The American economy is in trouble. You can read it in the headlines: Dud housing mortgages. Runaway national debt. Spiralling credit card and consumer debt. Skyrocketing gas prices. Stagnant job and income growth.
America’s habit of living on borrowed time has finally come back to bite it in the ass.
But how can you, as an American, save yourself? Quite simple. Leave America, now. The corporations abandoned America long ago. You should too. Here’s why:
1. Taxes. Look at this chart. The mean personal income tax rate is just under 30%. For corporations it’s just under 40%. You can see now why many companies prefer to set up offshore than pay US taxes. Why aren’t you doing the same?
You could be working in Hong Kong and be paying 15%, which is the top rate ANYONE pays, no matter how rich you are. In Singapore, the rate is 20%. What’s more, you won’t be paying any STATE taxes either.
Sure, as an American expatriate, you’re still responsible for federal taxes. But the first $80,000 of your income is tax free. Plus you can take a deduction for any foreign taxes paid. This means you can earn up to $100,000 before you pay any US federal tax. If you earned that much, imagine cutting your tax bill from 30% to 15%.
2. Social Security. This is another reason why you should leave America right away. Have you ever wondered why the US personal savings rate is so low? It’s because of Social Security. As of now, 12.6% of your wages go to Social Security. And this isn’t a retirement program you have control over. The US government decides your benefits and when you can collect them. The money goes into low-return US Treasuries. You don’t get a choice.
What kind of return do you think you could get if you invested the money yourself? The stock market might not be doing well lately. But historically, the market has averaged 9% annual returns versus 4% for Treasuries. Factor in 3% for inflation and you can see why Social Security is so pathetic. In short, Social Security is a scam. Leave America and quit paying Social Security. Manage your own retirement.
3. Cars. There are probably only four cities in America you could live without an automobile (New York, Boston, Chicago and maybe San Francisco). Live anywhere else and you’re going to need a car. To work. To shop for food. To see your friends. Per capita car ownership in America is the highest of any country in the world. The American lifestyle is built around the car. But the dependency on cars (and therefore oil) has driven America into a perpetual war it cannot win to finance a way of living it cannot afford.
A car is the second biggest purchase most Americans will ever make in their lives. But unlike your home, a car is a depreciating asset. It doesn’t get more valuable the longer you drive it. And you have to pay for gas (oil is still $100 per barrel). And you have to pay for maintenance. And just how many hours a day do you commute to work. An hour a day? Over a 40-year career, that adds up to 9600 hours spent in a car just to get to work. That’s more than an ENTIRE YEAR from your life.
Do you think foreigners live that way? Other countries have sensible transport policies. They have mass transit. America, however, is spread out. It has roads and highways and big box warehouse stores and drive-through fast food. Unless you live in one of the cities mentioned above, the only way to get around is to own a car.
4. Massive consumer debt. There are 50 million American households that can’t pay off their credit card balance every month. Their average debt load is $17,000. Why is that? You can blame advertising. America has some of the best marketers in the world that will seduce you into spending. You can blame a culture of buy now, pay later. You can blame a culture of Keeping up with the Joneses. But there’s probably a simpler explanation. Americans work hard. After working more than 40 hours a week, you probably feel entitled to spend a little money on yourself. But you have to pay for gas. You have to make your car payments. You pay up to 30% to the federal government, 12.6% to Social Security and who knows what in State taxes. And at the end of the week, you find that there isn’t much left to spend yourself. So you use the credit card. That’s why the average credit card balance is $17,000 in America.
Other countries don’t have this problem, especially Asian countries. They don’t have a culture of Keeping up with the Joneses. Sure, they like their iPods. But they don’t have to pay for foreign wars, gas or car payments. In the case of Japan and South Korea, they don’t even have to pay for their own security because America provides it for them!
What is different about Asia and America is Asia has a culture of saving, while America has a culture of debt. The average savings rate in China is 50%. Japan is 25%. South Korea is 35%. India is 22% The US? Zero. It’s no coincidence that a country in which 50 million households carry $17,000 in credit card debt has a household savings rate of NOTHING. China has a population of 1.3 billion people who have 714 million bank cards. But of that figure, just 5% are credit cards. The other 95% are debit cards, meaning the Chinese aren’t living on borrowed time.
5. Anemic economic growth. America is a mature economy. That means in good year, you can expect 3% economic growth. Now look at China. Since 1991, it’s grown anywhere between 7% and 15% annually. But you don’t have to live in a developing economy to enjoy fast economic growth. Developed economies such as Singapore and Hong Kong are expected to grow 4-5% each this year, respectively. That’s why people like billionaire investor Jim Rogers has decided to move to Singapore. A rising tide lifts all boats. If you wan to prosper, live in a fast-growing economy. Not a mature economy such as America.