The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1899-12-17
THE THXHTlON OF COUNTY and
MUNICIPAL BONDS.

\NE OF the gratifying features OF the convention
I J OF the League OF California Municipalities was
the unanimous vote given in favor OF the reso-
utions introduced by Mayor Phean and supported by
Mayor Eaton OF Los Angeles urging the voters to
cast their ballots the election for the cons
tutlona amendment exemptng from taxes all bonds
issued by the State by any county or city in the
State
The resolutions tersely express some OF the obiec-
tons to taxing such bonds in the statement The
imposition OF the tax simply results in preventing
our citizens and savings banks from holding these
bonds issued at low of interest and compels
their sale outside of the State, which is needles;
draught upon our resources; it is illogical and I'M
productive OF revenue for the State to tax its own
indebtedness"
The evils resulting from the taxation of such bonds
can be easily and clearly perceived by any one who
will give the subject due consideration In the first
place the imposition OF tax upon the bonds lowers
to that extent their value investments and accord
ngy the city or county which issues them has to paw
an additional rate OF interest offset the tax Or If
the rate OF interest be fixed then the premium to be
obtained for the bonds in open market will be less
ened. In that way the burden Of the tax falls upon
the community issuing the bonds and diminishes the
value OF its loan.
In the second place, as these bonds are issued at
low rates OF interest any tax upon them seriously
affects the net income derived from them provided
the be paid. If the bonds are purchased by our
savings banks or by other parties in the State who
will make an honest return OF them to the tax As
SCISSORS the tax will OF course be collected, but if
held by parties outside OF the State is comparatively
easy to conceal them that the tax is evaded Thus
there is advantage to the outside buyer over the
home capitalist, and that advantage counts for so
much that most of county and city bonds are in
the hands of outsiders
BY reason OF the transfer Of the bonds TO holders
residing abroad double evil results The State not
only loses the tax which it has vainly sought to i'm
pose upon them but also loses the interest for the
annual payments have to be sent to the holders who
reside outside OF California These interest payments
amount in the aggregate to considerable sum every
year and the loss OF that amount OF money from the
channels OF local trade is severely felt
Thus il will be that in our efforts TO impose I
tax upon city and county bonds we not only Out
burden upon public enterprises but we lose the
advantage of the bonds as investments for our bank,
and also the interest and eventually the principal In
short, the resolutions OF the League of Municipa
ties declare, 1t is Illogical and unproductive of rev
enue TOR State to tax its own Indebtedness" 1t is
safe to say derive almost no revenue from the tax
which works so much harm and compels the shin
ment from the State annually Of so much money for
needed upon issue plain as this and vet the
league has done well IN urging the matter upon the
attention of the people. 1t is one which should be
kept in view from until election day. so that the
vote for the amendment may be assured in its favor