ALIEN RESIDENTS AND THE INCOME TAX [To the Editor of
the SPECTATOR.] SIR,—It is an unpleasant and perhaps unwarranted task for an alien to criticize the laws of the country in which he is temporarily, and most happily, resident. Lately, hoivever, the English Press has had many articles and letters on why foreigners should or should not come to England. Another prominent topic, of greater importance, has been the main- taining of the £ at par and the problem of taxation. May an alien who loves England, who is temporarily resident here for that reason, and who has no access to the ear of Mr. Snowden, say a word through the Spectator on these two cognate topics ?
The alien happens to be an American of English descent. There are two classes of his countrymen who live in England : , those who are engaged in business or professional work here and whose incomes are derived from English sources, and the other class who are partially or wholly retired and whose entire incomes are derived from America. There is no reason why the first class should not nay precisely the same income taxes which a native born Englishman pays, and I have heard of no complaints from them.
Those of the second class, however, are in a different posi- tion. In the first place, their entire income derives from America, and would be the same whether they lived in London, Paris, Rome or Vienna. They do, indeed, get police protection and other benefits during their residence in any one of these cities, and it might well be fair to ask them to pay something toward local expenses. On the other hand, the American who lives in England and is in business here—as a representative of an American bank, motor-car concern, or what-not--pays no tax in America on his English income, which is in most such cases his total income. Those of the second class, like myself, have to pay an income tax to the United States Government, and, if like myself again, they happen to be legal residents of a State which has an income tax, like New York, they also have to pay a tax to the State. My Federal tax in America is about £100. My tax paid to the State of New York is another £100. Neither of these taxes is paid by the native Englishman or the American whose income is derived from his business or profession in England. In addi- tion I am now to be called upon to pay about 2350 under the new Budget in England.
The money, about £2,000, which I spend in England in the part of the year during which I occupy my flat'in London is all derived from sources outside England. I am not only not competing with anyone else for a job in England but I am bringing into the country by bank drafts £2,000 a year to bolster up the foreign exchange, strengthen the £, provide fresh purchasing power for shops and provide employment for our maids and others. It is clear gain for England, and is so recognized in Germany and some other countries.
England, however, taxes me 25 per cent. on all money I bring into the country. I would not at all object to a mode- rate tax, but it must be recalled that I am paying, as a retired professional man, not only this English tax of 25 per cent. but two American income taxes as well, which no Englishman or resident American in English business is paying. Aside from the question as to whether I, and others like me, may not have
to leave England for good, let us see how the plan works out in some concrete cases. My party of three, crossing the ocean twice every year, provides six passages.for a steamship line. I always have travelled on the Cunard, as I .prefer English lines. As I am taxed 25 per cent. on all money. I bring into England, if I buy my tickets_ nt the Cunard office in Cockspur Street, I have to pay a tax of nearly £40 on our passages on the Aquitania,' which cost about £150.. K I travel on the French or German lines, or even if I buy my Cunard tickets in Paris or New York, I save the £40. If I want to leave London for a fortnight's holiday, it will cost me 25 per cent. more to stay at English hotels than at Continental ones, apart from the h'gher cost of English travel, for every draft I draw in England is taxed, but as soon as I reach France they are not.
It may be claimed that anyone living in England ought to pay the same taxes as an Englishman. To that there are two answers to be made. One is that the Englishman does not pay two other income taxes in addition to the English, and that the foreigner I have been speaking of brings in clear gain to England by money derived from elsewhere to be spent in England, which the Englishman does not. The other point is —is England a gainer by the present method ? Everywhere on the Continent living is cheaper than in England. The American who, in spite of that, wishes to live in England is one who feels a special sympathy for England and its ways, and is likely to make a good citizen here. In a limited acquaintance I could name several people now living in Paris who would much prefer to live in London, but who cannot stand the English taxes on top of their American ones. These people, if living here, would spend about 125,000 a year, providing that toward the 'strengthening of the £ in exchange and helping to employ English labour and buy English products.
Aside from the money, I believe that the peace of the world and the good relations between the States and England largely depend upon a good understanding. Nothing could conduce more to that than a 'considerable colony of the right sort of English-loving Americans living in England; but as it is you drive us away, not because we are unwilling to pay taxes but because you make us pay them twice over. You cannot blame America for taxing income derived from American sources. You tax Englishmen only once.- You tax Americans in business here only once. But you tax us retired business or professional Americans twice. And so, much against our will, we go to live in Germany or France or Italy, and spend our money there. Is there no sensible way out of it, fair at once to England and ourselves ?—I am, Sir, &c.,
AN AMERICAN WHO WANTS TO LIVE IN ENGLAND.
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