JANSEN, Attorney at Law and Notary to J. C. B. Davis, October 1, 1874

Mr. Jansen to Mr. Davis.

In reply to the inquiries made of me, verbally and in writing, on the subject of the liability of aliens to the class-tax, or classified income-tax, in the states of the German Empire, I have the honor to advise your excellency as follows:

1. The levying of class-taxes and classified income-taxes is regulated in the several states of the German Empire by the laws of those states, in Prussia by the laws of May 1, 1851, and May 25, 1873.

2. In Prussia all residents of the state, unless subject to the classified income-tax, &re made liable to the class-tax by said laws.

The classified income-tax in the continuation of the class-tax, commencing with incomes of more than 1,000 thalers per annum.

• The class-tax is levied in 12 grades; the first grade commencing with an annual income of from 140 to 220 thalers, and amounting to 1 thaler per annum. The last and twelfth grade commences with a yearly income of from 900 to including 1,000 thalers, and a counts to 24 thalers per annum.
• The classified income-tax is levied in forty grades and upwards; the first grade commencing with a yearly income of from more than 1,000 to 1,200 thalers inclusive, and amounting to 30 thaler per annum; fortieth grade, commencing with a yearly income of from 220,000 to 240,000 thalers, and amounting to 200 thaler per annum.

If the yearly income exceeds 240,000 thalers, then the tax increased by 600 thalers from every additional 20,000 thalers.

It will be seen that only those persons having an annual income exceeding the sum of 140 thalers can be made to pay the class-tax, arid that those persons having an annual income of more than 1,000 thalers are made to pay classified income-tax. Those persons paying the class-tax, as a matter of course, do not pay any classified income-tax, and vice versa.

3. So far as the levying of the class-tax of aliens is concerned, the law provides as follows:

In the first place, article 1 of the general liability of the residents of the state, in its full text reads as follows:

“All those residents (inhabitants) whose yearly income does not exceed the sum of 1,000 thalers, are subject to the class-tax;” and article 5 in full text providing: “Exempt of the class-tax are a, c, d, e, f.”

(f) Aliens not having resided a full year at any one place within the state, with the exception of those who have a residence in the state for the purpose of profit and gain. Aliens may therefore be made to pay the class-tax—

• Generally, when they have resided one year at any place.
• When they have taken up their residence in the state for the purpose of profit and gain, immediately upon taking up such residence, without regard to the length or duration thereof. In such cases aliens, in pursuance of section 11 of the law, are to be made to pay the class-tax from and after the first day of the month following the one in which such residence has been taken up.

Relative to the classified income-tax as regards aliens, the law contains the following provisions. Section 16 in its full text provides in general:

“All residents (inhabitants) of the state, with the exception of the members of the royal family and the members of the two princely families of Hohenzollern, and all Prussians residing abroad, are subject to the classified income-tax, who of themselves, or in connection with any separate income of members of the family, making up their household, have an annual income of more than one thousand thalers.”

And section 18, concerning aliens, provides in full as follows:

“Aliens also owning real estate in the state, so far as the same all together affords an income of more than one thousand thalers, are, in consideration thereof, required to pay the classified income-tax.”

A like obligation applies to aliens who own within the state industrial (professional) or commercial establishments, or are partners thereof. Other aliens are subject to that tax only when they have resided in Prussia for the purposes of profit and gain for more than one year.

The meaning of the law is perfectly clear; but I bring to the notice of your excellency the following points:

• Upon a full consideration of both sections 5f and 18, it is evident that aliens, for an income from real estate or business establishments in Prussia, not exceeding the sum of one thousand thalers per annum, if such aliens at no place within Prussia have a domicile or residence, cannot be made to pay class-taxes.
• In the assessment of the income in this country in the case of aliens, Only such deductions can be taken into consideration as relate specially and expressly to revenues here; as, for instance, taxes, annuities, interest or balances of purchase-moneys, interests and debt arising from commercial and business transactions, but not the interest on personal debts.
• To constitute such a residence of an alien as to establish his liability to be taxed, a continued personal presence of the alien in this country is necessary. Merely establishing a household in a case, for instance, in which the alien in question declares or proves by his action that his residence in Prussia for the time being is quite temporary, does not] suffice. Nor can, on the other hand, every temporary absence of the alien remove or interrupt this liability of being taxed when the same has once ensued.

I have been unable to furnish your excellency with this statement at an earlier time, for the reason that it was a matter not exactly within my line, and I had to submit the matter of the legislative enactments and commentaries on the subject to a close examination. So far as a report on the status of aliens in regard to the taxes in the kingdom of Saxony is concerned, I pray for a delay of a week, to enable a colleague in Saxony to furnish me the necessary material.

Very respectfully,