The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-12-01
The nInInck Bnnk Tnx Bill.


are taxed on their market value, and the
banks pay the tax. Representative Bla-
locks bin provides that the owners Of
the shares shall pay the tax upon them
that the nonresident as well as the resi-
dent shareholders shall be taxed upon
the market value of their respective
shares
What would be gained by the proposed
change? We cannot see that anything
would. On the contrary the state would
stand a chance Of losing a great deal, be-
cause the proposed change would have
two effects. 1t would tend to drive bank
ing capital out of the state and it would
depress the market value of bank shares.
The only point we can see that Mr.. Bla-
lock hopes to gain is the taxing Of the
real estate Of banks independent of their
shares. But would that be a benefit to
the state? We think not The market
value of the real estate of banks IS now
included in the market value of their
shares. Take from the banks their real
estate and the market value of their shares
would decline sufficiently to cover the loss
of the real estate.
1t may, be that Representative Blalock's
real purpose is TO double tax banks-7that
is, tax the shares which include the real
estate and also the real estate. under the
mistaken idea that all banks are enor-
mously profitable institutions. If that
were done, either the rate of interest
would have to be raised to enable the
banks to pay fair dividends, or the weak
er banks would go out of business. The
fewer the banks the less the competition
would be, and the less the competition
the higher the rate of interest would be.
In either case, therefore, the borrowers of
money would suffer, and the higher rate of
interest would hold back the development
of the state. However, the state would
be the loser not only in the matter of i'm
provements and new enterprise, but also
in taxes upon improvements and enter
prises.
Again, a double tax would be unjust. 1t
is as unfair to double tax corporation as
it is an individual. Taxing bank shares at
their market value and then taxing real
estate held by banks-real estate which is
already included in the market value of
bank shares-would be double taxation of
the most burdensome kind.
How would the tax on the shares of non
residents be collected? Doubtless just as
the tax on real estate that is owned by
non-residents is collected-by sale of the
property if the tax is not voluntarily paid
A great part of the shares in banks is
held by non-residents. In this city, for
instance, nine-tenths of the shares of one
of the banks are held by non-residents,
and in another nearly one-half. Some of
the shares of each of the
other banks is held by per-
sons living outside of the state. If
Mr. Blalocks bill should become law
how long would the banks having large
part of their shares held by non-residents
continue to exist, unless the banks could
earn a great deal more than they do now?
We doubt if they would exist very long,
because their shareholders would insist
upon their going into liquidation. They
wouldn't want to hold their shares and
they would find it difficult to sell them
to local holders. Most of the banks of
this city pay their shareholders
6 per cent. One pays more
and one less. The state and county tax
rate is $1.22 on the $780, and the city tax
is $1.45, Unless the banks could increase
their dividends greatly-and we don't see
how they could-the shares wouldn't yield
enough after paying taxes to justify the
risk in holding them. They wouldn't pay
much more than per cent That being
the case, what would their market value
he? Would it be anywhere near what it
is now? OF course not, and hence the
state wouldn't get anywhere near as
much as it does now even though it tax
ed the real estate of banks in addition
to their shares.
The Blalock plan Is the plan that was
abandoned a long time ago, because it was
found to be unsatisfactory. Why does
Mr.. Blalock want to go back to it? Is it
only to have a change? But why change
unless something is to be gained? All
changes is not reform. Mr.. Blalock has
been before the public a great deal since
the first meeting of this legislature but
while we give him the credit for earnest
ness and sincerity we do not recall that
what he has done has been of much prac-
teal benefit to the state.
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