The record., 1911-01-19

credit n It could no; float its bonds at {,
OF these changing condltions-wlth ths
tax rate going higher and the yield from
this class OF property going lower-ha:
Decn that the owners OF this kind oi
property Will not list IL for taxation when
the tax rate tnkes anywhere from 10 "a
Is per cent OF the income yielded by that
property: Therefore. more and more OF
this kind OF property has gone into hid
Ing. and though such property forms ev-
cry year larger part OF our total
wealth. IL yields steadily n smaller pro-
burden OF supporting the government
Ialls more and more heavily upon real
estatc and other forms OF property that
can not be hidden. ,
II Is In order to cure this Injustice and
the evils attending II and resulting from
u that the revision II urged In Kentucky.
The evil has been corrected elsewhere.
II can be corrected here. The States Of tho
Union are rapidly abandoning this sys.
tenn. Ms state has ever succeeded in de.
Nlslng system OF penalties and assess,
menis or equalization that could compel
this intangible movable property To stand
and he taxed when the tax rate amounts
10 contscation OF so large n part OF the
income
How II Works In Kentucky.
Now let US look at the situation ir
kentucky The state tax is 80 cents
There You have already tax rate quite
as high as sOme Glasses OF property car
easily stand But we do not stop there
Under our law on top OF this 5O-cent
state tax must he put the county tax
which. taking the state over. VIII aver
age not far from 50 cents. This gives NJ
tax rate OF 81. too high for many. and
the process OF hiding gets well undei
way.
Nor do we stop here. On top OF this
state tax OF 50 cents and the county tar
OF 80 cents there Is still imposed n loca
tax ranging all the way from 80 cents e
"A Nrk.. geN
every or 10 cents added 10 the rat,
more and more property Is eliminated bl
hiding or undervaluatlOn. The average
tax rate In cities and towns OF FIRST. SEQ
ond. third. fourth and nth classes IL
Kentucky Is about t222 This amount
10 about 5 per cent OF the return from
any I per cent investment. II amoun.l
10 little under Is per cent of the returI
you aGSly II to per cent investment
such as savings account. II takes near
" % ner cent OF the income. Not ever
TIE widest EXTREMIST would propose az
income tax OF * TO Is per cent Yet tha
Is what we try TO collect from SOM
classes Of property. II Is too much z
expect OF weak human nature IL is
stupid defiance OF economic laws as wei
rs OF the law OF human nature. Whel
any tax takes more than 10 per cent oi
the income from any class OF property.
The larger the percentage OF income
taken by tax the greater Incentive Ia
evasion. undervaluathon- aud perjury IN
order 10 escape the burden. until you
on a tax rate already high does not
yield proDort.onate Increase OF reve-
nue..
We Have Tried Il Nineteen Years.
We hxcd this system I'm 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 It. the
system was being abandoned elsewhere.
IL h not yielding sufficient revenue for a
progressive state. IL hampers industries
II burdens the poor man. Ii drives capi-
tai out OF the state. or into forms or In
vestment that do no. promote business
activity and do not furnish employment
OF the state.
II Is a mistake TO suppose that Il IS the
rich man only, or chiefly. who has n
cause OF complaint against the present
tax system. The rich man can take care
of himself. and does take care ~ him
self. He undersf aNts ire INK laws. or II
3 ee kbie HS- to sfSbft ne ses T Tisssi Sdhssf
10 tell him how % 30 nrraugc his invest
ments as to be ia safe position when
the assessment time rolls around. II AL
He Is smart enough to pot the greater
part OF his estate In forms OF property
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 10 save anything at all.
generally II first takes the form of
savings account and then OF home.
lie knows little or nothing OF stocks and
bonds. II he has a savings account he
must conceal II from the assessor or give
up practically the whole OF Its yeild In
taxes. II he has not saved enough for
home he still pays a tax on real estate.
for every man who lives under roof
must pay this tax. whether In exchange
for n tax receipt from the sheriff. or for
n rent receipt from the landlord. There
Il no escaping IL And II the poor man
I'm Kentucky has tried to buy home and
has made a partial payment on II. ne
hnds that the notes representing his de-
ferred payments are also taxed. and the
lender may be trusted TO arrange matters
so that the owner OF the property will
stand the burden Of the tax on those
notes. practically making him pay double
money.
Costs the State Heavily.
] have seen II stated recently that the
assertion that our tax system has driven
capital from Kentucky and keeps other
capital from coming tn Kentucky Is a
bald assertion not resting on facts
have stated before. and 1 repeat herr.
spondence and otherwise l. personally
traced more than hye million dollars OF
capital that had been invested In Ken
tucky. but had been recently closed out
and taken from the state because Its
owners found that under more advan-
tageOus 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 whore the withdrawal Of 10000 or
t2oo.ooo. meant rather serious contrac-
ton In the available capital OF the COM
muniiy.
We Need Outside Capital.
Y
very startling statement made by a
speaker at a public gathering that we
do not need foreign capital In Kentucky.
/ am quite sure no editor OF Ken
Practically ali Of the development Of
the resources Of Kentucky that has
taken place has been by the aid OF for
cign capital. II must have been 80.
We did not have the capital ourselves.
II we do not get II from the outside.
we would not have II at all. The de-
velOpment now going on In Eastern
Kentucky is almost wholly by means
OF outside capital. We need this out
side capital. We want II to come. We
want u TO stand for Its fair share Of
the burden Of our expenses IL IS not
proposed to exempt II from taxation In
order 10 get II. but II Is proposed TO ad-
Just the taxes upon every form OF capt.
tai that comes with a reasonable view
10 the profit 1t expects to yield its own
ers and also with an eye out for the
competition between one State and an
other in the advantages offered for such
investments.
Some Absurd Results.
Let me point out n few OF the absu-di-
ties I'm practice In enforcing the general
property tax in Kentucky. Let us sup
pose n man with thousand dollars IN
a savings account In Louisville. At tho
prevailing rate OF interest, three per
cent, nc would realize In one year thirty
dollars on his savings. He would pay
326s5 OF this 5000 IN texaeR. 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 a Paducah bank
nj three per cent interest no would
have realized $500 a year from HIS IN
vestmcat, and he would have paid $5i 90
I'm taxes paying a penalty for being
eh~tft., Tn x,iau ~ fhfa ~ - ~ u,ov-