Milford chronicle., 1924-12-19

more DLOIOuAACCA " AA+1e'N%ANNs
If a farmer owns a farm ASSESS
at $4,000 subject to a S2,500 mort
rage. he mas an investment of 50,
500. The holder of the mortgag
has also an investment of $2500
But the farmer pays a tax on tn
whole $4,000 ($12.5O) while the hold
er of the mortgage has not tax /
he is n man of small income, anC
if he is a very wealthy man. he pay
only per cent. of interest ($4.5O,
or about one-third the tax levied OF
the farmer.
Again. of a farmer and wife hav'
ing a nincome of $4,000 and having
$4,000 to invest buy $4,000 farm
sub ect to a mortgage of $4,000. they
nay a tax and filing fee of $91 or
their income and farm; but if they
borrow $1,000 at per cent, and buy
100000 of a corporation stock that
pavs a 5 per cent. dividend, they pay
$3.50 tax and filing fee, about one
fourth the tax on an investment o.
same value.
Again, if married person, havine
100000 in 6 per cent. bonds borrows
in corporation stocks that are earn
ing we'll but paying no dividend. he
pays SIG tax, including filing fee.
If, however, he buys a $4,000 farm
earning we'll. though the earnings
are used for improvements, he pays
S141 tax, or about nine times as
much.
From the above illustration It is
clear that our present TAX system
does not treat alike the owner Of
real estate and the owner of per-
sonal property However when We
turn TO me tax on invested capital
of corporations we find that all
property both real and personal is
taxed at the same rate without any
distinction. 1t is quite difficult to
reconcile these two dissimilar meth
DDS unless we admit that the difficulty
of assessing personal property in the
hands of individuals has discouraged
it's taxation. This difficulty is re-
moved by using the income from per-
sonal property as a measure of the
value of the property itself.
16. What reasons have been al
vanced against the taxation of per
sonal property.
The fact that personal property
cannot be assessed and the fact thar
it may be kept outside of the state
make a direct levy almost impos-
sible. Those who do not wish to
taxation rests entirely upon those
who are willing to pay and upon
those whose property is subject 20
public inspection, such as property
held by trustees, guardians, and st
forth. This form of objection to the
personal property tax is completely
overcome by using income from the
as a measure of the prop
erty itself and making the income
tax at such rate as will bring TO
the state the same number of dollars
as though the property were taxed
The fact that the Federal
is now levying an in
its collection makes a state income
tax quite easy of collection.
Another objection to the personal
tax, which applies equally
10 the income tax, is that the prop
erty represented by mortgages ard
oy corporation stocks and bonds, and
so forth, has already paid a tax in
'ther states by assessments on real
.s."te, building, and so forth. ownac
~ corporations or pledged on mort ;
rage. While this is true = is equal :
Y true that the value of the securi- T
les is the equity remaining after $
payment of these taxes. This equity [
s properly taxable in our State. Il
II. Should the income tax equiv
llent to personal property tax be t
tpplied equally on securities repre- 1
enting property inside and outside.
# the state? I
In order to avoid double taxation i
" the State It would seem fair that S
he tax on real estate should be re- T
luced by the amount of tax paid by I
he Delaware holder of a mortgage e
|
Delaware corporations should be
'ermitted to reduce their taxes Dy L
he amount of interest and 'vidends
ayab'e to Delaware holders of such c
securities.
IS. Would it not be more con- Il
en- ent and equally just to relieve .
he owner of Delaware mortgages
nd securities from Income Tax pay
lents?
No. If this were done the holder :;
Z a mortgage would pay no tax -
-hile the owner of the property :,
-ould pay the entire amount as he n
ow does. As the holder of secur,-
es has no means of knowing the NJ
art of his company's property 10 "a
lted in Delaware, he has no means m
? knowing what part, If any, of A
lis tax should be related by the Is
ate. On the other hand, the cor ra
1ration knows the relation between Sc
, Delaware and outsi6eheld "a
and can, therefore. make 81
'oper cam for rebate on such fe
lrt of interest and dividends as of
e attributed to Delaware proper in
"a
10. Should household goods and 80
,rsonal property not used in bus on
ess and not in the form of securi- ia
IS be taxed?
Probably not. This property pro- IN
INSERT P ETA 81
NAL PROPERTY, WAGES AND q
CAPITAL. WHICH PRODUCE DEF Lal
RESENT LAW pa
roperty rol
A
col
Wages Salaries 80,