Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-12-27
A FREE BONDS

year OHCle 0dEl VIII STAT q
census of wealth, public debt, tax
free securities and taxes paid. 1t
will take six months we are told to
make it, because the census takers
will have to extend their investi-
cations into every county in the
United States. If it is taken ac-
curatelv it ought to tell US an in
~teresting story. Particularly In
tcresting at this time will be the
record of the growth of tax free
securities in the last 10 years con-
trasted with the growth in taxes
collected. Enormous quantities OF
state, county, school district, city,
federal, land loan and other tax
free bonds have been issued in the
last 10 years. For every dollar Of
tax exemption that attaches to
these bonds the non-tax exempt
property of the citizen must as
sumo an extra burden Of taxes.
When the total amount of these tax
exempt securities is ascertained
we predict that the sum total will
be staggering.
At the next session of congress
this matter of tax exempt securi-
ties will come up for discussion
and probably some action will be
taken on it. But it will be a good
deal like putting a lock On the
stable door after the steed is stol-
en-. And the lock cannot be put on
in a minute either. To shut off the
issue of tax free bonds issued by
sovereign states through federal
prohibition will probably require a
constitutional amendment, and that
generally takes some years to get
through. Besides such a change
in policy could hardly be made
retroactive without another con-
stitutional amendment repeating
the clause against retroactive legis-
latiorl. Perhaps even that would
not be enough. Such 4 law would
impair the validity of a contract.
These tax exempt bonds were sold
at a better price because of that
clause. To tai them after the
higher price had been paid would
be -epugnant to good faith and
honest dealing, ven if the consti-
tuition could be so altered as to
permit OF its being done.
A prohibition Of such tax free
issues in the future would still
leave a heavy burden of tax exempt
securities for the tax payer to car
ry for many years to come. 1t is
now plain enough that they should
never have been issued, but the
harm is done. The steed has gone
from the stables. No new locks
are going to change that sad fact.
Then any attempt to limit the
power and authority of the states
to borrow money on such terms as
seen, best to them is going to pro-
woke much protest from the cham
pions of states rights. Besides
special interests will probably be
opposed, or demand special ex-
emptions. One class of tax exempt
bonds are issued to provide money
to loan to farmers on mortgage.
They sell now On a basis of about
4 IL per cent interest at par. The
law provides that the land banks
that issue them must lend the pro-
ceeds to the farmers at not more
than / per cent increase over the
rate of interest they carry. Take
from these bonds the tax exernp-
ton clause and it would result in
raising the cost Of mortgage loans
made by the federal land banks to
the farmers by l or l IL per cent
at least. The agricultural bloc
would not like that. Neither
would the farmer. The taxes of
the citizen generally would also
be raised because deprived of their
tax free character, state, county, !
district and other securities
under the sovereign author !
;ty of the state would not sell at
par unless the interest rate were
raised. The subject is much more
complex than it appears on the
surface. While the popular de-
mard is to stop the issuance OF tax
free securities in the future we
expect such reform to come
with any speed, or without serious
in congress and outside
VI congress, from the interests that