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Is Not Paying Taxes Immoral?

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I have made it pretty clear I want to pay as little in taxes as possible. Recently I did a guest post over on MakingSenseOfCents where a few people mentioned they don’t think it is right to not pay taxes.

I understand both sides of the coin.

I am grateful for all those who before me paid taxes to ensure that I had affordable education when I was a child at school, for the decent roads that are in New Zealand and for the public healthcare system. I recently posted about what growing up poor taught me about money and revealed that both my parents relied on welfare when I was growing up, despite them not living together.
I can’t imagine what life would have been like for my invalid father without such benefits, provided by tax payers.

So… Why am I Okay With Not Paying Taxes? 
Firstly, I have no intention of living in New Zealand for the foreseeable future. Although New Zealand is extremely beautiful, I do not feel connected to the country. I feel it is relatively expensive, compared to many other countries I have visited, even including the United States and Spain. Why should I pay taxes when I am no longer using any of the services, even as far as using the roads?

Secondly, none of my income is derived from New Zealand. I have no New Zealand clients; I operate completely independent of New Zealand. If New Zealand exploded I would be devastated, but my business in no way would be changed.

Thirdly, I’ll be a tax resident of somewhere else. When I first decided I wanted to minimise my tax bill, I had thought it might be enough to be a non-tax resident of New Zealand and not become a tax resident of anywhere else and simply pay on tax. While that is possible, it probably wouldn’t stand up to a tax man if he came chasing after me. Instead, I have decided I will most-likely pursue a permanent residency in Panama under the Friendly Nations Visa. Although my personal income that is earned overseas and reported in Panama will be exempt from tax, I will be paying some tax due to the business I will have to create for the visa.

In my case, as I am severing my ties with New Zealand and not using any of the services, I think not paying taxes is moral. If, when I apply to be a non tax resident, my application is granted, then New Zealand has deemed me disconnected enough to not pursue taxing my income. Obviously I will be nervous in the weeks following my departure to find out what my status is, but I think I should be approved as I own no land here and generate no income in the country.

When Is Not Paying Taxes Immoral?
I think that not paying taxes is immoral if you’re breaking the law of any country in order to minimise your tax bill.
I think not paying taxes is immoral if you are operating under the table in a bid to avoid tax.
I think not paying taxes is immoral when you’re using all the country’s services and yet not contributing your fair share.

What I am doing is some clever tax planning while taking advantage of the fact that I am location independent.

To be honest, if my partner never wanted to return to New Zealand I would be quite content spending my days soaking up the sun, drinking out of fresh coconuts and enjoying $5 hourly massages.

If I consistently earned $21,000 a month for every month of the year – I’m not quite at that level, but would like to be – I would save around $70,000 a year in taxes. That’s basically like being paid $70,000 a year to go live in Panama.

So tell me what do you think? Is not paying taxes something you feel is immoral, or given the chance would you like to legally save a considerable portion of your income?

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  • Lauren says:

    I really appreciate that you took the time to explain your situation over on Michelle’s blog in the comments, as well as in this post. I can see where you’re coming from now, and it does make sense. As a former tax-paying expat from the US, I just get angry with people who choose to skip out on their tax responsibility here, for whatever reasons. Your circumstance is obviously different, and clearly you aren’t trying to do anything illegal or immoral, so I can certainly respect that! 🙂

    • Christine says:

      Hi Lauren,

      No problem! I am pretty transparent and I do think more and more people will become interested in not paying taxes and becoming location independent so I hope sharing my side of things helps with that. I would find it so hard to pay tax in the US as well as overseas, were you taxed twice? Thanks for your comments!

  • Will says:

    My opinion right now, before I’ve read the post…

    Avoiding taxes is the way of the future (as more people work online exclusively). Smart people do it. It’s like a game played against the government. You want your money and so does the government. As long as you follow the rules, you are just playing a fair game.

    After reading the post…

    “If New Zealand exploded” LOL. I’m completely on your side. NZ isn’t helping you generate an income, so why should they get a share? They shouldn’t. You do take advantage of certain services, so paying those taxes I believe are fair (just avoid income tax). Fuel tax, sales tax, etc.

    And you don’t owe NZ anything. You were raised there and you could not control that-so you don’t owe them ANYTHING for your childhood.

    • Christine says:

      Haha, yeah, if New Zealand exploded! That’s the start of a great book, I’m sure. Well Facebook only pays 2.4% on international revenue and we all know that’s in the high millions, if not billions, of dollars. I’m not gonna say because “FACEBOOK’s doing it, I should too”, but I think the average person pays so much tax because a) they’re stuck in one place and have to, and b) they can’t afford legal/financial/accountant advice good enough to help dramatically reduce their bills.

      In places like France where the tax rate is closer to 50%, it would take HALF of a year of working before you start making anything for yourself…

  • Frank Moreau says:

    I utilize programs to lessen my taxes all of the time. My RRSP (Retirement Savings Plan) gives me a tax break on income tax, mutual funds sheltered in a tax free savings account saves me a lot of tax. I would challenge anyone to cast moral judgement on me because I have every right to do what I am doing…

    If you can utilize legal ways to lesson your tax’s including leaving your country of origin for tax friendlier havens! I say go for it!

    The people who judge you are probably angry because you are refusing to put money in their pockets and their loved one’s pockets.

    If your critics want their government’s to get more money they demand a stop to wasteful spending and demand fiscally responsible, do not blame those who legally lessen their tax burden.

    • Christine says:

      It’s funny, we have elections at the moment and the opposing party is campaigning for higher taxes for the “rich”. Us “rich” folk make up 10% of the population and pay 71% of the net taxes. I don’t think we need to pay more tax. I think GST (Government spending tax, like VAT) should be higher. Tax spending, not saving or earning.

      I think we’re totally in the same mind about it – if it’s legal, why not do it? It’s gonna be quite a pain to set up in Panama but I will probably save tens of thousands of dollars a year in tax money (and my partner too) which will be a life changing sum! We could probably buy a house in a few years in cash with the money we’ll save from not paying so much (or any!) tax. What a fantastic opportunity.

      Can I ask about your “Tax-free savings account”?! This interests me…

  • Frank Moreau says:

    In my nation we have a high interest savings account system in which interest earned is tax free whether it is derived from mutual funds or account interest. It is a little similar to your KiwiSaver program it is just not retirement central.

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