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Why It's Getting Harder For US Investors to Get Money to Switzerland

America is destroying itself with regulation...

I KEEP hearing the same thing everywhere I go in Europe. The US is shooting itself in the face, writes Chris Weber, editor of The Weber Global Opportunities Report, in the Daily Wealth email.

The problem is the regulations the US now insists every nation impose on US companies or people seeking to do business or lower their taxes.

For instance, there are two Swiss cantons that are using low corporate taxes to lure companies to place their headquarters there. The more famous one is Zug, but the up-and-coming one is Obwalden (which just passed a flat tax rate of 6% of a company's profits).

Companies from all over the world are using this to lower their taxes. But when even the bluest-chip US company – publicly traded on the NYSE – sought to do so recently, it was turned away. Almost no one wants to deal with US companies or people anymore. They've decided it is more problem than it is worth, due to the intense regulatory atmosphere from the US

It used to be that anyone, from whatever nation, could come to the Obwaldner Kantonalbank (OKB) and open an account, even if they had just $100.

But starting around four years ago, this all changed. The long arm of the US government and the numerous new regulations have made OKB decide it will not take on American clients.

And please don't think I'm talking about tax-evaders here. Americans who used to be able to open accounts with tiny amounts of money at a safe bank like this and treat it just as they would their local banks, fully declaring all their money – these people are no longer welcome. It was with sadness that they told me this. But it is just too much trouble dealing with all the American red tape.

The effect of this is to deny small US investors a way to protect themselves from unsafe banks and devalued US currency. Now, pretty much anyone except Americans can do this.

It goes the other way, too. Non-US companies used to dream of listing themselves on the NYSE: That was the "big-time." But it is no accident that the overall number of listings on the "Big Board" reached its peak in 1997 and has been falling ever since.

Again, the problem is excessive regulation. The companies can list themselves on Hong Kong, Singapore, or London exchanges with much less cost and headache. The list of companies who have turned down a chance to list themselves on US exchanges is long.

It goes further than this. There are many nations on earth that have no inheritance taxes, or maybe just small ones. But if a non-US person buys stocks in the US (in excess of about $60,000), their estate has to pay US estate taxes if they die. So no wonder people are not excited to buy US stocks.

If the object of the government is to encourage investment, entrepreneurship, and create jobs, this is exactly the wrong way to go about it.

And I'm not blaming just one political party. Things are the same now as under the last American president. It's as if the nation has decided it no longer wants to encourage its companies or foreigners to invest in the US. Most likely, they don't think of it in those terms; they likely still think that since the US is such a great country, then of course anyone would want to invest there.

But the truth is that by doing these things, non-US people are less likely to invest, and thus the US is seen to be simply hurting itself.

More than just hurting itself, it is building up ill will all around the world. It is getting so that people will be avoiding the US entirely, going around it to invest and even trade. I know this sounds like an extreme reaction. But if things go the way they've been going for the last four or five years, this will be the result.

The American government can put on all these restrictions and keep out foreign investors and companies who want to list on the NYSE. It can deny the right of even the smallest investor to diversify into another banking system with a stronger currency.

But will this make for a stronger US? Are we entering a new world where everyone prospers except for Americans? If so, it is particularly sad, since America will be turning its back on the very ideas which made it so great.

You see, one hundred years ago, there was outright famine in Obwalden. Full of farmers who often had 10 children, the available farmland was just not enough for the people. Starvation got so bad, the Swiss government offered anyone free passage to America if they would promise never to come back. Many of them settled in the Imperial Valley of California, about as far from the Alps and green meadows as you can get.

The US was haven for the poor people of Obwalden, who were starving and saved by moving to America. These people are very appreciative of what America offered to their great-great-grandparents: America literally saved their lives.

And that is why they don't understand why America is now "destroying itself," as one of them told me. They are very, very sad to see it happen. In fact, they seem much sadder and more concerned about what has happened to the US than most Americans do.

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Starting with $650 saved from his newspaper round, Chris Weber began buying and trading gold at age 16. A millionaire by 20, he switched into foreign currencies and debt investments as the US Fed finally started to tackle inflation in the early '80s. Now he shares his trades and insights with private investors through the Weber Global Opportunities Report.

See full archive of Chris Weber articles

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