United States v Rexach

JurisdicciónPuerto Rico
EmisorTribunal de Distrito (US)
United States, District Court, Puerto Rico.
United States
and
Rexach et Al.

Jurisdiction — Personal — Over nationals abroad — Power to tax national abroad — The law of the United States of America.

The Facts.—This was an action for the foreclosure of liens for income tax assessed and outstanding against Rexach for the years 1951 to 1956 in the amount of $2,354,478.48, including penalties and interest. Rexach, who had been born in Puerto Rico, became a citizen of the United States under the Puerto Rico Organic Act of 1917. He continued to be a United States citizen until he was denaturalized by the United States in 1958. From 1944 onwards he was a resident of and domiciled in the Dominican Republic.

The defendant contended, inter alia, that he was not subject to taxation by the United States on the grounds that Puerto Rico was not represented in the Congress, that there could be no taxation without representation, and that in any event the tax policy of the Congress had always been to exempt persons not represented in the Congress.

Held: that the taxpayer was liable to file returns and to pay taxes on his income derived in the Dominican Republic during the years 1951 to 1956. A citizen of the United States domiciled abroad could be taxed by that country, whatever might be the situs of the property from which income was derived.

In a decision which dealt mainly with issues of the municipal law of the United States, the Court said, in part, with respect to the question of jurisdiction raised by the defendant: [185 F.Supp. 473] “Counsel for defendant has produced in this case a very learned, interesting and able argument bottomed on the proposition that there can be no taxation without representation, and that regardless of the correctness of this proposition, the history of Congressional tax policy respecting taxation of citizens who are not represented in the Congress, has always been, and presently is, to exempt them from federal taxation, and that in fact, there is no law extant taxing the income of a Puerto Rican, American citizen by naturalization, earned in a foreign country, in this case Santo Domingo. At the outset, I wish to make it clear that the sole fact of Benitez Rexach's American citizenship was a sufficient basis for the imposition of the tax by Congress. In the case of Cook v. TaitUNKUNK, 265 U.S. 47, 44 S.Ct. 444, 445, 68 L.Ed. 895, it was said that ‘the Government, by its very nature, benefits...

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