POV: You’re an American citizen, but you’re jaded by the federal and state government slicing open yet another vein of yours to drain you of your hard-earned money. It’s income tax, property tax, sales tax…you name it, the government wants a piece of it. While certain taxes appear to be a necessary evil for maintaining a huge nation like the United States, some more libertarian-minded individuals believe they’ve hacked the system by using a strategy known as the “Flag Theory.”
Would you plant proverbial flags in several different countries if it meant you could be guaranteed more freedom and fewer encroachments on your finances? Here’s what you need to know about embracing flag theory before you consider going nomadic.
Diversifying Yourself “Offshore,” Step By Step
Flag theory was originally the brainchild of investor Harry D. Schultz who, in the 1960s, argued that people should have two passports, that you should maintain an address in a country considered a “tax haven” like Luxembourg or Monaco, and that you should keep your financial assets outside whichever country you call home. Count the flags – you’ve got three!
Later on, what would become known as “Flag Theory” was expanded to five flags when other investment pundits proposed that people should plant “flags” in a country where they’re earning income and another in a place for recreation like vacationing or shopping.
The ultimate goal of planting all of these flags is to minimize how much you’re taxed on your active or passive income, capital gains, your business operations, your shopping, and the property you own.
Flag theory isn’t exclusive to just five flags, however. More broadly, the purpose is to relocate more and more elements of your life to a new country, planting a proverbial “flag” and harnessing the benefits of that particular place. Some countries are conducive to better business operations, your own personal politics, your investments or finances, or your lifestyle in general.
One of the main requirements, which some people with perpetual wanderlust certainly wouldn’t find difficult about flag theory, is that you have to be a “perpetual traveler.” Sometimes interchangeably known as permanent tourists, perpetual travelers move between residences at least once or twice a year.
But, as the flag theory website Nomad Capitalist explains it, flag theory goes against nearly all the standard structures of living we’ve come to understand. Your typical person will spend their whole life in their birth country, get an education there, remain employed there, open and maintain all of their financial assets there, and own real estate there.
“The average person’s setup has no backups in place if things go awry at home,” explains Nomad Capitalist on its website. “In a world where your government is all too happy to control your movement, tells you how to educate your children, imposes heavy taxes, and even tells you how to invest your money (or outright confiscates it), Flag Theory gives the control back to you.”
It sounds pretty ideal, no? For many of us in the so-called “laptop class” working jobs that could technically be located anywhere as long as your employer is cool with your working hours, it may seem attractive to live like a global nomad.
This lifestyle could expand your worldly experiences, which for some people is quite fulfilling. Furthermore, if you’re always on the move, you have to be a bit more minimalistic in how you live, and minimalism has been attributed to a deeper sense of happiness.
Or perhaps, it feels a bit dirty when you first start to read about it. Insulating yourself from instability within your own country by optimizing your life with flag theory could allegedly have the power to put an extra $1.5 million in the bank over a decade, enable you to prosper in countries you’ve dreamt of visiting or residing in, and protect your hard-earned cash from being snatched up by the government in lofty taxes.
Ultimately, being a global or digital nomad has actually gone quite mainstream and doesn’t bear the same legal risks or societal judgment it did in the past.
Has the Once Venturesome Flag Theory Gone Vanilla?
It’s not as though it has become super straightforward to go full flag theory, but this lifestyle is arguably more accessible to your everyday person now. First off, investment opportunities have become diverse and global. Digital platforms and international brokers make it almost bafflingly easy to have access to foreign stock exchanges and ETFs, decentralized blockchain technology supports cryptocurrencies like Bitcoin or Ethereum, and I guess if you’re really into (potentially scammy) trends, NFTs have become one of the hottest investment crazes.
Secondly, second passports are easier to come by and, in some cases, even lauded by other nations. In some countries, you can gain citizenship by opening a bank account through “citizenship by investment” programs. In Portugal, if you maintain a five-year investment (like real estate) with the Portuguese Golden Visa, you could possibly obtain citizenship. With Greece’s Golden Visa, you could become naturalized after seven years.
You can obtain a second passport from plenty of other countries that offer these types of programs like Spain, Uruguay, Paraguay, Poland, Dominica, Turkey, Malta, St. Lucia, and more. Most countries do require you to be physically present or considered a permanent resident before you could actually apply for citizenship, however.
Thirdly, plenty of companies are now corporatizing the global grind. As Financial Times writer Sarah O’Connor explained in her article on how the digital nomad identity went corporate, companies have actually started to find ways to support employees who want more flag theory freedoms. For instance, some companies are “wrestling it into a less risky and more controlled form” by allowing employees to work remotely from international locations, and in some cases, the companies have partnered with governments to funnel those employees into local volunteer activity programs.
