Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-12-31
Blow Aimed az Stnte Rights

y CBLIC understanding Of the real pur-
pose of what the National Tax Assoca-
ton would make the twentieth amendment
would be aided greatly IL the Green propo-
sition were entitled IA joint resolution pro-
posing an amendment TO the Constitution
further TO increase the powers Of the Fed
eral government at the expense Of the
rights OF the States
l; is proposed to give the United States
the power TO levy and collect taxes on in
come from securities hereafter issued By
or under the authority of any State, which
would, OF course, include bonds of counties
cities and other political subdivisions. AS
ii sop 10 the States, section . allows them
10 levy similar taxes on income derived
from United States bonds However, this
means nothing in practice. since the out
standing securities are not to be affected
and the Federal government will probably
issue no more bonds unless there is another
war.
The principal arguments advanced in be-
half OF the amendment are first that be-
cause OF tax-frce provisions much property
escapes taxation, since many persons invest
IN securities of the United States, the States
and cities and counties; second, that the sit
uatlon makes capital more difficult and OK
pcnsive TO secure FOR private enterprise and.
third, that States and municipalities are en-
oouraged to issue too many bonds
1t is quite true that many investors seek
;aX-cXcmp; securities. When they are sold.
However. the rate of interest determines tho
price. Governor Trinkle. in an address to
the Virginia delegation in Congress. which
printed. is being placed in the hands Of tho
members of the General Assembly clearly
shows how ii works out. The first 81 per
do
were worth on the market the day of his
analysis. price TO yield 3.43 per cent
while the other issues. on whose interest the
surtaX is levied. were selling to yield 4.40.
The difference OF 81 OF l per cent repre-
Sents the amount OF tax on the higher in
'crest-bcaring bonds. 1t may be seen clear
y that the first rs not strictly
speaking tax exempt, since their value rs
measured by return is such that in effect the
government; collected the tax for the life of
the bond AZ tho time OF issue 1t is quite
true that public bonds have a popularity be-
cause OF widespread m;sap apprehension that
they are safer than standard industrial or
commercial securities. but that notion is be-
ig rapidly dispellcd
n similar argument. therefore, holds good
as against the claim that private financing
IS impeded and the cost OF living added 10
4
higher rate TO secure money Yet public
"tI!i,ieS. for instance. properly managed and
wisely regulated can now market their Sc
curties. and tn" difference in interest rate
balances the difference in tax returns
should period o! saturation of the coun-
try's available capital ever be reached IL
viii ne as difficult for Federal State and local
BONDS to find market as for private sccuri-
ueS. the difference being again determined
by the tax situation
AS TO the claim that too many State and
local bonds are being Issued that is none
o! IN" business OF The Federal government
The people who want Tie schools and the
roads and who pay the interest and redemp-
non can and should determine that. Since
me power TO tax Is The power 10 destroy, The
proposed amendment simple means one
more long step away from maintenance OF
the rights OF the States and in the direction
OF further "ncroachmcnt OF Federal power
That should be enough for the Virrinia dole
CATION in the Congress