Non-resident aliens face a 40% federal estate tax on US investments above $60,000 with no spousal deduction

Under IRC Section 2101, non-resident aliens (NRAs) who hold US-situs assets -- including US stocks, US real estate, and US corporate bonds -- are subject to federal estate tax at rates up to 40% on amounts exceeding a $60,000 exemption. So what? US citizens and residents get a $13.61 million exemption (2024), meaning NRAs face estate tax at thresholds 227x lower. So what? An NRA with a $500,000 US stock portfolio who dies unexpectedly would owe approximately $176,000 in federal estate tax -- money their heirs may not have liquid access to. So what? This effectively makes it dangerous for NRAs to build meaningful US equity positions, discouraging them from participating in the world's largest capital market. So what? NRAs who do invest in US equities must either use complex offshore structures (adding $5,000-15,000/year in legal and administrative costs) or accept the risk of catastrophic tax on death. So what? This creates a perverse incentive where NRAs avoid US markets entirely and invest in less efficient home-country markets, reducing their long-term returns by 2-4% annually compared to diversified US exposure. The problem persists because estate tax treaties exist with only about 16 countries, leaving citizens of most nations unprotected. Congress has not expanded the NRA exemption since it was set at $60,000 in 1988, and there is no political constituency advocating for non-resident non-voters.