Mr. Adee to Mr. Powell.
Washington, November 2, 1897.
Sir: I have to acknowledge the receipt of your No. 59 of the 23d ultimo, in relation to a tax imposed by the Haitian Government upon foreigners employing other than native clerks, your representations having particular reference to a protest filed with you by Messrs. Ch. Weymann & Co., claiming that such a tax is in violation of article 5 of the treaty of 1864 between the United States and Haiti.
The question, as you state, is not new. It was very distinctly presented in 1876, when the remarkable provisions of the Haitian law of December 15, 1875, were brought to the Department’s attention. That law, which, not having been agreed upon by the Haitian Chamber, was put in operation by a decree, imposed numerous severe restrictions upon foreigners. By article 13 they were admitted to do business only as consignees at the open ports, and special discrimination of ten times the tax required of such foreign consignees was imposed upon any consignee of Haitian origin who should have acquired foreign citizenship. By [Page 393] article 16 foreign clerks, whether in native or foreign service, were subjected to special taxes, for the payment of which their employers were to be held responsible. And so with many other vexatious restrictions and discriminations illustrative of the general character, but not specially pertinent to the present inquiry.
Mr. Fish’s instruction to Mr. Bassett of March 13, 1876, No. 261, took the ground you recite—that the fifth article of the United States and Haitian treaty of 1864 was intended to protect and should protect our citizens from any discrimination in the matters of trade to the advantage of Haitian citizens, and directed due protest in case of any attempt to apply that law to American citizens in Haiti.
The decree of 1875 was followed by a law of October 27, 1876, of which a copy accompanied your No. 49 of October 12, ultimo,1 imposing a complete system of internal revenue taxes (impositions directes). It retained many of the objectionable features of the old laws it replaced, including, by its eleventh article, a tax according to a graduated schedule found annexed to a supplementary law of October 30, 1876, upon all foreigners employed as clerks or in any other capacity by merchants, manufacturers, or tradesmen, whether the latter be natives or foreigners, and rendering the employer responsible for the payment of the clerk’s license. Under this law many international disputes have arisen, the Metzger case, with which you are now familiar, being one of the most recent and most prominent, but it is unnecessary here to discuss its particular aspects.
In 1893 your predecessor, Mr. Durham, reported (No. 235, August 28) the introduction of a bill imposing special personal license taxes on all foreigners in Haiti engaged in banking, export, or import trade, on foreign clerks employed in the same branches of business, and upon a number of other trades and businesses scheduled in the eighth article thereof. Besides these enumerated taxes, it was prescribed in the same article 8 that all foreigners exercising professions or industries not provided for by that itemized tariff and open to foreigners, should pay twice the amount of the license tax paid by Haitians in virtue of a preceding law of October 24, 1876.
Mr. Gresham, in his No. 7 of November 7, 1893, answering Mr. Durham’s dispatch, characterized the proposed bill as departing wholly from the just principle of law laid down as the motive of the measure; as substituting an inequitable and discriminating treatment at variance with its declared precepts; as resulting in discrimination against our citizens, and as being contrary to the provisions of article 5 of the existing treaty, which specifically prohibits the subjection of the citizens of the United States in Haiti to “any contributions whatever higher or other than those that are or may be paid by native citizens.” Mr. Gresham added: From every point of view, so far as citizens of the United States established in business in Haiti are concerned, the proposed act appears to vitiate the reciprocal quality of treatment stipulated by international treaty, and should be so dealt with by you in the event that it becomes a law and an attempt is made to apply it to citizens of the United States.” The law in question failed to pass.
Mr. Gresham’s instruction, although in terms called forth by a bill which did not become a law, appears to be applicable to the present contingency, because the taxes complained of exist for the most part in the continuing law of 1876. That instruction is therefore reaffirmed. For your further government in dealing with the question the following observations may be relevant.
[Page 394]So far as the liability of the employer to the tax imposed upon the clerk is concerned no discrimination is professed, native and foreign employers being alike held responsible for payment of the tax. The Department is therefore not prepared to say that an American employer having in his service a clerk of any other than American nationality, or not of a nationality whose subjects may claim exemption from the discriminatory tax imposed upon foreign clerks, could properly plead discrimination and resist payment. But if he employ an American citizen as a clerk, or a citizen of any country entitled by treaty to claim exemption from such discrimination, the transference of the discrimination to the employer, instead of the clerk, is in itself discriminatory and should be protested against. In the case of an American citizen not only is the submission of the clerk to the differential tax an infringement of his treaty right, but transference of the liability for its payment to his American employer works in effect a discrimination founded upon an initial wrong and therefore is an invalid demand, to be opposed.
The foregoing considerations answer your first inquiry as to whether, under the treaty, American citizens are compelled to pay a tax for the clerks in their employ not Haitian.
As to your second inquiry, to wit, whether an American merchant, after having paid the tax in question for a year, is compelled to pay again for the same period on account of the recent law of which you send a copy and translation, the following observations may be made:
It is noted that the new law of September 15, 1897, in the printed form you send, only comprises two articles, the first modifying the tax upon foreign clerks of different classes already imposed by the existing law of 1876, and the second charging the secretary of state, finance and commerce, and the interior with the execution thereof. Your translation adds certain articles numbered 5, 6, 7, and 8 prescribing the procedure to be followed in case of delinquency. These, however, are matters of detail not material to the point. So far as an American clerk is concerned, the fact of a discriminatory tax constitutes the sole ground of protest because contrary to treaty, and it follows that any legislation modifying the tariff of the tax, or retroactively collecting it from him or from his American employer, in addition to taxes already paid, is open to protest on precisely the same treaty ground as the original tax to which your first inquiry refers.
As to the protest of Messrs. Ch. Weymann & Co., the Department is unable to instruct you, in the absence of proof that the protestants are citizens of the United States or that the three foreign clerks, in respect to whom the tax is laid, are American citizens, or are dependents of a State entitled by treaty to have its citizens or subjects exempt from contributions not equally imposed upon natives. If the clerks or any of them, belong to the latter class, good claim for the protection of their own government would seem to lie, without prejudice to the concurrent right of the American employer to protest on the ground that he is burdened with a vicarious tax, in itself illegal. This, however, can only be stated in a general way; the particular case can not be considered as an international reclamation unless a full showing of all the facts and circumstances be submitted under oath for the Department’s consideration.
Respectfully, yours,
- Not printed.↩