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HOT TOPIC How to legally pay no taxes... possible?

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Ashish Kulkarni

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You need to look further. UAE has no corporation tax except on businesses involved in Fuel and Gas or subsidiaries of foreign banks.

You could setup a business say, in Dubai or Sharjah or any other Emirate of your choice. Sell your current business to that business.

And then pay yourself a salary that takes you just near the tax threshold.

So business pays no tax. And you pay just some personal tax to keep yourself off the tax man's radar.

Please seek professional advise though.

I am sure you are not the first or last person pondering this question. As a business owner, we are in a fortunate position to have more control over our destiny. Let the salaried people pay taxes.

Just my humble opinion.
 

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Johnny boy

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No. No no no.
Yes, the distribution of the $75k is tax-free, but you still pay income tax on the profit in the year it is earned (in this case, presumably, the same $75k). An S Corp is still a passthrough entity, meaning any income from the S Corp still flows through to your individual tax return. The biggest tax savings comes from not having to pay FICA/Self-employment on those additional earnings.
Thank you for correcting me.
 

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This thread...


Millennials, boomers, terrorists, depression and happiness indices.. HAHAHA My gosh.
I was literally looking for a good train wreck meme for a different thread yesterday, so thank you for making this one worth my time. Rep+

You are a sh*thole!

You can present your own idea, but insulting countries or people living in those countries is not the purpose of this platform.
Well if this isn’t the most ironic message I’ve seen in months. You’re attacking him for attacking...who? He didn’t insult any country nor did he insult any person living in said imaginary country.

Nice first post though. Good luck with that.


While I’m here, my two cents is this: when I was 16 and working I used to love tax time because of my refund, as I got older I learned to not like it as I was paying every year. Having said that, my life was exponentially better when paying taxes than when not paying them.
 

flipex

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I believe this is my first post.
I would just like to say that most of the advice present in this thread is rather useless for OP as he is portuguese (takes one to know one) and our tax system is different from the U.S. as we don’t have federal taxes, etc.
I do have to say that it is very tradicional portuguese to want to avoid taxes all.
 

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I'm at a point in my business where I need to start worrying about taxes.

From what I've learned about IRS and IRC, the best way to legally pay no taxes is to either report zero net profit by balancing your expenses or open business in a country where there are no taxes.

Setting up business in a country where there are no taxes makes taxation simpler, but complicates your legal obligations. For example, the Principality of Monaco charges no personal income or business taxes for most business types, but to be considered a resident, you have to live there for 6 months and 1 day out of the year which is cumbersome.

On the other hand, reporting zero net profit by balancing expenses is more generally applicable, but we're faced with the challenge of where to put our money, when there are no more inescapable business expenses.

I was hoping you guys could provide information about countries where there are no taxes and their legal obligations (if any) and what flexible expenses could a business incur that would put the money somewhere we could 1.) easily access and 2.) wouldn't be as harshly taxed (or not at all).
After reading a lot of the nonsense on here (and several good posts as well), I thought I'd actually chime in on the topic.

Taxation can be a very complicated subject to address, especially when you consider international factors.

For example, all countries in the world fall into 4 tiers for personal taxation. Keep in mind, this ONLY relates to your personal taxation based on your RESIDENCY, not necessarily your citizenship:
  • Tier one: zero tax. This would be your tax havens like Cayman Islands and Bermuda. They have no tax on any income source for residents.
  • Tier two: residency based territorial tax. This would be places like Panama, Hong Kong and Singapore. They only tax local income and only when resident in the country. For example, a Panamanian who lives in Panama but derives all of his income from outside Panama does not need to report or pay anything to Panama.
  • Tier three: (this is about 90% of the world). residency based worldwide tax. Nearly the whole world uses this system. Basically if you are resident in that country, you pay tax on worldwide income.
  • Tier four: citizenship based worldwide tax. There are only 2 countries in the world in this category: The US and Eritrea.
The situation further complicates as you may guess based on your citizenship and residency. For example, a Canadian that spends most of his time abroad may still owe tax in Canada if he has not renounced his residency status (not citizenship). However, if that Canadian renounced his Canadian residency, he would then need to consider how many days he spends in a particular country, any other residency he may have acquired, or possibly other connecting factors or nexus.

Further complication this for entrepreneurs would be CFC rules (controlled foreign corporation), subpart F income rules (for Americans or US permanent residents), GILTI (global intangible low taxed income rules - Americans and residents), country or state nexus, etc.
 

GlobalWealth

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I'm at a point in my business where I need to start worrying about taxes.

