The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1881-03-23
Taxation.

EDITOR GAZETTE: When present subject
not only wish to be satisfied that L am right, but
to have my meaning clearly understood, if do not
carry conviction to the minds of others. l think
have shown clearly in the preceding numbers
that even solvent debts, of whatever nature, are
not property, not having any intrinsic value; but
when the property of the debtor, which gives them
solvency, they are worthless. And it is a clear
doctrine of the Constitution. affirmed by the
Supreme Court, that double taxation, or unequal
taxation, or over taxation, are unconstitutional.
wish now to show that the laws of 1876, carried
out TO their legitimate results in the usual manner,
cannot be enforced in many instances without
double taxation. Suppose to have 100000,
which he has loaned to b TO establish plantation
and has invested $4,000 in land and $4,000 in
building machinery, making $100 900 in real estate
Now 1t Is clear that the 100000 property loaned
by A to B has only changed its form and is in BIS
possession. By the law of 1876 must be taxed
on 100000, because it is solvent debt due to him
from b and b must be taxed on good real estate
which he has III his possession, for he cannot de-
duct his debt to A. his property is real estate.
II he had independent personal property to that
amount he could deduct 1t, according 10 the usual
manner in which that law is enforced but being
real estate he nust pay the tax without deduction.
And AS debt being a solvent debt he must pay the
tax upon IL without deduction; whereas all the
property there is In the is the 100000 in pos
session of Is, whilst the tax IS paid upon 200000,
making double taxation. And this must happen
under the laws of 1876 between the plantation and
its agent, where the personal property which the
plantation may deduct is not equal to the debt
which it owes Whatever it lacks of this sum must
be paid by both agent and planter and is double
taxation. Thus it will be that the law cdnnO.
be enforced in the present method without involv-
ing double taxation in many cases. But / think
that the method of assessment may be so changed
as to avoid this result as we shall see by and BY
AT present all solvent debts are taxed as property
and all debts owed by the creditor taxed are
deducted. Now all business men know that every
credit has corresponding debit, and that the ag-
gregate of credits is Just equal to the aggregate of
debits hence it follows that when all the credits
have been taxed and all the debts deducted there
is nothing left but the taxation of these debts
(or solvent debts) has been based on the propertv
of the debtor, the tax has been released Just so
much of his property as is required to pay the debt
or claim of the creditor Thus owes b $1,000
and has $1,000 in cash. B is taxed on the debt
($l00O) due from A. and B, deducting the $1,000
debt due to b, has nothing left to be taxed upon,
the tax is transmitted from the property to the
claim-from to b. Now, if all the credits or
claims In the Kingdom are taxed in like manner
and all the debts deducted-the solyency of the
debts being based on actual P,opeyy-it will leave
nothing to be taxed but Just that property. As in
the above case, the tax has only been transferred
from AS $1,000 cash to BIS claim for $1,000 upon A.
Thus by calling the claim property an taxing
1t, nothing IN the aggregate is added to the
property or the revenue, if debts allowed to be
deducted for the amount deducted will lust equal
the amount of solvent debts taxed and will only
transfer the tax from the property which should
pay 10 l06 Claim WHICH SLOQlQ not nav. III not
allowed 10 deduct the debt, then it is double taxa
tion-the debtor and creditor both paving on the
same prOperty-the debtor in possession, and the |
creditor upon his contingent claim upon it. A !
part of the duties of the Minister of Finance as
chief revenue officer is to get accurate an assess
ment as he can of all the taxable property in the
Kingdom. If he finds that one method, carried |
through, adds nothing to the taxable property |
while in some cases 1t involves double taxation he
should adopt different if possible and he is /
authorized to make rules for this purpose not con-
trarY to law or inconsistent with the Constitution
If he finds that taxing claims and deductino debts
adds nothing, but results in some cases in double |
taxation, let him devise another method. Let him |
require of the taxpayer true statement of his |
property of all knds-or all of which he is in DOS
session. The value of the taxable property iriH be
the by The former method; whilst it will re-
eve all Taxpayers from furnishing to the assessor
list of debtors and creditors that he may be able
to detect false returns, if there be any, anc the
department of such an accumulation of useless
papers. In short, it is simpler and easier, and
more likely TO give correct and satisfactory results
1t will cover the whole property from which the
treasury has any claim, and will give no double
taxation. 1t was the principle upon which Mr..
Preston's bill was based, and a correct one. 1t
would often change the payment of the tax from
one party to another. The person in possession
would always pay. In the first example named in
this letter, would return no property and pay no
tax, being only creditor of b. would pay the
tax on the 100000 in his possession-that is on
the plantation. should paw to B the amornt of
the tax paid by B; but it would be easy for him
to do this as TO have paid the same into the
treasury and it would be no greater hardship for
b to pay the taxes into the treasury than to have
paid 1t in the shape of interest to A. The treasury
would get all of its just dues: the aggregate of
property returned would be the same, and the
by and B would be the same In re-
gard to debts due abroad from taxpayers, or due
10 them from abroad, without the Jurisdiction of
the Government, the latter has no concern. 1t is
only to property within its jurisdiction that its tax
laws can apply. Double taxation has sometimes
resulted from taxing property here and the debt
1ue from its owner abroad as well as from the en-
iorcement of the laws of 1876 but both have been
touble taxation the former without any authority
IF law, and should be corrected even now think
within the scope of the ministerial power to cor
ect these abuses and wrongs, and feel sure that
lie is disposed to do it if he can
Hoping that he may succeed in so doing re-
main very respectfully yours, S. n. CASTLE.