The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-04-11
HOST OF EVILS
/. CONCEALED IN
!: MILLS TAXLAW
Threatens Higher Loan
Rates and Decreased Re-
turns for Investors.
OPPOSITION TO BILL
VIGOROUSLY VOICED

|. The tremendous evil effects that would
be caused to business in this city and
: throughout the State by the enactment
. of the bill introduced in the State Legis-
: lature by Senator ogden L. Mills to
provide for additional taxation on
, secured debts were pointed out yester-
day. Men who have studied the measure
T, closely said emphaticaly that II would
1 either increase the borrowing rate of
money or 1t would lower the returns to
J the investor possibly both.
One of the far reaching results OF
T. the enactment OF the measure into law.
they said, would he to drive from the
state a great amount of the business
now done through trustees, guardians,
. executors or administrators holding
millions OF dollars worth OF securities
that would be taxed under the new law.
The proposed legislation plans taxa
ton of bonds secured by property out
side the State 1t provides first for
! registration fee of s. on every bond OF
81 900. running for Ave years or more.
! and hen an annual tax of 81 80 so long
as tire bond pays interest That tax is
! to be levied on individual investors, do
nestle corporations, joint stock COM
,paries. agents. trustees. guardians.
executors or administrators holding such
taxable securities for persons within
the State or outside the state.
Would Drive Funds Away.
There IL no city In the country and
,probably few In the world. whore so
imuch money Is placed In funds for vari-
lous beneicisres or where so many Sc
'curities are held in trust for various
ipersons outside the state. Many of
Those funds have been established here
because New York is the financial CEN
tire of the country and the establish
ment of the funds in turn has given
lmore business 20 the state
The imposition OF $50 on every ST.
900 par value of bonds thus held. BUSH
ness men said yesterday. will tend to
drive those funds out OF the state. Trust
funds lawyers said, are revocable. The
result VIII be that New Jersey. Phil
adelphia or Boston will get the bust
mess.
Akin 10 this is the belief that there
win be an exodus Of wealthy residents
from the State. What the new tax
would mean TO Andrew Carnegie, for
instance. may be computed by figuring
iup one and one-half mills tax on 5000
600. 900 or sioo, 100000 Il IS predicted
that wealthy men. who have their resi-
licences In this state will establish nom
inal residences at their Skinner homes
,or in States where they az accustomed
Ito spend a few months every year.
4 New York will be "A loser not only to
the extent OF the tax they now pay, but
!. also at the time OF their death, for the
State will not get the inheritance tax.
Just what the annual tax on secured
ldebts means can be figured out In an
iother way. namely In comparison with
1.-THE national income tax. That shows
THE likell hood OF there being a change
jof residences with the enactment OF the
llaw.
The holder of 81 900 bond on which
Interest has not been defaulted during
1.-THE year must pay $3.50 tax 10 the State.
II II is per cent bond his interest
would be $50 and his income tax thereon
will be so cents. In other words. the
proposed taxation will hc three times the
Income tax. still further. II the bond
ipays 1 per cent or 3ia per cent. the
Interest would he $40 or s35 respec-
lively. but the State tax would be the
same, In other words. the higher the
class of the bond the more expensive it
will be TO the investor.
Analysts of the measure pointed out
further that eventually the Increased
taxation must be borne by the borrower
and that the general effect OF the hill
will be detrimental to the business and
manufacturing interests throughout the
State The borrowers Will have TO pay
more for their money in order TO pro-
vide for the taxation arid thus make
bonds as inviting as ever to the in
weston.
Still another feature OF the measure
that has been overlooked Hes In the
clause OF the proposed bin regarding the
class of indebtedness subject TO taxa
ton. The act now IN force provides for
permissive registration of bonds, and re-
fers specifically to bonded Indebtedness,
but the present bill, in making the deflni-
ton OF secured debts" says:
"a bond. note debenture. certificate
or other evidence of Indebtedness. or
other obligation for the payment of
money or its equivalent, whether form
ing part of a series or otherwise" which
obligation by its terms is payable one
lyear or more from date"
Promissory Notes Affected.
Men who read the measure carefully
asserted yesterday that tho word
mote" refers To promiseory notes hav-
Ing more than year to run. In other
words, the business man who borrows
money for more than a year faces the
necessity Of insuring the man who let's
him have the money against the $3.50
tax per thousand under the proposed
debt taxation law,
That phase OF the law viii apply spe-
,cially 10 private hanks, for they would
'be taxed on the basis not only Of the
bonds they hold but also on notes rum
,ning FOR more than a year state barka
land trust companies. % course, must
lmake a return of all the taxable bonds
and notes they hold and IL the total
amount of the tax payable on such in
debtedness Is greater than the tax they
lalready pay under the state banking
law they must pay the State In addition
to their regular tax the difference be-
tween the total and the bank tax.
I The point further il made that no tax
lis laid on real estate In the provisions
,of the bill, whereas, us a matter OF fact
1.-THE 4. per cent, recording tax on mort
lgages has really been evaded In some
instances Lawyers pointed out that
the legislators had no, taxed real es-
tate because they wished TO win the
favor of the farmers and the real es-
tate interests
The Investment Bankers Association
,of America Is opposed 10 features OF the
Mills bin, Robert Il, Reed of III Broad
way, OF counsel 10 the associa ton, issued
ia statement yesterday in which he said !:
THE Mills bill liz a marked improve
iment over the Tamage bin in all re-
,spects excepting one, and that Is the i'm
position of a compulsory registration tax
OF - per cent This with an aunul tax
~ I've mills commencing Immediately
will have disastrous effect on present
values Of Investment securities, which
are already SELLING at the lowest price OF