From what I've learned about IRS and IRC, the best way to legally pay no taxes is to either report zero net profit by balancing your expenses or open business in a country where there are no taxes.

Setting up business in a country where there are no taxes makes taxation simpler, but complicates your legal obligations. For example, the Principality of Monaco charges no personal income or business taxes for most business types, but to be considered a resident, you have to live there for 6 months and 1 day out of the year which is cumbersome.

On the other hand, reporting zero net profit by balancing expenses is more generally applicable, but we're faced with the challenge of where to put our money, when there are no more inescapable business expenses.

I was hoping you guys could provide information about countries where there are no taxes and their legal obligations (if any) and what flexible expenses could a business incur that would put the money somewhere we could 1.) easily access and 2.) wouldn't be as harshly taxed (or not at all).
As I noted in the above post, there are a ton of factors to consider and aside from searching for a professional in this space, a forum is not the ideal place to get answers because lots of people "think" they know what to do, but their solution is not necessarily YOUR solution.

For example, someone in the thread mentioned setting up a UAE company, "problem solved".

Well, maybe.

But factors like your citizenship, your legal residency, your tax residency, where you physically spend time, the nature of your business, your business physical location if any, how you get paid, where your customers are located, etc are all factors that could affect your decision.

And that takes more than a 1 minute thread post.....problem solved.
 

Raoul Duke

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After reading a lot of the nonsense on here (and several good posts as well), I thought I'd actually chime in on the topic.

Taxation can be a very complicated subject to address, especially when you consider international factors.

For example, all countries in the world fall into 4 tiers for personal taxation. Keep in mind, this ONLY relates to your personal taxation based on your RESIDENCY, not necessarily your citizenship:
  • Tier one: zero tax. This would be your tax havens like Cayman Islands and Bermuda. They have no tax on any income source for residents.
  • Tier two: residency based territorial tax. This would be places like Panama, Hong Kong and Singapore. They only tax local income and only when resident in the country. For example, a Panamanian who lives in Panama but derives all of his income from outside Panama does not need to report or pay anything to Panama.
  • Tier three: (this is about 90% of the world). residency based worldwide tax. Nearly the whole world uses this system. Basically if you are resident in that country, you pay tax on worldwide income.
  • Tier four: citizenship based worldwide tax. There are only 2 countries in the world in this category: The US and Eritrea.
The situation further complicates as you may guess based on your citizenship and residency. For example, a Canadian that spends most of his time abroad may still owe tax in Canada if he has not renounced his residency status (not citizenship). However, if that Canadian renounced his Canadian residency, he would then need to consider how many days he spends in a particular country, any other residency he may have acquired, or possibly other connecting factors or nexus.

Further complication this for entrepreneurs would be CFC rules (controlled foreign corporation), subpart F income rules (for Americans or US permanent residents), GILTI (global intangible low taxed income rules - Americans and residents), country or state nexus, etc.
Another can of worms in which the rabbit hole goes deep: Perpetual Traveler.
 

GlobalWealth

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So you know all those roads, and schools, and 911 service you enjoy so much? They all come from taxes. I suggest just paying taxes from a moral perspective. Now if you want to lower your taxes, I think that’s a different story.
Roads are primarily funded by fuel taxes.

Schools are funded by property taxes.

911 is funded by state and local sales taxes.

Each of those examples are consumption taxes, of which you pay when you consume those services. They have nothing to do with the topic at hand of how to minimize personal or business income taxes.
 

GlobalWealth

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Taxation is a necessary part of modern life. I agree that tax money can be (and often is) mis-spent which can lead you to look at reducing your tax payments, but looking at paying no tax whatsoever is frankly pretty disgusting.

Do you use public roads, hospitals, schools, fire and police departments? Who do you think pays for these services?
Again, none of those services are funded by income tax. It's a common misconception used by those who promote the morality of taxation.

The quote in 1927 by Oliver Wendell Holmes Jr, "Taxes are what we pay for a civilized society", is often cited by those duped into believing the have a moral duty to pay.

Ironically the average person paid about 3% income tax in 1927 and the highest bracket was a marginal 25%, wayyyy below the current tax rate.

Prior to 1913 when the US ratified the 16th amendment legalizing a federal income tax, the US had roads, hospitals, schools and police departments.

What it didn't have was perpetual wars, spying on the citizens, and 40% of the population living on welfare.
 

