The Kennewick courier-reporter. [volume] (Kennewick, Wash.) 1914-1938, 1929-01-03
m ROADS WIN
RENTON WILL
RE BANKRUPT
r.X Problems Confront this
C Session Of Legislature
which Means Much to the
states Prosperity.
By Richard Hamilton

L
soecific purposes, will be the big
,roh1em of the Legislature, which
will convene on January IA, and
!. seems inevitable that the tax
.ver will have a little bigger
had to carry after the house has
completed its work. OF course
every Legislature, has tax prob
Inns. but not every Legislature
10. so many serious and trouble
some tax issues as are now on tap.
Iet us look into some of the ma
;or tax questions and some OF the
,nrop6sals for substitute or extra
levies:
Probably the most urgent prob
lem is that of bank taxes. To begin
with, Washington has two classes
Of hanks, commercial and the So
called "mutuals" or savings and
loan banks. The commercial banks
now pay 1890, 900 annually in tax
es on capital stock, which is as
sessed against the individual stock
holder-the national banks paying
s69O,O0O, the state banks paying
100000, in addition to the regu-
lar property tax. The mutuals pay
no taxes on capital, only the COM
mon property tax.
In recent years, the mutuals or
savings banks have been growing
by leaps and bounds-their depos-
its now totaling more than $780,
0OOOO0- and the commercial
banks have been becoming more
nervous and more resentful. Con-
sequently, the commercial banks,
claiming that the capital tax is a
discrimination and a handicap,
have sought to extend the tax or
some other offsetting impost on
their competitors-tke mutuals,,
Such attempts failed in two or
three Legislatures.
Now, however, the issue has
come to head. National banks
took refuge in provision by Con-
gress that the stock of national
banks should not be taxed at
higher rates than those imposed
on competing capital, and filed
suits in the courts for the recov-
cry of protested taxes and relief
from subsequent levies. Because
Of the success of similar suits in
other suits, it is commonly assum-
ed that the Seattle banks will win.
Therefore, some counties stand to
lose more than 500, 900 in taxes
paid under protest, and the state
stands to lose $630,000 annually.
Moreover, it would naturally fol-
low that the state banks would be
relieved of their annual capital
tax Of 100000. So, in other words,
Washington is in line to lose
- 7
ss3O,0OO a year, which, if not re-
placed by some other type of tax
on financial institutions, will have
70 oe shifted to the general tax
payer.
The State Tax Commission,
which warned the 1927 Legisla-
lure, is striving to work out a So
luton. Conferences are now being
neld with the commercial banks
ana mutuals in the hope of induc-
ing them to agree IN a new tax
Plan, but its success is doubtful.
therefore, it will he up to the Leg
I1l- -
stature to work out an equitable
tax on the banks to avoid the
threatened loss of s93O,OO0 year.
IN this respect, the Tax Com
MISSION has been studying an ex-
use tax, or a corporation income
tax, which California and Oreoon
are planning to enact. This tax,
ueslgned to conform with the fed
efai provision that national banks
might be taxed on the basis of net
nsome' would be placed, at a rate
- iour per cent, on all incorpor-
eu buslness-national banks,
s'ase banks, mutuals and savings
aSSoclatlons, mercantile establish
ments, . industrial plants, etc. Then
- =. avoid pyramiding, a property
unset would be allowed up to the
went OF 80 per cent of the total
excise tax.
q = is figured that the result Of
m excise tax would be. Lower
sAes on national and state banks,
: taetlcally little change in the
Aes on mercantile and industrial
bs,ness' higher taxes on mutual
. 1
lions. -@i'ial nssisu-