Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-01-04
States Tax Credits at Full
Property Tax Rate, at Low
er Rate or Not at All.
READJUST D. C. TAX SYSTEM
Editorial Correspondence of The Star
BY THEODORE w. MOVES.
No. I.

|
next July. Congress created by the same
| act a joint committee to study District
| tax laws and to recommend such changes
! in them as are fair and equitable. and
| to report to this session of Congress. By
| this provision, as explained in the Sen
ate debate conforming it. Congress re-
| corded recognition of the probability
that in the hasty enactment of the new
tax law it's provisions might not in all
respects be wise and fair, and that its
abrupt injection into the Districts tax
system might require equitable read
justments The opportunity was thus
given and the obligation imposed to
make, Mt this session. such changes in
the local tax-laws. including the law
taxing intangibles. as will render this
taxation fair and equitable before it goes
into effect next July.
What amendments of the law taxing
intangibles are necessary to make it
wise and fair? What readjustments in
the local taX-system are in equity de-
manded by the imposition of the new
intangibles tax?
Prompt answer to these questions in
ton upon the District appropriation bill
is of vital concern to the people of the
capital community.
Varying Methods of Taxing 1ntan-
gibles.
The taxation of credits and other in
tangibles is attempted in the states in
several different ways.
1. The full property tax rate is ap-
piled to credits and other intangibles
as IL they were property. Results:
Absolute failure of tax as revenue
producer Complete success as a
perjury producer through compulsory
listing system under which the taxpayer
virtually fixes his own tax. Law con-
temptuously disregarded by bulk of
taxpayers and not uniformly enforced.
Gross injustice to conscientious few
who try to obey the law and in double
taxation of the same property neces-
sarily involved in this tax. -.
This dfscredited system still prevails
nominally and with many variations in
most of the states.
(See recent full discussion of the
breakdown of this tax in the report of
the n. Y. state tax committee G316),
pages 81 ct seq. and Al ct seq).
2 Certain states. recognizing the ele
ment of double taxation involved in
taxation of most intangibles, reduce to
. very low figure the rate Of taxation
levied upon intangibles and apply this
low rate only to n few of the different
classes of intnngibles, no two states ne
lecting the same intangibies for this
taxation.
Since intangibles are still treated and
taxed as property. the reduction of
the rate does not eliminate the evil of
double taxation of the same property.
but reduces II to minimum. To the
extent that the taxpayer continues un-
der legal compulsion to make return
under oath of his intangibles. to that
extent the evil of the listing. self
taxing system as a a,perjury promoter
continues to be suffered. To the ex-
tent that the few intangibles selected
for taxation in any state can be taxed
at the source, or in connection with
the making of some official record con-
cerning them which prevents cohceal
ment, this evil is eliminated or reduced
to minimum. Since there are many
who will endure this double taxation of
credits IL the tax is very light. but will
evade the heavier tax, the low rate tax
is more successful as a revenue pro-
ducer. in the equitable distribution of the
tax-burden and in diminishing fragrant
ia X -dodging.
rate upon intangibles. with numerous
and varying exemptions: Maryland.
Pennsylvania. Minnesota. Rhode Island
and Iowa. District of Columbia after
July /. 1910
The following states. under regis
tration plan. impose a low specific tax
upon the face value of certain debts,
exempting them from other taxation:
Connecticut. New York. The following
state imposes low rate income tax
in lieu of a tax on intangibles: Wis
consn.
3. Some of the states recognize so
completely the double taxation in
volved in a tax on intangibles; and the
perjury promoting evil of a compulsory
listing system. attempting to bring to
light invisible property by confession
of the taxpayer. and the absolute fail
ure as revenue producer of this tax.
that they have eliminated entirely the
general tax on the IntangibIes Of the
indy ividual. and In lieu thereof have In
certain instances tas In the District of
COlumbiaD imposed specific taxes upon
certain corporations. or TO offset the
lighter personally tax have raised to
the limit the tax ON realty. These states
are Delaware. Idaho. Washington. and.
until next July. the District Of COlum-
bin.
tSee Taxation of Intangible Personal
! Property IN Maryland G315), by Allan
G. Girdwood. secretary of state tax
commission of Maryland.J
Districts Transfer in Classification.
The effect of the legislation of Con-
gress at the last session is to transfer
the District from the third class to the
second class of states in their legisla-
tion concerning the taxation of intsngf-
bles This transfer. which goes into
effect next July, takes the District
| from ella assification with such states as
Delaware. Idaho and Washington. and
puts it in the class of such states as
Maryland. Pennsylvania and Minnesota
Washington is grateful that Com
gress in its hasty unconsidered change
of OUR tax law. did not apnIv
the General property tax rate to IN
tangibles, but adopted the system of
classified low rate taxation. The at
! tempt to apply the property tax rate
to personally, and especially TO in
tangibles, has failed everywhere utter
ly and disgracefully. The low tax rate
system is great Improvement over
the system under which the general
property tax is nominally collected
from personally under the law. but Is
not collected in fact, because the law
is evaded and unenforced Whether n
is an Improvement over Washinpfon's
present system of heavy tax upon
realty and tangible personally. with
out any deduction of deats. and
with a corresponding exemption OF ali
credits from taxation, is debatab ble ana
should be carefully considered by Com
gress.