Dateline: Kuala Lumpur
Here at Nomad Capitalist, we’ve always encouraged people to go where they’re treated best, and if you’re a wealthy person with a high income, you should at least consider the opportunity to legally reduce your tax rate overseas.
There are legal offshore tax strategies that you can use to keep more of your own money. And with that money, you can reinvest in your business, provide more for your family, and build your legacy. But some people are too concerned with one question to ever take the leap:
“What is the public going to think of me?”
If you leave the United States and pay fewer taxes to the government, are people going to stop liking you?
But maybe that’s their problem.
In this article, I’ll discuss why most people seem to hate those who are more successful or wealthier than they are and why their opinions shouldn’t stop you from investing overseas, going offshore, paying fewer taxes, and diversifying your assets.
VICKY WARD AND WALL STREET GREED
A recent article by Vicky Ward has inspired me to address this “trend” of hating the wealthy.
Ward’s article discusses how the COVID-19 crisis has affected the wealthy differently than the average American citizen.
Ward has written books in the past on “corruption among the country’s wealthiest 1%” and “Wall Street greed” in which she bashes the wealthy. She has spoken out on the supposed unfair privileges of the wealthy in multiple articles.
But in this particular article, Ward explains that she feels the wealthy have an unfair advantage during this time of the coronavirus pandemic. The wealthy have been able to escape the coronavirus pandemic in some ways by distancing themselves and leaving to their large houses farther away from the city to less populated places, while others in New York City are stuck in an area where they have more of a chance of being hurt by the coronavirus pandemic.
What Ward doesn’t address is the decisions that the wealthy have made to get them where they are. And once they gained their wealth, they chose to financially strategize in order to have a backup plan.
Not everyone – not even all those with money – do that.
People who have multiple assets, multiple houses, multiple options for where they can go in a time of crisis, have these things because they have diversified their assets to protect themselves and their investments.
The wealth that they have earned has been an insurance policy that these entrepreneurs, investors, and businessmen have been working to build for years.
Ward goes on to accuse the wealthy of being ruthless and greedy in order to get ahead. But what Ward sees as “greed,” I see as using good business sense in a competitive market. Successful people know that they aren’t going to progress in life – and in their finances – if they let other people take their business. That wouldn’t make any sense.
The majority of millionaires in the United States – more than eight out of ten – did not inherit their money. They’ve gotten to where they are with hard work and smart decisions.
But that doesn’t seem to matter to people who share Vicky Ward’s same opinions.
Many people, like Ward, seem to have a personal gripe against the wealthy. These are the people who are angry and jealous because they don’t know how to be successful or haven’t put in the work. They haven’t innovated because they expect to get by in the world the same way that generations before them did.
But that isn’t working anymore.
These people are motivated by anger and jealousy to hate anyone who is more successful or wealthier than they are. Because they have not created the option for themselves to leave where they are and go to a second house or another country where they have a second citizenship, they hate those who can.
This jealousy is going to cloud any sound judgment they might have, so I wouldn’t make them my primary source of validation.
BITING THE HAND THAT FEEDS YOU
Another example of the toxic public attitude toward wealth became painfully clear in April of this year when Twitter users lashed out at Jack Dorsey, co-founder of Twitter and CEO of Square, and essentially bit the hand that feeds them when he pledged one billion dollars to help fund COVID-19 relief.
He gave away 28% of his net worth and they were mad about it!
On Twitter – the platform that Dorsey created so that everyone can have a voice – people criticized Dorsey, saying that the donation wasn’t enough because it wouldn’t have any real significant impact on his finances or change his lifestyle. They didn’t want his donation if it wasn’t going to hurt him financially and change his wealth status.
Other people in their righteous anger accused Dorsey of just making this donation for PR. Because they seem to assume that the only reason an “evil” and “corrupt” wealthy person would donate to any cause would be to make themself look good.
These people in the Twitter comments seem to forget (or not care) that this is the guy who created Twitter – the very platform that they are using to complain – in order to give these people their voice and an online presence. This is the guy who created Square, which has allowed small business owners to collect payments, creating a more democratic system that has pushed business and entrepreneurship forward in a way that makes it easier for everyone.
People seem to forget the positive contributions that Dorsey and other self-made millionaires and billionaires have made, reducing them to nothing more than their “corrupt” wealth.
Again, I wouldn’t make these kinds of people your main source of validation.
A WEALTH TAX PUNISHES INNOVATION
Money is not inherently evil or corrupt, though the people in Dorsey’s Twitter comments may argue with me.
Most millionaires in the United States have earned their wealth through years of hard work and smart business strategy. They earned it through contributing value to the market and the world.
This is not a zero-sum game. Because the free market is made for competition, people have the opportunity to innovate and create something new that they can contribute to the market. And this innovation should be rewarded.
Should we punish someone for innovating, creating, and working hard?
Implementing a wealth tax or applying higher income taxes on the wealthy punishes them for the valuable contributions they have made. Taking their pay away from them is devaluing their worth. There are people in the world who want to raise taxes and put high taxes on the wealthy, not because they want to use this money to help their social causes but because they believe that billionaires should not exist.
I’ve spoken to people who lived in countries where everyone made the same salary. A hardworking, innovative CEO who had made contributions that help hundreds of thousands of people would be paid the same as a bus driver.
These systems did not care how valuable your contributions were. They just didn’t want you to make more money than anyone else.
These systems didn’t work.
GO WHERE YOU’RE TREATED BEST
Why should the wealthy stay in a place that is going to punish them for their contributions?
Today, more and more countries in Asia, Latin America, and Eastern Europe – countries with lower taxes than the US tax system – are opening up to investors and new citizens. These are countries that want you there. They are opening up their markets to your business. Their economies are growing and more people are moving to compete in them.
You have the option to move somewhere better – to an emerging market with new and better opportunities. Why not take them? No matter what you do, people are going to be angry with you. Why not go where you’re treated best?
If you no longer feel welcome in your western country because of the number of people complaining about the wealthy and the 1%, – the people that are going to hate you no matter what you do – you are not obligated to stay where you are.
As a wealthy person, you have the option to go offshore, to make investments and bank overseas, to obtain a second or even third citizenship, and to legally lower your taxes. By lowering your tax rate, you are going to have more money on hand to make significant donations like Dorsey did. Who cares if people in the West hate you for it if you know that you’re making a difference?
There are other countries in the world that want your business. They want you to bring in your money and your talents. And they just might love you for it.
This could be an opportunity for you to move to a country where you’ll pay fewer taxes and keep more of the money that you’ve earned. By moving to a better place, you’re going to have better taxes, better friends, and a better lifestyle. There’s nothing ethically wrong in going to a place where the rules are more in your favor.
We live in a world where you can’t possibly make everyone happy. But you can start by prioritizing what you think is best – what will benefit your life – and disregarding the things the naysayers in this world are going to tell you.