The Lancaster gazette. [volume] (Lancaster, Ohio) 1863-1886, 1868-06-11
Taxation of Building AssOcia-
tiOns.

TAXATION OF Bu1Idlng AssOc1a-
tiOns.
The following letter has been
addressed 70 the Aaditorof State,
by the Vice President ofthe Fair,
Geld County Savings and Building
Association:
LANCASTER, ONO, June sth, 1868.
Hon. JAMS II. G6DMAE, Auditor Of State,
CoLUMBus, OHIO
DEAR Sn:-In reference TO the returns for
taxation OF the assets Ot the "Fairfeld County
SAVINGS and Building Aossociation 'foi I,RDeas-
ter. Ohio, a corpofatiun orEantIed under the
a,t of the General Assembly OF Ohio, passed
February 2l. 1867, which return under protest
Is herewith presented, IN support Of said pro-
test and IN behalf Of said association permit
me to say, itis the opinIon OF the Board CT
Directors Of said assoc Iatlon, and many other
persons whose oplnionsRfe entitled to consa-
pTatiOu that the9e Savings S0cleties organized
unlsr the PROVISIONS Of the above recited law,
afe not liable to takatlon, except upon such
monny and property as the Societies may have
oil hand and own op the day liked for taxation,
ust Monday after tile 2dSnnday In April OF
T0mu mufSociety consists cfrhahy members, own.
ers pitts capital stoeklhf sci, O,oOo4divided in
zach. This eapt6f stock rs eietily h6ttaxa.
bic; nd one pretends that " 10 or Rh0nlq be tax
ed. Then what has this Society that is, liable
| to taxationl Tam rhinrheditlnt ty0n)as Audi
TOT Of S.ste have decided 1hat these Soql cites
| must return for tnxat on IT'S mites ana mort
| cages on other evidences lOf indebtedness o
them, the same as indydpals," This
| rnlmg Of yours, az n general prlnciple in taxa.
tipn isieorreet and proneT, tutitpssHmes that
| all notes mortgages and other evidences Of m
deHtenAets TO the soci etiesl-are simila rim Kind
and character to such things in the bands OF
| Individuals Ifthis be true, then, these socie-
hes oughito be taxed like mdiudInlsG9 :.
But such is not the case in any respect what
| ever The ass ociaton wesits m embcrs nom
inally SiOOGgO, and provides way liy which
| the association may discharge its ndebt dness
tn I'll members, by tie MON befs taking their
shares OF the capital stock 10 advance, giving
| the right to do this, 10 the member who will
pay the highest prGrnlUn for the RI ght of pre-
cedence in taking his stock In advance, When
4 member, in this way, gets bis stock advanc.
ed, he gves to the associailGnya mortgage in
demnity that he will do, and perform all the
duties required by the rules and regulations OF
the association. lsee copy Of mortgage, bond
and constitution and bylaws OF said ASSOCIATION
bherewith presented) This inhrteage indem-
nlty il, the only kind OF evidence OF indebted
ness td ths asSpsfahOn, which tho association
| holds THIS mortgage indemnitylls to secure
| future dues. fines, interest &c, and the mort
gagor does not agree to refund the money re.
ceIyad BY him on !, bis II toci thus advanced. II
| - IN no sense q lbafl lin the ordinary meaning
of that tsrtnp to hihiby the association. II is
not an indebtedness such as is Ieated by an
| individual in loahing money to another. Could
the member who had had his shares advanced
| deduct the amount recelyed as Indebtedness
from his own creditsi I think not Ifthis be
true, then, bow can this sarpe thing oecome
subject tOItaxation In the hands Of the associa-
ton a. debt due from tn memberto III J,i
| II has been suggested that the, rule cftaxa-
| tion which would exempt the mortgage indein-
nty in the hhnds Of the ASSOCIATION from taxa
ton, would necessarily withdraw from the tax
duplicate all the money paid to SAID assocla-
| ton hy its members, This, however, would
not he the effect Of snch y rule, rs all money
paid to salh,aHsOGiation hy liz members, IL ut
| once advanced to iss members md IL Eabl6to
| taxation In their hands. The rule claimed by
! the hudiiOr of state as above stated, would
tax the same money twice, in the hands Of the
association as debts due IT, and the money In
\ the hands Of the members who had had their
stock advanced. IL must not he overlook ad
In the consideration Of thus question, t.iat the
! members who have had their stock advanced
and eiventhe mortgage indemnity held by the
association, are still membersl9f the assDcia-
| ton and owners OfR prOportlOnate part VI the
assets, (mOrtgngcs) oi tie assoclatioh shch
! members pay taxes, on their stock advanced
to them n money, and thor share Of the same
amo unit M mentors Of tho association on the
'credits" Of said association. .....r.tI
! The association and its members do not stand
In the relation offender and borrower, creditol
and debtor. Hence similar indebtedness can
not arise and tho association cannot be liable
to taxation on these mortgage lDdemnitlea, be
cause they are not colnprehended or included
under thu term "credit" ms used In the tax laws
| and H. applicable to ludi iyiduals. 81,
The association has no transactions creating
| Indebtedness or credit, with any persons MOI
members Of the association, except for ord
nary current expenses, n person n CT member
cannot get 9 loan OF money .pl hI. .I..l
A rule that would place The money Of The
member Of the ass on oh an equality Will
persons not members would be u Just one, Sucl
rule would treat tho moneyOf the non -purchas
ing member as adebt TO him from the assoca
ton and would tax II under the term ''credr
II such member WIS otherwise liable TO taxa
tom frOrl this credit such members would IN
authorized to deduct any debts he might owe o
an equal amount II ismy opinion, however
that such rule Of taxation does not and can.
not result, from the tran snctlons Of the assoc
alton, and the rotation existing between tn,
associati IN and its members.
l Ift he true that the assoc ntion owes lis IN en-
hers the nominal value OF its capital stock ant
It's mo rtgnge lndcnnitlos can in any sense b,
i lefmtu "credll,'' tho NhSOchllon would W
authorized, as n. person, to deduct from il
"cfedits" nii "dcbts," and thus the association
would not bo taxable lorthe reason that III
debts would always be more than ITS credits.
The foregoing suggestions are but a few o
TIE many thnt might he mado on this subject
anithey are deemed just and proper, as rul,
and principle in taxation.
These associations are becoming numerous
and involving large interests It's not the ef
feet ofthese organizations TO increase Ordinn
ish capital for taxation, but merely to afford
safe and responsible depository for savngs, will
areturn, perhaps, OF ordinary legal interest
less the tl'e expenses ofcarrying them on. tn,
rule fortaxntlon required by you and aboy,
stated IN regard 10 these associations he adopt
cd, the taxes alone by such rule would Alin6s
entirely defeat the very object and purpose o
which the associations we're designed and or
gNnlEed. in my opLnion the taxes under th,
present requirements, and the expenses th,
associations, ,willconsume the entire profits TIC
cruing to the pss ocation. .,..tl.
| presume thm the othcr ASSOCIATIONS 10 IN,
state, have, or will prescntto you argument Il
on this subject, From these md your own com
prehenslve views on the subject Of taxation,
feel assured that the subject will receive tha
serious consideration, that IFS importance dc
nRnds and requires. .l .'i