File No. 16545/4.
In view of the statements contained therein, the department will be glad
to have you present an informal request to the British Government that,
upon the grounds of international comity and reciprocal favor, it extend
the present exemption from the income tax of the official incomes of
foreign consuls so as to include the private income of American consular
officers derived from property located outside the United Kingdom.
[Inclosure.]
Department of State
March 1, 1909.
memorandum on the payment of
income taxes by american consular officers in great
britain.
Under date of November 2, 1909, Consul Halstead, at Birmingham,
England, forwarded copies of correspondence had with the local
surveyor of taxes showing that the consul had been called upon to
make a return as to his private income, preparatory to paying the
income tax.
It appears from the correspondence that the official incomes of
foreign consuls residing in England are not subjected to payment of
this tax, and that the income referred to by the consul is that
derived from his investments in the United States. He protests
vigorously against the prospective imposition of the tax, and states
that if “the department, for reasons that seem valid to it, does not
see its way to free American consuls in the United Kingdom from
income-tax liability, or if the British Government refuse to grant
exemption to American consuls under British income-tax laws, I shall
be compelled, most regretfully, to retire from the Consular Service
before becoming liable for further British income taxation.”
The United States has treaty provisions with many foreign
Governments, but not with Great Britain, as to consular exemption
from taxation. Neither do our treaties with Great Britain contain a
most-favored-nation clause applicable to our consular officers.
The records of the department show that the following cases have more
or less bearing as precedents upon the question under
consideration.
On March 3, 1859, the department wrote the consul at Bremen in
relation to his claim for exemption from municipal taxation that—
You are reminded that consular officers are not clothed with
immunities and privileges of diplomatic agents and are
therefore subject to local regulations of the place in which
they respectively reside.
If Bremen consuls are exempted from taxation in the United
States, it is through the courtesy of the authorities of the
several States in which these officers are situated, and not
from any stipulation in the existing treaty between the
United States and Bremen, of which only can this department
take cognizance.
In reply to his communication forwarding correspondence had with the
Government of Oldenburg regarding the imposition of an income tax
upon consular officers, the vice consul at Oldenburg was instructed
on May 29, 1861, that—
If, as you intimate, the 12 consular officers of Oldenburg in
the United States have hitherto been exempted from the
payment of taxes, it must be due to the courtesy of the
local authorities in the cities where they reside, and which
can scarcely be expected, in view of the correspondence
which you have transmitted to this department, to be
extended to them hereafter.
Complaint having been made by the Russian consul general at New York
that he had been called upon to pay the Federal income tax, the
department wrote the Secretary of the Treasury that it was desirable
that the law on the subject should receive such consideration as to
exempt foreign consuls “from any such tax which may not be
chargeable upon income derived from property in the United States,
or from business other than that of an official character.” The
department added that it was not aware that the income of any
American consul derived from official sources was taxed by the
government of the country where he resided. (The department to Mr.
Chase, Sept. 23, 1863, 62 Dom. Let, 9.)
On April 5, 1887, in reply to his communication of January 25, 1887,
reporting the efforts of the Indian authorities to collect an income
tax from him, the consul at Calcutta was advised as follows:
Relative to the right of the British Government to levy a tax
on your official income * * * I have to say that whatever we
may say of the right of a government to tax the incomes of
persons residing within its borders, as consuls from foreign
governments, the practice of late years of our own
Government, and it is believed of the British Government,
has been not to insist on such a tax.
Therefore, whatever may be said upon the abstract question of
the right of the British Government to tax your income, you
may, with good reason, claim exemption from such tax in the
present case on the ground of international comity and
reciprocal favor.
The consul general reported on May 17, 1887, that he had protested
against the collection of the tax on the grounds of “international
comity and reciprocal right,” and that he believed that the
Government of India would not insist on the collection of the tax.
He added that if it should turn out otherwise, he would make further
report. As the records of the department do not appear
[Page 286]
to show any later
communication from him on this subject, it is inferred that the tax
was not collected.
The following instruction from the department is believed to set
forth correctly the status of consuls according to international
law:
The law of nations does not of itself extend to consuls at
all. They are not of the diplomatic class of characters to
which alone that law extends of right. Convention, indeed,
may give it to them, and sometimes has done so; but in that
case the convention can be produced. * * * Independently of
(the special) law, consuls are to be considered as
distinguished foreigners, dignified by commission from their
sovereign and specially recommended by him to the respect of
the nation with whom they reside. They are subject to the
laws of the land, indeed, precisely as other foreigners are,
the convention, where there is one, making a part of the law
of the land. (Department to Mr. Newton, Sept. 8, 1791, 4 MS.
Am. Let, 283.)
In the absence, then, of a treaty provision with Great Britain, it is
not seen that the Government of that country is under any legal
obligation to exempt our consular officers from the payment of a tax
upon their private incomes, even if derived from property situated
in the United States.
The department was advised by the attorney general of Massachusetts,
under date of February 15, 1909, that it is not the practice in that
State (which, so far as is known to the department, is the only
State imposing an income tax) “to assess a tax on the salary or
income of a foreign consul, whether official salary, private income,
or income derived from services outside the United States.”
