New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-03-25
T4y1TTOV or DEPOSITS.

Tn the recent discussion in the Committee
of Ways and Means, and in the Republican
caucus, there appeared TO be substantial agree
mont respecting the removal Of the tax on
banl, deposits and some of the minor taxes OF
the Internal Revenue system. Wide diversity
of opinion appeared as to the taxes on liquors
and tobacco. But those who favored and those
who opposed the removal Of these duties were
alike reaGy to remove the tax on matches, on
proprietary articles and on the deposits of
banks.
The latter tax is i'll many respects one OF
the most indefensible. II was imposed, like
MANY others, in the extreme stress OF ncccssi-
ties arising from the war, but unlike others,
has been rendered three or four times as heavy
by the subsequent action Of Congress, though
the necessity for collecting it has passed.
For the tax was originally imposed largely
as a compensation for the advantages
given to bankers at time when they
were permitted, by depositing six per
cent bonds, to draw interest at nearly or quite
six per cent on the capital thus invested be-
sides the interest on circulation loaned. These
provisions enabled the Union to place, during
and Immediately after the war, bonds amount
ing to several hundred millions, for which 1t
would then have been difficult 10 find market
otherwise. Subsequent legislation, greatly to
the advantage of the country, has cleared
away the six per cents, and so lifted the credit
of the Government that the banks can realize
barely three per cent upon the cost Of bonds
held, and nevertheless the compensatory taxes
are maintained, and are as heavy as they were
when the return on bonds purchased was six
per cent or more.
The fatal objection to this tax is that it is
in effect merely tax on commerce. 1t makes
the process of exchange between producer
and consumer more costly to both. De-
posts do not represent idle money, as Ignorant
persons often suppose. They representa- is true,
balances due by a bank to its customers, and
therefore, many imagine. money which credit
ors could draw if they pleased. But in reality
they represent in great part credits which the
bank has consented to allow against bills, notes,
and other claims upon persons who owe the
depositor. He has not the money; the bank
has not the money, though it has agreed to
advance a part if necessary; and the debtor
himself, in most cases, is waiting to get the
money by the sale of goods. 1t is tax on
debts tax on the credit system which sup
ports modern commerce-this tax on deposits.
No tax could be more unreasonable or in
furious to commerce.
Even if deposits represented unemployed
money, the tax would be unreasonable. The
United States does not tax property invested
in land or in buildings III railroads or securities,
in manufacturing establishments or in mines.
Strictly speaking, The United States does not
levy a single tax of any kind upon property.
Bat it does tax debts due by banks, on the
suppositiOn that these are property belong
ing to somebody else. If it were so,
the taxation of this species of property and no
other would be exceedingly unjust The man
who boards and hides $1,000 in gold or notes
cannot be reached by any tax, nor does the
Government make any attempt to tax him.
But he is hiding his talent in napkin. Why
should the Government try to tax "A man who,
instead of boarding his money in ideness, places
it where it may be employed for the support of
Industry In every point OF view this tax is
more Objectionable than any other now remain-
ing in force IL is TO be hoped that, whatever
else Congress may do or leave undOne, it will