The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1901-04-13

THE TAN ON LOANS.
The next tax which was proposed was
the tax on corporate and municipal loans.
While this tax was finally stricken out of
the bill I wish to say a few words in
explanation of it. 1t was never intended
that this tax should be collected, except
on the bonded indebtedness of corpora
tons The words of the section were
bonds and certificates of indebtedness,
and the opinion of the lawyers who we're
consulted was that these words, taken in
their connection, could not possibly apply
to promissory notes, acceptances and
open accounts. The law had already been
construed in other States where the
same phraseology was used. This, you
will understand, was no new tax, but
simply new way of collecting the per-
sonal property tax which had always
been levied. The holder of any bond
was exempt from listing and paying tax
on it himself. One wealthy gentleman
who came before the committee to pro-
test against the tax, admitted before the
interview was over that his chief OBJ
lection was that his income would be
considerably lessened if the tax should
be deducted from his interest, never hav-
ing realized before that his income was
as great as it was simply because he had
failed to list his property for taxation
as required by law. The representative
of some corporations argued that the tax
would cause their bonds to be sold for
less than they could now place them. If
this is admitted to be true it also carries
with it the admission that the bonds have
heretofore escaped taxation.
1t is this class of property which chief
ly escapes taxation and unless the tax
on personal property is soon repealed
altogether not only will it be necessa-
ry to adopt some such measure as the
one proposed, but entirely new and much
more stringent measures will have to be
discovered.
ON BUILDING ASSOCIATIONS.
The next tax in the revenue bill is the
tax on local building and loan associa-
tions.. This tax is precisely the same as
was levied last year, and is extremely
favorable to these associations. Everyone
who is familiar with them know their
great benefit to the community and is
willing to do whatever is possible to en-
courage them-possibly on the same theo
ry that caused the effort to encourage
State insurance companies. A number Of
our citizens who are interested in these
associations addressed a communication
to their representatives in the Legislature
asking that the section in Schedule A
in the revenue act taxing building and
loan associations should be stricken out
and that a tax of cents a share should
be levied under Schedule B. The result
would have been that the license tax
would have been levied and they would |
then have been subject to a property tax
as any other corporation, and would not /
have had the privilege they now possess /
of deducting from the value of all their /
shares the actual value of those other /
shares upon which the association has |
made loans.
REPORTS FROM CORPORATIONS.
The next change in the law is a sec
ton requiring certain reports from cor /
porations This section although taken |
verbatim from the laws of another State I
where it had been in force for years and /
observed willingly by corporations, seem |!
ed particularly obnoxious to the repre-
sentatiyes of certain corporations.
They objected most seriously to certain |
questions which were asked and in de-
ference to their wishes the committee
struck out the following questions:
Rate per centum of each dividend de- |
clared?
Gross earnings during the year?
Net earnings during the year?
Amount of profit added to sinking fund |
during said year?
These questions were asked in other ,
laws simply to be a guide to the officials
in determining whether or not a proper I
valuation had been placed on the stock /.
of the corporation Accompanying the /
report of the corporation which must be t
made in the month of June, to the State
Auditor, a statement is required from any /
two of the corporations officials 'esti- I
mating and> appraising the capital stock
of said company at its actual value in /
cash. after deducting therefrom the as
sessed value of all real and personal es- /
tate upon which the corporation pays 4
tax Upon this valuation the corporation I
pays the State tax to the State Treasur- +
err If the State Auditor and Treasurer .
are not satisfied with the valuation placed
on the stock by the president or treas /
urer of the corporation, they have the
right to review the assessment, and II
the valuation should be increased, the I
corporation again has the right to appeal
from this ruling. The State Auditor is
then required TO certify 10 the reg +
lister of deeds of the county where the
corporation has its principal place of
business, the value of the stock of the
corporation, and the corporation shall
then pay the county taxes upon said val
uation. There is nothing in the slightest
degree resembling double taxation in this
section for it has always had in it the
following express provision: Individual
stockholders in any corporation paying a
tax on its capital stock, shall not be re-
CURED to pay any tax on said stock or list
the same" This entire system OF cor
poration taxation was urged upon mem
bers of the committee by great many
persons who requested that some method
should be devised which would relieve
them Individually of the necessity of list
ing their stock for taxation.
JUDGE BROWN SUGGESTS A PLAN.
From a number Of letters received by
the committee ! will quote from one writ
ten by Judge Brown. He says:
I'm some parts of this State industrial
corporations have been made to pay
taxes upon their entire capital stock, and
also taxes have been levied upon the
certificates of stock in the hands of in
diyidual stockholders. 1t seems to me