The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-06-20
PEOPLES FORUM
Taxation of Banks.

Editor of The Virginian:
Sir.--I have just read in your today's issue
the letter of Mr.. O. G. Rucker. of Bedford City,
protesting against Our Inequtabe Tax Laws,
and I observe with much interest that he sets
the bank up fine example of a ''much-too-
little-taXed' corporation. l am quite sure that
the bankers of the State who happened to read
this article gasped quite audibly when the
writer's contention realized.
Evidently Mr.. Rucker is not familiar with
the law relating to the tax on bank shares ana
he could have gotten just the information which
he lacks by calling upon a prominent banker
of his city. Mr. J. ]. Scott, Of the Lynchburg
Trust and Savings bank. who is an active mem
Der of the taxation committee of the Virginia
Bankers association. which committee is just
waging a vigorous campaign for the cor
rection of inequalities in the existing bank tax
laws of the State.
1t is quite true as Mr.. Rucker states, that the
banks of this State not required to pay
State license tax. This is quite polite. A bank
is an institution organized and operated, not
alone profit producer for the investor as
many seem inclined to argue. but more par
ticuarly as a servant of the whole people. The
people appreciate this and use freely the ex-
! cellent banking facilities throughout the State
These people are protected in their dealings
with the banks by the government through le-
gally appointed representatives who make peri
odcal examinations of the banks affairs-but
not at the cost of the taxpayer He does not
have to pay for this protection The banks pay
for it.
AS taxpayers the banks of this State are not
eoualed by any other class of institutions, or
individuals, in the state. Banks have to pay
tax their combined capital surplus and un-
divided profits the same rate as a private
citizen pays his property. And this tax is
paid every dollar of the ACTUAL book value
of these combined assets of the banks-Very
greatly unlike the tax on real estate and per-
sonal property both of which practically
always assessed away below the actual market
value The law requires the banks to conduct
their affairs in such a manner that this actual
value can be readily determined
Yes banks pay an income tax. just as other
corporations do. They are required to make a
report to the collector of internal revenue each
year. setting forth the amounts of their incomes
from various sources and are assessed accord
ingy.
Below / quote from little booklet recently
gotten out by the taxation committee OF the
Virginia Bankers association, which booklet is
entitled "A Plea for Justice:
4 Z" Willing to pay their proper taxes and
asking only the Justice due every citizen, do the
bank shareholders get it? glance at the law
will show that they the heaviest taxed citt-
zens in the Commonwealth, and that the money
they have invested in an important industry
is more heavily taxed than the Ike capital in
any legitimate business in the Commonwealth.
Merely because they could not evade taxation
thanks to the salutary laws Wnch require IRE
quent public examlnation-the banks nave peeh
forced to pay out of proportion to every other
business in Virginia.
Mr.. Jones. for instance. owns piece Of real
estate in Richmond worth $4,000. He lives in
a city where the assessment is high tb5 per
cent? and he feels that he is burdened when
he has to pay taxes to the State at 35c and to
the city at s1;40 His bill is S2S4.3s. Mr. Smith,
in the city, puts $4,000 in bank stock
because he prefers that form Of investment.
But instead of paying on 60 per cent of his
capital he must pay on every dollar of it, and
has a tax Dill OF S33f.op. NO man can claim
that this bears any sembance of justice.
Take the case in rural community.
One farmer invests his profits in land; another
puts his available capital into the stock of a lit
tie bank which is building up the community.
The former will pay hardly more than 40
per cent of the real value of his property, while
the latter will pay on fun 100 per cent valu-
alton. The result is that on property of the
same actual value the owner of bank stock pays
two and one-half times as much as the owner
of real estate.
In view Of the fact that the bankers of the
State are doing their best to urge the legisla-
ton of equitable tax laws, feeling that they
are more oppressively burdened than other
taxpayers, and have appointed special repre-
sentative for the purpose of Canvassing the
State In the interest of the proposed law 1t is
quite startling indeed that Mr., Rucker should
come at this time in this manner upon the
subject.
/ trust that the people Of this State who read
the article will not be influenced in the belief
of Mr.. Rucker who evidently did not investi-
gate the matter before writing
Yours very truly,
II. L. ELEY.
CORTLAND. Va.