Daily Kennebec journal., 1902-05-02
STATE HOUSE.
How the Taxes Upon Savings
Banks Are Assessed.
Last Year a Bad One for Fire Insur-
ance Companies,
Applications for State Pensions Now
Number 2,194.

dsStSSOlS IN assessing tut lfintitlSe tax
upon savings banks is not thoroughly
understood by the people of Maine, ana
even among bank men themselves the
system is not wholly clear This latter
fact is evidenced by Il correspondence
that has just taken place between a
treasurer of one of the Maine savings
banks ana Hon. II. Il. Timberiakc,
State bank examiner. Mr.. Timber
lakes letter to the gentleman in queS-
tion is 50 clear ANA comprehensive
covering every detail of the methods
prescribed by law, that the Journal
takes pleasure i'll publishing the same
herewith:
Pardon me if l explain fully about
the tax law. When considering this
muttcr persons arc in danger Of getting
at it wrong end to. They think the tax
is based upon the property they hold.
This is not 50. 1t is 4 franchise tax,
tn value Of which is fixed by an ar
bitrary rule laid down by the lrSisla-
turc. Lik" the law prior to 1922, the
basis il the amount Of deposits. You
Niu remember that at that time the
tax Was assessed at the rate of Il of /
per cent. directly upon the average
amount Of deposits. The new law
followed this same principle and only
adopted the present somewhat COM
plicatcd system for the purpose Of dis
eliminating i'll favor of Investments
within the State, with the idea Of
tempting this capital to seek home in
NCStmCntS. We, therefore, start out
with the Same basis for the tax, i. G.,
tine average amount Of deposits (with
tho average of reserve and undivided
profits inciudcdD.
THE rule for determining the amount
of this tax is rs follows: From the
average amount Of deposits. reserve
ANA undivided profits deduct. 1st.
Government bonds. end. The shares
Of corporation stock such as are by
law of this State free from taxation.
3rd. The real estate owned by the
banks. 4th. An amount equal to II
Of such other assets rs were acquired
prior to the enactment Of the Law. 9TH.
2-T Of all new assets within the State,
and then assessed tax at rs Of / per
cent.
Thus you see that the basis is pre-
cisely the same as the old law, except
ing that it includes the reserve and
undivided profits with the deposits
Government bonds, the corporation
stock named and real estate are de-
Quoted the same as under the old law.
because they are either positively ox-
emDt from taxation to other holders or
pay municipal taxes. On all invest
ments acquired prior to the en-
actment of the law there was a
deduction of II to make the tax
upon that portion of the value
ot the franchises precisely the
same as before the law was changed.
j. G., " Of / per cent. This was be-
cause the banks claimed there should
be no discrimination on investments
that We're already made without any
expectations Of such a law as is now in
force.
Now comes the only real change
from the tax law in force prior to 1898
ana it is the only discrimination it
contains. Up to this point the law is
precisely the same as the old one with
tn" exception of the addition of tax
upon reserve and profits. You will
notice there is no deduction upon in
Nestmcnts out Of the State acquired
subsequent to 1893, but there is a dc
dUCtion of - upon all Investments
within the state. The effect of this
would be, if an equal amount Of new
Investments We're made without and
within the State. TO make the average
n for the entire tax at the same rate as
| before. If, however, the greater
amount of the new investments are
without the State the new tax law
would slightly increase The amount Of
the tax paid by that bank, while il the
greater amount Of the Investments
We're within the State it would make
| the amount of tax less than under the
old law.
~ think ] have Row answered your
| inquiry about municipal notes You
see that il does not matter whether
they are notes or bonds as no dcduc-
tion is made on account of them. Your
| taX would be precisely the same as
| though you held the bonds Of the same
municipalities.
Il also note what you say about
street railroad bonds guaranteed by
steam railroad. | cannot agree with
you in your construction of the law.
/ think you are deciding the matter as
you think it ought to be, basing your
Judgment upon the quality of the Sc
| curity and not upon the law our
legislature has enacted. The legisla-
ture says that no savings bank shall
buy q street railroad bond until certain
conditions are first complied with.
know of no way in which we can dodge
that provision. / am not attempting
| to make law, I am attempting to con-
strue laws which the legislature has
seen fit to enact"
In order to obtain the balance or
| basis remaining for the purposes Of
| taxation. the average of deposits.
average of reserve and average of
profit and loss are added together to
secure the total average of basis for
tax. From this total is deducted the
value of government bonds. value of
stock exempt from taxation. assessed
value of real estate owned one
seventh of all investments acquired
prior to 1898, and two -sevenths of all
investments within the State subse-
quent to 1893. and the balance is the
basis remaining for taxation at seven
| eighths of one per cent.
| Did you know that the fire insur-
ance companies of this country lost a