[wind_magic]

Or, why I really dislike the new knee jerk reaction to "off shore tax cheats".

Imagine you get to together with a couple of people from here at Sailnet and decide to start a company together manufacturing boats. You are from the U.S., another is from Canada, another Australia, and a few others from other countries. You all throw in a little seed money and you want to incorporate and build a business together.

You look around and decide that the best place to incorporate is in the islands, low taxes, good banking, pretty scenery for the annual corporate meeting, etc, seems like the best choice because Canada, the U.S., Australia, etc, all have really high corporate tax rates, so why incorporate there, it doesn't make any sense to do so.

After incorporating you open bank accounts in three different countries, Mexico, Switzerland, and Australia, for various reasons, and you open a brokerage account somewhere too to hold idle cash so it isn't sitting there doing nothing.

Few of the guys decide to do the design and manufacturing, some others decide to do sales, so some get together and build a small place in Mexico to build the boat - why Mexico ? Because it's warm, land is available there, labor is inexpensive and easily trained, etc, good choice, so you build a little shop there and start building boats.

Guys doing sales figure the best market is in Australia, Europe, and America, so they open three sales offices, one in each country and start printing up brochures and selling boats to anyone who will buy one. Boat needs a warranty so they make a deal with a company in Japan to underwrite the insurance and make good on the deals, for their percentage of course.

After things get moving the group brings in a few more people and decides it wants to issue some shares and get more people involved, let the owners cash out a little equity to build some big houses, buy a few cars, and the like. So everybody gets together and decides they will list in Dubia because that is where they think they will get a good reception, and their second choice is possibly on the Nasdaq in the United States as an alternate, maybe an ETF on another exchange in Europe.

So the company is moving along, has investors from all over the world, more bank accounts than you can shake a stick at, and is paying people in 17 different currencies ... the simple question is ... WHAT NATIONALITY IS THIS COMPANY ? Is it where it is incorporated, where its original owners live, where it builds boats, where it sells them, where it does its banking, where it trades its stock, or in this day and age is just in whatever country decides it wants a little more tax money and accuses everyone of being offshore tax cheats ???

This is a VERY important question now - because the current administration of the U.S. has now come out and decided to fight "tax cheats" who are incorporated off-shore, doing business in other countries, and "hiding" money in non-U.S. banks.