Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1924-04-11
Governor Ritchie Against Plan To
Assess Tax-Free Bonds.

Propounding a doctrine Of States rights
in tax matters as well as in other economic
and political fields. Gov. Richie last Mon
day expressed himself squarely opposed
TO section Of the Mellon tax plan, which
proposes an indirect tax on the income of
State and local securities under certain
circumstances.
The Governors opposition was voiced in
a telegram sent Monday to Senator Reed
Smooi. chairman Of the Senate Finance
Committee. and Senator F. M. Simmons.
II State, county and municipal securities
are removed from the tax-exempt class. the
Governor argues, the agricultural commu-
mites will suffer most. He reasons that
the farmers are the heaviest taxpayers
and that IL the interest rate on public
bonds is increased because they are no
longer exempt the farmers eventually
will bear the brunt.
He feels 1t his duty to the farmers Of
Maryland as well as other taxpayers to do
all in his power to defeat the proposed
measure.
ostensibly the measure was inserted in
the tax plan. the Governor says, to catch
those who evade the law by investing
heavily in tax-exempt securities. But in
reality it will shift the burden of Federal
taxes from those who can bear it best to
the shoulders Of those who pay the heavi.
est local taxes, he argues.
The Governor calls attention to the fact
that Maryland citizens pay four times as
much to support the Federal government
as they do TO support their State govern
ment. He also points out that il such
legislation is continued. States will retali-
ate by finding a way indirectly to tax
Government securities which are tax
exempt.
Governor Richie is believed to be the
first State Executive who has taken a
positive stand against the proposed meas
ure. His States rights plea Is strictly in
line with former statements against the
Capitalization and increase of Federal
authority.
In his telegram he quotes Chief Justice
Marshall's oft-quoted phrase. that "a power
to tax is power to destroy" II State
rights can be interfered with. he says. the
Government can embarrass greatly the
issue Of State securities for such purposes
as good roads. and thereby exercise a
control over such public works.
The Governor holds that the provision
really increases the direct taxes Of State
although II is apparently intended to pre-
vent evasion Of Federal income taxes
The amendment is explained as follows:
The amendment will prevent certain
evasions Of the income tax. that is. make
certain taxpayers pay more. and win in
this way help to lower the Federal income
tax rates and benefit the great body oil
Federal income taxpayers.
The Governor simply says regarding thi:
that general reduction is very desirable
He goes on to say that the net result would
be to increase the direct tax, and here he
says he holds brief for his own State.
II the Federal government can tax thu.
indirectly State and municipal securities
IL will increase the rate which the State.
have to pay. the Governor says. This in
creased interest rate must Be paid by the
taxpayers Of this State and must be raised
by direct taxes. he holds. He believes thai
the effect Of the amendment is largely tC
relieve the group Of Federal income tax,
payers. but to do it at the expense of the
direct taxpayers Of the State.