San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-02-23

may be expecting too much of some
legislators-many of them, in fact-fol
there is a strong tendency on the part
of present-day lawmakers to let ex
pcdiency rule. us
Is it possible that any member of the
Texas Legislature, or even of Congress
has considered that in the practical sense
there is no such thing as tax exemption
for owners of securities, such as stocks
and bonds, even under the present Or
der? Well, as a general proposition
it is fact, as bit of business analysis
will show. There is at least one appar-
ent eNception-govcrnment bonds, The
wealth represented by government bonds
is not taxed. The government docs not
tax itself. But in the case of non-gov-
eminent securities the wealth repre-
scented by such printed and signed prom
Uses OF reimbursement is taxed, indis-
putably,
Technically, of course, a bond itself
may correctly be said to be free from
taxation. But even though its posses
sor pays no direct tax on it, the fact
does not mean that this technical exemp-
ton cheats the government out of reve-
nue which it ought to get or that as
a result of such an exemption citi :ens
who hold no bonds are being imposed
upon.
The simple truth of the matter is
that the property in which the bond
holders money is invested is taxed, so
that, in effect, that money itself is taxed.
Without the bondholder's money a cor
poration, say, that issued the bonds
could not have acquired the property
that is taxed.
Suppose that group of men-the
same men as those composing the hypo-
thetical Corporation-should raise a lot
OF money among their friends for the
purpose of engaging in the same kind of
business as the corporation was con-
Quoting, but should issue no bonds as
security for the money thus obtained
How would the government proceed to
tax the friends who had provided the
money for the enterprise? 1t would
simply levy upon the property in which
their money was invested. This tax,
albeit indirect from their standpoint,
would be reflected in the lesser returns
they would get from their investment
Therefore, they would not have escaped
taxation. Nor does the bondholder
escape taxation; he can't escape It even
if his money is invested in government
bonds. In effect he bears a part Of
the burden in that he receives low
interest on his money. If he was truly
exempt from taxation he would receive
seven or eight per cent instead of,four
or five per cent. If the government
taxed its own bonds directly it would
have to increase the interest to attract
investors; thus it would pay out with
one hand the money it took in with the
other hand.
The honest explanation of this move
ment to do away with so-called tax ex-
emptlon is that governmental expenses
are too great to be betrayed at the old
rates of taxation, and that government
officials, lacking the hardhood to face
the issue of frankly higher rates. are
trying to kid the people, and perhaps
themselves, into believing that by levy,
| ing upon all bonds and similar securi.
Dies they would get revenue from prop
erty which is escaping taxation. As
matter Of very simple fact, they would
be imposing additional taxes upon prop,
erty that is already subject to taxation
If they should set out to tax idle money
that would be different proposition
But they want to tax both the property
in which money is invested and the re-
ceipt (bond or other security which i
issued to ANYBODY who provides tina
money.
| Whenever anybody talks about eth
privilege of tax exemption" he ought t.
be asked whether he has reference t.
the property of charity institutions O
to old men who get poll-tax receipts
without paying for them.