Evening star., 1922-05-18
Unwise Raise of Intangibles Tax

indicia of the relative amounts OF
Individual ownership.
Our :ntangibles tax law also in
wolves double taxation In that 1t I'M
poses a tax on intangibles and at the
same time retains the substitutes for
that tax In extraordinary license
taxes and excessively heavy taxes on
the gross earnings of great corpora
tions which Congress, refusing to tax
tntangi bles directly, enacted In lieu
thereof in 1902 and 1904.
X X
In 1917 Washington vigorously criti-
cized it's intangibles tax law and
sought specific amendments as fol-
lows:
1. The scope Of taxable intangibies
should be much restricted. Our law
and credits, including moneys loaned
md invested, bonds and shares OF
stock" except the stock Of banks and
other corporations within the Dis
trfct, the taxation of which IL pro-
vided for in the tax law of 1902 with
subsequent amendments.
This law taxes all credits without
any deduction for the corresponding
debts, and iS unmistnlxa bly, double
taxation Of the same property by the
same taxing power.
1t taxes all loans and Investments,
a. well as all credits No other state
I'm the new classification taxes all
intanG1bles. As we have seen. Mary.
land taxes only certain stocks and
bonds. 1t does mot tax mortgages or
the bulk of bank deposits. Pennsyl-
vania. ON the other hand. gets half
its revenue from mortgages and 20
per cent from trust estates, whose
intangtbles cannot he concealed.
Minnesota makes important exemp-
lions from its list Of taxable in
tangfbles.
(see N. Y. State Committee Report
(1o18), Pa, D. 172S Md, .. 175I Mimi,
p. 1907
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
(1s16), pages 40 to 1s4.)
Self-assessment under . listing
system Nike that provided by our
where. Even when only . low tax
rate IL applied to intangibles the sue
cessful operations Of the tax have
been limited largely to collections
from the source, from fntangibles in
the hands Of the court, and not to be
trust estates, and from the taxation
Of credits Of record like mortgages,
with q rigorous provision of law for
ascertaining their ownership.
II taxable intnnEibles in the Dis
trict were by amendment confined
rixidly to the particular stocks and
bonds from which Maryland derives
all its Intangible tax revenue, and
to mortgages from which Pennsyl-
vanfa derives half its Intangible tax
revenue, the District would be taxed
more drnstically than either Mary
land or Pennsylvania, with q result-
ing maximum Of revenue and a mini
mum of perjury promotion and gross
and obvious injustice.
Taxed intanEibles 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 arc to be taxed without de-
duction of debts, II every taxpayer fs
to be taxed ON what II owing to him
and is not to be relieved Of taxation
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 u three or
even two mills rate would he sufficient
II
report, pages 81, 81, IS and I'D
The safe limit II three mills, a rate
equivalent to 4 per cent income tax
ON q security paying per cent inter-
est. (See New York state report
I010), pages 169, 19O. 2O8.)
A per cent income tax II the maxi
mum rate imposed I'm Wisconsin and
Massachusetts. which substitute . tax
ON the income OF intangibIes for q
low rate ON the value OF the intan-
Efbles.
Minnesota's rate IL only three mills.
Maryland's rate in three mills for
local purposes and one and q half for
state purposes. The District has NO
state rights. PriviieEes: bsneflt. or
mot justly bear the Maryland state
II M.ryI.nd,. rate /. imposed upon
piled i'm the District only to the In
tansfbles which Maryland taxes,
namely. certain stocks and bonds.
OmittinE mortgages and ordinary
bank deposits.
II Pennsylvania,s rate of four mills
IL imposed i'm the District it should
be applied with all Of Pennsylvania's
exemptions and lenient enforcement
against Individuals, SO that One-half
Of the revenue from this tax shall be
collected from mortgages on real
property held in trust BY trust COM
panies and only 80 per cent from in
dividuals assessed by a sworn return
OF arbitrary estimate. New York
state report (191O, page 173J
+ X
In response to these representa-
lions Congress after deliberation re-
duced the rate from four mills to
three mills. VIII Congress now
without deliberation increase the rate
two-thirds to flve millss II the tax
rate In to be unsettled. the District
VIII I'm fairness be given the oppor-
tunity not only to defend the three
mill rate, but to urge again upon
Congress, as I'm 1917. the equity of
amending the present intanEibles tax
law by restricting materially the
scope Of taxable fntangibles, SO that
tho District will not in this respect
be more searchinEly and compre-
hensively taxed than Maryland, or
Pennsylvania or MinnesOtn.
r DT~TC"