Evening star. [volume] (Washington, D.C.) 1854-1972, 1922-04-27
PROPER RATE AND BASIS
FOR INTANGIBLES TAXES

The conferees unexpectedly. without
hearings. increase the intangibles tax
rate from three mills to five mills. an
increase of SC % per cent. When the
Districts legislature last permitted 1t
to be heard in respect to this tax the
tax rate was reduced from four pills to
three mills on account Of the facts ana
figures and comparisons with the corre-
spending taxes in other cities which
Washington was able to submit. The
Districts representations made then
should be considered now. in view Of
the fact that no opportunity whatever
has been given to restate its case today,
prior to action which makes Its intangi-
BILE tax heavier in rate and broader In
its scope Of application than that OF
Maryland or Minnesota or Pennsylvania
or the other states enumerated. WASH
ington then said to Congress:
what specific amendments should
be proposed to the intangibles tax
law?
l. The scope of taxable intangibles
should be much restricted. Our law
AS II now stands taxes all moneys
and credits. including moneys loaned
and invested. bonds and shares of
stock" except the stock of banks and
other corporations within the Dis
trict. the taxation of which is pro-
Nlueu LOT In the TAX law OIL lSUl, Win
subsequent amendments.
This law taxes all credits without
any deduction for the corresponding
debts, and is unmistakably double
taxation of the same property by the
same taxing power.
1t taxes all loans and investments.
as well as all credits. No other state
in the new classification taxes all in
tangibles. AS we have seen, Mary
land taxes only certain stocks and
bonds. 1t does not tax mortgages or
the bulk of bank deposits. Pennsyl-
vania. on the other hand. gets half
it's revenue from mortgages and 20
per cent from trust estates. whose
intangibles cannot be concealed.
Minnesota makes important exemp-
tons from its list of taxable intangi-
bles.
(see n. Y. State Committee Report
d916), Pa. p. 172: Md, p. ITS; Mimi,
p. 1909
2. In selecting the intangibles to be
taxed in the District and those to be
exempted. the lessons taught by the
experience of these other states
should be learned and needed.
(See N. Y. State Committee Report
U916), pages 10 to 1S4.)
Self-assessment under a listing sys-
TEN Qike that proposed by our in
tangibles law has failed everywhere.
Even when only low tax rate is APP
piled to intangibles the successful OPP
eralions of the, tax have been limited
largely to collections from the source.
from intangibles in the hands OF the
court and not to be concealed, like
those belonging to trust estates, and
from the taxation of credits of record.
like mortgages, with rigorous pro-
vision of law for ascertaining their
ownership.
If taxable intangibles in the District
were by amendment confined rigidly
to the particular stocks and bonds
from which Maryland derives all its
intangible tax revenue. and to mortgages.
from which Pennsylvania derives half
it's intangible tax revenue. the Dis
trict would be taxed more drasti-
cally than either Maryland or Penn
sylvania, with a resulting maximum
of revenue and minimum of per-
jury promotion and gross and obvious
injustice.
Taxed .intangibles in the District
should In equity be at least thus re-
stricted.
3. The rate Of taxation should be
lower. not more than three mills, II
credits are to be taxed without deduc-
ton Of debts, il every taxpayer is to
be taxed on what Is owing to him and
is not to be relieved Of taxation on
what he owes. This is undeniably
double taxation, and the rate Of such
taxation should be nominal.
In the discussion before the New
York city tax committee (1916) the
opinion was expressed that three or
even two mills rate would be suffi-
cient if there were no debt offset.
(See Report. pages 50, "a, rs and To
The safe limit is three mills, rate
equivalent to a per cent income tax
on a security paying per cent inter-
est. (See New York State Report
(1s16), pages 169. 100, 206.)
A per cent income tax is the maxi
mum rate imposed In Wisconsin and
Massachusetts,, which substitute a
tax on the income Of intangibles for
a low-rate tax on the value Of the in
tangibles.
Minnesota's rate is only three mills:
Maryland's rate Is three mills Tor local
nurnoses and one and q half for state
nurposes. The District has no state
rights, privileges, benefits or e1,
penses. 1t does not need and should