Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-01-06
RADICALLY AMEND
|NTANG|BLES TAX
Minimize Double Taxation and
Perjury by Low Rate on
Few Intangibles.
TAX MAINLY AT SOURCE
Editorial Correspondence Of The Star.
BY THEODORE w. MOVES.
Mo. III.

BY THEODORE w. MOVES.
No. III.
The tax on intangibles in its present
shape imposes or threatens double TAX
alton on the same property. 1t taxes
credits without deducting debts.
For example, it taxes mortgage notes
as credits and also taxes the mortgaged
property without deducting the mort
gage indebtedness.
The mortgagor pays full taxes on the
mortgaged property; on what he does
not spend Of the borrowed money, and.
in the shape Of increased interest, on
the mortgaged note, his own promise to
pay.
The borrower, the impecuntous owner
of mortgaged property. thus triply
taxed, in effect, upon the same prop
erty, typifies the small taxpayer. who
already pays. it is felt, more than his
share of taxes. He asks for relief and
his burden is made heavier.
Bank deposits are loans to the banks.
The banks already pay tax on gross
earnings in lieu Of personal taxes. De-
posits ought not to be doubly taxed. dt-
of the banks and the depositors.
If several individuals, as partners, own
and operate a business property they pay
taxes only on the partnership property.
II these same individuals change the form
Of their ownership from partnership to
a corporation, they should still be taxed
on the same property and in the same
proportions. If in addition to this full
tax on the partnership corporate prop
erty, there is another tax on the indica-
inna nf MT nf WI
in the shape Of stock certificates, double
taxation results. No additional taxable
values are created by the substitution OF
stock certificates for partnership agree
ment as indicia of the relative amounts
of individual ownership.
The new law also involves double
taxation in that 1t imposes tax on in
tangibles and at the same time retains
the substitutes for that tax in extraordi-
nary license taxes and excessively heavy
taxes on the gross earnings Of great cor
porations which Congress, refusing to tax
directly, enacted in lieu there
of in 1902 and 1904.
Special Consideration for the Unrep-
resented Taxed.
The fact that in the District taxes are
United States makes it the more essential
that in equity a taxing body in which
the taxed are not represented should to
a certainty avoid double taxation and any
other tax exactiun tfiaf fs oDvf6dsfy tx
cessiye and unjust.
Congress should not for example. i'm
pose a more drastic tax on intangibles
In the District than neighboring Mary
classified low rate personally tax taxes
all forms of intangibles in the fashion ap-
parently proposed for Washington. Mary
land, for instance. does not tax mort
cages: it does not tax bank deposits of
non residents or Of residents unless they
bear interest, and according to Judge
Lesser Of the tax commission the question
Is before the courts whether all bank de-
posits are not exempt; it does not tax
book accounts or in general non-produc-
tive securities or credits.
II the District Is to be taken from the
class Of states which do not tax intangi-
bles, ie.. Delaware, Washington state and
Idaho. and put into the class of states
Qike Maryland) which tax lightly certain
forms of intangibles. then at least every
equity and every safeguard against dou-
BILE taxation which applies in Maryland
or in any other OF these states should
with scrupulous care be applied in SINH
lar taxation of the District.
Not All Intangib1es to Be Taxed.
The District intangibles tax seems to
cover all credits. No state which has a
classified tax on intangibles applies it
to all intangibles. Maryland, as We
have seen. exempts mortgages. bank
deposits and book accounts. and derives
the bulk of this revenue from bonds
and certificates of Indebtedness of
terest-bearing or dividend-payings stock
Of foreign corporations, locally owned.
Minnesota exempts shares of stock,
money and credits belonging to incor-
porated banks. certain mortgages and
municipal bonds, and imposes a tax of
only $40 of l per cent.
Pennsylvania exempts bonds. except
those of Pennsylvania corporations
Seventy per cent of Pennsylvania rev.
enue from this tax is derived from the tax
on mortgages and personal property
held in trust by trust companies.
Thus Maryland derives it's revenue
from stocks and bonds; Minnesota ex-
empts stocks, and Pennsylvania derives
so per cent of its intangibles tax rev.
enue from mortgages, which are not
taxed in Maryland.
There are obvious reasons of policy
for assimilating the Districts intangibles
tax system to that of adjacent Mary
land. The very rich mans intangibles
have wings, and IL taxed more heavily
in Washington than in Maryland will
fly to Baltimore, il bank deposits, or
Just over the border. If other credits.
Wise and Fair Tax on Intangibles.
The states of the Union in trying to
work out an enforcible. a just, and an
effective or revenue-producing tax on
certain intangibles have given the sub
iect the thoughtful. anxious considera-
ton of some of the best brains of