Littleton man questions fairness of how foreign investments are taxed
More than seven decades after commanding a naval ship during World War II, Richard Bennink is still up for a fight.
The 97-year-old Littleton resident challenged state legislators about the fairness of the state taxing the full amount of dividends on his foreign investments, even on the portion that Belgium claimed for taxes.
"You are being taxed on a tax," Bennink said. "You can say you're paying a tax on money you never got."
And Bennink found he wasn't alone.
There were an estimated 22,848 New Hampshire residents who in tax year 2011 paid the state Interest & Dividends Tax on foreign investments, producing $309,407 in net state revenue for that year, according to the state Department of Revenue Administration.
That averages out to $13.54 per filer.
Bennink said he bought 500 shares of Anheuser-Busch stock in 2010, a year after InBev, which acquired the St-Louis-based brewer, announced the consolidated company would remain headquartered in Belgium.
In Bennink's case, he paid about $20 more in the state I&D tax than he considers fair on his 2013 foreign earnings - less than Bennink would have paid for gas to drive from his house to the State House and back, if he was still driving.
Instead, working the phones, Bennink convinced Sen. Jeff Woodburn, D-Dalton, to sponsor a bill to fix the problem.
Woodburn's Senate Bill 208 would have allowed for filers to deduct the amount of foreign taxes paid from taxable dividends under the Interest & Dividends Tax. It got sent to interim study instead.
The legislation is "somewhere in between heaven and hell," Woodburn said.
But Sen. Bob Odell, R-Lempster, who won't seek reelection, was more optimistic."I don't think that this dies," Odell said last week. "I would anticipate it will become an issue in the next legislature, beginning in January."Odell, who in his 70s, said he also finds himself paying foreign taxes on certain investments, then paying again when he files for his Interest & Dividends Tax. He said the foreign tax he pays shows up on his mutual fund statements.
Odell said Bennink has "a justifiable reason to raise a concern."Melinda Cyr, tax policy analyst at DRA, said the federal government provides for a tax credit on foreign taxes paid, but New Hampshire doesn't have a corresponding credit.
She said a Senate committee asked the DRA to take a sampling of how other states handle the situation.
"Some provided no relief similar to New Hampshire; some provided a tax credit but only for Canadian income" and some provided a full tax credit, Cyr said.
Many states tackled the issue of foreign taxes as part of their state income tax, which New Hampshire doesn't have, she said.
Woodburn said he didn't think it was fair to tax someone on the amount of tax paid to a foreign government on investments."Some people say it's not fair to (pay once), but certainly it's not fair to pay twice," Woodburn said. "I think Mr. Bennink's persistence has been about the principle of the matter."
Bennink is still fighting to get a silver star, awarded for combat valor, that he said he earned for his war service. In World War II, he was tasked with landing about 400 Marines on an island a half mile from Guadalcanal, scene of a battle between American and Japanese troops.
"I wish I would be a little more persistent with the U.S. Navy," he said, comparing it to his work on changing the I & D tax. "They owe me a medal."