A retired American who has lived in New Zealand for 50 years wants U.S. double taxation to end

“Double taxation has had such a profound impact on me, especially as I approach 80 and have to contend with multiple failed efforts and thousands of dollars in legal fees to craft a U.S. and NZ estate plan that won't run into cross- jurisdictional complications when I die.”

— An American in New Zealand

Dear Fellow Americans,

This is what a U.S. law from the Civil War is doing to your sisters and brothers, aunts/uncles, nieces/nephews, and friends who dared to leave home and make a new life for themselves elsewhere in this big wide world.

Although I was a dirt-poor hippy with a backpack when I arrived in New Zealand 50 years ago, I eventually grew up, settled into a job and, when I was able, started saving responsibly for this time in my life by investing in the U.S. stock market. My investments have done well, so I can't claim to be a struggling retired woman. But I am hounded by the obligation to declare U.S. income taxes on top of my New Zealand income taxes. This is the kind of double taxation that President Trump, on the campaign trail last year, pledged to end once and for all.

The US should have no right to tax me on my worldwide income on the same basis as any American who lives in the United States and benefits from the U.S. tax base. I get nothing in return for any U.S. taxes that I pay, which, so far, are minimal since I don't trade my shares and I earn little in dividends. I do have to pay tax to the United States on my U.S. investments, of course. But I should pay that tax on the same basis as any non-American with investments in the country. After all, I also have to pay tax on those same investments in the country where I live, too.

Competing tax systems

New Zealand does not impose a capital gains tax on my US investments, but I have to pay tax in New Zealand on the unrealised "deemed income" from those investments as well as pay capital gains tax to the United States when I begin to sell my shares to cover the cost of my care, as I have no family here to care for me. Nor should I have to pay $1,375/year for my U.S. return to be filed and to struggle for several full days (honestly!) each year complying with IRS reporting requirements based on two different tax years in two different currencies and then having to check a 70-page return before signing it.

My U.S. bank and broker will close or freeze my accounts if they learn that I live in New Zealand, even though my income is automatically reported to the IRS.  Brokers and banks simply don’t want to have to deal with the government compliance requirements that come with non -resident American clients. Isn't that what anyone else would call prejudice? As in "We don't do business with your kind." If I have to liquidate my entire life savings in shares all at once, the capital gain tax burden would be prohibitive. I could not then invest in the local stock market due to the punitive (and very expensive to comply with) PFIC tax that the United States imposes on non US investment funds.

There is also no capital gains tax in New Zealand on the home that I've lived in for 23 years. Property investment is a major form of investment here, so housing inflation is high. So are property taxes. If I sell my home, the capital gains tax I would have pay to the United States (even with the $250,000 exemption) would be significant. Buying back in the same market where others do not have to pay capital gains tax would put me at a significant disadvantage. So, I'm kind of a prisoner in my own home. At my age, I don't know how much longer I can stay here on my own. How dare the United States claim the right to tax me on the sale of my own home in New Zealand when I haven't lived in the United States for almost 50 years!

Is Congress listening?

I feel like I’ve been thrown in the deep end with my hands tied behind my back, after saving so responsibly for this time in my life, simply because I am an American citizen and because the U.S. government seems to have forgotten that the American Revolution was once proudly fought with the outcry of “No taxation without representation!” Yes, I get to vote. But, believe me, I don’t feel like I get enough representation from my Senators or Congressmen or from the President of the United States. The people who represent me are people like those from Tax Fairness for Americans Abroad who advocate for our rights.

Double taxation has had such a profound impact on me, especially as I approach 80 and have to contend with multiple failed efforts and thousands of dollars in legal fees to craft a U.S. and NZ estate plan that won't run into cross- jurisdictional complications when I die.

Please support Americans abroad by contacting your representatives in Congress to tell them that the double taxation of Americans abroad and associated bureaucracy (FATCA, FBAR…) have to end. Please ask them to support the Residence-Based Taxation for Americans Abroad Act that Rep. Darin LaHood introduced in the last Congress and is preparing to reintroduce into the current Congress.

Thank you and

Good luck to us all!

A retired American who has lived in New Zealand for 50 years