GlobalWealth

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Well taxation was there in the middle ages to finance the aristocracy in exchange for protection. Nothing really modern. In some countries like France it's become quasi "slavery" for the State. When your body and brains are taxed so much it's a new form of "slavery" since your labor and fruits of it aren't even your own, but are used to finance a bureaucratic class.
The irony here is that in the middle ages when the tax collector came the people knew they were being robbed. They paid out of a clear and present danger of direct violence that would and did happen in the event of immediate non payment.

Nowadays people are brainwashed to believe it is their moral duty for the greater good. The weak minded even argue for the morality of taxation as a higher moral authority.

Media is a powerful tool.
 

GlobalWealth

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Why not pay your taxes? Why are we encouraging a crime in this forum?
Why are legal strategies for minimizing or eliminating your tax burden a crime?
 

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GlobalWealth

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I believe this is my first post.
I would just like to say that most of the advice present in this thread is rather useless for OP as he is portuguese (takes one to know one) and our tax system is different from the U.S. as we don’t have federal taxes, etc.
I do have to say that it is very tradicional portuguese to want to avoid taxes all.
He is Portuguese, but specifically asked about US tax questions and the IRS.
 

GlobalWealth

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I'm at a point in my business where I need to start worrying about taxes.

From what I've learned about IRS and IRC, the best way to legally pay no taxes is to either report zero net profit by balancing your expenses or open business in a country where there are no taxes.

Setting up business in a country where there are no taxes makes taxation simpler, but complicates your legal obligations. For example, the Principality of Monaco charges no personal income or business taxes for most business types, but to be considered a resident, you have to live there for 6 months and 1 day out of the year which is cumbersome.

On the other hand, reporting zero net profit by balancing expenses is more generally applicable, but we're faced with the challenge of where to put our money, when there are no more inescapable business expenses.

I was hoping you guys could provide information about countries where there are no taxes and their legal obligations (if any) and what flexible expenses could a business incur that would put the money somewhere we could 1.) easily access and 2.) wouldn't be as harshly taxed (or not at all).
I'll try to get a bit more practical here now.

First of all, you need to consider YOUR business and YOUR opportunity.

If your business has nexus (physical connection) to a certain jurisdiction, then you are obligated to pay tax in that jurisdiction, if any.

For example, if you own a chain of pizza restaurants in Iowa, you would have clear nexus. You would need to pay payroll tax for your employees plus income tax on your business and your personal tax.

If your business is more location independent, then you have more options.

Maybe you can "move" your business to a more tax friendly jurisdiction.

However, you would then need to consider the other factors like your citizenship, your legal residency, your tax residency (not always the same), etc.

If you have a location independent business but live in New York city, you will have a federal, state and city income tax obligation regardless of whether your business is registered in Nevada, Delaware or Seychelles.

If you are willing to give up your residency status in your home, presumably high tax country, and live in a tier 1 or 2 country, then it is easily structured for a zero tax lifestyle.

There are also some more complicated strategies available to "strip" out profit from your business for tax deferral, but typically the more complex strategies are for higher incomes (I'm not assuming your income.....or @Vigilante's gender for that matter).
 

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The irony here is that in the middle ages when the tax collector came the people knew they were being robbed. They paid out of a clear and present danger of direct violence that would and did happen in the event of immediate non payment.

Nowadays people are brainwashed to believe it is their moral duty for the greater good. The weak minded even argue for the morality of taxation as a higher moral authority.

Media is a powerful tool.
Amen brothers. Nobody thinks in terms of efficiency and productivity of government, waste, etc... They've been zombified by politicians, the bureaucratic class and the technocrats. It's fairly pathetic.
 

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@AgainstAllOdds @CareCPA @Kak - I lost track of the thread when it went full Lord of the Flies, but RE: using cash basis accounting and putting your money in inventory to reduce income tax:

Here's what I don't understand, and I'm guessing it's because I'm missing something fundamental. If you buy all that inventory before year end, you increase your property tax when you have to report your 12/31 inventory right? Are you really coming out ahead, or are you just decreasing income tax but getting hit with property tax?
 

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@AgainstAllOdds @CareCPA @Kak - I lost track of the thread when it went full Lord of the Flies, but RE: using cash basis accounting and putting your money in inventory to reduce income tax:

Here's what I don't understand, and I'm guessing it's because I'm missing something fundamental. If you buy all that inventory before year end, you increase your property tax when you have to report your 12/31 inventory right? Are you really coming out ahead, or are you just decreasing income tax but getting hit with property tax?
Property tax does not exist on a federal level. Do you have a state-specific property tax that you're concerned about?

My general experience is that the threshold is high (or the exemption is high, depending on wording), and that tax is generally low. Usually property taxes target mainly real property (real estate) and higher-value tangible property (i.e. vehicles, heavy machinery, etc). This varies heavily by state. Example: PA does not have a tax on assets, only an income tax.

