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

property tax In KENTUCKY. Let us sup
pose n man with thousand dollars IN
4 savings account in Louisville. Al the
prevailing rate OF interest. three per
cent. he would realize In one year thirty
dollars on his savings He would pay
SOC G. OF this 5000 IN taxes. do not
know what the tax rate now IL in Pa
ducah Several years ago II was $40
on the $1,000 II this. man had his thou
sand dollars deposited IN Paducah bank
at three per cent interest. he would
have realized 5000 a year from HIS IN.
vestmcnt. and he would have paid $3i.o
iSry In p2 Tdw e P Ss is for no S wong
der that out Of more than So. OO0 Oo0. 900 OF
savings IN the United states there are
barely S2oooO.0O In savings banks in Ken:
lucky. The more liberal policy pursued
nv the New England states has made
hat little corner OF our country the
great reservoir Of savings funds, the
hoarded dollars of people Of small means.
which IN the aggregate make such an
enormous sum. that every great enter
nrise with deserving bond issue 10 float
looks first to the New England market
Banks Protect Themselves.
1t Is often stated by people who have
not Investigated this movement for
revision of the tax system that It origi-
mates largely in the desire of banks to
escape from taxation. Let no one con-
matter. The tax on banks does not stop
there. There IL such thing as incl
denco of taxation, which In COMING
parlance merely means shouldering the
load off on the next fellow If a bank
has to pay a high rate of taxation 1t
gets It back from the borrower. If that
borrower Is a retail merchant he gets
10 back from his customer If the bor-
rover is the owner of real estate who IS
putting money into houses, he gets 1t
back from his tenants. who may be poor
men. In the end, the tax will be borne
by somebody else than the bank The
ulNlupnUS
its stockholders.
But I do not mean that too heavy a
tax on a bank has not an unfavorable
effect. The unfavorable effect of it is
uDon the community, however, as
whole Rather than stand too heavy
load of taxation the banks viii reduce
their capital and surplus, as many of
them have done i'm Kentucky. Under the
law of this State. the amount that can
be loaned by bank to any one individ-
ual or firm or corporation Is limited to
fixed percentage of the capital and
surplus of that bank. The result. there
fore Of reducing the capital and surplus
of banks Is to reduce the amount OF
credit that can be given and to restrict
the banking facilities Of our large mer-
camille and manufacturing establish
ments. This has gone so far that there
Is not large establishment In the state
to-day that can procure from its local
banks a sufficient line Of credit to carry
on its enterprise. Nor is there in Ken
lucky today on account of the heavy
TAX we put on capital ana banking de-
posits single institution or any group
of institutions strong enough to float
really big financial enterprise.
A FarsicaI Result.
Contrast with this the fact that for
1910 there We're listed in the state of
Kentucky for taxation bonds to the
amount of only S5,773.376. out of a total
assessment of SS2S, 275 022---or less than
bonds the amount listed of stocks and
money and they all amount to less than
10 per cent of the total, and without
mortgage notes (Which can't ESCAPED to
less than 5 per cent of the total. This
is absurd, but it is true. No man will
presume to say that this is more than
an infnitesimal part of the bonds ac-
tualiy owned in this State subject to tax
alton under the State laws as they
stand. OF this meagre amount nearly
one-half was listed in jefferson County.
How II Could Be Better Done.
There are ways of deriving revenue
from these classes of property that es-
cape in Kentucky under our present sys-
have shown, to tax savings deposits
yielding three per cent by the same
method and at the same rate that we use
in taking any other form of property
which pays fifteen or twenty or twenty
five per cent and which is fixed and visi
BILE In its character. The consequence is
that practically no savings deposits are
given in for taxation. In the New Eng
land States savings deposits are taxed
at rates varying from some thirty to
forty cents. This tax is paid by the
bank, and the bank adjusts it with the
owner of the savings deposit. The State
is certain of the revenue, since II is
content to take a reasonable percentage
of the income derived from the deposit
and 1t has no difficulty i'm collecting II.
1t is not forced to attempt to find this
property in the hands Of the individual
holder.
Can Be Brought Out.
1t may be urged that lowering the rate
on property of this character will not
bring 1t out for taxation. We can only
point to the experience OF other States
in this respect. Human nature is pretty
much the same everywhere. Most men
would rather be honest about their as
sessments II they can be so without suf-
fering confiscation. The change of rate
on this class of property has multiplied
State of Maryland within recent years.
and made possible the reduction of the
State tax rate to is cents.
Our Remedy in Kentucky.
But we are not at liberty in the State
Of Kentucky to adopt any Of the meth
DDS that have afforded relief to other
States, because of the restriction pm
upon our Legislature by the constitution
of the State. We are tied hand and foot
to the general property tax system.
| do not believe in crticsing withou'
proposing a remedy 1t is not proposed
that there should be any sudden and
radical CnanSe OF the revenue system
Immediately upon the adoption of the
proposed amendment to the Constitution
of the State. II the Legislature proposes
the amendment to the constitution ana
the people ratify II at the polls, the re-
suit up to that point will be merely tina
the Legislature is put I'm a position
where IL can begin the work OF revising
our tax system. The amendment does
not mean must" 1t means may"
it is wise the Legislature will revise
slowly The government must go on
Revenue must be had. Revision must
be cautions. 1t should preferably be as
sisted by tax commission gathering in
formation for the Legislature to act
upon. II should be along a consistent
line designed to end in a system under
which the sources of revenue shall
classified, certain property being taxed
for State purposes, and for State pur-
poses only; other property for Municipal
purposes and for Municipal purposes
only; still other property for County
purposes and for County purposes only
all property being taxed at some rate for
some purpose and for one purpose only.
that rate being as fairly as possible ad-
justed to the normal income from prop
erty OF that class and collected by the
method that will yield the largest re-
turns.
THAT is the proposition in a nutshell.
IL is not theory. Ii Is being successfully