IO Files: SD/A/C.5/147

Department of State Position Paper, for the Instruction of the United States Delegation to the General Assembly


Tax Equalization

the problem

In the course of considering the budget estimates or in connection with some other agenda item, it is expected that note will be made of the fact that the United States continues to levy national income taxes on the salaries of United States nationals on the Secretariat despite the action of the United Nations subjecting all Secretariat personnel to United Nations Staff Assessments on their salaries, and despite General Assembly Resolution 239 (III) requesting Member governments to relieve their nationals on the Secretariat from double taxation on their salaries. There may also be discussion as to whether the United Nations should continue to reimburse United States nationals on the Secretariat for the amount of United States income taxes they pay on their salaries. What part should the delegation take in such discussions if they occur, and what should be the United States position on the issue of reimbursement?


With regard to Resolution 239 (III) of the Third Session of the General Assembly (1948) asking Member nations to take the necessary action to relieve their nationals of double taxation, the [Page 82] delegation should indicate that the Congress of the United States has been requested to take such action and that it hopes that Congressional action will be forthcoming early next year.
The United States delegation should take no position as to whether the General Assembly should extend beyond 1950 the authorization to reimburse United Nations employees for taxes. The United States delegation should resist any move to impose a special assessment on the United States to cover the cost of reimbursement of United States nationals on the Secretariat. It should insist that replenishment of the Working Capital Fund for advances made therefrom for reimbursement of 1950 taxes, or any appropriation in connection with reimbursement of 1951 taxes, be included in the ordinary financing of the Organization and that funds be provided according to the established scale of contributions.


Staff assessments are a form of internal income tax levied by the United Nations on the salaries of its staff, and the assessment plan is intended to insure that United Nations staff members, irrespective of nationality, will be subject to the same tax regulations insofar as their United Nations salaries are concerned. Proceeds from the assessments (about $3,500,000 for 1950) are entered in the books as miscellaneous revenue.

The Staff Assessment Plan cannot be said to have succeeded in its purpose until all Member governments have taken action to relieve their nationals on the Secretariat, by exemption or otherwise, from what amounts to double taxation. Resolution 239 (III) requested Member States which had not acceded to the Convention on Privileges and Immunities of the United Nations, or which have acceded to it with reservation as to its Article 18(b), to take the necessary action to exempt their nationals employed by the United Nations from national income taxation with respect to their United Nations salaries and emoluments, or in any other manner grant relief from double taxation to such nationals.

During the past year the Canadian parliament has taken the action requested in this resolution and the United States is the only Member government which has failed to complete action in this regard.

H.R. 5993 and S. 2345, now pending in Congress, would exempt from federal income tax the salaries paid by the United Nations to United States nationals on the Secretariat. The legislation provides that, while this income is not subject to tax, it shall be included in the individual’s gross income for the purpose of determining the rate of tax which should apply to any income the person may have from other sources. This was inserted in the bill in order to prevent the individual [Page 83] from getting a “windfall” by having his non-United Nations income taxed at a lower rate. The United States believes that this legislation, if enacted, would constitute full compliance with the General Assembly Resolution.

For the information of the Delegation, the tax legislation was submitted to Congress late in the first session of the 81st Congress only after it became clear that there would be no action in that session on the Convention on Privileges and Immunities of the United Nations. The legislation has not yet been considered by the House Ways and Means Committee, and since this is a revenue bill which must originate in the House, the Senate Committee will not consider the legislation until after the House has passed it. It had been hoped that the Congress would act on the bills during this second session of the 81st Congress but it now seems clear that there is no possibility that Congressional action will be completed before the Congress adjourns. Every effort will be made to secure Congressional action early in 1951.

provision for reimbursement

Pending action by the Member governments concerned, the General Assembly has from year to year authorized the Secretary General to reimburse United Nations staff members for national income taxes on their United Nations salaries. At the Fourth Session, a number of delegations expressed their disappointment that the United States had failed to comply with the General Assembly Resolution on taxation and pointed out that the United States default in this matter presented the organization with the unwelcome alternative of either reimbursing the United States national (and thus indirectly contribute approximately $500,000 for the year to the United States Treasury), or withholding reimbursement and seeing the United States nationals subjected to the penalty of double taxation. In the end, after the United States had reported on the steps this Government had taken during the year in this connection, and after the Secretary General had appeared before the Fifth Committee to make a personal statement, the Fourth General Assembly voted ‘to continue reimbursement for another year.

At the Fifth General Assembly, the issue of reimbursement may arise in connection with (a) a report from the Secretary General on the Staff Assessment Plan, (b) the item to be included in the supplementary appropriations to replenish the Working Capital Fund on account of advances for reimbursements made in 1950, or (c) the draft Working Capital Fund Resolution for 1951 in which at present there is no provision for continued reimbursement. The United States is not in a position to propose continuation of reimbursement even though the consequences of double-taxation will be severe for the [Page 84] United States nationals on the Secretariat. The United States, therefore, should confine itself to stating that it will continue its efforts to complete the necessary action to comply with General Assembly Resolution 239 (III). If the issue should arise of assigning any special responsibility to the United States for the costs of reimbursing United States nationals, the Delegation should express strongly the conviction that these are general costs of the organization and should be borne by the entire membership in the same manner as other administrative costs.