Ken McElroy and Nomad Capitalist founder, Andrew Henderson, in a discussion about lowering your taxes through investing in different worldwide markets & a conversation about what wealth taxes actually do around the world.
Learn more about Andrew Henderson by visiting Nomad Capital https://nomadcapitalist.com
Ken McElroy:
So, Hey everybody, I got Andrew Henderson here. He’s got nomad capitalists and he has successfully reduced his tax rate legally from 43% down to 1% by buying properties in, in other countries, he, he has, uh, lots of websites, the five most valuable passports for visa free travel. The 12 second residence permits that you can, uh, get what this, a single bank deposit and fastest, uh, country to get citizenships. So all kinds of stuff around, uh, moving out of the country or moving your wealth into another country, having a citizens shipped somewhere else. Andrew, welcome.
Andrew Henderson:
Great to be back with you.
Ken McElroy:
Let’s talk about the wealth tax. Obviously it’s a huge topic in America, especially now with the debt and the pandemic on our shoulders. Um, you know, let’s, let’s chat about how the different countries treat wealth tax differently, or treat wealth differently in how they tax wealth. Can you walk through the, to the listeners, what wealth tax is and how it’s different from an income?
Andrew Henderson:
Well, I think we’ve written the 2000 articles over the last eight years. I’ve made well over a thousand videos on a book and all that time. I think I’ve never seen so much of an, uh, a height tax. As I see right now with the wealth tax, not only in the U S I see the UK has been pushing a big time. I see talking Canada, Australia, even New Zealand, which is supposed to be the tax friendliest of all these little places. And so what is a wealth tax? It is, uh, the politicians in the, what I call legacy brand countries who have decided, uh, we don’t need to be competitive anymore. People just going to come here because, uh, as Gavin Newsom said, where else are you going to go? There’s not a thousand places in the world of beaches. There’s not 2000 places with girls in bikinis, sitting at a beach bar.
Andrew Henderson:
You can’t go anywhere else. You’re stuck with Gavin. And so what they’re deciding to do, not only at a national level, but in some of the States like California, Massachusetts, et cetera, is say, every year we’re going to go through and we’re going to try and calculate your wealth. Now, the issue with this, which is why so many countries abandoned it in Europe, there’s only three or four left that have a dozen or so at the turn of the century, uh, is what as well is it cryptocurrencies? Of course, it’s money to bank. I guess it’s cryptocurrency thing. If they know that exists, I’m all for, as you said, all legally, legally. So I guess they know your crypto exists. Aren’t cars. I mean, home equity, Idaho in the UK, they were saying half a million pounds. That’s not a lie. I mean, basically if you own a paid for broom closet in London, you’re now on the hook to hand over 5% of your wealth.
Andrew Henderson:
And so the numbers have ranged, I guess, anywhere from one or 2% Elizabeth Warren’s, there’s two to 3%, uh, South African proposed, 7% a year. Um, one guy proposed that. So basically every year you just add up whatever you have, according to God knows what standard, uh, and you send them a check every year. And the idea is that eventually they will transfer your wealth from the evil, rich, like you nasty people. And Elizabeth Warren will get her mitts in there and move it around a little bit and she’ll pass it on. So other people have opportunities because your children shouldn’t be able to inherit what you have. So I guess if you’re on the South African system, about 15 years, you’ll be broke with these zero interest rates. So that’s what it is. So what do you do?
Ken McElroy:
I think, what, what kind of, what part does culture having created some of these wealth taxes in your opinon?
Andrew Henderson:
Well, uh, I mean, 1995, 1996, my father told me, uh, by happenstance, what I’ve now turned into my five magic words go where you’re treated best. He realized back then in the United States where I’m from probably won’t always be the best place for entrepreneurs. I was 11 or 12. I wanted to be an entrepreneur pretty early. And he said, you know, even if it’s another country go where you’re treated best. And I think he saw the writing on the wall that is income, correct. How politicians, uh, in a country where more and more jobs, people like me, I have about 40 people who work. Maybe we’re going to be at 50 very soon. I don’t have a single person working for me in the U S it’s not competitive. And so with the politicians now have the ability to say is, we’ve got to tax these nasty rich people who live in our country because they’re not creating opportunities.
Andrew Henderson:
Well, what really has happened over the last 20 years, even on publicans like Steve Bannon have admitted this, you built a middle-class in places like Asia in places like Eastern Europe, they are coming up. And so guys like me can now go and with a lot more risk and you know, all that, uh, go in hiring, create value. And so, as, as wages in the U S are stagnant, the culture has been, who do we? Who are we going to blame? Yeah. Have you ever read the, uh, uh, how to win friends and influence people? People aren’t going to blame themselves, mass murderers don’t blame themselves. They read the first chapter of the book, the guy on death row. He doesn’t blame himself. Do you think people blame themselves for their economic position now? So the situation now is in cultures where they were once high in the hog.