If you can provide more context, I may be able to help out more.
 

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Property tax does not exist on a federal level. Do you have a state-specific property tax that you're concerned about?

My general experience is that the threshold is high (or the exemption is high, depending on wording), and that tax is generally low. Usually property taxes target mainly real property (real estate) and higher-value tangible property (i.e. vehicles, heavy machinery, etc). This varies heavily by state. Example: PA does not have a tax on assets, only an income tax.

If you can provide more context, I may be able to help out more.
So I’m in TX which is no state income tax but high property tax - I’m so used to working in big companies that I was assuming - but now that you mention threshold, I think inventory value has to be north of a certain relatively high amount before it kicks in
 

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It won't happen but it would be awesome. It won't happen because the income and corporate taxes are what gives leverage to politicians to racket donors.
Imagine if all the people who agree with this bill but believe it is impossible suddenly said, "you know what, I'm going to call my Congressman about this!"

Would the scripted Eeyore line "this could never happen" still be impossible?
 
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I was literally looking for a good train wreck meme for a different thread yesterday, so thank you for making this one worth my time. Rep+



Well if this isn’t the most ironic message I’ve seen in months. You’re attacking him for attacking...who? He didn’t insult any country nor did he insult any person living in said imaginary country.

Nice first post though. Good luck with that.


While I’m here, my two cents is this: when I was 16 and working I used to love tax time because of my refund, as I got older I learned to not like it as I was paying every year. Having said that, my life was exponentially better when paying taxes than when not paying them.
Apologies to all, someone accessed my account without my permission (let it be known it's not my comment). Though it's a lesson for me to be more careful with my account.
 

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Imagine if all the people who agree with this bill but believe it is impossible suddenly said, "you know what, I'm going to call my Congressman about this!"

Would the scripted Eeyore line "this could never happen" still be impossible?
I don't think it'd make any difference. Politicians are buddy buddy despite the show they're putting on. It's like 2 businesses that are supposed to compete but have some kind of common interests (e.g prices can't get too low). Their bread and butter is donations from big donors who expect tax breaks, subsidies and other advantages in return. Remove all of that and politicians stop having leverage. Power isn't usually ethical.
Sorry for being a party pooper but looking how Western democracies are evolving, I can't be that optimistic. I think most of our elites have contempt for citizens now (Macron in France.)
 

Al Berton

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Well, I hate taxes. I understand that taxes are needed for a bunch of fundamental services; I have a now 18 years old daughter whose life has been saved from our (I am Italian) public health system for free when she was 3 months old. Nevertheless, the fiscal pressure here is impossible and I hate to see rivers of money wasted from public administration people that offer never worked a single day in their lives. I also find unfair see the most struggling to make ends meet at the end of the month, and all these parasites leaving on their shoulders. But here at least we are arrived at a point where we see the State as our enemy and not as our friend.
Having said that, I lived in the Principality of Monaco and there rules depends on your citizenship (US citizens if I remember well are subject to US tax payment due to a bilateral agreement with the local government, but iI am not 100% sure and if you are interested please check on the official PoM government site), but generally if you spend there more than six months you are subject to local taxation which is zero. You can also set a Monaco based business. If some of you has some particular question on the subject I can possibly be helpful. I also have some friends there.
 

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I don't have a problem paying taxes. I want to minimize taxes I pay, but believe I have benefited greatly from entrepreneurship in the greatest economic opportunistic system in the world. I have paid a lot of taxes. I literally just caught some things up and paid what would be the equivalent of more than a great salary... but that was for a few years of catch-up. I believe in what Kyosaki said when he was facing a large tax bill... he just had to go make more. I see no ceiling in what I can earn.

People ask me all the time about Amazon fees. Amazon fees? Who cares? It is only a percentage of what I MAKE on Amazon. Same is true to a degree with taxes. I could be so blessed to have such a large tax bill. Means I am doing something right. So... taxes? You're worried about taxes? Go make more money. Go pay an accountant to handle your tax strategy.

There are a few on the forum whose whole existence is to avoid taxes. Personally, I'd rather live on the Gulf Coast of Florida and pay some taxes than live in some third world sh*thole but be "tax free." To each his own.
This. Many anti-tax people don’t realize that taxes also pay for roads, rule of law, a military to keep invaders from plundering your business because there’s no protection etc. etc.
 

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In Canada you don’t pay taxes if you’re self-employed and make less than... $20,000 I think. Somewhere around that figure. Not sure how that applies including the States.

