Foreign Relations of the United States, 1950, The United Nations; The Western Hemisphere, Volume II

IO Files: US/A/M (Chr)/170

Minutes of the Thirty-fifth Meeting of the United States Delegation to the General Assembly, New York, November 8, 1950, 9:15 a. m.

New York, November 8, 1950, 9:15 a.m.

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[Here follow list of persons present (41) and brief consideration of an item not on the agenda.]

1. Tax equalization (SD/A/C.5/147).¹

Mr. Hall, outlining the history of this problem, indicated that the question arose because of the provision in the Privileges and Immunities Convention, which called for exemption of United Nations officials from national income taxes. At the time this convention had been considered, both by the Preparatory Commission and the General Assembly the United States had entered reservations on this point.² In 1946, when the question of fixing the salaries of the officials had come up, this subject had been raised, and we had then proposed that salaries be fixed on a gross basis, subject to national taxes, but had been voted down. When the Assembly learned that the United States would probably tax its nationals, it provided for their temporary reimbursement. In 1947, these tax reimbursement provisions had been extended, and the Secretary-General had been authorized to study the possibility of a scheme for levying staff contributions on officials. We had supported that proposal. In 1948, the Secretary-General presented the plan for a staff contributions system of United Nations officials, with assessments to be levied against their salaries. That plan had been adopted. The General Assembly again had called upon members to ratify the convention on privileges and immunities. Mr. Hall recalled that the Senate had approved the convention with a reservation on the tax provision.³ About the time the House was to consider the matter, the Gubitchev case⁴ had arisen, and it was decided that any further consideration at that session was consequently out of the question. In 1949, the Assembly had extended the provisions for tax reimbursement for another year. The United States was now the only state that had not either acceded to the Privileges and Immunities Convention or adopted special legislation exempting its nationals from taxation. Canada had been in the same position, but it had now adopted legislation allowing an offset of the United Nations contribution under the staff assessment plan against national taxation of Canadians employed in the Secretariat.

Mr. Hall raised the question of the position to be taken by the United States in this session of the Assembly. He explained that the Secretary-General would present a supplemental budget estimate of $1,000,000 to cover the reimbursement of United States nationals in the Secretariat. At that point we could anticipate a great deal of criticism of the United States. Mr. Hall then referred to the recommendations in the position paper, SD/A/C.5/147, which was before the Delegation. In the first instance, the Delegation was to indicate that the Congress had been requested to take the necessary action to relieve US nationals of double taxation and that it hoped that Congressional action would be forthcoming. The second recommendation was that we should take no position as to whether the Assembly should extend beyond 1950 the authorization to reimburse United Nations employees. However, we should resist any move to impose a special United States assessment to cover the cost of reimbursement of the United States nationals on the Secretariat. Mr. Hall noted that this idea had been proposed in the past. He personally believed the General Assembly would extend the reimbursement provisions, but there might be a vote of censure for the United States position in this regard. He did believe that our position might be more difficult this year. However, there was little to do except to indicate to our friends we would present the issue to Congress and to hope that no precipitate action would be taken by the General Assembly.

Senator Cooper said he sympathized with Senator Lodge, who had this problem this year. The Senator said it was one of those things where political realities could not be ignored.

Mrs. Roosevelt asked what the result would be if a special assessment were levied against the United States and adopted by the Assembly. Mr. Hall said this could be done. We would simply have to ask Congress for money to pay the assessment. If we wanted to belong to the organization, we had to pay. The only sanction against non-payment was the loss of vote at the end of two years if our arrears exceeded a certain amount, as provided in the Charter. Mr. Popper pointed out that it would take a long time to get behind under the Charter if an assessment of this small amount were involved. Senator Lodge said that the problem would be to explain to the average Congressman why we were the first nation ever to have a special assessment levied against us, particularly since we paid the, largest contribution.

Mr. Cohen inquired whether only American nationals were involved. Mr. Hall replied in the affirmative, noting that Canada had been previously involved. Mr. Cohen asked whether there were any danger of a special assessment being levied. In this case, perhaps Assistant Secretary-General Price, on behalf of the American nationals in the Secretariat, could indicate that they did not object to their US taxes. Mr. Hall thought this would not be helpful inasmuch as others would insist that there should be no discrimination among members of the Secretariat. We had tried out that idea once by suggesting that it was a matter of indifference to other people whether Americans paid taxes or not, but we had gotten a violent reaction to that position. Mr. Cohen thought it should be possible to get over the arguments against the special assessment. Certainly the Assembly ought not to go that far because in the end such a move would be self-defeating. Mr. Hall recalled that in 1948, the Fifth Committee had passed such an assessment by a majority of 2. The next day the United States Delegation had been successful in getting the matter reconsidered and defeated. He thought we could defeat such a special assessment on principle again. Mr. Cohen thought it would be well to alert a couple of the important delegations to carry the ball for us in the event such a proposal should be made. We would need some faithful friends to speak on the folly of such a special assessment. Mr. Hall thought such a move could be defeated without any question.

Mr. Ross asked whether Senator Lodge would sit on this item. The Senator replied that he would unless he could find some good excuse for not doing so. Senator Cooper recalled that Secretary-General Lie and the British had come to our defense last year. We were at fault in this matter; we had not had any decision from Congress. He wished it could be gotten over; we were always holding out hopes that something would be done. He wished that Congress could say either yes or no. Senator Sparkman asked whether, assuming Congress came across, it was contemplated that United Nations employees would not be assessed at all. Mr. Hall explained that would not be the case since they were taxed as staff members and at a rate higher than our own since the Canadian scale had been chosen as the basis for the staff assessment plan.

[Here follows discussion of other agenda items.]

1. Supra.
2. For documentation on this matter, see Foreign Relations, 1946, vol. i, pp. 60 ff.
3. For relevant documentation, see Foreign Relations, 1948, vol. i, Part 1, pp. 34 ff.
4. Documentation on this subject is scheduled for publication in Foreign Relations, 1949, volume v .