Andrew Henderson:
I lived, I graduated high school in Avon Lake, Ohio, and there were various plants in Avon Lake and Sheffield like that have become far less productive because there are better places to run those plants, but there was a time and they’ve unlike Ohio, where all you to do is finish it unlike high school and show up sober at the plant. And you had a great job. You had a pension that took care of you for a life. And that’s gone now because, you know, nasty guys like us like competition. And so we’re going where we’re treated best. And so, uh, you know, politicians in these cultures are blaming, you know, how, why don’t we just get to have a $60,000 a year job for showing up sober and sweeping the floor.
Ken McElroy:
So, so you kind of touched on these wealth taxes and how they haven’t worked in other countries. Can you, can you talk about how they were and now they’re not, and, and, and why you see them kind of coming and going?
Andrew Henderson:
Well, I mean, a lot of European countries have had wealth texts over the years. Um, the one that I most work with now is I have a lot of people who want to leave their country and live overseas in Spain as a place that a lot of people feel familiar with. They want to go live in Spain, except Spain has a wealth tax Spain’s government is probably Spain as a country is extremely inefficient. I went to a, uh, a bar once with some friends of mine, but five years ago in Valencia is at the end of the month. And they said, sorry, we’re fresh out of alcohol. We didn’t pay the liquor supplier. So you can’t have any wine, but is inefficient as that is a bar was no wine. The government in Spain is excellent at collecting their tax, their high income taxes and the wealth tax.
Andrew Henderson:
They’re really one of the only ones left, but frankly, you’ve had a lot of countries. I can’t even keep track of them all, I guess, Sweden, Denmark, places like that, where they’ve said, this is too difficult. And what they also learned in places like France was you can move from France, a couple of miles over the border, into Belgium, where part of Belgium, they speak French. And it’s not that difficult. Now here’s the rub. If you’re an American, when Elizabeth Warren was asked about this, I think it was on CNBC. She said, huh? You don’t understand our system. This is what I talked about. Cause I’m the nomad capitalist. She said the us system, we’re the only system in the world, basically besides an African dictatorship where we have extra territorial taxation, we tax our citizens worldwide. So if you go and live in Europe, if you go and live in Asia, you may get an ex, an exclusion.
Andrew Henderson:
That’s some of your income. You may get tax credits. You may get, you know, write down. You can move overseas and pay a lot less, but you’re never going to be free of the IRS until you give up your us citizenship. And so most people don’t want to do that. A good friend of mine team. I do that. And so he thinks even with record high numbers of people, expatriating, they’re actually applying and they’re suppressing it. I don’t know about that, but how many people are going to renounce their citizenship? I did. And not really for that reason, but you know, that is the rub. If you’re an American, is they can follow you with this wealth checks anywhere. So I think that the reasons why it failed in many of these European countries was you had this freedom of movement within Europe that you don’t have in the U S you know, even California is at our state wealth tax.
Andrew Henderson:
We’re going to follow you for 10 years. We’re going to follow non-Americans for 10 years and try and figure out what percentage of their wealth was generated from California, and then send them a bill. So if you were a guy from Dubai who comes and spends a long summer in LA for 10 years, they’re going to try and get there. They’re cut. That was the proposal. So, um, you know, there’s a very isolated view where the United States, in my opinion, as someone who’s been all over the world, that, uh, you can’t escape. And I think that’s what could make the U S much more deadly. I think other countries like I have discussed similar extra Tor, uh, territorial taxation to where they would do the same thing to people in the future. So that is a trend that I think could happen in Western countries.
Ken McElroy:
Yeah, I would agree with you. Uh, thank you, Andrew. I appreciate that. And now we’re gonna jump over to the premium site. Again, Andrew, at KenMcElroy.com/Premium. And we’re going to, we’re going to talk to Andrew about, uh, you know, some of the most tax friendly countries.
Ken McElroy:
Andrew, thank you. Uh, lots of knowledge here, guys, do not try to do this on your own. I don’t know if you just heard of in the last two minutes, there was a 20 years plus probably of knowledge right there, just in things that, that he’s figured out over time, make sure you make your way over to nomad capitalists. Uh, and, and, and don’t try to navigate this yourself. There’s a lot of things that you can do, right? There’s a lot of things you could do wrong, uh, make sure you get the best advisors for that. Uh, Andrew, again, thank you so much for your time. Great information for, for the folks. And, uh, I wish you all the best.