No. 452.
Mr. Pendleton to Mr. Bayard.
Legation of
the United States,
Berlin, March 20, 1888.
(Received April 2.)
No. 595.]
Sir: I have the honor to inclose herewith and to
submit for your consideration the entire correspondence* with the consul-general at
Frankfort-on-the-Main, and with Mr. Samuel R. Honey, of Rhode Island,
touching the income tax levied upon the wife of Mr. Honey, temporarily
residing with her daughter at Frankfort-on-the-Main.
It appears that Mrs. Honey is in receipt of a monthly allowance from her
husband to defray her own and her daughter’s expenses.
The collection of the tax first levied was successfully resisted by the
consul-general on the ground that the residence in Frankfort permitted by
the law with freedom from taxation had not then been continued for the
year.
When the second levy was made, the consul-general contested the legality of
the tax on the several grounds that Mrs. Honey was a married woman; that she
had no independent income or property, and that the allowance of a monthly
sum by her husband for her support could not be called her income. The
position and argument appear to have been stated with such force and zeal by
Mr. Mueller that he was partially or wholly successful, but as the lady was
residing in Germany and the money for her expenditure, by whatever name
called, came within the jurisdiction periodically, the assessment seems to
have been somewhat changed, and now to appear as made against either the
money or Mr. Honey. To this, objection is made that Mr. Honey is not
domiciled, or even temporarily sojourning in Germany, and that he and his
property of all kinds are taxed in Rhode Island.
It seemed to me that all the questions involved were judicial ones, proper
for the consideration of the legal tribunals of Germany, and that, as grave
differences of opinion as to the proper interpretation of the law existed
between the consul-general and Mr. Honey on the one side and
[Page 624]
the tax-assessing officials on the other, it
was a case in which those tribunals should be at least primarily invoked for
an authoritative interpretation, and that at this stage the subject was not
one for diplomatic intervention. I therefore advised the consul-general and
Mr. Honey to exhaust the legal remedies by proper proceedings in the courts.
For some reason, not very clearly expressed, this course has seemed
distasteful to Mr. Honey, and, as I should infer from his last two letters,
to have been rejected. Those letters seem also to close his correspondence
with the legation. There is no reason to doubt the intelligence and
impartiality of these courts. If their decision should accord with the
contention on the part of the consul-general and Mr. Honey, the whole
subject would be satisfactorily and finally disposed of. If they should
affirm the validity of the assessment, the facts as found and the law as
authoritatively stated might be reported to the Department for such action
as it might deem proper.
I beg to express the hope that my course in this case will meet the approval
of the Department. There has not been time in preparing the copies of the
correspondence for this mail to translate the accompaniments to inclosures
Nos. 5 and 9, which are in German. I shall inform Mr. Honey that I have
submitted the whole correspondence in this case to the Department.
I have, etc.,
[Inclosure 5 in No. 595.]
Mr. Mueller to Mr.
Coleman.
[Extract.]
Consulate-General of the United States,
Frankfort-on-the-Main, February 25, 1887.
Sir: I beg to say that I am well acquainted
with Mrs. Honey, and that she has consulted me some weeks ago about the
tax question; and upon the views expressed to her by me she felt
satisfied that nothing was to fear on that account during the first year
of her stay in Frankfort. No demand for the listment or payment of taxes
has been made upon her, and it is not likely that the attempt will be
made to exact income or other taxes from her before expiration of one
year at least. The rule has been generally practiced by the fiscal
authorities in Frankfort and southern German States that taxation of
foreigners should begin after a residence of one year, and whenever
efforts to the contrary have been made within my jurisdiction I have
always succeeded to check and counteract them.
In the case of Mrs. Honey I am inclined to hold that she can not be hold
to pay taxes even after the lapse of one year. Her husband’s home in
Rhode Island is her legal domicile, and her residence here is a mere
temporary and transitory one, conferring no right upon fiscal
authorities to subject her to the payment of income taxes. Other
arguments are that no income-tax law prevails in the United States, and
that Mrs. Honey has no income. The money expended by her is her
husband’s money, and constitutes a part of his and not of her
income.
You may be assured that I shall protect Mrs. Honey against any and all
encroachments upon her rights as an American citizen.
I am, etc.,
Jacob Mueller,
Consul-General.
[Inclosure 9 in No. 595.]
Mr. Mueller to Mr.
Pendleton.
Consulate-General of the United States,
Frankfort-on-the-Main, January 30, 1888.
Sir: I have the honor to submit to your
consideration a letter just received from Mrs. Honey dated this day.
[Page 625]
The tax matter, referred to by Mrs. Honey in her letter, has occupied my
attention for some time. The local tax-assessing officials at first
intended to levy an income tax against Mrs. Honey, upon the ground that
she had lived in Frankfort more than a year, and after I had demonstrated to them that
under the income-tax law a married woman, native or foreign, could not
he taxed, they, in admitting that fact, turned around and levied an
income tax against Mr. Honey, although he, as conceded, has never
resided in Germany. Against this levy, preposterous as it seems to me, I
availed myself, in the name of Mr. Honey, of the remedy provided for in
the tax law by riling a remonstrance with the
“Einkommensteuer-Einschätzungs-Kommission,” and upon their decision of
December, adverse to Mr. Honey’s protest, I, in the name of Mr. Honey,
addressed a “remonstrance” to the “Bezirks-Commission” on January 14
last, but have failed as yet to obtain a decision thereon.
It was my purpose first to exhaust the remedies under the income-tax law,
before I should lay the case before you, hut Mrs. Honey has become
exceedingly irritated and excited by the tribulation and intrusions of
the tax collector that I felt in duty bound to accede to her request,
and to respectfully ask for your advice and assistance.
