Senate Floor Debate and Action September 17, 1951 82d Congress, 1st Session 97 Congressional Record 11434-11435, 11441-11442, 11462-11463 [P. 11434] RATIFICATION OF CERTAIN CONVENTIONS Mr. GEORGE. Mr. President, the Committee on Foreign Relations has considered the conventions hereinafter listed and has recommended that the Senate give its advice and consent to their ratification, subject to the reservations and understandings which are indicated in the resolutions of ratification. The treaties or conventions are as follows: First. Convention with the Union of South Africa relating to income taxes, signed at Pretoria, December 13, 1946-Executive O, Eightieth Congress, first session. Approval recommended with an understanding relative to the collection provisions of article XV. Second. Convention with the Union of South Africa relating to estate taxes, signed at Capetown, April 10, 1947-Executive FF, Eightieth Congress, first session. Approval recommended with an understanding relative to the collection provisions of article VIII. Third. Convention with New Zealand relating to income taxes, signed at Washington, March 16, 1948-Executive J, Eightieth Congress, second session. Approval recommended subject to a reservation relative to taxes collectible from public entertainers. Fourth. Convention with Norway relating to income taxes, signed at Washington, June 13, 1949-Executive Q, Eighty-first Congress, first session. Approval recommended subject to an understanding relative to the collection provisions of article XVII. Fifth. Convention with Norway relating to estate taxes, signed at Washington, June 13, 1949-Executive R, Eighty-first Congress, first session. Approval recommended subject to a reservation respecting the collection provisions of article IX. Sixth. Convention with Ireland relating to estate taxes, signed at Dublin, September 13, 1949-Executive E, Eighty-first Congress, second session. Approval recommended subject to no reservations or understandings. Seventh. Convention with Ireland relating to income taxes, signed at Dublin, September 13, 1949-Executive F, Eighty-first Congress, second session. Approval recommended subject to reservations relative to the capital gains provisions of article XIV and the accumulated earnings provisions of article XVI. Eighth. Convention with Greece relating to estate taxes, signed at Athens, February 20, 1950-Executive K, Eighty-first Congress, second session. Approval recommended subject to a reservation regarding the collection provisions of article IX. Ninth. Convention with Greece relating to income taxes, signed at Athens, February 20, 1950-Executive L, Eighty-first Congress, second session. Approval recommended subject to an understanding with respect to the collection provisions of article XIX. Tenth. Convention with Canada relating to income taxes, signed at Ottawa, June 12, 1950-Executive R, Eighty-first Congress, second session. Approval recommended subject to a reservation relating to the professional earnings of public entertainers. Eleventh. Convention with Canada relating to estate taxes, signed at Ottawa, June 12, 1950-Executive S. Eighty-first Congress, second session. Approval recommended subject to no reservations or understandings. Twelfth. Protocol with the Union of South Africa, relating to estate taxes, signed at Pretoria, July 14, 1950-Executive T, Eightyfirst Congress, second session. Approval recommended subject to an understanding relative to the collection provision referred to above under Executive FF. Thirteenth. Protocol with the Union of South Africa, relating to income taxes, signed at Pretoria, July 14, 1950-Executive U, Eightyfirst Congress, second session. Approval recommended subject to a reservation relating to the profits of public entertainers and the understanding referred to under Executive O above. Fourteenth. Convention with Switzerland, relating to income taxes signed at Washington, May 24, 1951-Executive Ñ, Eighty-second Congress, first session. Approval recommended subject to reservation regarding profits of public entertainers. Mr. President, permit me to say that all these treaties, as is apparent from a reading of the titles, and from the reservations and understandings included, seek to eliminate double taxation with respect to the incomes of individuals and corporations and with respect to taxes on decedents' estates. There was some difference between the witnesses who testified before the subcommittee appointed by the distinguished chairman of the Committee on Foreign Relations, the Senator from Texas [Mr. CONNALLY] to consider these several treaties and protocols, but the subcommittee was unanimous in its conclusions, and the full committee likewise concurred in the conclusions of the subcommittee. The subcommittee consisted of the junior Senator from Iowa (Mr. GILLETTE], the senior Senator from New Jersey [Mr. SMITH], the senior Senator from Iowa [Mr. HICKENLOOPER], and myself. I shall invite attention only to those reservations which are common to all treaties, or at least common in degree. It will be noted that the first reservation suggested with respect to several of these treaties, especially South Africa, Norway, and Greece is for mutual assistance in the collection of taxes. I may say that no similar reservation appears in the convention with Ireland or in the existing conventions with Canada and the United Kingdom. These conventions provide in the case of South Africa, as amended by the protocol that the assistance and support to be given by each contracting state shall not be accorded with respect of citizens or nationals or estates of citizens or nationals of the contracting state to which application is made for assistance in collection, unless such citizen or national or estate is entitled to the allowance and credit under the applicable convention. In the case of the existing convention with France, the restriction upon assistance to such nationals is proposed without limitation. It is the opinion of the subcommittee and of the whole committee that the provision of the pending estate and income conventions are too broad. As a general rule it is not believed wise to have one government collect the taxes which are due to another government. Therefore the committee recommends that these provisions be eliminated from the pending conventions; with the exception that the provision of the South African Convention, as amended by the protocol, be accepted, subject to the understanding that the application will be limited to those cases in which the estate of a decedent claims a credit under article 5 of the convention. The committee recommends this limited exception in the case of South Africa in view of the fact that the convention is retroactive to 1944 and the fact that since that time the estates concerned have been on notice with respect to the collection provision. Mr. President, I may say that this was the view taken by the committee with respect to all these assistance provisions. It was simply deemed unwise to have our citizens in foreign countries subjected to the judicial procedures of those countries, and likewise it was deemed unwise to obligate our country to undertake the collection in our own courts of taxes due to the foreign countries dealt with in these conventions. It will be recalled that in many instances, or perhaps all, the courts would be called upon to enforce very harsh civil penalties, and it was not deemed wise for our courts to undertake that particular job. It will be noted also that in two or three or more of these conventions there are reservations relating to the compensation paid American citizens by American firms or employers in the countries with whom we have negotiated these treaties. That matter relates to the compensation for personal services of American citizens in foreign countries. Exception has been taken heretofore, I may say, in regard to this question in connection with the negotiation of other treaties, but it was disregarded by those who negotiated with respect to several of the treaties now before the Senate. It was pointed out that these provisions were highly discriminatory against artists, musicians, motion-picture actors, and others who went into foreign countries, but who were at work there for American employers, and temporarily resided in those foreign countries while they were carrying on their business enterprises there. It is a rule, which has been adopted now for many years, that an American citizen who spends at least 183 days in a foreign country is to be exempted from double taxation-in other words, taxation by both countries. However, an effort was made to make a most invidious distinction as between artists and others who went into the foreign countries to make motion pictures or to give performances for American employers. Another provision in the Canadian treaty which has called for a reservation is the capital-gains provision of the act [p. 11435] of 1950. It will be recalled that by section 213 of the Revenue Act of 1950, a capital-gains tax was imposed upon visitors from other countries who entered the United States and perhaps rented a room in one of the hotels in New York City and there engaged extensively in capital |