Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-20
CALF RN|A GETS
SECRET TAX DATA
Scares Wealthy, Evading
Levy On Property Held Out
side Borders of State.
BY Consolidated Press.

LOS ANGELES, Calf, February
akin TO a mild panic
has seized some of the weather. resi-
dents of California especially the
thousands of retired business and
professional men who have come here
recently from other States and who
chose to ignore the California act OF
1925 imposing a tax on stocks, bonds
and other valuable securities held out
side the State.
Virtually all the States of the Union
are looking for new sources of reVe'
nue., stretching their ingenuity to the
limit in an attempt to keep pace with
the upward swinging cost of gov
eminent.
Here in California it was realized
that thousa nds of residents of the
State must hold outside securities
from which they were deriving hand
some incomes Under the laws of the
State, there was no way of reaching
these securities. California has at
tracted hundreds of thousands of new
residents from all parts of the coun-
try, especially from the Middle West.
II Was dcSi1cti ItiOPSI tLit titC ili-
tangible property held by all persons
outside the State should be taxed at
least a small percentage of their face
value.
Few Made Returns.
Acting evidently on the theory that
the State. or the counties of the State,
which were to get the revenue under
the new law. would never be able to
trace the outside securities. very few
persons have made returns. To their
amazement. within the last few days,
the owners of the outside securities
have been receiving notices of as
sessment and penalties attached.
They have rushed to their attorneys
for advice. and have been told there
is nothing to do but pay In full.
The sad part of the predicament in
which the 'scoff laws find themselves
is that the new tax law provides that
where returns were made of outside
securities, they should be taxed at
only per. cent of their value A
S. 900 bond would be taxed at only
$40. But the law also provides that
where owners of securities failed to
make returns, the tax should be as
sessed at the full face valuation.
Therefore. the delinquents are to be
compelled TO pay the regular county
rate of taxation on the full face value
of their securities. Here in Los
Angeles County, where the tax rate
is $3.50 on every hundred, the owner
of $780, 900 worth of outside securities
will have to pay a tax of $4,000. If
he made the proper return of his in
tangible outside holdings, he would
have been assessed on only $1,000
valuation and had to pay a tax of
only 1915.
Data Are Puzzle.
The thing that is puzzling the tax
delinquents Is how in the world the
State of California learned about their
holdings in other States, some Of them
thousands OF miles away.
The inference is that the State and
counties. acting together, may have
obtained their information through
the Internal Revenue Bureau of the
Federal Government at Washington
The income tax law provides that the
returns of corporations shall be open
to examination by State officials on
the request Of the governor of the
State.
Perhaps the State has made no at
tempt to find all the security holders
now residing in California Perhaps
it has unearthed just enough to throw
real scare into all the delinquents
and to cause them to make hurried
returns OF their security holdings
wherever they may be located
AS piece of secret service work it
has been a knockout.
New Zealand is just becoming inter-