No. 238.
Mr. Fish
to Mr. Davis.
Washington, November 21, 1874.
Sir: Your dispatch No. 25, in relation to the imposition of income-tax upon citizens of the United States residing in Germany, has been received and considered with attention.
To your dispatch are annexed communications from Mr. Leo Wolf, Mr. Wierss, and Mr. Appleton, all claiming to be citizens of the United States residing in different parts of Germany, and objecting to the imposition of this tax; added to which is your correspondence on the question with them, and an opinion of Mr. Jansen at Berlin, as to the legal aspects of the law of the different German States imposing these several taxes. It appears that each of the persons objecting to the tax is admittedly a resident in that part of the German Empire where he is assessed, and not a mere temporary sojourner for pleasure or otherwise.
Upon examination of the statement of Mr. Jansen, it further appears that taxes on income of aliens appear to be assessed under certain restrictions and within certain limitations upon resident aliens only, although it appears that a person carrying on business is deemed to be a resident immediately upon taking up his residence in any place.
[Page 489]The real question raised, therefore, by this correspondence, is, whether an income-tax may properly be assessed against an alien resident in Germany.
As a general rule the power to impose taxes is an attribute of sovereignty, and Where the person or the property in question is a proper subject of taxation, the species of tax and the amount which should be collected may fairly be left to the state or government exercising this power.
By the act of March 2, 1867, it was provided—
That there shall be levied, collected, and paid annually upon the gains, profits, and income of every person residing in the United States, or of any citzen of the United States residing abroad, whether derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever, a tax, &c.
Such provision does not materially differ from the corresponding provision in the previous acts on the same subject. It applies in terms to all persons, aliens as well as citizens residing in the United States, and to all citizens residing beyond the limits of the United States.
So far as the subjects of taxation are concerned, the income-tax referred to in your correspondence does not appear to differ from the income-tax imposed by this Government.
On the ground, therefore, that the parties complaining in these cases are all residents of Germany, and so long as the tax is uniform in its operation and can fairly be deemed a tax and not a confiscation or unfair imposition, it is not believed that any successful or consistent representation can be made to the German government in their behalf.
It is true that in some cases a party may be liable to double taxation, but such instances are exceptional, and this fact cannot alter the rule. No income-tax, as such, is at present collected in this country.
Some of these statements complain of excessive taxation, even under the provisions of the German laws, but such matters would seem more properly to be questions for submission to the German courts.
The views of the Department are confined to the particular cases presented in your dispatch.
It is not admitted that an income-tax could be collected from nonresident aliens, nor is the general question of municipal taxation adverted to in the communication of Mr. Kreismann, the consul-general, but concerning which no particulars are given, here considered.
The general views expressed in your dispatch on this question are concurred in by the Department.
I am, &c.,