The citizen. [volume] (Berea, Ky.) 1899-1958, 1911-01-12
How IL Works In Kentucky.


of property. and the process Of hiding
gets well under way.
Nor DO We stop hero. on top ot thls
state tax % ~ cents and the county tax
~ 30 cents there Is still imposed a local
tax ranging all the way from 90 cents 10
NN. and sometimes higher. and with
every or 10 cents added TO the rate
more and more property Is eliminated by
hiding or characterization. The average
tax rate IN cities and towns OF FIRST. sec
ond. third. Fourth and hfih classes IN
kentucky Is about SO. This amounts
to about ~ ger cent OF the return from
any per cent Investment. II amoun' 3
10 a little under q per cent OF the return
from any 8 per cent Investment. and u
you apply 10 10 per cent Investment
such a. a savings account. u takes near
ly - per cent oi the Income. Not even
the Widest cN'r"mcst would proposc an
Income tax OF u to IS per cent. Yet that
classes Of property. 70 Is too much %
expect Of weak human nature. IL Is a
stupid defiance Of economic laws as wei
as ~ the law Of human nature. when
any tax takes more than 10 per cent NJ
the income from any class Of property,
naturalization and evasion Will begin
Tho larger the percentage Of income
taken by q tax the greater incentive 10
evasion. differentiation and perjury In
order to escape the burden. until you
reach n point where 10 pile further taxes
on a tax rate already high does not
yield a proport'onate Increase OF rcve-
nue..
We Have Tried II Nineteen Years.
We fixed this system In the new con-
stitution nineteen years ago. our intcn-
tons were good. We acted with the best
light We had nj that time Unfortunately.
however. nj the time we adopted II. the
system was being abandoned elsewhere
10 Is not yielding sufficient revenue for
progressive state. u hampers Industries
" burdens the poor man. II drives cap!-
tai out 81 the state. or into forms Of In
vestment that do not promote business
activity and do not furnish employment
90 labor and ID not develop the resources
~ the state.
n Is a mistake TO suppose that II is the
rich man only or chiefly, who has a
cause Of complaint against the present
tax system. The rich man can take care
Of himself and does take care Of him
self lie understands the tax laws. or ~
he does not understand them himself. h"
Is q bile to employ the best legal counsel
20 tell him how 10 80 arrange his invest
ments as 10 be In q safe position when
the assessment time rolls around. IT all
else fails. he can move out ~ the state
lie Il smart enough to put the greater
part Of his estate In forms OF propc
that he can easily conceal from the as
SCISSOR. The poor man can not DO these
things II he has been fortunate and
thrifty enough to save anything at all
generally II FIRST takes the form Of q
savings account and then Of n home
lie knows little or nothing OF stocks and
bonds. II he has savings account he
I
up practically the whole Of It's yeild in
taxes. II he has not saved enough for a
home he stu pays a tax on real estate
Tor every man who lives under n roof
must pay this tax. whether In exchange
for tax receipt from the sheriff. or for
4 rent receipt from the landlord. There
"a no escaping a. And II the poor man
n Kentucky has tried to buy a home and
finds that the notes representing his de-
terred payments are also taxed. and the
lender may be trusted 20 arrange matters
- that the owner 81 the property wiz
stand the burden Of the tax on those
notes. practically making him pay double
tax to the extent Of his unpaid purchase
money.
We Need Outside Capital.
u has not been long since heard the
very startling statement made by a
speaker at public gathering that we
10 not need foreign capital I'm Kentucky.
I am quite sure no editor Of Ken
lucky newspaper VIII Pgree TO this.
Practically all OF the development OF
taken place has been by the aid Of for
cisn capital II must have been 50.
We dld not have the capital ourselves.
" We do not get IL from the outside.
we would not have Il at all. The de
yclopmont now going ON in Eastern
Kentucky Is almost wholly by means
% outside CAPITAL We need this out
side capital We, want q To- come. We
tho burden OF our expenses, II is not
proposed 10 exempt u from taxation in
oider 20 get II. but II IL proposed 10 ad-
Just the taxes upon every form Of capt.
tai that comes with "A reasonable view
q the profit Il expects to yield it's own
ers and also with an eye out for the
competition between one state and an
other In the advantages offered FOR such
investments.
Sor,e Absurd Results.
Let me point out few 90 the absurdl-
iies I'm practice in enforcing the general
pose man with thousand dollars IN
4 savings account In Louisville. At the
prevailing rate OF interest. three per
cent. he would realize In one year thirty
dollars on his savings. He would pay
SaG65 Of this 5000 In taxes. I do not
know what the tax rate now is In Pa
ducah. several years ago. II was 81 10
on the $4,000 II this man had his thou
sand dollars deposited In Plducah bank
at three per cent interest. he would
have realized $500 a wear from his IN.
vestmcnt, and he would have paid s3i o.
thrifty. In view OF this. Il Is no won,
der that out OF more than 5000. 10000 OF
savings IN the United States there are
barely 81 OG0. coo I'm savings banks in Ken
lucky. The more liberal policy pursued
hy the New England States has made
that little corner OF our country the
great reservoir 81 savings funds. the
=
which In the aggregate make such an
enormous sum. that every great enter
prise with n deserving bond issue 10 float
looks first to the New England market.
Banks Protect Themselves.
II is often stated by people who have
not Investigated this movement for a
revision of the tax system that II orig
mates largely I'm the desire OF banks to
escape from taxation. Let no one con-
Germ himself about the banks In this
matter The tax ON banks does not stop
there. There is such a thing as Incl
dence OF taxation. which In comm
parlance merely means shouldering the
load on on the next fellow, II a bank
has TO pay high rate OF taxation II
Pets Il back from the borrower. IL that
borrower Is a retail merchant he gets
II back from his customer. II the bor-
rover Is the owner OF real estate who Is
putting money into houses. he gets II
back from his tenants, who may be- poor
men. In the end, the tax Will be borne
by somebody else than the bank. The
bank Will continue to earn dividends Tor
It's stockholders.
But | do not mean that too heavy a
tax ON bank has not an untavorable
effect The unfaNorable effect OF II Is
upon the community. however AS a
whole. Rather than stand too heavy a
load OF taxation the banks Mil reduce
their capital and surplus, az many OF
them have done In kentucky. Under the
law OF this state. the amount that can
be loaned by bank To any enc indlv'd-
ual or firm or corporation IL limited 10
a liked percentage of the capital ami