I definitely don’t recommend reported zero income. Looks fishy.
 

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This. Many anti-tax people don’t realize that taxes also pay for roads, rule of law, a military to keep invaders from plundering your business because there’s no protection etc. etc.
You clearly haven't read the whole (and most interesting part of this) thread.
 

red_cents

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I'm at a point in my business where I need to start worrying about taxes.

From what I've learned about IRS and IRC, the best way to legally pay no taxes is to either report zero net profit by balancing your expenses or open business in a country where there are no taxes.

Setting up business in a country where there are no taxes makes taxation simpler, but complicates your legal obligations. For example, the Principality of Monaco charges no personal income or business taxes for most business types, but to be considered a resident, you have to live there for 6 months and 1 day out of the year which is cumbersome.

On the other hand, reporting zero net profit by balancing expenses is more generally applicable, but we're faced with the challenge of where to put our money, when there are no more inescapable business expenses.

I was hoping you guys could provide information about countries where there are no taxes and their legal obligations (if any) and what flexible expenses could a business incur that would put the money somewhere we could 1.) easily access and 2.) wouldn't be as harshly taxed (or not at all).
Good afternoon. I'd like to throw in my 2 cents on your post, for you and anyone else interested on this subject.

Firstly, it has been well argued that all income tax acts are entirely unconstitutional. It does not matter if you live in the US, Canada, UK, Australia or New Zealand. In fact, I suspect income tax acts around the world are all built following the same statutory guidelines.
Aaron Russo's "America: Freedom to Fascism" documentary is a must watch, if you haven't seen it, as it shines a light on a perspective most people are not even aware of. Food for thought if you will...

You've certainly heard the rich don't pay taxes. That's the job of the working class and the uninitiated and/or the ignorant, right? Or so it seems. How is this achieved? By hiding money and/or income oversees and in other countries? Maybe for some. Does it work? Again, maybe for some. The IRS has tentacles all over the world so I would recommend you really educate yourself before you take steps because you might unknowingly be stepping into a field littered with landmines. There are many ways of avoiding the tax man. Some are nonsensical; others very plausible.

Let's look at a fun, hypothetical scenario. Meet John.

John is looking to protect his wages from the tax man. In fact, John wants to protect his income from everyone including law suits, angry spouses and yes, the strong arm of the tax man too.

John knows his wages can be levied and taken away from him.

John is a pretty smart guy. He was lucky to learn asset protection strategies by a friend of his, nicknamed red_cents. As a result, his car is in a trust. His home is in a trust. His dog is in a trust. He owns nothing. Nothing of his can be taken away from him as he literally owns nothing. He could get married and divorced without worrying about his ex-wife taking half his stuff. Probate can't touch his estate if he dies. Everything goes to his beneficiaries. He's got some great trustees and sleeps well at night.

John decides to have his wages 100% levied by an entity he owes money too, for work done in the past. A contract is drafted and the appropriate steps are taken with the employer. Now John received NOTHING of his wages. They are sucked up before any deduction is taken out. John has to borrow money from the entity (or another entity) and goes further into debt. His wages now can never be touched (because they are already 100% levied) and he MAKES NOTHING, year after year. Has he lives, he BORROWS more and more, effectively growing the debt he owes to the entity. What taxes are to be paid if he takes nothing home? Food for thought...

With all this said, I would invite you to consider new ways at looking how money flows through your life and finances. Anytime your LEGAL NAME shows up in the PUBLIC somewhere, it is a potential LIABILITY to you.

I would advise to OWN NOTHING but CONTROL EVERYTHING.

A book I would recommend is: The art of passing the buck VOL I. It is a peek into how PRIVATE legacy trust are setup by the rich to avoid taxes, protect assets and pass everything they work for, onto their children.

red_cents
 

Kak

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In the spirit of this discussion and my dismay surrounding the resurgence of the “eat the rich” sentiment in the USA, I need to recommend this book.

It may be a little off the beaten path, but it is absolutely fascinating.

Seasteading
 

Kak

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Let’s talk about taxation without representation...

Who is representing the wealthy when we are talking about 75% taxes and retroactive wealth taxes? The poor. Hmmm.

The 99% argument really kicks the left in the a$$ on this one.

What about ANY progressive taxation?

We are dangerously close to to a voting majority that DOESN'T pay any taxes...

Is democracy really the answer? I am starting to wonder.

What if countries had to compete for our residency?

Unless laws are EQUALLY applied to everyone, I am starting to think we are doomed to go down some pretty ugly paths as a nation.
 
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