xt76125q8c7g https://exploreuk.uky.edu/dipstest/xt76125q8c7g/data/mets.xml Robinson, William A. 1906.  books b97-24-37872774 English [s.n.], : Louisville, Ky. : This digital resource may be freely searched and displayed.  Permission must be received for subsequent distribution in print or electronically.  Physical rights are retained by the owning repository.  Copyright is retained in accordance with U. S. copyright laws.  For information about permissions to reproduce or publish, contact the Special Collections Research Center. Kentucky Taxation. Taxation, an important question affecting the interests of the citizen and the commonwealth  : shall Kentucky's opportunities be extended for greater growth / [William A. Robinson] text Taxation, an important question affecting the interests of the citizen and the commonwealth  : shall Kentucky's opportunities be extended for greater growth / [William A. Robinson] 1906 1906. 2002 true xt76125q8c7g section xt76125q8c7g 



     TAXATION

An Important Question Affecting



Interests



of The Citizen and



   The Commonwealth.



SHALL KENTUCKY'S

  OPPORTUNITIES
     BE EXTENDED FOR

GREATER GROWTH






      LOUISVILLE, KY.
      August 15, 1906.



The

 














                         INDEX.


                                                         Page.
I      Taxation ............       ..................    3
II.    Kentucky-Advantages ......  ....... ............ 4
III.   Kentucky-Progress ............................. 5
I V.   The Hindrance ..............................    7
V.     Search for Better Method ........................ 8
VI.    A Compirison-Other States ...................... 8
VII.   The Inevitable General Effect ..................... 14
VIII.  Experience-as to Capital specially ................ 15
IX.    Results-Pennsylvania System ..................... 17
X.     Results-Kentucky's System ...................... 18
XI.    Uniform Ad Valorem System-as a System .......... 19
XII.   What to do-Suggestions ......................... 20

 


I.



                        TAXATION.

          Tins OUGHT TO, AND DOES CONCERN YOU.

   The notable fourth Kentucky State Development Convention,
held in October, 1905, was presided over through the three
days' session by Governor Beckham and United States Senators
Blackburn and McCreary (nearly one hundred counties repre-
sented). One night session-Senator Blackburn presiding-
was wholly set apart for the discussion of the important ques-
tion of Taxation, in its bearing upon the welfare of the State.
   The subject was opened by a carefully prepared paper by
Senator Cammack, of Owen County, chairman of the State
Revenue Revision Commission.
   Senator Cammack declared as result of his investigations,
"after gathering together the revenue laws and financial reports
of nearly every State and Territory . . .we were astonished to
find that Kentucky possessed one of the crudest and most defec-
tive revenue systems of them all"-"our laws relating to assess-
ment of property, and collection of taxes are abominable."
   Strong terms, from a trained lawyer, and one chosen to be
chairman of so important a commission, by the Senate of the
SLate. Other speakers followed, without exception clearly point-
ing out unwise provisions in our system, generally the result of
most unwise Constitutional restrictions, and the Convention by
unanimous approval appointed a committee of fourteen-three
from the State at la ge and one from each of the eleven Con-
gressional Mstricts-'tG ulge upon the next General Assembly
the passage of a bill submitting such constitutional amendment
to the people, and t'tle passage of such acts as will under the
limitations of the present Constitution, cure existing defects in
the present revenue laws "
   Ex-State Senator Charles Carroll was appointed chairman of
this committee.
   The writer was requested by Senator Carroll, as a member
of the committee, to appear with him before the Joint Committee
of the Senate and the House on Constitutional Amendments,
at the session of the General Assembly which met the following
January, and present to those Committees matters discussed in
the Development Convention, and by its Committee afterward.
   We were accorded a most respectful and patient hearing, and
the Joint Committee by an almost unanimous vote recommended
an amendment to Section 171 of the Constitution, which had been
offered by Senator Lancaster, of Marion County, and which it

 
4



was believed would give opportunity for great improvement in
our system of taxation.
   Following this hearing some days after, the writer was by
the Senate invited to address them, in Committee of the whole,
which he did, and the same afternoon the Senate, by a vote of 31
to 5, on call of the roll, approved Senator Lancaster's amendment.
   Under the prolonged and tedious discussion of the new rev-
enue act (some 165 printed pages) in the House, action on the
amendment to the Constitution was unfortunately crowded out
and never came to a vote, though its friends labored earnestly
to secure its consideration, having had good assurance of its
passage by more than the requisite three-fifths vote.
   So this important measure failed, so far as the last General
Assembly was concerned.
   From time to time since, the writer has had inquiries by letter
and otherwise for information as to various points made in his
argument before the Senate, and in order to meet these inquiries
and frequent suggestions, he has had this paper printed.
   Kentucky is now handicapped and seriously hindered, in his
judgment, in her progress by her unfortunate revenue system.
This, he is convinced, is one of the chief obstacles to the greater
development of this great State. He believes that intelligent
discussion is bound to lead to a public sentiment which will
demand reform. The State will certainly not grow as she
ought without it.
   Let it no longer be said truthfully that we have "one of the
crudest and most defective revenue systems," "our tax laws abom-
inable", and if this paper shall contribute, in small degree, to
discussion and action, bringing about better things. the writer
will be repaid.
   He has no axe to grind.. no end in view. but the good of
Kentuckv.
   Not.._Membership Senate 38.

                              II.

                  KENTUCKY-ADVANTAGES.

   A brief review of our advantages and progress, or lack of
progress, give basis for reliable conclusions as to whether our
position is satisfactory.
   Our great natural advantages are well known-possibly we
have relied too much upon them. Let us, however, call to mind
some marked points of interest, natural and otherwise.
   Center of Population. Kentucky is practically at the center
of the United States.

