The Butler weekly times and the Bates County record. (Butler, Mo.) 1918-1950, 1922-04-13
A BLOW AT TAX-FREE
SECURITIES
Alabama Supreme Court Upholds ke-
tording Tax Law on Federal
Land Bank Mortgages.

AOull .! HtdDd1Ild ~ ellS SaAiS N
as Federal Land Banks. The Alabama
decision probably stops the organrza-
iio.l ri more of these banks and will
-t;a..se change in the operation OF all
banks operated under the rural credit
system, according to bulletin issued
by Secretary Chassell of the Farm
Mortgage Bankers Association OF
America.
The Supreme Court sustains the
rev Alabama law requiring the pay
meut of recording tax OF fifteen
cents per hundred dollars on all
mortgages recorded. The Federal
Land Bank of New Orleans severa!
mo,ths ago refused to pay the record
ing lax on the ground that its mort
cages were exempt from taxation I'M
&c" ederal statute, when Probate
Judge Crosland of Montgomery coun-
" demanded the fee. After several
months of litigation, the Supreme
Court decided the test case i'll favor
OF the state and the Federal Land
Bank is directed to pay the fees. The
court holds that the taN is not an al
valorem tax, but a privilege tax.
''elc is no law requiring the Land
banks to record their mortgages
i'lc state of Alabama affords an OPP
ro' unity for recording and it im-
poses a tax for the privilege and pro-
lection thus furnished to the parties
Wing mortgages. The law is uni
form i'll its application The law i'm
poses no tax on the mortgage unless
the holder exercises his option to have
!, recorded. Payment for this privi-
lege must be made as provided by the
State Law.
ire Supreme Court of Alabama has
d nigh reputation for ability. The
lcuslon written by Chief Justice An
d,rson is conclusive and in harmony
win a long line OF decisions OF the
CHftd States supreme court. In all
probability the Alabama decision will
+ affirmed at Washington.
Federal authorities have held that
revenue stamps are not required on
Fedora Land Bank mortgages, but
that Is d special exemption from a
< neal requirement like the exelnp-
ton OF their interest from Federal Ill
come Tax. There is nothing i'll these
decisions to conflict with the Ala
y. ma decision.
Inc Supreme Court OF Alabama has
noNA the wa to remove a part i
the unfair discrimination again>, d..
inNl liors which has caused niue, l.s-
9atstacton everywhere since the >,.-
c;ti subsidy OF TAX exemption o. Land
BARK Bonds anG mortgages his been
III effect.
Minnesota and several other states
have recording tax laws but III :,.:e
except ,ilabaui;, has the right of *
emp,ion been tested in the courts
he legislatures OF over forty s;aars
{ oIyene in the coming year. In all
probability every one OF them will
enact recording tax laws similar -
chat ii Alabama. The purposes u. lie
r,.oi ding tax law are to iurA.~,,
needed state revenue. to encourage
home investors to invest i'll lucal
mortgages and abolish the unfair dis
now existing i'll favor oil
J oint Stock Land Banks and Federal
Land banks.
1 nc most mportan: immediate e.
Get o. the Alabama decision Will 5c
to discourage the organization -!
more .,oint Stock Land Banks Con-
sel,a'ive capitalists will hesitate Al
Ter reviewing Tie decision in tins ,c,t
case.
IN 1910, the Senate Committee IN
rina"ce recommended ior passage ne
smcot bill to take away from JOINT
.Jtt ok Land Banks the tax exemption
priv iiese. The agricultural depression
hat followed caused action on lie
1,lI % be deferred These banks
aicd TO junction at the time When
the, were needed. Now that ..c
money market is easier. they arv ;s>a-
ING large amounts OF tax Tree boUls
tor rich investors. Public sentiment
lrai.lft tax free bonds is much
stronger now than in 1919 AS soon As
tic present historical condition oil
finance has Gained down
4 little. it is expected that the Smoot
bii. will pass Congress with very little
OPPOSITION. Within year. or at most
"ith'n year and half. future issues
OF Joint Stock Land Banks will be
subject to Federal Income Tax asI
DIVIDED by the Smoot bill that was
lavorably recommended in 1910. Con-
gres-'onal sbsidies to the stockhold-
pr. nj twenty. tbroo h,,,I,. =,