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France which might have a bearing on this question is Article XI of the Convention of Peace, Commerce and Navigation of 1800. You request the Department's instructions in the matter.

The Treaty of 1800 with France is no longer in force, having expired by its own limitations on July 31, 1809. (Malloy Treaties, Volume I, page 496.) There appears to be no treaty provision in force between the two countries at the present time bearing on the matter under consideration.

Attention may, however, be invited to the fact that under the Revenue Act of 1924,16 aliens resident in the United States are assessed income taxes at the same rate as American citizens. The Act furthermore allows credits in the payment of income taxes to married persons and the heads of families, and for minor children and other dependents. These credits are allowed resident aliens as well as American citizens.

Section 210 (a) of the Revenue Act of 1924, provides that

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17

["] 17 there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax of 6 per centum of the amount of the net income in excess of the credits provided in section 216, except that in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 2 per centum, and upon the next $4,000 of such excess amount shall be 4 per centum;"

Section 216 of the Act provides in part as follows:

"For the purpose of the normal tax only there shall be allowed the following credits: 18

"(c) In the case of a single person, a personal exemption of $1,000; or in the case of the head of a family or a married person living with husband or wife, a personal exemption of $2,500. A husband and wife living together shall receive but one personal exemption. The amount of such personal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them.

"(d) $400 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is incapable of selfsupport because mentally or physically defective.

"(e) In the case of a nonresident alien individual ... 17 the personal exemption shall be only $1,000. The credit provided in subdivision (d) shall not be allowed in the case of a nonresident alien individual unless he is a resident of a contiguous country, . . . 17 ”

16 43 Stat. 253.

17 Omission indicated in the original instruction.

18 The following omission indicated in the original instruction.

It will be observed that under these provisions of the Revenue Act of 1924, a citizen of the United States or an alien residing in the United States who is the head of a family or a married person living with husband or wife, is granted a personal exemption of $2,500 in addition to an exemption of $400 for each person other than husband or wife dependent upon and receiving his chief support from the taxpayer, if such dependent person is under eighteen years of age or is incapable of self-support because mentally or physically defective. You will accordingly express the hope that American citizens residing in France will be assessed income taxes at the same rate as citizens of France, and that those who are married or are the heads of families or who have minor children or other dependents will be allowed the same credits in the payment of French income taxes as are allowed French citizens under similar circumstances. You will submit a report to the Department regarding the matter. I am [etc.]

For the Secretary of State:

JOSEPH C. GREW

851.5123/23

The Ambassador in France (Herrick) to the Secretary of State No. 4737

PARIS, January 7, 1925.
[Received January 20.]

SIR: With reference to the Department's instruction No. 1190 of November 10th last, which directed me to express to the French Government the hope that American citizens residing in France would be assessed income taxes at the same rate as citizens of France, and that those who are married or are the heads of families or who have minor children or other dependents would be allowed the same credits in the payment of French income taxes as are allowed French citizens under similar circumstances, I have the honor to report that I have received a note from the Foreign Office, dated December 30th, to the effect that the above-mentioned request cannot be granted, as, in the absence of conventional agreements, citizens of one country living in the other must submit to the laws relative to their position. I am enclosing a copy and translation of the note in question.19

Since, under the respective laws in force, French citizens living in the United States enjoy more favorable treatment than American citizens living in France, I should be glad to be instructed whether the

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Department does not desire me to take up this matter further and whether the intimation in the French note, that a convention on this subject might be made, should be followed up.

I have [etc.]

MYRON T. HERRICK

851.5123/25 : Telegram

The Ambassador in France (Herrick) to the Secretary of State

PARIS, May 26, 1925-noon.
[Received May 26—8:36 a. m.]

293. Embassy in receipt of various complaints from American citizens because in certain instances they have to pay higher income taxes than French citizens (see last paragraph my despatch number 4737 of January 7 last). Request instructions.

HERRICK

851.5123/25

The Secretary of State to the Ambassador in France (Herrick)

No. 1535

WASHINGTON, June 6, 1925. SIR: The Department has received your telegram No. 293 of May 26, in which you state that the Embassy is in receipt of complaints from American citizens because, in certain instances, they have to pay higher income taxes than French citizens, and request the Department's instructions in the matter. You refer in this relation to the last paragraph of your despatch No. 4737 of January 7, last, in which you ask whether the Department desires you to follow up the intimation made by the French Foreign Office that a convention on this subject might be entered into by the two Governments.

