"And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed." - Luke 2:1, New Testament

"Since the beginning of recorded history, the business of government has been wealth confiscation." - Ron Holland

It's a common assumption that governments exist in order to serve the people of a country and that in order to do so, they must be accorded the necessary evils of power and taxation. I believe that the opposite is true, that in the perception of those who rule, power and the ability to exact tax are the very purpose of government, and service to the people is merely a justification for that pursuit.

This condition is perennial. Throughout history, rulers have maximised their power over their minions and, likewise, have exacted as much taxation as they have been able to get away with. Consequently (and quite understandably), it's always been the norm for people to try to protect their wealth, however large or small, from confiscatory taxation.

Taxation is, of course, legalised theft. It is never collected voluntarily, as it might be with a charity or place of worship; it is taken by force. (If you don't agree, try refusing to pay.)

Centuries ago, those who had acquired a measure of wealth might have hidden it under the floorboards or buried it in a field. However, over the last century, as long distance travel became increasingly possible, those who have possessed wealth have developed a more reliable method: store it in another country, one where the laws of confiscation are either not so rapacious, or -- better still -- don't exist at all.

The Era of the Tax Haven Blossoms

Tax havens are not a new idea, but they didn't come into their own until the 20th century -- a time when they flourished. Deservedly, they've become increasingly sophisticated and serve their clients extremely well. So well, in fact, that they've become a threat to those countries (mostly much larger countries) that are oppressive in their tax regimes. Eventually, these countries joined together to form the Organisation for Economic Co-operation and Development (OECD), which, despite its euphemistic name, is charged with the dual goals of ending tax havens and creating forced equalisation of taxation in most of the world's countries, whilst they allow the primary OECD countries to do as they please (to operate independently of the forced taxation equality).

In recent decades, the OECD have ramped up their campaign. First, they created propaganda describing tax havens as centres of "money laundering," suggesting that money that had been obtained through criminal means was being transferred to overseas banks to disguise its source. (An excellent treatise on this subject can be found here.)

At the same time, the OECD made a concerted effort to avoid discussing the volume of tax-haven business that actually was caused by the fact that OECD member-countries operated oppressive tax regimes, and that tax-haven clients were merely seeking freedom from economic oppression.

The OECD have made great progress in their effort, with much of the world's taxpaying public now believing that tax havens are merely for criminals and "tax cheats." (More recently, the OECD have been working to create the belief that tax havens are linked to terrorism, and I predict that we shall see this effort increase dramatically in the future.)

But now, the OECD have a greater impetus to crush the economic liberty in the world that tax havens provide. Most of the OECD countries have squeezed their populations to the limit and, wanting still more, have turned to massive, unpayable debt as a solution.

Just like an addiction to heroin, this dependency on a level of money that's beyond what can be taxed has led these countries to a desperate impasse: the economic system itself is on the verge of collapse and nearing the end of their ability to maintain the cost of their overreach. They are redoubling their efforts to limit the activities of the world's tax havens.

The Last Holdout

In recent years, we've seen one law after another passed in the EU, the US and other First World countries, laws that allow for greater capital controls and the confiscation of wealth by banks and governments.

In addition, governments are passing legislation that increasingly limit the ability for an individual to make currency transactions. Whether spending, receiving payment, depositing or withdrawing, the freedom to transact is attracting greater scrutiny. (The ultimate stage will be the need to request permission to make any transaction.)

Since the early 2000s, several associates and I have tracked this development and termed it "The Great Race." The OECD countries hope to gain total control over tax havens before their over-taxation and debt cause their economies to collapse.

If they fail to gain complete control prior to that time, they may not economically be able to take control after that. Although we've watched developments closely over the years, I must confess, we're no closer to knowing whether they'll win the race... It will be close.

On the surface, it would seem that the outcome wouldn't matter much one way or the other. After all, the collapse of these economies, although possibly not imminent, is nevertheless inevitable. Sometime in the next few years, one trigger or another will bring down the economic house of cards. So, if the tax havens are destroyed in the meantime, why could they not simply reinvigorate themselves post-crash?

The problem is that if the OECD nations win the Great Race, the last bastion of economic sanctity -- the tax havens -- would have fallen, and much of the wealth they now contain might already have been transferred to the dying empires.

Like gold going down in 17th century Spanish galleons, it would be a long time before that wealth would be likely to resurface in the hands of those who are productive. It would have been squandered by the rulers of the OECD member-nations in their last gasp of world economic domination.

This does not mean that the world would never recover. After all, wealth is never destroyed; it only changes hands from time to time. But it could very well mean that, as in the aftermath of the collapse of the Roman Empire, sufficient wealth was not in the hands of those who are by nature productive. Therefore, a return to a productive free market would likely be slow in developing.

Historically, whenever collectivism has become total, recovery in its aftermath has always been slow.

And so the race is on -- in a very big way. The world's tax havens are, today, the last bastions -- the Alamo -- for the free ownership of wealth, and no one can say for certain to what degree the OECD nations will succeed in their quest prior to their economic fall.

To be sure, many low-tax and no-tax jurisdictions have been taking the position that "The OECD have the biggest guns. If we can only placate them for a bit longer and remain in business in some form until they collapse, we'll be poised for recovery once the dust has cleared."

In the meantime, many residents of OECD countries, who are only now figuring out that their governments are closing in on their wealth, are questioning whether there is any point in moving their money to jurisdictions where the laws are less confiscatory. They tend to say, "But if the OECD are going after the tax havens, what good will it do for me to diversify my wealth? They'll get it all in the end anyhow."

There's certainly logic in that reasoning, but as any long-term investor who is familiar with the benefits of tax havens will say, "There is no guarantee your government won't strip you of your wealth, but there never was.

The whole point has always been to not be the low-hanging fruit. Get your wealth as far removed from countries whose objective is to take it from you. In doing so, you raise the odds that you'll retain your wealth... At the very least, you'll be the last to be victimised and you might escape altogether."

In essence, the world's tax havens are the economic Alamo -- the last holdout against world economic domination. In a few years, we'll know whether they've succeeded in preserving economic freedom for the future.

Editor's Note: Naturally, things can change quickly. New options emerge, while others disappear. This is why it's so important to have the most up-to-date and accurate information possible. That's where International Man comes in. Be sure to watch this free video to find out our favorite tax havens.