The sun., 1899-05-21
KENTUCKY'S TAX BURDEN.
CAPITAL DRIVEN OUT OF THE STATE
By P0PULISTIC LAWS

Otner SOTpOThtlOnt oO out VI bubtnots.
LOUISVILLE. May 20 - When Kentucky
adopted a new Constitution in 1901 the spirit
OF hostility to corporations and all forms Of
capitalistic enterprise was being developed to
the furious pitch which has since given the
State over to Bryanism. It was not suspected
at the time. but the teachings OF the Demo-
cratic leaders who have since made Kentucky q
Populistic stronghold were just then finding
converts The new Constitution was their
work. 1t was accepted by the people without
thought OF the effects Of the revolution II was to
bring In the States system Of taxation.
The Constitution was framed largely BY ex-
Gov. Knott, Senator Charles J. Bronston and
others. who have since taken an active part in
the Bryan campaign. The existing Constitu-
tion. though little rusty and antiquated. was
admirably adapted to the needs OF a cUnserva-
tive commonwealth. Under 1t capital was
treated with liberality. manufacturing enter
prises were encouraged. and the States great
resources we're being rapidly developed. The
people generally were satisfied with their
organic law: but the reformers were at
work and by dint chiefly OF harping upon the
fact that the old Constitution still recognized
the institution Of slavery. the people were
stirred up to a point whore they assented to
the calling Of a new constitutional convention
The convention was called and every dema-
gogue who desired to stamp his ideas upon
the States future legislation. every theorist
and every farmer who felt himself under the
necessity of curbing the money power has
tened to announce his candidacy to he dele
gate. few lawyers who desired to provide
for their professional future were added.
The keynote OF the Convention was tho dis
position to regulate capital Equality OF taxa
tion was insisted upon. and the most radical
PROPOSITIONS to bring this about were intro
duced. Strangely enough. a lawyer who had
been promoter and had ruined every enter
prise with which he was connected. took a
prominent part in the framing of the organic
law upon taxation. His theory was that all the
burdens possible should be thrown upon capi-
tai in its most LIQUID form, such as the shares
of banks and manufacturing and trading cor
porations, bank deposits and so on. The farmer
delegates thought so, too. and the result was
that a rigid ad vaorem system Of taxation
was made obligatory. The old provisions per-
mittng the exempting OF raw materials for
manufacturers and affording freedom in mat
ters OF incorporation were oil repealed or
ignored. The cry was that the poor cottager
was taxed to the full limit upon his little home.
and that the bondholder and capitalist must
bear an equal burden. The taxation OF all
forms OF tangible property. real and personal.
having been provided for. 1t was next deter
mined to destroy all monopolies and to assess
franchises and all rights and privileges that
had been acquired In the past or might be ac-
quired in the future. No franchise was to be
given away. but all must be sold to the highest
bidder and limited to term OF twenty years.
The Legislature which assembled in 1901
was to enact the laws to make the Constitution
operative. It was pervaded by the same spirit
Of populism; IL remained in session a year. and
1t formed a patchwork OF legislation that was
worthy OF Texas or Arkansas rather than OF
Kentucky. A stringent statute was drawn up
against trusts. and under it a fierce war Is cow
being made against even ordinary business
corporations.
For year or two after the laws Vent into
effect not much alarm was felt. The State
Board OF Valuation was In charge OF the as
sessment OF franchises. and 1t construed the
legislation SO literally as to cause no COM
plant. The full effect OF the constitutional
provisions was not realized. and the cities
raised their revenue partly by means OF license
taxes which were not oppressive. upon mer-
chants and manufacturers But the spirit Of
the convention was working. aud soon 1t began
TO be understood that the provision requiring
equal taxation was being evaded, that ad
valorem meant ad valorem. and that no favors
could be shown TO any firm OF organized wealth
no matter how desirable 1t might be. When
this was understood a general increase was
begun in the assessments OF all forms Of cor
porate property
Next 10 'he raliroaas' the uanks ana other
hnaneiai institutions "ere uese'neo 70 oe haro-
est MT. ohoer their Ola ehareers' granted
"hen u was oiincu't 10 secure DahKs' they
were ta@eo only one,hali OF per cent upon
their shares 1t had long been felt that this
was too little. but the banks pleaded vested
rlRhts. COMPROMISE was arranged before
the aaoption OF the new constitution where.
ny the banks agreed 10 pay TAX OF
20 Genus upon each Sioo OF eapital ana
surplus ana me usual TAX upon an real
ana PERSONA property ID heu Oh u'i o'ner
taxatoh Inc scheme worked Weil' put win
the aoop'ion OF tne no" constitution .ne pahSs
agreed 10 pay 'ur'her lax upon tneir gross
earnings 10 the huh'cipaiitles IN the way OF
licenses ihe pan was ID eaeet III loo4- iooo.
wheh the Huhicipal authorlties oisco'ereo that
tnis was not carrying OUT the al Valorern pro-
VISIONS OF inc TAX laws ana the banks were at