In the absence of applicable treaty provisions it is not believed that this Government can demand as a matter of right that the French Government accord to American citizens in France as favorable treatment in matters of taxation as it accords its own citizens. You will, however, inform the Department of the difference between the taxes assessed against American citizens and against French citizens and advise it whether American citizens are being given less favorable treatment than is accorded the nationals of any other foreign country. The Department does not consider it advisable at this time to take up the matter of the negotiation of a treaty on this subject. FRANK B. KELLOGG

I am [etc.]

851.5123/27

The Ambassador in France (Herrick) to the Secretary of State No. 5318

PARIS, June 22, 1925.
[Received July 7.]

SIR: With reference to the Department's instruction No. 1535 of June 6, 1925 (File No. 851.5123/25), I have the honor to report that the deductions allowed by the French law to French citizens and to citizens of other countries having a treaty of reciprocity with France are given in Articles 42 and 43 of the law of March 22, 1924, a translation of which reads as follows:

"Art. 42.-The 4th paragraph of Article 6 of the law of March 30, 1923, is replaced by the following text:

"The above deductions shall be increased as regards each taxpayer subject to the tax by a sum of 3,000 fr. for his wife if the latter has neither salary nor personal income, by 3,000 fr. for each child of less than eighteen years or who is infirm and without a salary, and by 2,000 fr. per person dependent upon him under the same conditions as those of Article 7 of the law of June 25, 1920.'

"Art. 43.-The 4th paragraph of Article 7 of the law of June 25, 1920, is replaced by the following text:

'However, for each child under twenty-one years of age remaining dependent upon its parents and for each person beyond the fifth, whatever his age, the deduction shall be raised to 3,000 fr.'"

American citizens do not receive less favorable treatment than is accorded to nationals of any other country, with the exception of those countries which have treaties of reciprocity with France. I am enclosing a single copy of the law of March 22, 1924.21 I have [etc.]

For the Ambassador:
SHELDON WHITEHOUSE
Counselor of Embassy

851.5123/33

The Ambassador in France (Herrick) to the Secretary of State

No. 5778

PARIS, November 30, 1925.
[Received December 11.]

SIR: With reference to my despatch No: 5318 of June 22nd last, and to previous correspondence with regard to the desire of the Department that the French Government should grant reciprocal income tax exemptions to American citizens living in France, I take pleasure in reporting that I have been able to secure a satisfactory settlement of this question.

"Not printed.

126127-40-vol. II——14

While the Department stated in its instruction No. 1190 of November 10, 1924, that "there appears to be no treaty provision in force between the two countries at the present time bearing on the matter under consideration," and while the Foreign Office, in a note enclosed with my despatch No. 4737 of January 7th last, refused to grant reciprocal exemptions on the ground that no convention existed regulating this question, I deemed it worth while to point out to the Foreign Office that a broad construction of the Consular Convention. between France and the United States of 1853 22 might be held to cover the point at issue. I pointed out, furthermore, in a personal interview, that, since French citizens in the United States receive the same exemptions as regards family charges, etc., that American citizens receive under our income tax law, reciprocity would, in fact, exist if the construction I desired were given the above-mentioned Consular Convention. I urged that this construction be adopted in order to put an end to the many American complaints regarding a lack of fairness in this matter and because of the good effect that such equitable action would have on American opinion.

I have to-day received a note, a copy and translation of which I am enclosing herewith, to the effect that, as a result of Article VII of the Consular Convention of 1853, American citizens in France and French citizens in the United States are assimilated to nationals of the country in which they live as regards the payment of or exemptions from taxes.

I am also enclosing a copy of my note to the Foreign Office 23 to which the foregoing note was the reply.

I have [etc.]

MYRON T. HERRICK

[Enclosure Translation]

The French Ministry of Foreign Affairs to the American Embassy

The Ministry for Foreign Affairs has the honor to inform the Embassy of the United States, in reply to its note of November 12th, that from Article 7 of the Franco-American Consular Convention of February 23, 1853, it results in fact that American citizens in France and French citizens in the United States are assimilated to nationals as regards the payment of or exemptions from taxes.

The Minister of Finance will give all appropriate instructions in this connection.

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