Evening star., 1939-02-26

po'>
taxation, safeguard Uncle Sans reve-
nues and stimulate the flow OF lnterna-
tional trade and commerce.
To accomplish these three things, this
Government is in the midst OF neeotlat-
Ing a series of tax conventions with
other powers. Two new ones ALREADY
have been negotiated but are not yet
ratified, third is now under way and
more may come.
The movement for more equitable and
more far-reaching tax collection is
aimed to fill large order Necessity for
such action has been spurred by COM
plants from international business and
serious leaks in the international tax
dikes.
Far-Reaching Ramifications.
To the man on the street. international
taxation. with its far-reachlng ramltlca-
tions, stretching into the intricacies OF a
multiplicity of tax laws in many coun-
tries, may seem far removed. But, with
the United States piling up public debt,
predicted in some quarters to reach
$4,000 900, 900. and a world arming to
the teeth the question OF taxation
threatens to hit an increasingly larger
part of the earning population of this
country right in the pocket, where 1t
hurts the most.
Not that this new taxation will come
immedia ately-Presiden Roosevelt and
his New Deal cohorts have been putting
out encouraging promises to business
that no new taxes may be expected soon
but the White House is committed still
to the policy of spending. The battle over
whether to continue to spend or to re-
trench now RACES in Congress. 1t threat
e.ls to split still wider the breach between
the discordant conservative and pro-
g.essive elements of the party in power.
So the international movement to ex-
tend the benefits of tax conventions .
an increasing number of nations, for the
.r.lief of international business and pro-
t2ction of the Federal tax till as we'll
contradictory as that may sounds
likely to become one of the more lncon-
s1icuous, little understood, but probably
ftr-reaching elements for good.
Texts Kept Secret.
The two tax conventions, already draft
ed with the Netherlands and Sweden.
sill are kept official secrets. They must
continue SO until one of the Slgnatory
covers discloses the text when sub
ilitting it publicly to ratifying legisa-
tive body for approval. The pending
convention with Canada, on which only
ele conference has been held, necessarily
sill is in the dark. The Canadian nego-
tiations opened here last month and
p:obatE will resume at a second get
together Of representatives of these two
neighborng countries shortly. The OBJ
joct of the Canadian negotiations is to
Improve one tax convention of rather
. limited scope already in effect.
In it's attempts to solve these inter-
national double taxation problems the
American Government has not confined
It's efforts to tax conventions but also has
resorted to two other methods of ap-
rvoach.
. First, tax credit was inserted in the
revenue law shortly after the Word
War to provide system whereby the
american citizen or corporation-subject
t, certain limitations-would receive
credit against United States income tax
for income taxes paid to foreign powers.
In the second place this Government
rnsorted to reciprocity. 1t included
statutory provisions in the revenue act
en- few matters such as shipping. For
example, this country now exempts from
taxation the income derived from sources
within the United States by ships docu-
nented under laws of foreign countries
when such countries grant similar eX-
emption to ships documented under laws
of United States
More Comprehensive Method.
These provisions are not mutually ex-
elusive. but are all directed at the same
end In some instances one means may
be more appropriate than the other.
In general, the tax convention method is
far more comprehensive, but it is not
practical to obtain tax conYptions with
ell countries.
Benefits expected to flow from tax
conventions are anticipated to include
Stimulation of international trade and
.,mmerce. This ties in with the benefits
from trade treaties, now favorite in
strument of this Government for boost
ing trade.
"A To relieve the admitted inequity of
International double taxation there grew
out Of studies started under auspices of
the League of Nations. in which experts
from the United States participated as
unofficial observers, movement which
, has spread far more rapidly among other
powers than it did to the United States.
Prior to 1923 there were few tax conven-
tions, but since that year and particu-
larly during the past decade they have
come into use on a large scale. Counting
the conventions of the restricted type
usually involving some single phase of
taxation, such as shipping profits. or, as
in the case of the effective American
Canadian convention, dealing mesely
with tax rate, the number now stands
at around $50. The principal American
agreements are with France and Canada.
Developments Traced.
How the general process of affording
equitable treatment to the international
taxpayer has been developed is explained
by Eldon P. King, special deputy COM
missioner OF the Bureau of Internal Rev.
enue. Mr.. King is one of this Govern
ment's representatives in negotiating in
ternational tax conventions. He has not
disclosed any of the details of the pend-