The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1909-06-22

Pay Taxes Even III baHkS H1Oiu "a
empted Bonds, and Matter is to G (
Before Council of State in Sale o.
$500. 900 of State Bonds.
The Council of State is this morning
to meet to take under consideration
the terms on which the State bonds
OF North Carolina, to the amount OF
100000. are to be held by banks
which may purchase these, and the
question Of taxation pon the shares
81 the capital stock Of banks held by
individuals.
These $1,000 900 in bonds are, by leg
islative enactment, made exempt rOm
tayation. and the question which is to
be met applies no alone to these
bonds, but to other State bonds held
by banks as a part Of their capital
stock. It is understood that banks in
the State, which made bids for the
bonds, did 50 with the idea that these
State bonds could be deducted from
the value of shares of stock. which are
to be listed for and taxed to the own
ers Of such shares, and it is this ques-
ten at issue which is causing the de-
lay in awarding the bonds, for if this
is not to be the procedure h banks
expect to decrease the bids made.
The highest bidder for the bonds
was the Raleigh Savings Bank. which
offered $1O3 for the 500 par value
Of the bonds. Other conditions being
equal, and the deduction Of the bonds
being allowed from value Of shares Of
stock listed for and taxed to h own
ers. his bid and others will hold
good: but if the deduction is not al
lowed it is expected hat lower bids
will be substituted. That there is a
possibility Of a change is shown by
the fact that out Of town bankers.
1850 c.
lem and Baltimore, are still in the
city awaiting a final determination.
It is the report that the State Treas
urer and the Acknowledgement are in
accord that the value Of the bonds
can be deducted from the value Of
shares of capital stock, but the North
Carolina Corporation Commission.
which has in charge these tax matters,
concludes thai while State bonds are
exempt from taxation in the hands
of q corporation or Of an individual,
that they cannot be deducted from the
value Of shares of stock which are
listed for and aXed to the owner Of
sue shares, that the tax for the
shareholder must be paid, even if the
bank holds State bonds as part Of it's
capital. stock, represented by these
shares.
Here is the position taken by the
Corporation Commission. It is
tnat in assessing shares OF stock
in banks Under section 33
Of the Machinery Act. the North Car
Dina Corporation Commission holds
that share holders cannot insist upon
having the value of State bonds held
by the bank deducted from the value
of the shares.
The Commission holds that the
principle involved in this matter vas
presented to the North Carolina Su-
preme Court in the case Of Below
against Commissioners, 80 N. c. AS.
In that case Below held shares Of
stock in the North Carolina Railroad
Company. The charter Of thi com
pany provided that all real estate held
by It tor rights Of way, station places
OF whatever kind and work shop loca-
tons shall be exempt from taxation
untll the dividends or profits Of the
company should exceed six per cent
per annun 1t was conceded that no
dividends or distribution Of profits had
peen made among the share holders in
excess OF six per cent. It was held
that shares of stock in a corporation
may be taxed as a distinct specie Of
property belonging to the holders in
OF taxation imposed upon
the property of the corporation and
that Below must pay taxes on his
shares OF stock Notwithstanding the
TACT mat the Of the COM
pany was exempt from taxation. In
TINS opinion, which was delivered bv
thlef Justice Smith, It is said on page
I'm Van Allen VS.. Assessors. .
Wallace 573, it is held that shares
OF stock in a National bank may
De taxed to the holders although the.
Whole capital is invested in securities
Oh the National Government which an
act OF Congress declared to be ex-
empt from taxation by State
This principle was also affirmed NV
the Supreme Court of the Irn;+a1
states in the case of the Cleyeland
trust Company VS.. Lander. as raw
EDITION, page 456, in which the conrt
says: "A tax on the shares Of stock
IN d trust company under the Ohio