The Breckenridge news. (Cloverport, Ky.) 1876-1955, 1911-01-11

becomes n1bn t0OON0 10 iHhf NHtl wv
<owner OF the property regards as. toe
large a proportion OF the income from
That property.
M The Gap Widens.
M Even in the earlier DAYS OF corporate
unemployment, the misht "as not quite SC
bad as II Is to-day. Year by year. how.
ever bonds and stocks and notes anc
M other IRONS of intangible personal prop
VI erty represent a larger and larger per
M centage of the total property OF the com
VA munity. Year by year, at the same time
W the demands for revenue for public pur-
M poses. such as good roads. good schools
etc, become heavier and the tax rate
. goes higher and higher. AT the SAINT
IA time the yield from bonds and stocks has
M grown smaller and smaller. In earlier
days railroads thought nothing, Tor IN
~ stance, Of issuing per cent bonds. To
'| dav any standard railroad would con.
slider itself disgraeed In the matter OF
" credit II it could not float its bonds at
. per cent or less. The Inevitable result
Of these changing condltions-with the
III tax rate going higher and the yield from
VA been that the owners of this Kind ot
IA property will not list IT for taxation when
the tax rate takes anywhere from 10 10
n % per cent Of the income yielded by thar
property Therefore, more and more OF
this kind of property has gone into MD
Ing, and though such property forms eV-
Il cry year a larger part of our total
wealth IT yields steadily a smaller pro
portion of the total revenue, ana the
falls more and more heavily upon real
estate and other forms of property that
&an not be hidden.
the evils attending 1t and resulting from
1t that the revision is urged in Kentucky.
The evil has been corrected elsewhere.
IL can be corrected here The states OF the
Union are rapidly abandoning this sys-
tenn. No state has ever succeeded IN de-
vising a system of penalties and assess,
4 ments or equalization that could compel
this Intangible movable property to stand
and be taxed when the tax rate amounts
to confscation of so large part of the
How It Works in Kentucky.
Now let US look at the situation in
Kentucky. The state tax Is 90 cents.
There you have already a tax rate quite
as high as some classes of property can
easily stand But we do. not stop there.
Under our law on top of this 5O-cent
state tax must be put the county tax,
which. taking the state over, will aver
age not far from 80 cents. This gives us
tax rate of 81, too high for many, and
the process Of hiding gets well under
way.
Nor do we stop here. On top of this
state tax of 80 cents and the county tax
Of 80 cents there Is still imposed local
tax ranging all the way from 80 cents TO
$l.S5, and sometimes higher, and with
, every or 10 cents added to the rate
! more and more property Is eliminated by
II hiding or differentiation. The average
4 tax rate in cities and towns of first, sec
y ond, third. Fourth and NTH classes IN
" hentucky is ABOUT W. lnlS dHloultS
to about So per cent of the return from
any 4 per cent investment. 1t amounts
TO a little under 40 per cent of the return
from any per cent investment. and II
Y you apply it to a per cent investment,
I such as a savings account, 1t takes near
4 ~ 70 per cent or the income. Not even
the widest EXTREMIST would propose an
income tax of IS to IS per cent. Yet that
is what we try to collect from some
(. classes of property It Is too mucn %
\ expect of weak human nature. 1t is q
lie VtIlpid defiance of economic laws as well
Y IS of the law of human nature. When
4 any tax takes more than 10 per cent or
Y the income from any class of property
I differentiation and evasion Will begin
The larger the percentage of income
taken by a tax the greater incentive TO
evasion, differentiation and perjury in
order to escape the burden, until you
Neach a point where to pile further taxes
Ii a tax rate already high does not
Yield proport!onate increase OF reve-
We Have Tried 1t Nineteen Years.
We fixed this system in the new con-
stitution nineteen years ago. our inten-
tions were good We acted with the best
light we had at that time. Unfortunately
however at the time we adopted 1t, the
system was being abandoned elsewhere
1t is not yielding sufficient revenue for q
progressive state. 1t hampers industries.
1t burdens the poor man. 1t drives capi-
tai out of the state, or into forms OF in
vestment that do not promote business
activity and do not furnish employment
to labor and do not develop the resources
of the state.
1t is a mistake to suppose that it is the
rich man only, chiefly, who has a
cause of complaint against the present
tax system. The rich man can take care
self He understands the tax laws, or If
he does not understand them himself, he
is able to employ the best legal counsel
to tell him how 10 arrange his invest
nents as to be i'm a safe position when
the assessment time rolls around. IL all
else fails he can move out or the state.
He Is smart enough to put the greater
part of his estate in forms of prope'
that he can easily conceal from the as
SCISSOR. The poor man can not do these
things. If he has been fortunate and
thrifty enough to save anything at all.
generally il first takes the form of n
savings account and then of a home.
He knows little nothing of stocks and
bonds. If he has savings account he
must conceal IL from the assessor or give
up practically the whole of its YIELD in
taxes. If he has not saved enough for a
home he still pays a tax on real estate.
for every man who lives under roof
must pay this tax, whether in exchange
B for a tax receipt from the sheriff, for
2 rent receipt from the landlord. There
< is no escaping it, And II the poor man
X In Kentucky has tried to buy home and
II has made partial payment on It, he
3 finds that the notes representing his de-
n ferred payments are also taxed. and the
Y lender may be trusted to arrange matters
A so that the owner of the property viii
I stand the burden of the tax on those
A notes, practically making him pay double
tQx to the extent or his unpaid purchase
Roney.
Costs the State Heavily.
have seen 1t stated recently that the
M assertion that our tax system has driven
capital from Kentucky and keeps other
capital from coming 70 Kentucky Is a
Il bald assertion not resting on facts.
have stated before. and repeat here.
that about three years ago by corre-
spondence and otherwise l. personally
traced more than five million dollars OF
capital that had been invested in Ken
I lucky. but had been recently closed out
L and taken from the state because H.
owners found that under more advan-
fageous tax laws elsewhere they could
get greater yields from their Investment.
This money was not taken from the
large centers of population like Louis
VILE II was taken from small commun-
tiles where the withdrawal OF 100000 or
100000 meant rather serious contrac-
ton in the available capital OF the com
munity.
We Need Outside Capital.