New-York tribune., 1922-02-19
Bill to Save
25 Million Tax
Blow ut Realty
Cyril II. Burdcu Says SEN
ator Da>cnport's Efforts
to Validate Levy Will
Pcnalizc Mortgages

he New Yorh Tide and Mortgage Com.
rsrv. sues another tsv levy coming
or income from motagage investments
- ,hc bill introduced hv senator pav
,rpolt, Which apparently has beer
prepared by the state fsN ComMissloH
ior the pirpo-e Of validating taxes
amounting TO Sg5.ooo.0oo which were
cc-leNtcd the last to years en- bank
2ssociaton tocA.
Although Senator Davenror, : Greg
ted with stating that the bill viii not
7eralizo mortg gage Investments. MIR
Burdctt has his doubts ON this point
which he says arc based on court de-
cisions. The potential evil in the biz
is far greater than the obvious good
- say. II q statement issued ycstcr-
ca! N'. RurGett ays:
II desire - call attention to the
lil ,0troducod by Senator pavenpov'
Hr;. No. =. py No. s%9l, which lcvic+
az annual ,rN of pcr cont for the
-oa-. coded December ST. 1890 ana
. ec1mh>. ~ 1921. and every subsc-
ouor' year thereafter upon the mon
eyed capita g every private or i'm
ai1iaual banker Of this state and Of
every individual citizen Of this state
hcid loaned or invested in competitor
with the capital Of banking associs-
Sons organized under the authority
OF the United States
The taNes for the wears 1920. 1921
and i922 amounting 70 3 per cent, arc
payable or or before May I, l922
Why 1t Ma, A1cc; Realty
~, +, probable That tho tax impos ed
* his bin will affect bonds srd mort
cages on real estate. for the following
reasons.
81. latc opinion rendered by tho
Supreme Court Of the United States in
TIC Merchants National Bank Of Kich-
Moud Va, ~. the CITY Of Richmond
handed down ,Iunc +. lp2l, 10 was hold
that The mctAoJ of taxation Of tho
stoch of na,ioYai haahs III the state of
New York woGd he defective. Section
o..ig Of the he,iscd Statutes OF the
United states provides that, while the
Leg lature O. each state may de-
levm'uo and direct the manner aud
r';,co oi taxation ~ all shares of ma
t'orai banking associations located
WITHIN The state. yet the taxation sha
not bc at greater rato than that
assessed upon othcr mouoNed capital
II the hands ot !udvidual citizens Of
such state
an 1890. d. 'bo time of the passage
o. the income taX law. our tan laws
N.rc .m,udcl 10y adding Section "A
trlis.o. cNemptne all Intangible per
So'@ property fro taxation. the
t'rri ''rtatg ginlc personal pfoperty' bo
inc dtGred q ucorporeal property
iaciud'uc money. deposits in bank
sferct of stock. bonds notes. credit
csidercos of aH interest I'm property
and evidences OF debt.
What Court said Recently
"Endcr Section iN Of the tan law
therefore. lt ha been coutonded in th'
reccnf action broGp-t Icy the Hanoye'
National Bank oi ,hc CITY Of New or
fs. cod gle e. "a 'nai moneyed capi
t. in the hands of indiNidusl citizens
en- r'ne into competition with the
money Invested I'm national bank stock.
lays no taN and. therefore. the state
tax on ratloual bark stock H. invalid
Justice DeNls handed down an oriuioi
in the iast-named ~uit ON fcbruarv 1T
~ lu which h' decides against fhi
con'enti n. but Nevcr' he c.s he ISSUE
has been raised - t1 the Validity O.
tases evlcA by the state Of New orl
for the Neass 1920 and 1921. ~hjci
taXeS are said 10 amount 10 ovcr SO.
oo0 on0. and I'm order - validate th'
collection cf such taxes and 10 mak.
the future collection thereof valid tn,
Department of Taxes for the State o
New YORK is using every effort to havl
tho Davcnpor; bill enacted into lAp
without any consideration as to thu
sweeping character of its provision
and the great hardship which i'm man,
case> would be imposed by the intia
tx &C per cent uDon the propcrt,
winch would ho affected thereby.
Meaning OF Noneyed Capital
The uncertainty a. to the incidcnc
o. thi, tax arises by reason OF the ycn
'mcroyod capital m tive hands OF in
diNiduai citizens eu,crins into compc
tit.ou with money Nvcstci ia u@tiope
hanh stock The Inclusive cAaracte
% such property, however. is shown -
tho defiaitions of moacycd carital /
tho tao decisions heretofore reudcre,
f. Wit: I'm Mercantile" Bank " Sc.
York. l-l t. :. rs. aud. June e., H.,
in the suit of Nerchapts National Ban
Of Richmond Va y. the City of Rici
mond. above referred to-
"ln the latter case Justice ritno
quotes, with approval. the l2nguage c
Mr. Justice Mathew. IN the Mcrcantil
BANK case. as follows:
ne terms u Tie act of Congre-.
therefore. Include shares Of stock G
other INTERESTS owned by individuals i
al! enterprises la which the capits
employed :H carrying on its business
money. where the object Of the bus
Ness Is the making of profit by il
use - money. Inc monoNed capit;
thus employed Is invested for that pur
n"So in securities b, way Of loan. dis
c"NN' or otherwise. which are fro,
timc TO time, according TO the rules ,
ihc business. reduced again to none
..nd rcinVcs ted. It include money i
the hands OF individuals employed i
" slml ar way. invested IN loans. or i
securities for the payment of none,
c.tn"r a an investment Of Il pcrmancr
Ct - ctcr or temporarily with >ie
=, ale or repayment and roinvosi
n. ~ this Way the moneyed cap
Il III tnc hands Of iudlN idu4l- is di.
tinguishcd from what y known gcaci
a!il as pcISon;4 property.
nc important part of this opinion
Ire sentence which defines moneve
capital. This undoubtedly include
money invested in bonds and mort
cages on real estate. o. we'll as a
moneys IN bank. awaiting Investment.
hors Agree With Sponsors of Bill
~ 81. TOLD ,hat tuc State Tax Cou
miss =. as we'll as Mr. Davcnpor
holds .ho opinion that the bill in qucs
tion does not impose a tan on bond
and mortgages canno, uudorstan
the ground for this opinion, but j
any event, their opinion not IN
controlling factor. We are bound b
rhe decision Of the courts. and. al
though there is 10 decision holdin
specifically that bonds and mortgage
would come under the definition i