The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1891-08-17
DISSECTING THE TAX LAW
An Exposition of Some Of the Promi-
nent Defects of the Present Statute.
II Imposes Q Double Tax on the Debtor Glass
and on Shareholders in Corporations, and
Its Spirit Is That Of the Dark Ages.
o The Editor of the Indianapon. Journ.r.

To the Editor OF the Indianapolis Journal:
In the Sentinel of Friday Mr.. j. p. Dunn
writes an article of two columns In the IN
terest of the Democracy by way of apology
for the present tax law. His exc for the
defects of this law are that the science of
taxation is in Its infancy. although it is as
old as government itself. the inherent in
tricacy of the subject. the bad condition OF
the States treasury and the lack OF In
formation Of the Legislature. There is no
doubt that some apology is needed. This Is
shown by the amount of kicking" that is
being done now by the taxpayers, and l
can assure Mr.. Dunn and the State De-
mocracy that when tax paying time ar
riyes the last Legislature Will feel the earth
move beneath it. Only q few citizens now
realize the full effects of the law. When
the levy is made and payment IS demanded
their eyes will open as wide as their pocket
books.
think the condition of the State treasu-
", and need of moro revenue. as Mt. Dunn
confesses. is the only excuse. or the chief
excuse, for the new law. and TO that are
due its chief defects. Grover Cleveland
had q Republican condition confronting
him, while the last Legislature was con-
fronted by q Democratic condition. In the
past the Democratic government of the
State reduced the levies below the actual
needs of the State. IN order to catch votes.
The calf was given rope enough to hang
itself. which il has successfully done.
Debts have piled upon the State; the party
ispow in q corner. and Is enjoying the fruits
of its political folly.
There may be merits in this law. IL
may provide better machinery for discov-
ering all the taxa BILE property. and for
equalizlng the valuations. than has here
tofore existed This can be determined
so. i have 10 sympathy for the person
who endeavors to escape taxation when
it is just. He is as unpatriotic
and reasonable as one who shoots
at the country's flag. for he is endeavoring
to cripple the government. Nor can l pity
him who Is required to disclose his prop
erty OF show his books to the proper Off
Ger. An honest man will never object to
Investigation. On the other hand he will
invite it if his honesty IS questioned. The
requirement to assess property at its true
cash value Is q good one. since the constI-
tuition limits the levy. Otherwise whether
the valuation were high or low would be
immaterial. so long as it were uniform and
impartial. i willingly give the Legisla-
ture credit for an attempt to improve the
law so long as such improvement tended
TO increase the State revenue. But l
charge 1t with permitting glazing defects
in the law for the apparent purpose of in
creasing the revenue.
SOME OF THE DEFECTS.
Two of the prominent defects in the law
are the double taxation of debtors and
stockholders. The worst imperfection q
tax law can have, and the one most easily
remedied, is unequal taxation; but for pur-
poses of raising revenue it is q frst-class
plan. If q person will disclose all his
property. it is the easiest thing in the world
to determine what his net assets are. Any
business man could do it in a minute. The
law Wen provides for the discovery of
property, but the plan of determining the
Taxpayers net assets is a miserable farce.
1t cannot be attributed to lack of infOrma-
ton, for every man in the Legislature
knew better. 1t Is due to an earnest desire
for revenue; and this desire IS sought to be
satisfied TO q great degree out of the people
who owe debts or are shareholders.
The burdens of carrying on the govern
ment should be imposed on all who get the
benefits of such government according to
the benefits received; that is. to be uniform.
equal and Just In it's distribution. That Is
the first and simplest principle of taxation.
A property tax should be in exact proper
ti0n to property owned within the State
whose government protects it. When prop
erty is assessed twice. although to different
individuals, it is doubly taxed. 1t Is an
other fundamental principle of taxation
that he who uses the property must event.
ually pay all the taxes on it. IL property
is doubly taxed, the person who uses that
property Is doubly taxed. This il the way
In which the present tax law affects debt
ors and stockholders.
The new law taxes men on all their debts
by taxing all classes of credits, and, al
so, the property which those credits rep
resent So far as taxation Is concerned,
there Is no difference between those two
things. A credit is not property IN The &C
curate sense of that word. A note Is mere
~ a promise to convey or deliver money on
certain conditions. A mortgage is merely a
promise to deliver certain land or chattels
on certain conditions. The same 10 true of
an account. a bill of ladlng, a verbal prom
ise to pay money. or of any other debt.
Likewise. shares of stock are not property.
They are merely pieces of paper showing
that L am entitled to receive a certain share
OF the dividends or assets of a corpora
ton when they are distributed; that
am entitled TO property. When q man
buys a mortgage or share of stock, he pays
his money for what tangible property those
pieces of paper represent. BY the law. for
many purposes. they are treated as If they
were the property they stand for; but.
still. they are merely IN regarding
property. Their value Is that OF the prop
erty they are to transfer; always that.
They are of no value whatever independent
of that property. Destroy the property
and you destroy the value of the mortgage.
VI 5toChs VI tlCoAG - VIC CiCuiS 6uu Ou
tax the property, and the reverse Is true.
Now. the new tax law taxes the property
represented by credits twice.
ILLUSTRATING THE POINT.
For the first illustration, / will take q
mortgage on q farm or lot. Suppose q farm
is worth $40, 900, on which there is a mort
gage for $4,000; personal property. $1,000:
personal debts. $500. and credits. s1O0. The
schedule of property is made up in this
manner, according to the new law:
Credits TO be assessed ---------.-.-----t 600
Personal property VI 900
Lands and
Total l. 200
Tho farmer pays on Sill. 0OO. the MORTGAGE
pays on the $4,000, and the other creditors
on the $500, by virtue of Section 90. So
this property is assessed at l $500. and the
farmer must pay the tax eventually on this
amount. for whatever taxes the mortgage