would need to make sure you aren't on any public rolls - like for voting. You would also need to develop your own offshore money sources - and keep them private. You'd want to make sure all your communications were private - and that you didn't keep paper/data records of anything that could incriminate you. And one more thing, you wouldn't want to own any physical property in your country of residence.

You may find this method very "extreme" and not want to use it fully. However, it is possible to enhance one's privacy by applying many of the "lower level" strategies as suggested. Each step towards increased privacy, is a step towards more freedom.

The downside is that, once again, you may be breaking specific laws - and risk the resultant penalty if caught.

4. PT: This is the "Perpetual Traveler" option - where you become a non-taxpayer by exploiting the "resident for taxation purposes" laws in various countries.

The essence of this strategy is that you need to divide up your "life" into different jurisdictional bases. For example, you would want to become a resident in a place which has little or no tax. Ideally, this should be a tax haven, or perhaps a country which doesn't tax worldwide income. This lays the foundation of your lifestyle - for as a legal resident of such a place, you are not liable for any (or very little) tax on your income.

The next step is to arrange your financial affairs (banking) in yet another jurisdiction, while protecting your assets in a different one again. Finally, you would set up your legal business structure in a different jurisdiction from any of the others. And once you have achieved all of that - you are free to actually live anywhere on earth - as a visitor.

Most developed countries will allow you to stay up to 6 months as a tourist. And as a tourist you are not liable for any taxes (apart from sales taxes of course). When your time is up, you simply move on to your next favourite destination - and repeat the process.

You don't have to move to a different country all the time, but can choose say three places which you will spend your time in each year (or even two places). The only proviso is that you mustn't stay longer than the prescribed time that qualifies you as a tourist. Stay longer - and you may be deemed a "resident for tax purposes", and be liable for tax.

Naturally, this option is not for everybody, as many people would feel uncomfortable uprooting themselves and living in different countries as a matter of course. But it does offer a legal way to live a tax-free lifestyle, and to reduce bureaucratic influence on your life. The other advantage is that most countries actually treat tourists better than their own citizens. You'll find you are mostly welcome - as is your spending!

The downside is that it is necessary to change your life somewhat and rearrange your affairs. The upside is that when done properly you will not be breaking any laws - and can sleep easy at night.

Important note for US citizens: to benefit from this strategy, you would need to give up your US citizenship and acquire a new passport. The reason is this: The USA taxes on both the basis of residency AND citizenship (one of the few countries in the world that does) - and expects you to pay tax, no matter where you live on the planet. There are some financial concessions for being outside the US, but you are required to continue filing a tax return - and paying taxes as due. The only way out of this dilemma is to forego your US citizenship - and start over in a new country.

So you can see, from the brief overview of each strategy, that there is something for everyone - something to suit differing personalities. And all you need to do is take your pick and work towards it.

Yours in freedom

David MacGregor