The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1891-08-17

Atty. 81. 900. and the creditors assessed
none for their credits. the property would
be taxed but once. The farmer would pay
that tax: but, if the creditors did not have
to paw on their credits, also, the farmer
would get his money loaned at q lower rate
of interest. thus coming out even all
around. Whether the value of property
represented by credits, therefore,. be as
sessed TO the debtor or creditor is i'm
gan recently. The Legislature Of 1889
enacted a tax law whereby the MORTGAGE
was to pay the tax instead of the mort
gageor. as had been the rule. The only re-
suit was that the rate OF interest on mort
cages was increased 80 as to cover the
taxes to be paid by the MORTGAGE. No
body received any benefit from the change.
The debtor had to pay the tax anyhow.
since he used the property. For this rea-
son any double taxation of property by
way of taxing credits and evidences of
debt imposes a double tax on the debtor.
The law would do the very same wrong If
it should assess land rented to both the
landlord and the tenant and require both
TO pay taxes on the land. One uses the
land the other has the deed for 1t.
The same reasoning holds true in case of
any other form of debt. If l borrow $1,000
to buy machinery, and give back o chaItel
mortgage on tho machinery, the new tax
law will make me pay tax on that $1,000
and also pay my creditor enough extra In
tcIcSt 80 as 10 eDaDIb DlIn 10 pay tdAcS On
the same THOUSAND dollars of property. Or
If l give my note for 81 900 and bry horses
with the money, l must pay taxes on the
horses aud pay my creditor enough extra
interest to enable him TO pay taxes again
on the same 81 200.
1t is true that the new law permits one to
deduct his debts from bis credits. but If
his debts exceed his credits he gets no de-
juction for the excess. With all Door
debtors. in fact with nearly all
debtors. the debts exceed the cred
its by q large amount. As to the
amount of that excess, there Is a double
taxation. The plan that should have been
adopted, If credits were to be taxed, was TO
add a mans credits. personality and lands.
and from the'sum deduct all his debts. The
residue. would have been the accurate
value of the interest of that man IN the
property taxed. But sections so and 53 pro-
vide quite a different rule, separating the
credits. the personality and the lands. and
allowing debts to be deducted only from
the credits, when they should be deducted
from all the property or assets. This Is q
good thing for the State treasury. but not
for the great debtor class. who are thus re-
qulred TO pay taxes on q sum equal to bis
debts just twice what the man pays who
owes nothing. OF whose credits equal OF ex-
coed his assets. This class includes the
rich, especially the money-lending class.
| There is nothing novel In the plan OF deter
mining what q person is worth that L have
given. 1t is used daily by every business
man.
DOUBLE AND TRIPLE TAXATION.
The great trouble with corporations at
present is due to this same double taxation.
the taxing of capital stock. AS l showed
above. stock is paper evidence of what the
holder shall get in the shape of property
when the dividends or assets OF the corpor-
alton are distributed. 1t represents the
property for certain business purposes and
- 49, ---.-s-
without losing It's value. 1t gets its value
from the property it represents. Affect the
property and the stock is affe cted. Tax the
stock and you tax the property 1T repre-
sents. The new law recogn ICES this par
TALLY in Section "a. where it says that If
the capital stock Is invested in tangible
property returned for taxation. the amount
of such property shall be deducted from the
capital stock. But all stock is necessarily
converted into money or other property
that is tangible. If it is not, it
is worthless. The stock is always worth
the assets of the company. The value of
the two are necessarily the same. for one
represents the other for commercial con-
venlence. Now. Section So assesses the
value of the stock to the stakeholder. Sec
ton "a assesses ir also to the corporation or
it's equivalent. And if the corporation is
so unfortunate as to have its property In
another State. by Section "a 1T must still
pay double taxes here on its stock and also
pay on the Same property in the other State.
Thus this law taxes such corporations
twice here and in the other State once. SO
the same property pays taxes three times.
Let US illustrate this In the first place,
suppose the capital stock is $1,000 O0. What
is 1t WORTH We look for what it repre-
sents:
Personal property 10000
circuits 1OO,oOO
Franchise 10000
Gross
10000
Net assets to be assessed. .....--........$15O,OO 900
This is the true value of the stock or the
property, as you wish to call 1t. and ia what
should be saxed. If you assess the stock TO
both the stockholders and to the corpora
ton, and both pay taxes on it, there is
double taxation; and this is required by the
law. Only the corporation should be taxed
here. and the shareholders exep pied. or the
reverse. Whether You tax the capital
stock or the property is immaterial, so long
as all the property is in this State. but do
not tax both.
THE SPIRIT OF II DARK AGES.
Suppose the property is all out of this
State but a desk. IL may be q Colorado
mining company organized by men here.
with capital stock of $500, 900. Their lands
and personal property are all in Colorado.
worth $3.50. 600. Their franchise and office
desk are in Indiana, worth $4,000. They
should pay taxes in each State on the
property they have in each State. and no
more; for the government of Indiana
furnishes no protection to the property in
Colorado. Hence, the corporation should
be assessed $50. 900 here. and no more. The
present tax law would assess the shares
of capital stock to the stockholders
here $500, 600. By Section IA it would
assess the same capital stock to the cor
p~oration here. S500.O O0, thus making those
stockholders pay taxes on l,OOO,O OO, In
stead Of Sc, 600 in Indiana. They would
have to pay their tax In Colorado also on
$3.50, 900. SO Indiana by this law gets fifty
times more tax than IL should from this
kind of q business enterprise. This is
getting revenue with a vengeance.
Because these stockholders do business as
q corporation instead of a partnership they
must pay double taxes, and because it's
property is In another State, it must pay
taxes three times. This is the same spirit
manifested towards the encouragement of
trade and business enterprise that charac-
terized the dark ages.
These two classes of property-represent-
ed by evidences of debt and by shares of
stock-in this State will increase the tax
assessment in the State about one-fourth.
That is, tue debtors and shareholders will
pay above their legitimate share. an
amount equal to one-fourth of the whole
State. county and local tax of the State.
BY this wrong the State avenues will he
increased one-fourth. This increase was
one object of the law. Surely the Democ-
rasy believe in a tax for revenue only as