Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-12-13

Levi A. Hughes of Santa Fe, before
the State Taxpayers association
meeting which was held in Albu-
querque q week ago:
In my opinion the New Mexico
laws relative to the taxation of the
stock of national banks are illegal
and discriminatory in that they are
in conflict with the federal laws
governing such taxation and in that
they require such banks to pay
more than their fair share of taxes,
The taxation by states of national
bank shares is controlled by Sec
ton 5219 of the United states Re-
vised Statutes. providing that;
Nothing herein shall pre-
vent all the shares in any asso-
citation from being included in
the valuation of the personal
property of the owner and
holder of such shares, in as
sessing taxes imposed by au-
thority of the state within
which the association is locat-
ed-subject only to there
strictions that the taXation
shall not be at a greater rate
than is assessed upon the
moneyed capital in the hands
of individual citizens of such
state"
The term "moneyed capital In
the hands Of individual citizens"
has been construed by the United
States supreme court to mean;
"Sharcs of stock or other in
terests owned by individuals in
all enterprises in which the
capital employed in carrying
on its business is money, where
the object of the business IS
the making of profit by the use
of money"
Mercantile National Bank VS.
New York, 121 y. S. 1873.
Cites Pitney's Decision.
In other words. the United states
laws provide that stock of national
banks can not be taxed, or assessed
for taxation, by the state at a high
err rate than stocks of other organ
izations which compete with them,
and IL the national banks are dls-
eliminated against, the tax is Vold
as to them. And further, the banks
can not be taxed at a greater rate
than Is assessed against individual
investment of moneyed capital
This is fully discussed in the case
of Merchants National bank VS..
Richmond, decided by Justice Pit
ney of the United States supreme
court last June. and reported IN
the United States supreme court
advance opinions of July Is 1921,
1t does not take lawyer 10 see
that our state statute does not com
ply with this requirement of equal
ity laid down by federal law. by
Section 504 Of our taxation code ali
hanks are required to furnish the
tax commission with a sworn state
ment of their capital stock, reserve
fund undivided profits ana real
estate. The full value OF those
items as they are carried on the
banks books, less the banks ma
bilities. Is the assessed valuation OF
the banks shares. Building and
loan associations, on lhe otliel
hand, which unquestionably enter
into competition with banks, are
assessed on an entirely ditterent
basis. By Section sos of the act
their assessment is based on the
amount maid in on stock by the
shareholders, less the amounts
loaned out to shareholders ana
secured by real estate mortgage or
pledge of stock.
connecting Organizations.
JTnder this law, then, we nave
two competing organizations, one
a national bank and the other
building and loan association Inc
hank is assessed for taxes on the
full value of all it's assets. includ-
ing its paid up capital, its loans
and discounts, its reserve fund ana
its undivided profits less its llapli-
tiles. The building and loan asso-
citation, on the other hand, is
merely assessed upon its paid up
capital less the amount OF its OUT
secured. loans. Upon, ms
feature alone, there
seems no doubt In my mind, put
that our state law violates the fed
eral statutes, and that not onlv
are the taxes assessed national
banks illegal, so that banks may
escape payment thereof, but tnar
the banks. If they pay under pro-
test, can recover back every cent
of taxation paid to the state under
our present laws.
The same discrimination In per-
haps a greater degree in practice
is shown between the taxes as
sessed against shares of bank
stock and the assessment against
other moneyed capital In the
hands of individual citizens OF the
stato. Such discrimination being
So ifically restricted by the provi-
sions of section 5219, Revised Stat
utes Of the United States. as inter-
preted by Justice Pitney.
Tho Present Method.
The present method of arriving
at the value of bank stocks for as
sessment purposes is to take the
book value of all of the banks as
sets and deduct therefrom all of
the banks liabilities, the differ
ence, of course, reflects the book
value of the stock of the institu-
ton. In arriving at the value OF
the stock, or of the net worth of
the institution, the chief asset of
any bank, namely its loans and dis
counts, are listed at the face value.
l am quite sure that any bank In