Most people trying to make a crust online (or offline for that matter) are so focused on doing just that, they ignore taking simple steps to ensure that they hang on to just as much of it as they can. Instead, they hand over large lumps of their hard-earned money in tax, usually in one of two mistaken beliefs. Either:

1. It’s a good thing, a sure sign of a civilised society. Or,
2. If they don’t, the Feds will “get them”, fining them, expropriating their assets, maybe even jailing them.

I’d respectfully suggest that those two “reasons” are mutually exclusive. Visiting penal sanctions on citizens because they decline to hand over their money to you could hardly be regarded as the mark of a civilised society. In fact it might more properly be regarded as the mark of a criminal one!

So how does this situation arise, and how can the thinking man or woman avoid it?

Most e-mails I receive regarding business opportunities trumpet the benefits of being an entrepreneur. Now the Shorter Oxford English Dictionary defines “entrepreneur” as follows:

“A person who undertakes or controls a business and bears the risk of profit or loss”.

Yes, that’s “risk”, “profit” and “loss”. All things that people with their own businesses regard as being as inevitable as night following day.

Interestingly, the SOED contains no definition of “rentseeker”. Still, key the term in to Google and you’ll discover that it refers to people who want to be paid to take your money for a “service” that you would not yourself choose to pay for.

Now let’s just talk this one through:

1. They want to be paid. In practice, they don’t just wish to be paid, but to enjoy substantial pension rights. All of this is funded by the taxpayer.
2. In return for these payments, they undertake to extract further sums of taxpayers’ money to provide what they describe as “services”.
3. Critically, taxpayers would not, either as individuals or collectively, freely choose to pay for these services. If they did, they would do so, in the marketplace.
4. The money is therefore taken by coercion.
5. They lack any concept whatever of risk (at least to themselves) or of profit (to taxpayers). Loss, on the other hand, is guaranteed to each and every taxpayer.

Now, in any other context, this process is known as “robbery”, or, more subtly, “fraud”.

After all, it IS your money, right? Well not according to Uncle Sam, or, depending where you’re based, your nearest friendly local equivalent.

Governments seem to think that they’ve generally got a whole lot better set of ideas about what to do with your money than you might have yourself (despite all the evidence to the contrary in front of everyone’s eyes). What they’ve particularly got, however, is a set of excellent ideas for using your income to pay their own salaries and pensions (final salary, index-linked, performance-irrelevant). And these people are known as rentseekers.

The legendary investor, Jim Rogers, writing in the Foreword to “Financial Reckoning Day”, by Bill Bonner and Addison Wiggin, had this to say:

“In America, if you have a job, you pay taxes. If you save some money, you pay taxes on the interest. If you buy a stock and get paid a dividend, you pay taxes. If you have a capital gain, you pay taxes again. And when you die, your estate pays taxes. If you live long enough to get social security, they tax your social security income. Remember: you paid taxes on all this money when you earned it originally and yet they tax it again and again”.

Now wouldn’t it just be nice to avoid all of that?

Because it’s the simplest thing on earth, particularly if your earnings are being generated in that weird nether land called cyberspace, to use a set of perfectly legal arrangements to process your money FREE OF TAX.

In other words, you set yourself up a company, a bank account, and a business address somewhere no predatory taxman stalks! That is, OFFSHORE. There are quite a large number of these jurisdictions, and there is not a single Fortune 500 company that doesn’t use them. I kinda think that tells you a lot.

Once it’s all in place it works just like any other company arrangement – you just don’t pay any tax!

Now no-one’s suggesting that it costs nothing to set up these arrangements, and it’s true it’s not going to figure high in your priorities if you’ve got a marketing budget of $10 and are wondering how to pay the rent. But, assuming that you’re already generating even reasonable income, it just has to make sense to look into this.

After all, even if you’re not interested in saving yourself a whole lot of money, there’s another reason you might wish to avoid all of this. I’ll leave you with another quote, this time from Charles Adams, in “For Good And Evil: The Impact Of Taxes On Modern Civilisation”:

“Tax haven ‘refugees’ report that they are tired of fighting the taxman. They have had enough of audits, year in and year out, of having their banking and accounting records picked over and questioned. They are tired of having their privacy totally destroyed by inquisitional tax agents. They are tired of appeals, big fees for tax professionals, and endless tax litigation. Many complain that the soak-the-rich philosophy of their homelands was not as intolerable as the harassment and scorn they receive from revenue bureaucrats”.

Personally, I can relate to that...

If what I’ve been saying strikes any chords at all with you, there’s much more at http://www.advent-taxfreedom.com, and a free e-zine too.