Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-01-31
CITIZENS ABROAD
ASK TAX RELIEF
American From Brazil Says
Business Is Being Killed
by High Levy.

Failure of Congress to exempt from
the Federal income tax income de
rived by American citizens conduct
ing business in foreign lands is kill
ing American business abroad" Rich
ard T. MOmsen, president of the
American Chamber of Commerce for
Brazil, declared in an interview here
yesterday. Mr.. Momsen has come &c
Washington as representative OF his
organization and the American Cham
Der of Commerce of Cuba to urge
Congress to write such an exemption
into the pending tax revision bill.
Although the House adopted a lin
tied tax exemption for such income
the Senate finance committee, Mr..
MomSen pointed out, refused even to
go that far and eliminated the entire
provision Mr.. Momsen said he was
confident that If Congress had first
hand information as to the handicaps
which such an income tax imposes
1t speedily would grant the exemp-
ton that is extended by every other
government in the world to It's citi-
Zens abroad.
Thinks Exemption Too Light.
Even the provision voted hS the
House, after the ways and means
committee had heard arguments for
the exemption by Q. X. Davis, secre-
tary of the National Foreign Trade
Council. and other foreign trade eX-
pertS, does not go far enough, in the
opinion of most American chambers
nj commerce abroad. Mr.. Momsen
said. This provision exempted for
the individual citizen OF the United
States amounts received as salary or
commission for the sale of export
from the United States of tangible
personal property produced in the
United States, in respect OF such
sales made while he Is actually en-
ployed outside OF the United States, If
so employed for moro than six
months during the taxable year
The comment of the Senate finance
committee, in striking out the pro
vision, that IL was unnecessary be-
cause an income tax credit already
is allowed by the United States Of
the amount of such tax paid to a
foreign government, did not take into
consideration the actual facts of the
situation, Mr.. Momsen said.
Cites Heavy Burdens.
While it IS true" he said, that
Americans residing abroad are per-
mitted 10 deduct from their American
tax the amount of their foreign tax.
this covers only income or excess
profits taxes of foreign governments.
Most countries levy a great variety
Of business and other taxes which
are entirely unknown or unheard OF
in the United States. AS a result.
the present partial exemption in
the form of a reduction is to a great
extent of no value.
In countries where the income tax
imposed is greater than that in the
United States, It would seem that the
relief we desire Is not necessary
But there is perhaps only one coun-
try which levies a higher income
tax than the United States. Brazil,
where I have resided for the greater
part of the last Is years. is in that
category. There are. however, a mul.
titude of other taxes which are i'm.
posed upon business and professional
men there, which II added to the In
come tax probably would make the
total q greater burden than our
taxes in this country. Every business
man in Brazil, for example, has to
pay a municipal business tax, Which
in many classiflcationS runs into
thousands of dollars year; he must
nav a tax on every sign on his place
of business or elsewhere, and numer-
Gus other taxes.
City Taxes Are Heavy.
The cities also exact the payment
of sanitary and multitude of other
taxes on business in every form. 10
the federal government he pays a
fixed tax known as the industrial and
profession tax: he also pays the fed
eral government tax varying from
10 to 90 per cent of the rent or rental
value of the premises he occupies
And yet the American in Brazil can
not deduct these taxes from his Amer
lean income tax. In other countries
where there is no income tax at all
and burdenSOme taxation is levied In
other forms, the situation is still
worse.
The important point is that the
United States is the only Government
that does not exempt its citizens from
tax on incomes derived abroad, and
that all the other governments have
recognized the wisdom of giving
their nationals abroad every oppor-
tunity of competing on equality with
the citizens Of other nations. 1t must
be obvious that the American trading
abroad under these conditions Is at a
serious disadvantage. It is discourage
ing: il is killing American business
abroad
Asks Early Relief.
With American foreign trade con
Quoted under the handicaps of com
parative ineXperience IN the foreign
field mad high labor costs in this
country, il should at least he relieved
of the added burden of the income
tax, Mr.. MomSen said.
American chambers Of commerce
abroad are not asking the tax ex-
emption for the so-called "eXpatri-
ateS" or American citizens who seek
TO escape taxation under American
law by taking their fortunes abroad
An exemption clause, he said, could
easily be drawn 50 as to exclude
those not entitled to its benefits by
limiting the exemption TO earned in
come" if not too narrowly defined.
CHAMBERLAIN DISGUISED.