That’s not to say that all workplaces post-2020 lockdowns remain friendly to remote labor, however. Some major employers are pushing back against digital nomads, requiring prior work-from-home arrangements to be renegotiated back into a physical office presence. Multi-billionaire business magnate Elon Musk stirred controversy when he banned remote work, but now it’s becoming more common for the public sector and federal government to slowly push return-to-office mandates.
Planting Flags Abroad Doesn’t Solve Problems At Home
Look, I’m no fan of taxes. When 17-year-old me got my first paycheck from my part-time job at a candy store, I was honestly pretty shook by how much was being taken out of my wages monthly and pooled into government programs.
Now a grown adult making much more than candy store wages, I’m still distraught by the steep percentage slashed off my salary – never to be fully repaid to me in tax returns – and funneled into wasteful government spending measures such as, but not limited to, spending over $1.7 billion each year maintaining 77,000 empty federal buildings, using a $118,971 grant to research if a real-life Thanos wearing an Infinity Gauntlet could actually snap his fingers, or dropping $2.3 million in research for injecting beagle puppies with cocaine.
But if I’m frustrated by how the government is operating, instead of throwing my hands up and waving white flags, shouldn’t I do everything in my power to change it? Shouldn’t I support candidates who vote for legislation that keeps tax rates lower and reduces unnecessary burdensome regulations, and personally vote against spend-happy ballot measures that just increase debt?
One comment I came across while reading through expatriate accounts on Reddit really hit home on this point: “Unless you have a desperate ideological commitment to contributing as little as possible to the communities that facilitate your livelihood and lifestyle, I cannot fathom how this could possibly be worth the considerable effort.”
It’s true, being a flag theory nomad does require detail and effort that could be redirected into other – potentially more fruitful – investments. Naturally, there are many websites that promise to help you through the process of becoming a global citizen and figuring out where best to plant your flags. You could get an hour-long consultation on internationalization for $300 or perhaps $400, but if you want full services from ones like Nomad Capitalist, you’re looking at a $25,000 retainer fee just to start. That’s a steep cost!
For what it’s worth, one Redditor who lived overseas for 12 years stated that flag theory lifestyles are mostly impractical for anyone who doesn’t have an eight or nine-figure net worth. The user raised red flags for tax evasion or criminal activity related to planting multiple flags, explaining that if you’re “clocking the big bucks” it would probably make more sense to get a good tax planner who can bring your rates close to tax-haven levels of low.
“All this stuff does is make poor people think they’re outsmarting the system the way rich people do,” said the Redditor.
Isn’t Being a “Global Citizen” Just Rebranded Globalism?
International commerce and healthy trade with foreign nations is all well and good, but if we’ve learned anything post-Covid hysteria, it's that we can’t trust pushes to become “global citizens,” whether that’s grassroots or dynamically-programmed, authoritarian measures. If you’re anything like me, and the borderline dystopian rhetoric from globalist organizations like the World Economic Forum (WEF) weirds you out, then the language used to promote Flag Theory should give off questionable, bad vibes as well.
I get it, WEF wants you to “own nothing and be happy,” while flag theorists want you to regain ownership over your finances and assets, but both require you to rescind your national identity to some extent to become a global citizen. It’s just two different roads that lead to the same destination, no?
Certain elements of flag theory are noble and probably good business strategies in today’s digital climate, but preserving individual autonomy doesn’t have to mean trading away any sense of nationalism. Human beings weren’t built to be autonomous creatures – we thrive when we’re in rich communities, surrounded by people we love, and maintaining both religious and civic bonds.
Do you really have a “home” for your family (if you want one or already have one, that is) when you’re planting flags in many different nations, potentially with opposing cultures to your own? Or do you instead become homeless and perhaps ungratified with the simple things in life? Perhaps there’s a happy middle-ground where you can diversify your assets without risking legal repercussions or potentially wasting your time.
Some people do dream of becoming an expatriate, moving to another nation, and thriving off a structure perhaps different from the one we’ve got here in the States. But, if you're worried about rising authoritarianism at home, you won’t be solving those problems by moving a portion of your life to a different country that can’t match our level of constitutional freedoms. Getting well-versed with international law and laws of the land for whichever countries you plan to plant flags in is no easy undertaking and shouldn’t be treated as such.
If you’ve got international travel on the brain, there are much less risky and time-consuming ways to see the world. Plenty of countries offer short-term and seasonal work visas, or you could maintain the romantic allure of travel by saving it for times when you’re ready to fully unplug with your loved ones on a dream vacation.
Furthermore, if you’d like to maintain close ties to home while reducing how much the government takes from you in taxes, you should get educated on fiscally conservative economic policy and then vote for people who want to increase your financial freedom – not micromanage the economy.
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