The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1888-10-17
The Savings Banks.

House bill eighteen, introduced by
Mr.. Walbridge of Concord, proposes
some important changes in the laws re-
lating to savings banks and savings
banks and trust companies. The tax
on the deposits of the savings insttu-
tons is made one-half of one per cent
annually; on savings banks and trust
companies, one per cent-the rates orig
inally, which were averaged and made
uniform at six-tenths of one per cent
in 1884, The taX-eXemption limit is
reduced from 81 800 to $500, and the
finance inspector is directed to report
the number and amount of such indi-
vidual deposits. Investments In West
ern mortgages are restricted to forty
per cent of the banks assets, and they
are required to invest not less than
one-fourth of their total assets in mort
cages on real estate in Vermont. The
existing requirement is one-siXth.
These, we believe, are the principal
changes proposed by Mr. Walbridge.
Whether there would be sound wis
dom in reducing the exemption limit is
matter for consideration. The animus
of Mr.. Walbridge's proposition is nat
ural and Ineligible. 1t comes from
the fact of the well-known abuse of the
exemption provision to escape local
taxation. The laws intent, clearly eX-
pressed, is that the 81 800 exemption
shall be the aggregate of one PERSONS
deposits in all the savings banks of the
state. 1t is not denied that this limita-
ton is evaded. a taxpayer can not lie
outright about the aggregate deposits
in his own name, without detection, as
the laws checks make exposure GER
tain. 1t is not, however, so easy to
prevent indirect evasion. An individ-
ual may deposit his money in the name
of other persons besides his own, often
family relatives, or others with whom
he may have a confidential understand
ing 1t is difficult, from the nature of
the case, to show these frauds in le-
gal way, and the savings banks officials
may not know, or suspect even, that
evasion is practiced. The difficulty of
detecting and preventing such abuse of
the legitimate functions of savings in
situations and of placing the burdens
of taxation where they belong, on those
who have the taxable property, ex-
plains this constant effort to lower and
confne the limits of exemption. So
great is the tendency to abuse privi-
leges of this kind, many excellent men
have seriously questioned the wisdom
of allowing any exemptions whatever.
A proposition like Mr.. Walbridge's,
or one that should exempt 1000,
does not seem entirely unreasonable.
Whether it would relieve honest tax
payers by subjecting to local taxation
the difference between $500 and 81 800
of individual deposits of the latter sum
is not quite clear. The difference
might be allowed to remain in bank,
or it might be loaned on mortgages in
Vermont, to be taxed, or invested in
taxable stocks or non-taXable govern
ment bonds, or sent to swell the vast
sum private investment agencies are
adding to the loans of the banks in
western mortgages. In the latter con-
tingencies reduction of the exemption
limit might aggravate the evil it was
designed to remedy, since the money
withdrawn, so long as it remained in
the banks, was taxed at the rate of six
tenths of one per cent annually, equiva-
lent to sixty per cent on the grand
list Perhaps less doubtful remedy
would be the one which Governor
Dillingham; suggests to the legislature
an increase of the tax on savings bank
deposits. Mr.. Walbridge's other pro-
posed changes seem to be in line with
the recommendation of Inspector Page
and of the suggestions of the COVER
nor's messages.