The Mount Holly news. [volume] (Mount Holly, Burlington Co., N.J.) 1891-1942, 1906-02-20
-a-------------
Taxation of Bank Stock.

The above subject, it will be remem
bered, caused considerable discussion IL
this county last year, and the commits
sioners of appeals in the different town
ships had some trouble in trying to solv'
the problem. The United States InOestol
of February 10, contained the following
article:
1.-The Court of Appeals of Kentucky hal
rendered very important decision relat
ing to the taxing of the shares of stock In
national banks, to the effect that when the
shares of national bank stocks are taxed
under the statutes of that state, they are
subject to have deducted the value of nom
taxable government bonds held by the
banking Institution. The court In render
ing its opinion goes very fully into the mer-
its of the question, which arose out of the
case of the Marion National Bank and the
Citizens National Bank, both of Lebanon,
against John A. Burton, sheriff of Marion
county.
''The action was taken to restrain the
sheriff from arriving at the value of the
shares of stock of the banks for the pur-
pose of taxation by ascertaining the mar.
ket value of the shares, then deducting
from that sum the value of the real estate
of the bank and dividing the remainder by
the total number of shares of stock. The
lower court sustained that method of as
certaining the value of the shares of stock,
but the court of appeals at Frankfort, in
reversing that judgment and ruling, points
out that under the decision of the Supreme
Court of the United States, the state
banks are entitled to have deducted from
llah GO much IF tho{r fol
as is invested in the non-taxable securities
of the United States, and it follows that
shares of stock in national banks must be
treated with reference to taxation In the
same way, or at least in such way that
discrimination shall not be used against
them.
THE court, in rendering its decision,
stated that it Is fact in law that cor
poration owns its capital that the stock
holders own the shares of It's stock
The capital, If invested In bonds, is none
the less capital, so that when the capital is
taxed, that in which it is invested Is neces-
sarily taxed. If, as is the requirement
of the statute, and doubtless the practice
of the board of assessments in taxing the
banks intangible property, which includes
its capital not invested in tangible prop
erty, the tax is called franchise tax, 1t Is
nevertheless, in fact, an ad valorem prop
erty tax upon the capital of the bank ;
therefore, under the decision of the 6u
preme Court of the United States, the
state banks are entitled to have deducted
from their assessments so much of their
capital as is invested in the taxable
securities of the United States.
ct follows that shares in national banks
must be treated as to their taxation in the
same way, or at least so that they will
not be Disseminated against. In sense,
and indirectly, the tax paid upon the cap
| ital of the bank is at last paid by the share
holders out of that which would otherwise
come to them, so that the tax against the
state bank, which is entitled to have de-
Quoted from the assessment of its capital
so much of its capital as was invested In
mates in law against the national bank
shareholder who is assessed upon the value
of his shares in the national banks CAPT.
| tai, from which no deduction Is allowed.
National banks, with respect to taxa
| ton. should be placed upon the same
footing as state banks, and under those
provisions no exemption from taxation
which would be allowed a state bank, OF
any deduction that would be made in fa.
voriof the state bank, must, under the act
of 1902, be made in the assessment of the
shares of the national banks. In no re.
spect may the moneyed capital invested In
national bank be taxed under the act at
higher rate than the moneyed capital In
vested in state banks, nor may any dis
elimination be made against the national
banks"