Most tax planning has as its focus the reduction of taxes over a comparatively short period measured in a handful of years at most. The plans involve adopting specific techniques to achieve both specific and general goals -- reduction of income tax, funding retirement and ensuring that family assets end up going to the appropriate final destination.

But there are those who either consciously or inadvertently have adopted -- or plan to adopt - a broader strategy to achieve what seems right now to be the best of all possible tax goals.

What they do is earn their income in the United States where income tax rates remain substantially below those in Canada, but retire to Canada where there are no death duties. An approach of this type can produce massive lifetime tax savings, though often there are sacrifices that have to be made.

When people talk about comparative tax burdens in Canada and the United States, they almost always focus on income taxes. But the United States (at least for the time being) has very substantial death taxes for those who have accumulated significant wealth. While American death taxes can be deferred and while many eliminate them in other ways, the fact of the matter is that any U.S. resident with substantial assets has to do significant estate planning to avoid the burden.

Tax life is complicated by the fact that the United States imposes its taxes based on, among other things, citizenship. So a person who is or becomes an American citizen takes, along with the rights and duties, the potential obligation to pay income taxes and death taxes, even if he or she is no longer living in the United States. Further, there are anti-avoidance provisions that don't let you off the hook simply by renouncing American citizenship.

The most important single point to bear in mind, therefore, is that to optimize your overall tax-planning position, under no circumstances should you take out U.S. citizenship. This will mean that, among other things, you cannot vote, but if you are a legal U.S. resident alien with a Green Card, there are precious few other drawbacks.

If you are planning to take advantage of the ideal North American tax environment, the move is to earn income in the United States, paid in U.S. dollars and taxed at lower U.S. rates. At the time you are ready to retire, you move back to Canada and re-establish your residence here. If you move most of your assets out of the United States when you return to Canada, you will limit exposure to American death duties.

This sort of planning is helped by the Canada-U.S. Tax Convention, which has a host of provisions designed to ensure that there is no double taxation and that fair tax treatment is given to such things as retirement plans and social security payments.

We recently chatted with a U.S. tax lawyer who says that he regularly advises Canadian immigrants to the United States and one of the points he raises early in the game is that if there is a desire ultimately to return "home," the decision not to become a U.S. citizen makes economic sense.

Of course, most people do not live by tax-planning rules. My daughter recently decided to take out U.S. citizenship after living there for many years after marrying an American. I suggested that taking out citizenship was a bad move from a tax-planning point of view. Her response was that she wanted to vote in the recent presidential election. I suggested that giving up huge tax advantages to choose between Bush, Gore or Nader didn't make much sense to me, but both arguments fell on deaf ears.

When a friend or relative does decide to move to the States to work, highlighting this tax issue would be doing a favour. Good advice is always welcome even if it is not always taken.