To show the disposition of these tax-collecting officials toward Mrs.
Honey, it will be sufficient to refer to the fact that said officials
entered, as I think unwarrantably, rooms occupied by Mrs. Honey and her
daughter, and then and there made a levy upon the furniture owned by the
house mistress and only in use and possession of Mrs. Honey as tenant
thereof.
The inclosed copies of my correspondence* with the proper fiscal authorities and the
answer of the Einschätzungs Commission of December 21 last, show
distinctly that the proper authorities had distinct knowledge of the
fact that a reclamation was pending and that Mr. Honey, against whom the
tax execution was issued, was an American citizen and an actual resident
of Rhode Island, and not of Frankfort, and that neither Mrs. Honey nor
her personal property could under any circumstances be made liable to
the payment of an alleged tax debt of her husband.
In conclusion, dear sir, permit me to say that Mr. Honey, attorney at law
and lieutenant-governor of Rhode Island, when he was here on a visit
last summer, made it his special request that any attempt to levy an
income tax against him or his wife should be resisted for financial
reasons as well as on account of the great principle involved.
Awaiting your advice in the matter, I have, etc.,
Jacob Mueller,
Consul-General.
[Inclosure 10 in No. 395.]
Mr. Coleman to Mr.
Mueller.
[Extract.]
Legation of the United States of America,
Berlin, January 31, 1888.
No. 2707.]
Sir: Replying to your letter of the 30th
instant, relating to the income tax assessed by the Frankfort
authorities against the supplies of money transmitted by Mr. Samuel R.
Honey to his wife for the maintenance of herself and daughter in that
city, after a period of residence there exceeding one year, the legation
informs you as follows:
You are quite right in adopting the remedies against supposed improper
assessment provided by German law, and they should be exhausted if necessary, in order that it may be definitely
ascertained what the latter, as applied to the particular case is.
This legation has been heretofore informed by the Department of State, in
an instruction relating to the liability to taxation of Americans in
Germany, that “as a general rule the power to impose taxes is ah
attribute of sovereignty, and when 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.”
I remain, etc.,
P. S.—We beg to add, that as the laws regarding taxation in this
country are understood at this legation, a protest against an
assessment does not suffice to arrest
[Page 626]
proceedings for the collection of the tax
imposed, but that the collected tax is refunded when the party
protesting is successful on appeal.
In regard to the seal attached by the authorities to the sofa
belonging to Mrs. Honey’s landlady, it seems clear that the same
must be removed, if this has not already taken place, upon the
demand of the latter.
[Inclosure 11 in No. 595.]
Mr. Coleman to Mr.
Mueller.
Legation of the United States of America,
Berlin, February 1, 1888.
No. 2709.]
Sir: Following up my letter of yesterday the
minister desires me to say to you again that in his opinion you have
taken the proper view of this tax question as regards Mr. and Mrs.
Honey, viz, that the question is purely one of Prussian law; that if by
Prussian law either Mr. or Mrs. Honey is liable to assessment for income
tax, and the property of either coming within the Prussian jurisdiction
may be seized for the satisfaction of the tax, there does not thus far
appear to be any valid objection to such law as a breach of
international law.
You seem also to have presented with force and cogency your view of the
proper interpretation of the income-tax law.
The minister would advise that the case should be presented to the legal
tribunals in the most effective manner, by very competent attorneys, in
order that the true interpretation may in the last resort be judicially
and finally determined. Then if a case shall be made proper for
diplomatic intervention, the Department of State at Washington will
doubtless instruct this legation to take such course as to it shall seem
best.
If Mrs. Honey has no ownership or other legal interest in the furniture
already seized or proposed to be seized?; it would seem that an
intervention on behalf of the real owner not charged to be implicated in
the tax claim would surely be effective for its release. It can scarcely
be the desire of this Government to attach or jeopard the property of a
person in nowise liable to the tax.
The whole subject of income taxation was maturely considered and acted on
by the Government of the United States during the years of the war, and
precedents for the taxation of non-residents and aliens, and levies on
property or moneys within the jurisdiction may be found.
I trust most sincerely that your view of the meaning of the law may be
sustained by the judicial tribunals and the case in this way
satisfactorily adjusted.
Your obedient servant,
[Inclosure 12 in No. 595.]
Mr. Honey to Mr.
Pendleton.
[Telegram.]
Frankfort officials seizing wife’s furniture for taxes. Please protect
her pending investigation.
Honey,
Lieutenant-Governor.
[Inclosure 13 in No. 595.]
Mr. Pendleton to
Mr. Honey.
Legation of the United States of America,
Berlin, February 1, 1888.
F. O. 2710.]
My Dear Sir: I have received your telegram of
the date of yesterday. I had already had some correspondence with the
consul-general at Frankfort-on-the-Main on the subject, and to-day sent
him an additional letter, of which I take the liberty to inclose a copy.
Obviously the first thing necessary is to have an authoritative
interpretation
[Page 627]
of the
income-tax law of Prussia, and afterwards to determine whether the law
so interpreted is in conflict with the international law. If it shall
appear to be so, the Department of State will doubtless instruct me.
The effect of a protest or reclamation here, as in most other countries,
I Imagine, is not to stop the enforcement of the law as the officials
understand it, but to lay the foundation for a reversal or revision of
their decision and the refunding of the money, if it shall appear that
too large a sum has been paid.
I notice you speak of the furniture attached as being that of your wife,
whilst in the statement of Mr. Mueller it is constantly spoken of as
being not her’s, but her landlady’s.
You may rest assured that I will with great pleasure do whatever I can to
secure justice to Mrs. Honey.
Consul-General Mueller appears to have been very prompt and intelligent
in presenting Mrs. Honey’s case.
I am, etc.,
