The Bridgeport evening farmer., 1916-07-27
World of Finance
i AVIATION OF SECURITIES
ANALYSIS BY
HINCKs BROTHERS & co.

cufsg energetic, honest and ingenious CT A1bHjknissfoner have resulted in oT1I36fh1&to many security owners an oWnkening sense of their situation as regards the taxation of their securities.
 The tax commissioner Is trying to enf0rce the laws as they exist, in which etfogt he should have the support of all rood citizens. But in carrying out the Jaw as it stands, he is necessarily ealing sattention to what the law is, {, andeH 1 safe to say that the existing law na4ets with the disapproval of many people. In occasional cases 1t seemA to involve a very real hardship. For instance: we know of case whore woman died leaving but lit- t1e in her estate--in fact about all she left of value outside of savings bank depcait was some jewelry--a diamond 0r sn<-whiclf the appraisers on the es- {at0Hkut down at $500. Under the hW23fz1915 a tax of 2 per cent. per &hn1n7 for five years preceding her ASath was assessed on this -jewelry 6nnsi1he she had never paid taxes on ' ff during her lifetime, and the Wo- <map,s estate was mulcted to the ex- !. tent of 10 per cent. of the value of i. thigs jewelry by reason of this omfs- sion. Probably the poor woman had never dreamed of paying taxes on her ' 1aKelry. Almost any day you will see Sdn thA papers an item or two regard { i4e the penalty-tat assessed against somoonets estate because of this fail ure to pay taxes in his lifetime. Many of those seem like hard cases. Per hapa the hardest case we can imagine is that of holder of a small-town l. nota. Ordinarily the selectmen of ! small town, when money is needed. proceed to borrow it by sort of fore cd loan process from some of the wealthy citizens. and in a great many 2 instances make the note at per cent. rate. The holder of this note, 1 thiIe he has security which is fun l dAfnentally good. generally takes 1t t 8nder mild protest. 1t is difficult to ! ind any market for it, and there is no { opportunity to make a profit by ap- ] iprociAtiou in it's value. It never oc- ours to the holder that this note is \ taxable. and if he dies after holding z 1t Ave years, he will have a tax of per cent. . year for i've years against hiss loan to the town will have shown hAm . net rate of only 2 per cent
 HoWever. 1t is . condition and not R tkecr3 withjwhich the security hold- IT q Connecticut is confronted. and ! the vital question Is what to do under the circumstances,
 There are two courses which the se- yCurity holder can follow:
 z {1) Pay taxes on his taxable se- ! curities at the rate of four mills per ]. yo4r on theif par value, making pay- { nuent to the state treasurer in lieu o1 bayinG the local tax
 M0 Sell his taxable securities and 1 bUy non-taxable ones.
 This leaves us to inquire what are !, taxahle securities. and what are non- ! tpxable securities. As the non-tax- ables are much less in number and <, ara more easily classified, we will answer the question by defining non l taxable secuTitiee and adding the z st&tenpent thAt all other securities are tadlb3 4 < 2 rs Hy the law of 1915, steam railoads street railways, as we'll as water. gas electric and power companies, pay a ! tax to the state based on their gross ' or net earnings as the case may be and the law specifically provides that {, the owner of any share of stock, bond or other evidence of indebtedness o1 such corporation shall be exempt from taxation thereon.
 So the bonds, notes and stocks o1 any steam railroad, trolley. water gas, electric or power company locat. ed in Connecticut are exempt from taxation.
 A question of some difnculty arise, as to tthe taxability of bonds of rail roads whose lines are only partly lo < cated in Connecticut. such as the New z England Railroad Issues, and of lesI difficulty with regard to the Harlem River & Port Chester bonds, all O. whose lines are, ,locatedlin New York In our best Judgment, the New Eng land Railroad bonds may reasonabl, and justly be deemed non-taxables be cause of the lines being so largely To cated in Connecticut, but we think tn, bonds and notes of the Harlem Rive & Port Chester Railway, although tn, property is entirely owned by thu New Haven" are subject to tax be cause the entire mileage is outside O
 Connecticut. Also the Providenc, Securities As are perhaps subject t, tax although guaranteed by the %''Nev z Haven," and representing an invest
 ment all of which Is owned by tn,
 sNeW Haven road. It is elaine, by some, however, that the 'New Ha ven'' guarantee on these bonds is s, broad and inclusive as to render then primary obligations of the '.Now Ha ven" road Furthermore, in a lat < report issued by the New Haven road these bonds are listed among tn assumed obligations. If they are pri
 mary obligations of the New Haven,
 or if they are assumed obligations. W, feel that the bonds may properly b. regarded as non-taxable, although w
 admit this is a very delicate point an, < court decision might run to tn
 contrary. Any bond buyer who be lieves in the "New Haven" guaran tee---for there isn't much else of sub stance to these Providence securitie
 may we'll take the chance that the, are non-taxable, and buy them now a a price to yield a most generous return on the investment
 By the laws enacted prior to 1915 Connecticut telephone companies ha, paid tax on their gross earnings an, their securities had by statute beel specifically declared non-taxable. Thi situation obtains to-day.
 United States government bonds ar nofa-taxable.
 Houds of the State of Connection are by special statute made free iron taxation.
 There are a few bonds called rail road aid bonds which are also free O tax, but there are not many of then .t0n1 they- appear go yareJy as to R'