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Would You Move Offshore to Save Taxes? An Interview with Andrew Henderson, Nomad Capitalist

  • July 27, 2020
  • 1.9K views
  • 6 minute read
  • Jeff Wiener
expat entrepreneur
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I’m a first-generation Canadian.  When my grandparents started looking for a place to live post World War II, they applied to a number of countries including Australia, the US, and Canada.

It so happens that their immigration paperwork was accepted to Canada first, and so, my grandparents, along with their two kids, came to Canada.  

My mother met my father, and the rest, as you say, is history.

I’m a proud Canadian. I enjoy living in the country and all that it has to offer including the education system, the infrastructure, the healthcare (more or less), and most importantly, my freedom.  Freedom of speech, of association, and my right to vote.

If for whatever reason, I am not happy with the government, I can exercise my democratic right to vote. I can vote municipally, provincially, and federally.  As a result, our various levels of governments, as inefficient as they sometimes are, are held accountable to the populace.

Fortunately, and with some exceptions, one being when Canada’s Prime Minister vilified small business owners in 2017,  I have also been more or less pleased with how my country is run.

Let me address the 2017 situation:

Canada’s tax system is very fair if you’re a middle-income earner, or, small business owner. Once your income exceeds approximately $220,000 CDN/year, or you build a significant amount of wealth, Canada’s tax system is quite regressive and unfortunately acts as a disincentive for future growth. 

The irony is, this is the type of investor and entrepreneur that every country seeks, the risk-taking, business building individual, so when Trudeau vilified the wealth and small business owners in 2017, he created an us vs them mentality.

For the first time in many years, I felt like I wasn’t needed by my country, and that memory has sat with me for the last three years.

Now fast forward to 2020.  We’re deep into a worldwide pandemic and economic recession.  Most governments around the world have increased their budget spend by a considerable amount.  Those budgets eventually need to be repaid, but, I imagine it’s going to be at least a few years before they even start discussing reducing these over-bloated debts.

BUT, when they do, you can be certain that the rhetoric around the us vs them will become even stronger than it was in 2017, and there will be a very heated debate about increasing business and personal taxes, and perhaps even introducing a wealth tax.

It was Winston Churchill who said “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle?”

** You can listen to the podcast I had with Andrew Henderson from Nomad Capitalist where he and I discuss moving off-shore:

Canada is an Amazing Country, But … The Tax Rate is Very High

I’m now in the later stages of my career, so the thought of leaving Canada isn’t really an option for me, but, if I were a younger entrepreneur considering where I want to live and start a company, there would be many considerations, one of which would be the tax rate, and how tax and business-friendly the nation was to their entrepreneurs.

I would also remind our politicians about an economic term called “The Laffer Curve”.

The Laffer Curve considers the relationship between the level of taxation and the government’s revenue.  There is a point on the curve that maximizes revenue, and anything beyond that point, the higher the tax rate, the lower the tax revenue.

Laffer Curve

At this stage, Canada has a marginal tax rate that well exceeds 50%, and is nearing 55% in some provinces.  At the current tax rate, there is less and less incentive to operate a business, maximize revenues and profits, and build wealth. After all, the more the government confiscates wealth by way of taxes, the less the incentive there is to produce.

And that’s where many entrepreneurs and taxpayers decide that they’ve had enough, and vote with the feet.  They move to a tax-friendly (or tax-friendlier) country.

And make no mistake, there are many many countries around the world who are handing out citizenship and clamoring for these wealth creators and entrepreneurs to call home.

Enter the Tax Consultant

I had the privilege of speaking with Andrew Henderson from Nomad Capitalist on my podcast.

Andrew’s company helps successful entrepreneurs, investors and business people reduce their taxes, grow their wealth, and become global citizens.  His company’s slogan is  “Go Where You’re Treated Best.”

And not so surprisingly, there is a huge demand for his service. 

Most Western nations operate under the assumption that their own country is the best place to live.  They assume that they can treat their tax citizens with disrespect, and these citizens will obligingly continue to pay higher and higher taxes. What isn’t acceptable is to create an US vs THEM mentality.

Now, there’s a reason the Laffer Curve starts to slope downwards once it reaches past the point of peak revenues.  The wealthiest people can pick up the phone, and call people like Andrew Henderson for assistance.

Not so surprisingly, here’s a headline from a Globe and Mail article in late 2018:  High-income earners paid $4.6-billion less in taxes in 2016 despite a higher rate for top 1 per cent

And here’s a similar article from an American newspaper: New York City expected to lose more than $300 million from wealthy fleeing city for low-tax havens

So how are the federal governments around the world going to cut their deficits?

They have two choices, they can either raise taxes, and/or, they can cut expenses. Cutting expenses doesn’t win votes. 

Unfortunately, in order to remain competitive, any nation has to be cognizant of how they treat their wealthiest investors and entrepreneurs, otherwise, there are many countries around the world waiting to offer these dissatisfied citizens a new place to call home.

And as a result of the pandemic, and the majority of the workforce somewhat sheltered in place for the foreseeable future, and with not nearly as many people traveling around the world or making their way back home, working remotely is now more of an option than it ever was.

The world is a big place full of wonderful lifestyle opportunities, and there are people like Andrew who will be more than happy to help find you a new place to call home.

I’m not advocating leaving your country. I’m not going to, and I have no plans of ever relinquishing my citizenship or of expatriating. I am very aware though of the societal forces that are at play. On one hand, we have the “haves vs. the have nots”, and on the other, we have the government’s ever-increasing need for more dollars to spend.  We have the governments who need to keep their economies alive by encouraging, rather than discouraging the wealth producers to produce.

It’s a delicate balancing act, one many entrepreneurs (and wealth creators) choose not to play.  They simply leave.  And when they do, people like Andrew are only a phone call away.

Before you go, I wrote this blog post that I think you might find interesting (and it’s on target to what I just discussed) How I Protect and Grow My Wealth With These 8 Simple to Understand Concepts.

If you liked this post, you might also enjoy this one: Do you Have the Most Important Trait Required to Become a Millionaire?

Download my book and Amazon bestseller (number 1 in business, number 1 in non-fiction).  You can get your FREE copy here. This book covers in great detail how I protect and grow my wealth through strategically investing in real estate, and maintaining a health cash position.

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Jeff Wiener
Jeff Wiener

Jeff sold his company to private equity in 2017 and is now semi-retired. Jeff spends time traveling and with his family, writing this blog, managing his real estate portfolio of apartment buildings,  overseeing his investment portfolio, investigating angel investments, coaching other entrepreneurs, and managing his private equity holdings. Jeff is currently on a couple of boards, one for profit, the other not for profit, and now helps entrepreneurs grow their business, profits, and ultimately, create wealth.

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