Evening star., 1922-10-31
SAVINGS BANKS
WAR ON TAX RULE
Interpretation of Law by
Board of Appraisers
Brings Protest.
% PLACES AFFECTED
All Reports of Assessments Re-
turned and 6 Per Cent Gross
Basis Established.
% PLACES AFFECTED

savings banks or thlS city are up
in arms against an Interpretation of
an act of Congress. approved July /.
1902. by the board of personal tax
appraisers of the District.
According to that law national
banks and trust companies were to
pay. in lieu of all personal taxes. 6
per cent of their gross earnings. Saw
ings banks were first to deduct from
their gross earnings the total amount
paid to their depositors as interest
on savings. On the balance, without
further deduction, the tax rate was
4 per cent.
8 Per Cent Rate.
Now. after twenty years. the ap-
praisers have, after investigation.
been led tc believe that a majority
of the banks in the District of Colum-
bia who have been taxed on 4 per
cent basis on their gross earnings,
less the amount paid as interest to
their depositors. are conducting busi-
ness along lines similar TO that of
national banks and trust companie
and 1t is the opinion of this board
that they should be taxed at the rate
of 6 per cent per annum."
Acting on this theory, the board has
returned all reports of personal as
sessments returned by savings banks
and have placed the assessment on a
s per cent gross basis.
Twenty-Eight Banks Affected.
There are in Washington about
twenty-eight savings banks that will
be affected by this new rule.
With some OF them the matter will
be so serious that it will involve divi-
dends to shareholders. with the ma
jority of them it will at least ma
terially reduce the distribution of
dividends, and may lead to concerted
action on the part of savings banks
for the reduction on interest paid to
depositors. which now varies from 3
to per cent per annum.
There are practically thirteen saw
ings banks that have deposits of
from sS90,000 to s2.ss4 900. These
banks pay from $27.5o0 to slO5, 900
a year in interest.
$2s.OOO.OOO Savings.
The total amount of savings, ac-
cording to reports of the controller
of the currency of September Is last,
was about s27.000,000. At per cent
interest this would mean paying
additional taxes on $4,000 a year,
which amount would be nearer
s1,000,000, as many of the banks pay
3la and some 4 per cent.
In estimating the loss to the banks
the additional 2 per cent. not only
on the amount of the interest pa d
but on the entire gross earnings,
would make the loss a very serious
matter to the savings banks.
An opportunity for appeal is offered
to the board of personal tax appeals,
at a date and time to be determined
by communicating with the board
Appeal Certain.
That an appeal will be taken is
evident from the fact that the Po-
tomac Savings Bank. one of the
largest in the group. has called a
meeting Of the entire savings bank
contingent to be held tomorrow even
ing in the rooms Of the District
Bankers Association. New Masonic
Temple, at o'clock.
While the changes indicated are
threatening from the view of the
savings bank officials. they further
take exception to the action of the
appraisers in making their ruling so
near the close of the calendar year.