[Congressional Record Volume 153, Number 139 (Wednesday, September 19, 2007)]
[Extensions of Remarks]
[Page E1931]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   PURPOSES OF THE FOREIGN TAX CREDIT

                                 ______
                                 

                             HON. TOM UDALL

                             of new mexico

                    in the house of representatives

                     Wednesday, September 19, 2007

  Mr. UDALL of New Mexico. Madam Speaker, I rise today to introduce 
legislation to correct an outdated tax law that is forcing a husband 
and wife of almost 30 years from my district to live thousands of miles 
apart during what should be the golden years of their retirement 
together. In introducing this legislation, however, I seek to not only 
assist my constituents who have brought this inequity to my attention, 
but also to assist any other families facing the same problem.
  Madam Speaker, I first introduced this legislation during the 109th 
Congress. I also had an opportunity to testify before the House Ways 
and Means Committee, Subcommittee on Select Revenue Measures last 
Congress. Unfortunately that was as far as my bill progressed.
  Today, however, I introduce this legislation with great optimism for, 
and a continued commitment to, its passage. At issue is what I believe 
is an outdated provision of the tax code that is preventing one of my 
constituents, Mrs. Novella Wheaton Nied, a U.S. citizen and native New 
Mexican, from enjoying her retirement years with her husband Veit Nied, 
a German citizen.
  The Nieds have been married almost 30 years and have lived overseas 
in various countries for the length of their marriage until September 
2001. Mr. Nied, an economist, retired in September 2001 from the 
European Commission in Brussels, Belgium. The couple decided to return 
to Taos, New Mexico, Novella's home, for their retirement years, but 
learned upon Veit's approval of permanent resident status in the United 
States that his pension from the European Commission would be subject 
to double taxation--the initial tax by the European Commission, and 
again by the U.S. should he choose to make his residency here.
  Double taxation on his pension will create a hardship for the Nieds 
in their retirement--both financially and emotionally. As a result, Mr. 
Nied did not accept the permanent resident status and has been 
traveling back and forth between Germany and the United States, being 
very cognizant and diligent about following U.S. immigration and 
taxation laws, and therefore has not stayed longer than 120 days per 
annum in the United States, which would render him liable for taxes in 
this country. This unfortunate living situation has been ongoing since 
2001 when they learned of the double taxation and have been seeking a 
solution that would allow them to once again live together.
  The United States has tax agreements with many countries to prevent 
double taxation, as well as provisions in the tax code that allow 
resident aliens who pay taxes to a foreign country to claim the foreign 
tax credit that reduces their U.S. income taxes. Unfortunately, the EU 
does not qualify as a foreign country for purposes of the foreign tax 
credit.

  The bill I introduce today amends the Internal Revenue Code to treat 
employment taxes paid to the European Union by employees of the 
European Union as income taxes paid to a foreign country, for purposes 
of the foreign tax credit. This bill will allow Mr. Nied, and others in 
his situation, to qualify for the foreign tax credit.
  This is a simple bill that brings a section of the tax code up to 
date with the changes in international political institutions. While it 
certainly will help Mr. and Mrs. Nied, this legislation will also help 
other families who face the same situation. The sooner we pass this 
legislation, the sooner the Nieds, and others, can be reunited and 
enjoy their retirement years in the company of their loved ones.

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