Department of Defense Still Paying Some Foreign Taxes

Since the early 1900's, Congress has expressed concern that the United States not pay taxes to foreign governments on defense activities overseas. In 1979, the House Committee on Appropriations noted that some tax payments were continuing and reiterated its longstanding objection to such payments. In its fiscal year 1980 report, the Committee deleted funds in Department of Defense appropriations earmarked for this purpose. In 1981 appropriations for military construction, Congress expressly banned the use of funds for the payment of property taxes to any foreign government.

The Departments of State and Defense have made some progress in reducing the tax burden on U.S. forces overseas. In the United Kingdom, the percentage of the tax assessment that is billed to U.S. forces has been negotiated downward and offsetting credits have been applied toward the U.S. obligation. The United States has also been afforded some tax relief in Germany, but German officials have been adamant in insisting on payments of taxes on family housing, calling them public charges, not taxes. In these two countries, where over half of all U.S. forces deployed overseas are stationed, the United States still pays millions of dollars in taxes.

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