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.