Bisbee daily review., 1914-01-14
CORPORATION TAX LAWS REVIEWED FOR THE PRESIDENT
Commissioners Davies Consid- CTS Wisconsin's Income Sta tute Important in West

w OANp oN itt islation throughout the United States during 1912 is reviewed in a final re- port on taxation of corporations pre- sented to President Wilson today by Commissioner Davies of the Bureau of Corporations. One of the striking features of legislation reviewed Is New york's secured debts law of 1911. ! The Wisconsin income tax law of 1911 is considered the most important tax | legislation in the Eastern Central and | Western Central States New York's 'secured-debts" law, en- acted in 1911, extends system of tax ation whereby foreign. as well as do- nestle. mortgages, and the bonds. notes, or other evidences of debts se- cured thereby. are, upon the payment of a single fee (one-half of 1 per cent of face value). exempt from all sub oequent taxation.
 This system has been severely con demned. because 1t taxes unequally items of property of the same class, because 1t may deprive the State of | the right to tax in the future proper tv worth millions of dollars, and be. cabse 1t permits corporations, upon the payment Of nominal fee, to ogeis | tax free, entire issues of long tern bonds. tlius placing the sale of tax exenipt iailroao and industrial seeur- itics in direct competition with the | sale of tlie taA-exempt state. county. | and municipal bonds. It has. however. | heen commended upon the alleged ground that experience in New York has proven that at the previous tax rate tone half of 1 per cenD an an nual tax on mortgages has had de. ciced tendency to raise the rate of | interest tlcreon that bonds and oth- CT taxable intangible personally have senerally escaped taxation. and that the annual yield from this system Is almost wholly new-found revenue, collected at a comparatively small cost.
 Whether the competition between tax.;ree Trivate and public securities has a tendency to lower the market price of the latter and whether an annual tax on mortgages increase in- terest rates thereon, are questions hardly susceptible of definite proof. and the question of the legal right of the legislature to guarantee that se- cured debts thus taxed thereafter be tax free, is still unadiudicated
 The inequality of the present sys. tenn may be clearly shown by an ex. ample: Thus, ten-thousand- dollar mortgage given for term of three years is required to pay exactly the same amount of tax as a ten-thousand- dollar railroad bond mat uring in % years. Assuming that each bears an. nual interest at the rate of , per cent, the total income from the bond will be more than eight times that from the mortgage, while the amount of tax paid in each case, namely, $50 equals 3 1-3 per cent of the total in come from the mortgage, 1t equals but O.f of l per cent of the income from the bond
 From financial standpoint, the system, up to the present. has been productive of larger revenues to the State. During the first year of the op. eration of the "secured-debts" tax
 1912), which deals With foreign se- curities, the tax yield amounted to nearly s1.50O,0OO. Comparative data, however. are not obtsinable for former years. Between 1907 and 1912 the an nual tax yield from the mortgage recording" tax, which deals with do mestic mortgages and their accompa. nying securities. average about $3,S00.. 900.
 "Other noteworthy features are the decided trend toward greater central ization of the adminis.i ation of tax laws and the classification of property for taxation purposes" says the re port. Wisconsin is leading example of the one and Rhode Island of the other. Wisconsin, by it's income-tax law, centralized it's administration ol assessments and successfully reached intangible property without employing tho classification method. Rhode Isl
 ana mas adopted the classification method under which selected classes are separated from the general prop erty of the state, and each related class is taxed at rate which differs : from the general-property tax rate. Legislation with respect to the es tates of nonresident decedents is also noteworthy. By reason of the lack of , uniformity of state laws, such estates are sometimes subject to taxation three, and even four times Massachu
 sets, however. has recognized the principle of taxing such property but once, namely. by taxing the real es
 tate only. Personally Is not taxed
 since such property usually passes in
 accordance with the law of the ju
 risdiction where the decedent is dom iciled, New York, in addition to tax ing real estate, taxes chattels located in New York, and Wisconsin has i. passed inheritance tax <, Legislation i looking towafdSa complete physical ft StaHIS basis for taxatiop 1" N