In a recent case New York has successful sued India 37 million dollars in property tax for housing. In a 7-2 decision India will now own New York $16.4 million plus interest on the taxes it has neglected to pay. Prior to this time embassies and missions could not be taxed. Mongolia is another country which might fall under the tax law.
The U.S. government is afraid that it will limit not only the amount of foreign missions in this country but may draw reciprocal actions from other countries. The U.S. maintains the largest diplomatic presence in the world. They have over 3,500 buildings across the world. If foreign governments want to earn the money they paid back they might also charge property tax.
The other problem is that some government might not be willing to place embassies and missions in the U.S. if they are going to be charged for them. The lack of embassies can affect all types of diplomatic efforts related to war, treaties, business, immigration and investments.
Let us say we don't have an embassy for the United Arab Emirates. Our workers will have a hard time going overseas to work with firms, we may not be able to get our workers out as quickly if there is problems, we will have difficult making economic treaties, passing economic aid and many other related problems.
One might ask what the big deal is if we tax their embassies. A problem results when our government must stay within a foreign affairs budget and embassies become more expensive. Let us say that India now wants to recoup their money and taxes our embassy. The total value of U.S. and Indian trade is around 33 billion dollars. If this was cut in half it could hamper future business deals.
The U.S. needs to make as many business contracts and deals as it can. Even though many politicians are saying that the economy is zooming along our growth rate is about half of Europe and about a quarter of that of many Asian countries. That means we are starting to lose the business game. As China is making oil contracts, military contracts and economic treaties across the world, now is not the time to tie our shoes together.
