Evening star., 1922-04-28
Intangible Property Taxes
In District and the States

/, sonal Property in Maryland. 1916" by
Allan c. Girdwood, Secretary Of the
state tax commission of Maryland.)
Instead Of an increase in the rate on
Intangible personal property the Dis
trict should have been granted either
the repeal of the law or its material
MODIFICATION through the lesSening OF
the scope Of its application. 1t obtained
soms years ago dir1inution OF the ratf
from to mills. at which lower fig
ure 1t has yielded more in revenue
than at the higher rate. 1t is now
| proposed to advance the rate to 5
mills, one of the highest imposed
| anywhere in this country In the class oi
states imposing this particular kind o!
| tax, and certain to cause the withdrawal
from the District of large values in re-
movable intangible personality.
| X X X
An fntangibles law. however light
the rate. has no place under existing
conditions in an equitable readjust-
| ment of the local tax burden. Such
| law In the District today is unneces-
sary, inequitable. imposes double tax
alton on the same property and is in
evitably and unjustly uneven in its
application. penaiizing veracity, re-
Ward1ng falsehood, falling the light
est upon those who are most expert
IN swindiing concealment and heavi-.
est on the truthful and the honest.
Bun II an intangibles tax Is retained
oy congress, if the repeal of the law
| IS viewed as undesirable or as hope
less. then there should be such
changes and readjustments as Will
reduce to a minimum the inequita bic
| features of the law, including double
| taxation of the same property.
Doupie taxation is effected by the
law as 1t stands by taxing credits
! without deducting debts. For ex-
ample. 1t taxes mortgage notes as
! 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 ihe borrower, the impecunious
| owner of mortgaged property. thus
| triply taxed in effect upon the same
property. typifies the small taxpayer.
| who already pays more than his
I share of the taxes
Bank deposits are loans to the
banks The banks already pay tax
| on gross earnings In lieu of personal
taxes. Deposits, ought not to be
doubly taxed directly or indirectly.
as personality. both ofthe banks and
| the depositors.
| If several individuals, as partners,
own and operate business property
! they pay taxes only on the partner
ship property. II these same indi-
! viduals change the form of their
| ownership from partnership to a
| corporation they should still be taxed
! on the same property and in the same
! proportion If. in addition to this
| full tax on the partnership corporate
/ property. there Is another tax on the
! INDICATIONS of amount of individual
ownership in the shape of stock GER
! tificates. double taxation results. No
| additional ia able values are created
by the substitution of stock certifi-
Gates for a partnership agreement
as indicia of the relative amounts of
/ Individual ownership:
! No state in the Districts present
| classification in this matter taxes all
! intangibles. Maryland taxes only
! certain stocks and bonds. 1t does
not tax mortgages or ordinary bank
deposits. Pennsylvania, on the other
hand. gets half its revenue from
mortgages and 30 per cent from
| trust estates whose intangibles can
not be concealed. Minnesota makes
| important exemptions from it's list
! of taxable intangibles.
| In selecting the intangiblss TO be
/ taxed those should be chosen in re-
I spect to which the tax can be collect
| ed at the source. or which are in the
{, hands of the courts and cannot be
! concealed. or which are credits of
! record like mortgages with a rig
! orous provision of law for ascertain
! ing their ownership. Only in re-
I spect to such classes of intangibies
i has even the low-rate tax success
| fully operated. Other intangibles
| should be exempted. Self-assessmeht
! under a listing system of the in
J tangibles of the individual has failed
/ everywhere.
{ The rate of taxation should be not
more than mills, if credits are
/ to be taxed without deduction of
! debts, if every taxpayer is to be tax
! ed on what is owing to him, and not
/ to be relieved of taxation on what he
| owes. This is undeniably double
! taxation, and the rate of such taxa
| tion should be nominal.
| Minnesota's rate is three mills. a
! rate equivalent to per cent income
, tax on security paying 5 per cent
| interest. In Wisconsin and Massa-
| chusetts, which substitute tax on
/ the income from intangibles for
! tax on their value, per cent is the