Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1881-03-23
Taxation OF Deposits In Trust Companies.


that the officers Of certain trust companies claim
that neither such corporations themselves nor the
depositors are taxable under the laws Of Vermont
for the deposits in such institutions; and that by
reason Of the fact that such corporations are liable
under the laws OF the United States to pay a tax
to the federal government Of one-haf one per cent
per annum on the amount Of their deposits, the
state of Vermont foregoes all revenue from taxa
ton Of the money so deposited. The trust COM
panes base their argument to this effect upon the
language Of the Goth section OF the act Of 1880,
entitled can act TO equalize taxation which
reads: "The provisions Of this act shall In no
way be construed to apply to the taxation Of de-
posits of savings banks, savings institutions, and
trust companies, otherwise taxed"
Your conclusion that this claim is unsound
seems to me entirely correct, and to be clearly
supported on general principles Of justice as well
as by consideration OF the history Of the laws of
Vermont relative to the taxation Of this kind Of
property. The general law OF the state Is, and
for many years has been, that all debts due from
solvent debtors are taxable to the creditor In his
list OF personal property. Deposits in savings
bank or trust company are plainly debt due
from the corporation to the depositor, and as
such are taxable to the depositor ~ a debt due
from solvent debtor, unless express statutory
provision to the contrary is made. No such provi-
sion to the contrary was ever made prior to 1878,
and the only act OF that year having any such eff
feet is No. 3, entitled AN act taxing the deposits
Of savings banks savings institutions and trust
companies" approved November %, 1875 see
acts of 1878. page H. That act required both
savings banks and trust companies to nav d.
rectlv To the state n tax of one half of one per
cent per annum both ON their deposits and aeon
mutations except 40 much thereof AZ IL invested
in real estate owned bv the coronation: and pro-
yided that no other tar should be assessed on
such deposits and accumulations, TOR dqainst The
depositors on account thereof" But IL was by the
same law expressly enacted that the provisions of
that act sbould not anplv to any trust comnanv
during such time as it should nav to the govern.
mept of the United States a tax which amounts
to one half of one per cent annually upon its cap
ital and deposits; but that 1t should apply to any
trust company when the same should for apy rea-
son cease to nav such tax to the United States.
The law of 1878 SO far as it applied to savings
banks and trust companies provided a new
method of taxation of the moneys deposited with,
or in other words, lent to, those insttutions-a
different system from any before rescrted to In
this state-a system which reached those moneys
by direct tax against the debtor and not against
the creditor 1t taxed those deposits "other1oise"
from previous taxation, and by its express terms,
whenever 1t did apply, it relieved the depositors
from taxation for such deposits by the ordinary
mode of taxation upon their individual lists. But
when the act of 1878 did not apply to trust com
pany by reason of its payment of a half per cent
Irnited States tax IL did not atsV the tax.naving
liahi,i, n, danosi,or in that institution In, loft
,,a,, lo.aa,,. a.. ta,auo taxat,o In ,ho aaa,,a.,a
,,,-,,.'., H., -. A. -, -. 49,,
.r,a :, ,oeo 49, o.,,a,i,o ,ova,;o, ;, ,,a. ,,o
,,o,dad 30 oroa,o an,, ro,r or aad,,,ona, a,h;ao,
=, .a,'a,io,, ona on ,ho n,hor hand e. .,o,,oroi
-. ,a' ~, ,ooo,,,, s.,,, $50.
anv nronertv which was already taxahle II Took
the law AS IL already stood. and simply sought To
make that law more effectual and thorough by
preventing It's evasion and the concealment Of
taxable property. Its object was to secure to the
state of Vermont the benefit of equal taxation of
all taxable property within its sovereignty and
protection. But neither the law of 1880 nor the
previously existing law of taxation which it
sought to enforce, did (unless perhaps in the
much mooted question of taxation of mortgaged
premises and mortgages thereon to their full re-
spective values) seek to impose duplicate taxation
or its equivalent, and therefore 1t was provided
by section 20 of the act of 1880, already quoted,
that "the provisions of this act shall in no way be
construed to apply to the taxation OF deposits OF
savings banks savings institutions and trust COM
panies other,oise taned" In other words, that the
provisions of the act of 1880 for fully bringing to
the knowledge OF the listers all debts due the per-
son listed from solvent Debtors through the means
oil his personal list sworn to by him, and reported
TO- ana maze up py' the iisters' sho"'d not Apply
10 species oil such deots winch oy announcer mooe
was already reached' with no chance ior escape
Tor purposes oil mxation,-ih SNORT was othertoiSe
tdfed especiaiiy III view oi tIe iac, that 'he Ia"
oil 1918, by which such deots were ou'sT"tSe tdhed
proDrueq ut ~ tba SSsiasI6ps on ~
count thereof.
The object OF the entire tax system of Vermont,
as supplemented by the recent law of 1885, is
plainly to compel all property, including debts
due from solvent debtors over and above the debts
owing by the creditor to contribute its fair share
of taxation to the State of Vermont the sover-
eighty which protects such property and estab-
fishes such law. Therefore it seems too plain
almost for argument that the words " otherwise
tared" in section twenty of the law Of 1850 mean
"other,cise tared" by the State of Ver1mont-and
that depositors in trust compapies cannot escape
contributing their fair share of taxation TO this
state for the debts due them from sncb cornora.
tons on the ground that the limited states oov-
ernment for the purposes of its own revenue has
seen fit to impose a tax upon sncb denosits In
respect to taxation AS well as many other narticu
lars the federal povernment and tho severa,
states are entirely separate, distinct and indie