The times. [volume] (Richmond, Va.) 1890-1903, 1901-12-27
THE PRINCIPLE OF TAXATION.

doctrine which we have been p1eaci i
FOR some time past.
The News refers to that part OF Coz
crror Tylcr's State message TO the LEXIS
laturc in which he speaks of the dithcui's
of taxing Invisible property 1t says
there are a great many statesmen, or
persons filing positions cut out ior
statesmen, in our scheme OF government
who are losing a great deal of sleep over
this question. 2 Eee
..They have nrapesca ,nne scheme after
another,,no tax invisible property, the
News proceeds "a9d have inVariaoiS
found it unsatisfactory in part. They
have not stopped to inquire. apparently,
whether they have any moral right TO
TAX invisible property at all, but proceed
on the assumption that it ought TO De
taxed ana that inquisitorial measures are
perfectly legitimate TO follow the dis
closure of the existence or presence %
The property.
The great difficulty with these Statesmen
and we acccsd TO them perfect sincerity
of motive is that they DO not distinguish
between what is property and svhat IS
the mere representation of property.
what is substance and what is shadow
But the News brings out this point adj
niirably in the following:
Stocks and bonds represent actual prop
crty that is visible. and that is taxed
N:ca yon como to taxing the stocks and
bcrds you simply place another tax on
this visible" property. Take large
farm owned by an individual. de pays
taxes on the land. houses, horses, stock
of every kind. Suppose he Incorporates
this farm. and he and the members OF
his family own the stock. The farm and
everything on it still pays the same tax
as before il was incorporated, but those
who would run down invisible property
would require him and the members Oh
his family to pay in addition a tax on the
shares of stock This is simply double
tax, nothing more nor less The man
who lives beside him on the same kind
OF farm which is not incorporated. pays
the one tax on the visible property,
while he and his family pay this tax ana
another one on the shares OF stock, the
invisible property
Carrying it further, money is borrowed
on this incorporated farm and bonds are
ISSUED. The land and all on it continues
to pay the same tax, the shares of stock
pay another. and the man who lends the
money and holds the bonds pays another.
If the man who chases invisible prop
erty' can come up with him:
Is not this 1ling UP of the tax, direct
1y and indirectly. on one piece of prop
erty an unwiSe thing2 1t seems 50 to US.
and that common fairness requires that
one tax should be placed on the property
and no more. II the act of Incorporating
gives TO property any special value, as 1t
does in the case of exclusive franchises.
~ toy no D1rIn pf franchise
addition to the property tax. This is
right and fair but do not double up the
taxes Oh propcrtS that has in no wise
been increased in value by reason of a
change in the form of holding the prop
erty.
It seems to be impossible to fix in the
minds of many people the simple fact
that the stockholders and bondholders OF
a corporation are simply as so many part
ners, each owning a certain interest IN
The property of a corporation, whatever
that property may be. When man owns
q house and lot. to give simple illus
tration and borrows money thereon. Civ
ing his note secured by mortgage on the
property as evidence Of the debt, he and
the holder of the note are in point Of
fact joint owners of the property In such
a case and in all such cases, it is for the
State to levy a tax upon the property in
volved and let the owners of the property
arrange it among themselves as to what
part of the tax each will pay.
But the best illustration which We have
seen is one which we cited recently from
the city of Baltimore. 1t will bear repi-
1ition: a man died, leaving 4 large estate
10 n number Of heirs The heirs decided
fer the sake OF convenience, to put their
real estate. for the estate consisted in
real property, into a corporation, and 10
issue to each heir according as his in
tcrcst appeared a certain number OF
shares. There was debt upon the estate
and this WAS converted into bonds Now
i. is manifest that there was no change
here except in the form of ownership. No
property was created by the issuing Of
stocks and bonds. The property WIS as
sscssed as other real estate in the city OF
Baltimore is assessed and taxed upon a
fair valuation. Can any reasonable man
claim that these heirs should be compelled
to pay an additioRal lax upor the stocks
which they have issued, or that the hold
erg Of the bonds, which are mere evil
dences OF the dobt upon the property,
should be made 10 pay taxes upon the
bonds? We say that the stocks and bonds
are not property, but the simple evidences
o. ownership and of debt. Tho property
IS taxed, and so the evidences of owner.
ship and debt should be exempt
But what, pray, is the difference be-
tween 3 corporation Of this character and
a railroad corporation, or 4 manufacture
ing corporation. or any other corpora
ton? III the Baltimore case. to be sure.
there is no franchise involved. and we
believe that franchises should be taxed.
because they are property.
Now when the State of Virginia pro-
ceeds upon that principle, upon the prin-
nf all