The San Francisco call., 1903-01-20
DIFFICULT PROBLEM.

The assessment of Intangible personal prop
erty is the problem that has always given the
SCISSORS NO one can seriously urge that prop
erty of this character is not Justly liable TO
taxation. Every State in the Union has en-
acted legislation the object of which is TO
compel this class of property to pay tribute to
the Government in the way Of taxes for the
protection which IL receives This intangibla
personal property is largely represented by cor
porate securities. such stocks and bonds To
Illustrate this. let us take corporation whose
value of its stock. 81. 600 GOO 1t paws to lis
stockholders regular dividends at current
rates, on this amount. The shares of stock
are regularly bought and sold at such figures
as would make the total stock issue worth this
amount. The total assessment Of the corpor-
alton. however for its tangible property. such
as its real estate. together with it's tangible
personal property and such money and credits
as IT may pay taxes upon amounts to but 81
WO,0O0. Shall il be argued that no proport on
Whatever Of the remaining $3. GOO 000 of values
shall be taxed? To admit this would permit
the greatest inequality in the way of taxation.
10 Illustrate; A might invest 500, 600 in the
stock Of this corporation which stock NAYS
him a regular income; the property which n
represents is only taxed for Is per cent 81 tts
value, while b. who invests the same sum
500. COO In city real estate or in farming
laEds, which pays him no greater income pos
sibly not as large. is taxed on 60 per cent or
10 per cent of his investment. No laws of any
state have ever contemplated the release from
taxation OF the values represented by these Sc
curities Yet II Is fact that in many States
owing TO the difficulty of enforcing the law
these values generally escape taxation. A re,
view Of the laws on this subject in our State
will prove instructive.
II was the law Of this State formerly TO as
sess the property of corporation over and
securities of the corporation by assessing his
shares OF stock. These values were to be as
sessed to him at their full cash value. less
that proportion which the tangible property
on which the corporation paid taxes bore to
the full cash value Of its capital stock
AN ILLUSTRATION.
To illustrate: In the case cited above IL
the corporation paid taxes on tangible prop
amounting to 81 900 GOO and the total value
of the capital stock was 81, 000. Geo each stock
holder would be allowed to deduct one-quarter
from the cash value of his shares of stock
this one-quarter representing the proportion of
the corporations property on which the cor
poration paid taxes.
collect taxes on the remaining $3 600 600 OF
values from the stockholders, or from those
who resided within the State Ii was found
under this system that our expert
ence tailed with that of other States having a
similar rnethod-that is to say. it was found
to be impossible to discover the owners of this
stock This was due to the fact that ii was
either fraudulently concealed from the as
SCISSORS fraudulentIy transferred to marty
living without the State and beyond the iuris
diction of the Assessor. The trainers Of o,lr
present State constitution, which was adopted
in 1879. set to work TO remedy this Condition
of affairs. They desired to devise scheme
by which it would be impossible for this great
mass Of personal property to escape taxation
Reading the debates of the constitutional con-
vention on this subject. We can have no doub.
as to their Intention in this regard. 1t was
first proposed to assess the capital stock to the
itself and to compel IL to pay the
tax thereon for Its stockholders, giving, of
course due allowance for those sums maid as
taxes its tangible property. This scheme
however. abandoned in view of the fact
that the United States Supreme Court had s,es
cided in the case Of a similar method of as
sessment IN an Eastern State that this was an
illegal assessment. The court based this deei-
sion the fact that the shares of stock were
the property OF the owners thereof and that
as many OF these resided without the State.
the State was in effect going beyond its con-
fines to assess property over which it had 10
jurisdiction to its local corporation. This was