The citizen. [volume] (Berea, Ky.) 1899-1958, 1911-01-12

camille and manufacturing establish
ments. This has gone 30 far that thcre
II not large establishment In the state
to-day that can procure from Us local
banks n sufficient line % credit TO carry
on It's enterprise. Nor Is there In Ken
lucky today on account OF the heavy
tax we put on capital and banking de-
Of Institutions strong enough TO Goat q
really big financial enterprlse.
A Fsrsieai Result.
Contrast with this tho fact nat for
1910 there were listed in the State OF
Kentucky for taxation bonds 20 the
amount OF only S,03g6. out OF "a total
assessment Of $50, 275.0 22--or less than
seVen-tenths OF one per cent. Add to
bonds the amount listed Of stocks and
money and they all amount to less than
mortgage notes (Which can't escaped TO
less than 5 per cent 81 the total This
Is absurd, but II IL true. No man Will
presume to say that this IS more than
tually owned IN this state subject to tax
alton under the state laws as they
stand. or this mcagre amount nearly
onc-haf was listed IN jefferson County
The tendency Is 10 give in less and less
OF this kind Of property You can not
expect men to give 80 In when they know
that TO do 30 II 10 surrender anywhere
from 40 TO Is per cent Of the incor1e.
all OF this five and threc-q11rtcr million
dollars Of bonds listed for taxation in
Kentucky belonged 20 dependent people
and represents money left them by hus-
bands and fathers. who thought In this
way TO provide for the future Of their
families. The laws Of the state do not
permit the investment of funds In any
thing but the most stable ~ securities.
You can not buy really sound STANDARD
bonds that will pay more than per cent
on the Investment and vet the very law
which says the trust funds must TIC in
vested In this class OF securities, In the
same breath says that OF the . per cent
Weld on The investment. the state. cOun-
ties and municipalities may take more
than one-half in taxes.
How II Could Be Better Done.
There are ways OF deriving revenue
from these classes OF property that es-
cape I'm Kentucky under our present sys-
TEN. Let me illustrate. We attempt. as
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
I've per cent and which is fixed and WISH
Bile in Its character. The consequence IL
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 II with the
owner Of the savings deposit The State
IL certain Of the revenue. since u Is
content to take q reasonable percentage
Of the income derived from the deposit
and II has no difficulty In collecting u.
II Is not forced TO attempt to find this
property In the hands % the individual
holder.
This. % course. docs not cover the
bonds OF corporations outside of the
state. but the same wise policy OF making
the rate lower removes The temptation
10 conceal this class Of property. and the
property more than SGs0.Dpa OF revenue
a year. or course. Pennsylvania IA an
enormously wealthy state. But IL has
gotten wealthy partly because ~ its en-
coura ging all forms Of Industry by wise
tax laws. In natural resources II has no
advantage over the state Of Kentucky.
Can Be Brought Out.
II may he urged that lowering the rate
on property Of this character viii not
bring II out for taxation. We can only
point TO the experience Of other states
In this respect. Human nature IL pretty
much the same everywhere. Most men
would rather be honest about their as
scsspents II they can he so without suf-
fcrinS confscation. The change OF rate
on this class OF property has multiplied
the revenue from II many fold in the
State OF Maryland within recent years.
and made possible the reduction OF the
State tax rate 10 l6 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 pr
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 criticIsing withou
proposing remedy II Is not proposeS
that there should be any sudden and
radical change OF the revenue system
Immediately upon the adoption of the
proposed amendment to the Constitution
OF the State. IL the Legislature proposes
the amendment 10 the constitution an
the people ratify II at the polls, the re-
suit up to that point viii be merely tha
the Legislature Is put In n position
where Il can begin the work of revising
our tax system. The amendment does
NOT mean must" 1t means may"
u Is wise the Legislature will revise
slowly. Ths government must go on.
Revenue must be hat. Revision mus I
he cautious. 1t should preferably be as
sisted by tax commission gathering I'm
formation for the legislature to ac'
upon II should be along n consistent
line designed to end IN "A system under
which the sources OF revenue shan
classified. certain property being take
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
an IN opcrty being taxed nj some rate Tor
some purpose and for one purpose only.
that rate being as fairly az possible adj
1usted 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 nutshell.
II is not theory, 10 "a being successfully
done. Fourteen States have now &C
shaped their constitutions that thy may
DO Il. And at every step Of the progress
from the old method to the new.
work would be in the hands OF n
chosen representatives Of the people.
The Goal To Be Reached.
The formulating OF the new system
and the working ont q. its details shou
be done most cautiously. but always
with "A view to finally REACHING a POI
where the state would raise Its ontir
revenues from one class ~ property
the Counties from another class pi
property, and the Cities from still an.
other. Under such n system, when CON-
pletely In effect, farming lands would
be taxed only for local purposes. They
should not pay cent OF tax for S'a'e
purposes No kind q; property taxed for
State purposes should be- taxed for local
nurposes and none taxed for County or
CITY purposes should be taxed for State
purposes.
by this separation ~ sources OF revenue,
we avoid that piling NJ of ono tax rate
ON another which makes the burden 90
heavy IN Kentucky. and by this classify e
ing Of property according 10 its capacity
for standing "A tax proporti0nate 10 the
income II yields, We remove the incen-
tive which our present system furnishes
10 naturalization and evasion and per
turV