Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1891-05-15
A Defective Law.

Ol tne Legislature seems 10 increase
as time passes. A serious defect i:
now apparent in the revenue law
whereby several millions of property
will escape taxation, unless the act i,
amended.
1t seems that short time ago the
Capital National bank of this city
asked their attorney for his opinion OF
the construction OF the new revenue
law in regard 10 taxation passed at
the last session Of the legislature He
has Just submitted the following
opinion: "Th, revenue law enacted
by the-faye lesmiatrre--in some re-
spccts is materially different from the
law which it rcpeals, notably SO in
! Section 81, and the effect which it
may possibly have in the matter of
! taking national banks. The United
States statute in that regard author
ICES the legislature of each State to
tax all shares of national banking as
sociations located within the State
upon certain restrictions therein
named. There is a clear distinction
between the capital stock of the bank
and the shares as such.
Desty lays down the rule that the
capital of a national bank is not taxa
bic by the State. The only way stock
can be reached is by assessment OF
the different shares of the stockholders,
and an assessment on shares in gross
against the bank is not authorized
is illegal The decisions of the Su-
preme Court of the United States, as
well rs many OF the States, amply
support this proposition.
Turning now to present revenue
law, it will be seen that u significant
change was made by the last legisla-
ture i'll repeating the law of 1889. The
old law, in Section -, provided for
taxing of stockholders OF every bank
| the value of the shares of stock there
in This was strictly in conformity to
! the statute of the United States.
! Now, turning to Section 81 of the
present revenue law, it will be seen
that tax is laid upon the aggregate
amount of capital, surplus and undi-
vided profits, deducting therefrom the
value of real estate, il any. While the
State has undoubted authority to as
sess and collect taxes from banks and
other corporations not national, there
can be no question that the State is
precluded from taxing national banks
in this manner and can only levy and
assess taxes upon shares rs such. The
power given to the State, by act OF
Congress, is limited to the assessment
of shares of stock, and until the State
by appropriate legislation exercises
this power, it necessarily follows that
no valid tax can be levied either upon
national banks, as such, or upon the
shareholders OF such banks.
"The present law also includes an
assessment upon the surplus and un-
divided profits of national banks.
{
This cannot be done, as such surplus
escheats to each individual share and
can only he reached by taxing the
shares. The bill was drafted by the
committee on revenue and taxation,
of which Senator Forrest, of King,
was chairman.
According to this last report of the
Comptroller of the Treasury, issued
October I'd, 1890, there were 81 ma
| tional hanks in the State, with capi-
tai of $5,327 ,73O, q surplus of 81 ,253,-
600 and undivided profits of 1872 600.
If the State is precluded from taxing
banks it will mean loss to the State
Treasury of nearly $2S0,000 before the
next regular session OF the legisla-
ture."
Attorney General Joness attention
was called to the faulty construction
OF the bill, but he would not at the
time vouchsaie an opinion. Lawyers
here generally however, who have
been seen, are unanimous that as con-
structed the bill exempts national
bank from being taxed.