893.5123/11: Telegram
The Counselor of Embassy in China (Peck) to the Secretary of State
[Received September 17—5:35 p.m.]
270. 1. The Minister of Finance82 today discussed with me Chinese income tax enforcement. He asked me to convey to the American Government his earnest hope that the American Government would be generous in its attitude toward payment of this tax by American citizens in China. I told him the Embassy had not yet received the Department’s instruction in regard to this subject. Kung said there was no reason in law or equity why foreigners in China should not pay that tax. Foreigners residing in other countries pay the local income tax and the Chinese rates are relatively low. He was especially anxious that American firms should deduct the income tax from salaries of Chinese employees in accordance with the law and that American banks should deduct the tax from income derived by Chinese from deposits in such banks.
2. Kung alluded to the moral obligations resting on foreigners to pay income tax in consideration of privileges attached to their residence. He said that although the United States was traditionally China’s foremost friend apparently in the matter of this tax Great Britain had shown the way to other nations, since the new British Ambassador arrived in China broadly said British subjects would pay [Page 632] the tax if all other foreigners did so. Kung emphasized that unless the tax were actually collected from all other nationalities including Japanese no effort would be made to collect from Americans. 3. Sent to the Department and Peiping.
- H. H. Kung.↩