Wilmington daily commercial., 1875-10-04
state Tax ON CITY Bonds.
A nuMrus AMONG THE HOLDERS OUTSIDE TIL
STATE.
IE WILNTINOToN MANKET

RuMrus AMONG THE HOLDERS OUTSIDE THE
STATE.
The refusal OF the City Council, by vote o,
Thursday evening, to continue to pay, Gn addi
ton to the six per cent interest on the city'i
bonds,) to holders residing in other States II fur
ther sum equal to the Delaware State tax which
lioy wonld be required to pay II residents OF
thus State has created considerable dissatsfac-
Ton among them. On Saturday number .oi
the Pennsylvania holders OF city bonds called
aJ the Treasurer's Office for their interest
which they received without the addition oil
Delaware State tax. They mostly took it under
protest. They complain strongly Of Councils
action and one OF these bondholders remarked
toa COMMERCIAL reporter that il such was to be
the future policy of the Council he did not wan
hls bonds, any longer.
1t has been the custom OF the city for some
years TO pay an amount equal to the State tax
on the city bonds, whether they were held in OF
outside the State. There seems to be, however,
40 warrant either in the ordinances or on the
face of the bonds for such custom, 30 far as
regards holders residing outside of Delaware,
and former City solicitor has given
the opinion that tho payment, in
tho latter case, was unlawful that in
aamucli as the State of Delaware can lay no tax
upon the bonds except where they are held in
siie the State, the city in paying its interest
should not in addition pay the equivalent of
snci tax, to holders living elsewhere. The
bonds on their face promise that six per cent. in
To be levied upon said principal sum
or interest by authority OF tile State
of Delaware or the United States of
America" and the engagement here manifest
y bears out tho opinion of the eX-SOlicitor. In
practice, however, it has been found that in Or
dor to sell the bonds to Pennsylvauiana it was
necessary to add to their interest tho same
amount as would be paid, for State tax, to Deia-
ware holders. Some years ago, the same posi-
tlon was tabon by Council that has now been
taken, and il caused great dissatisfaction, and
40 general throwing OF bonds on the local mar.
ket ~ to greatly depress their price. 1t is also
the fact that the City Treasurer, being authorized
to do 30 by the Finance Committee, assured
Pennsylvania purchasers of large amounts that
they would be paid six per cent g AMI Delaware
State tax, and that upon this assurance one
party took some $40, 900. 1t is obvious that If
the State of Pennsylvania should lay no tax on
such bonds. in the hands of their holders in that
State, the latter would be getting more than six
per cont. interest. A Kennett Square man, on
Saturday, stated that Pennsylvania docs tax
Them, but whether more or loss than the Della
ware rate, he did not say. II this be the case,
then the bonds would not be 80 good an invest
ment, in Pennsylvania, as in Delaware, If tho
city insists OH its present refusal.
Generally, in financial circles, it is considered
an unwise step for the Council to make this
change OF policy. 1t is thought that bonds will
be -ent here and thrown on the market. In the
present condition OF the mouey market, how
ever, tins may be considered very doubtful, and
II they should be, there are no doubt many in
yestors here who would willingly take them up,
hs there was considerable disappointment that
tlio recent loan was 30 quickly cleaned ont.
City bonds now command premium in the mar
ket, selling at 1919.