The cure for always thinking that the grass is greener on the other side can be travel. Lots of it.
When I was a boy, I enjoyed reading Superman comics. Some things haven’t changed. Even though I will turn 54 soon, I still collect to read (and re-read) present-day DC comics that feature the Man of Steel. I even have tucked within a crammed bookshelf, at the side of my bed, a copy of an intriguing non-juvenile paperback entitled Superman and Philosophy.
A popular catchphrase that was specifically associated with the mighty orphan from Krypton, Kal-El, who was found, rescued and adopted by Pa and Ma Kent, and renamed Clark was: “Truth, Justice, and the American Way!”
My fascination with Superman and with other television programmes and movies made by Americans for Americans but successfully exported across the globe meant that I harboured a naive, unformed dream to one day live and work in the US. The power of intention is so potent I was able to do so in Northern California in the summer of 1987, when I was 23. (All told, I’ve visited different parts of the US 10 times over the last 31 years.)
However, I’m delighted to report that I’m happier than I have ever been to be still living, working and earning in beautiful, sunny Malaysia. No nation on the face of the Earth is perfect. I know that first-hand from being fortunate enough to travel to more than my fair share of countries on several continents over the decades.
For me, the allure of possibly living in the US has dimmed because of the terrifying spike in gun violence reported too frequently there, and the painfully complex, tentacular US tax code that demands global taxation of US citizens and US permanent residents.
WHERE THERE’S STILL SUNSHINE
I’m thankful to be a Malaysian living and working here where it’s illegal for most of us to carry firearms, and where our living costs and income tax and consumption tax (GST, in our case) are way lower than in many developed nations.
No one likes to pay taxes — except perhaps the extraordinary but fictional mild mannered reporter Clark Kent. Yet taxes are a necessary part of the privilege of living in a civilised country where ‘things’ — such as roads, hospitals, bridges, utilities and the like — along with people — like lawyers, plumbers, doctors, Grab drivers, financial planners and engineers — work.
Thankfully for us in Malaysia, our income tax code is simpler than, say, America’s, while our tax rates are lower. In my opinion, when you couple those tax-based advantages with our year-long summer, lower cost of living, multi-ethnic society, perennially available satay and nasi lemak, seasonally-available durian, and our well-positioned, broad-based productive economy, all of that translates into a potentially altered catchphrase:
Truth, Justice, and the Malaysian Way!
Of course, we could all draw up a long list of ways to make Malaysia better. Near the top of my own list would be the hope that we reverse our embarrassing slide down global corruption rankings. If you weren’t aware of this, there was a widely commented news report in February this year that stated:
“Malaysia’s failure to resolve major corruption scandals is one of the main reasons the country fell seven spots to its worst-ever position in the annual Corruption Perceptions Index...”
The report went on to state Malaysia fell to No. 62 in the Transparency International index last year, compared to its 55th ranking in 2016. Our particularly woeful 2017 showing was Malaysia’s lowest position since the index began in 1995. (In contrast, last year Singapore was ranked 6th, in a tie with Sweden, while the US came in 16th.)
UNDERSTANDING INCOME TAX
Nonetheless, from a factual financial planning perspective, Malaysia’s simpler, more accommodative tax environment isn’t something we should take for granted. In fact, my professional advice to individuals who earn well above our national average household income of about RM5,000 to RM6,000 a month is to hire competent, professional tax accountants and advisors. We shouldn’t be penny wise but pound foolish.
You see, it was no less a brainiac than Albert Einstein who voiced this complaint against America’s Inland Revenue Service (IRS):
“The hardest thing in the world to understand is the income tax.”
As Malaysia clambers up the wealth curve, our tax code will undoubtedly grow more complex. Bear that in mind as we consider a lesson from a long dead 17th century finance minister of France, Jean Baptiste Colbert, who observed:
“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
Today here in Malaysia, under the weight of our 6 per cent GST collected by the Customs Department and the, shall we say, heightened efficiency of the Malaysian Inland Revenue (IRB), many people I meet are unhappily hissing like excessively plucked French geese. Yet there’s no question that every civilised country needs taxes to be collected.
Therefore, our honest, commonsense goal should be to seek out and harness expert advice to maximise our after-tax income so that we may retain sufficient money to save and invest to reach our key life goals, be they as serious as retiring well or as frivolous as affording increasingly expensive comic books.
© 2018 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed financial planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at https://www.linkedin.com/in/rajendevadason, [email protected] and Twitter @RajenDevadason