The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1911-12-09

than six per cent TO ordinary borrow
ers OF ordinary amounts. Under
special conditions, il is sometimes
possible TO shade this a trifie, but not
often. The loaning rate is fixed by
conditions themselves right around
six per cent. We have stated above
that this loaning rate is too high
TO encourage new, or the develop
ment of established business, with
the other risks and outgoes attend
ant.
We believe that the loaning rate
in Vermont on reasonably good Sc
curtiy should not exceed five per cent
and that if it did not there would fol
low a most notable Improvement in
active business conditions. We be-
lieve it is possible to lower the loan
ing rate to five per cent without
great disturbance of conditions, or
loss of state revenues, and that what
ever was sacrificed there would be
made up many times over in the gen
eral uplift that would result.
How would we accomplish this?
BY the simple expedient of chan
ging the law with regard to the state
tax on bank deposits, in these two
particulars
LIST. Increase the state tax rate on
deposits of savings institutions from
seven-tenths of one per cent to one
per cent.
end. Exempt all loans by such in.
ctitntfopc OF tho ipfaract rofa Of Gvo
per cent or less. We would make
this exemption general, to all such
loans placed by any institution, com
pany or individual.
1t is not assured that the seven
tenths per cent bank tax rate fixed
years ago as the result, we presume
of some compromise of views. is ar
bitrary and cannot be changed. 1t
ought to be when changed conditions
demand it, The effect of an increase
to one per cent would be to reduce
the banking rate for loans in this
state to five per cent, or to the point
where the banks could avail them
selves Of the exemption provision. II
would tend to keep Vermont money
at home at this rate, since on the
money sent outside the banks would
have to pay the increased tax rate.
The increase rate would TO some
extent, reimburse the state treasury
for its loss through the operation of
the home loan exemption, though
there would undoubtedly be some fall
ing off in revenues from this source.
Another effect would be a small re-
duction CT the earning power of
bank deposits. With an income rate
virtually fixed at five per cent, not
many banks could pay quite four per
cent 10 depositors. But all of them
could easily pay three and one-half
per cent, and in our opinion this is
enOugh-as much as the active earn
ing power of money warrants Many
banks now find 1t extremely difficult
TO pay four per cent, and II is only
within a few years that we have be-
come accustomed to this high rate
light lowering OF the dividend rate
might even be attended with indirect
advantage il might induce people
we'll able to use their own money
actively to do So
With the five per cent exemption
open to everybody, the banks would
not have monopoly of loanng
There would be a wider margin than
there now is between the returns of
individual loans at this rate and what
the money would earn the owner
through the banks Accordingly, We
should see the business man or wo-
man, capable Of placing money safe
ly, do so directly, in many cases
where the rules of banks would not
sanction loans, to the evident advant.
age Of all parties and the public,
The one chief merit OF this plan
would be an absolute assurance of
relief and Improvement for the Dor
rover He would get the five per
cent rate. else the lender could not
claim the exemption Unlike the
fat rate idea, the initial and positive
advantage would come to the needy
debtor. instead of being conferred
on the creditor, with the prospect
that in fltering down through to the
debtor il would get lost somewhere.
Stocks would still be taxed, as they
ought to be, being investments IN
business that depend on the business
for returns, the same as the farmer >
investment in his land No material
loss in local grand lists would ensue,
since very little money is now taxed
TO the owners. We believe II has
other merits over the fist rate plan,
and in future article or articles We
shall refer to various features of il,
as we'll as to other steps that we be
lieve will mean tax reform Ran.
dolph Herald and News.