The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-04-22
CANNOT REPEAL THE
FOREIGN TAX BILL
Can Only Be Modified at the
Split Session
CONSTITUTION IS EXPLICIT
representative King Explains How
Measure Was Passed-Governor
Insisted on His Point at the
Last Moment.
CONSTITUTION is EXPLICIT

There seems to be somewhat of mis-
matter of imposing a franchise tax on
corporations lending money In this state"
said Jere C. King, one of the represen-
tatives from Jefferson county
Section 2s2 of the new constitution
says; The legislature shall by general law
provide for the payment 10 the state of
Alabama of a franchise tax by such
foreign corporation, but such franchise
tax shall be based upon the actual
amount of capital employed in this state
The new constitution went into effect in
November, 1901, but this section was al
lowed to remain in allegiance until the
last legislature met.
1.-THE bill to impose the tax was what
is known as an administration bill, and
was prepared under instructions from
Governor Conner, its object being to raise
revenue. 1t went through the house of
representatives without debate and was
passed on to the senate committee on
finance and taxation. 1t was here 1t first
attracted attention from a member of the
committee who Is interested In those for
eign corporations which lend money in
the state and he cried a halt while he
took counsel with other interested as he
was.
THE administration bill called for a
franchise tax on foreign corporation do
ing business in the state of S25 on the
first 800 actually employed, 50 per 500 on
the next 5000 actually employed, and one
tenth of ! per cent on all capital over
$1,000 actually employed.
1.-THE debate in the senate resulted in
amending the bill by substituting one
fortieth for one-tenth of 1 peg cent
tax on all capital over the first $1,000. The
house accepted the amendment and the
bill was sent to the governor for APP
proval.
LAS an illustration of the difference be-
tween the effect of the original bill and as
amended let us take 81, O000 900 capital. I'm
der the original bill the franchise tax
would be $685. as compared with $3.50 81
under tive amended bill, a difference of
slli33S, not very much. It's true, but
sui enough 10 set the IOItlBn capitalists
complaining.
Governor Conner refused to approve the
bill as amended on the ground that the
tax was too small and it was sent back
to the senate and house with the words
and figures 'one-fortleth struck out aud
one-tenth' substituted. This was done
the last day the legislature was In ses-
sion, when bills were running through
at a rapid rate and as there was no
time to debate the matter both houses
eoncurred and the bill was passed without
dissent. That's the whole story of how
the bill was passed In its present form.
Lenders of money will not pay this
tax If it is imposed, the borrower Will
pay 1t and pay more than the amount Of
the tax. Lenders say they Will advance
the rate of interest one half of 1 per
cent, which amounts to 5000 so IL they
have TO pay $500 they Will collect 5000.
The worst that can be said of the bill
is that It is iiupolitic. 1t may serve to
divert capital into other channels, not
because of the amount of the tax, but
simply because capitalists do not like to
be taxed upon the money which, they
say, Is helping to develop the industries
in the state
The law cannot be repealed. but II
may be modified The section 232 OF the
constitution uses the word shall which
is mandatory. Neither can the law be
made as to apply to foreign corpor-
atoms lending money, for that would be
class legislation, and therefore unconsti-
tutonai. The foreign corporation lending
money In this state gets off very light
compared with the resident. II foreign
corporation lends its money In this state,
even under the present law, II pays a tax
of only slGO3 on the 100000, while the
resident pays $4,000 on the same
amount"