 
                              5
   Climate. Is temperate and in first rank of healthfulness.
   Soil. Wonderful in productiveness, in great variety-a great
agricultural State.
   Rivers. Along the whole of her northern border-800 miles-
flow the Ohio and Mississippi rivers, and transversing a large
portion of her breadth, and joining the Ohio, the Big Sandy,
the Licking, the Kentucky, Green, Cumberland, and Tennessee,
besides other smaller streams, over 2.000 miles in all of navigable
waters, leading to the Gulf. Examine your maps carefully and
note these pre-eminent advantages.
   A "nine-foot stage all the year round from Pittsburg to Cairo,"
the projected canal from Lake Erie to the Ohio River, and the
Panama Canal both completed, 800 miles frontage such as Ken-
tucky has on the Ohio and Mississippi Rivers, gives an advantage
to our State simply immeasurable.
   Coal. Exceeding the deposits in Pennsylvania and distributed
in different sections of the State-and vet we continue large con-
sumers of Pennsylvania coal-and the seventh in rank of mining.
   Iron no doubt beyond what has been revealed. for Coal and
Iron are by a beneficent Providence almost invariably stored
together.
   Oil. Petroleum, in abundance now, and greater supply un-
touched.
   Timber. A wealth remaining, waiting manufacture into the
useful, to give employment to the skillful mechanics, and exported
to other States will yield great returns to our people.
   Transportation--of marked superiority. Important railways
stretch out over the State for 3,200 miles, adding to our 2,000
miles of water-ways (being steadily improved by the general
government)-means of exporting our great products, and im-
porting supplies.
   This enumeration suffices to make good Kentucky's claim to
great advantages, though much else could be added.

                             III.

                   KENTUCKY-PROGRESS

   Have we progressed as a State in a ratio proportioned to our
great advantages
   In the spirit of patriotic loyalty, and full confidence in the
great future certainly coming to Kentucky. let us at the same time
in all frankness fairly weigh conditions. Since the adoption of
Kentucky's latest Constitution (1891), in which radical change
in system of taxation was made, our country has had its greatest
substantial material progress.

 
6



   Tested by certain unfailing signs, has Kentucky within that
period had her fair share
   Population. The last United States census (1900) gave net
increase in the United States as 20 per cent. Kentucky only 15
per cent (less than either Alabama, Arkansas, Georgia, Louisiana,
Mississippi, Pennsylvania, West Virginia, etc.), the whole United
States being 33 1-3 per cent more. In 1890 Kentucky stood
eleventh in the list; in 1900 we dropped to twelfth. Georgia tak-
ing our place.
   Immigration. Of course we want only the best class-only
600 of the 1,020,000 who reached our land last year found homes
in Kentucky.
   Take area for area with Massachusetts, Kentucky could in-
clude 10,000,000 in her population (instead of 2,250,000) with
vast room still to spare , and far better lands) awaiting cultivation
and made to yield great increase.
   As the Hon. Wim. Rogers Clay, (of Lexington, in his splendid
speech before the fourth State Development Convention, put it,
'we have now fertile uncultivated land in our fence corners suf-
ficient to feed a million."
   And 600,000 native Kentuckians are recorded as living in
other States, equal to one-fourth of our present population.
   Railroads. Kentucky in 1900 ranked only twenty-third in the
forty-five States in railroad mileage. In decade then ended we
built only 150 miles, though in previous decade there were added
1,500 miles.
   Banking Capital is entirely insufficient to propel strong growth.
   In Louisville, our chief commercial center, there has been
an actual rdluction-between 1890 and 1905 (fifteen years) of
banking capital-as represented in the clearing house, of 33 1-3o,
wvhile deposits have nearly doubled, the direct result, as the
writer believes, of excessive taxation (i. e., large increase over
our forner rates, as well as much higher rates than those pre-
vailing in progressive States).
   Savings Banks. Blut little progress made.
   In a report of a list of States examined, Kentucky does not
appear at all.  Massachusetts shows deposit in Savings banks,
largely of wage earners, of over 500,000,000-more than total
assessed value of all real estate in Kentucky (485,000,000!)
   Where is the inducement to deposit with three per cent an-
nual interest, when the law exacts from the depositor in most
Kentucky towns and cities. in annual taxes from two and one
quarter to three per cent (State, county and citv included).
   Savings banks deposits are a certain index to the prosperity
of the mechanic and laboring man..
   Building and Loan Associations should show large increase.

 
7



   A writer says of the value of these Associations to the work-
ingmen, "the amount of thrift on a small income and the number
owning homes is larger than in any other system of savings
known."
   Pennsylvania has one-fifth the number of these Associations
in the United States. It is stated that more homes are owned
by workingmen in Philadelphia than in Greater New York and
London combined, and that tenement houses, such as the two
latter cities have, are unknown in Philadelphia.
   And ownership of homes is one of the best guarantees of good
citizenship.
   Manufactured Products. Increase value as per United States
census 1900 for ten years past, Kentucky increased only 22b-
about 28,000,000 (previous decade 659o).
   Alabama, 60 ; Arkansas, 100, ; Georgia, 557; Indiana,
70 ; Louisiana, 111 ; Mississippi, 110 /c; Tennessee, 50
West Virginia, 95/0; Pennsylvania, 40  (but about 500,00,-
000!)
   Kentucky ranked forty-first State down the list in Inventions,
as recorded last vear in Washington.
   Do not these tangible facts indicate something wrong-some-
thing lacking in Kentucky Something we can, and must cure
   Nothing the matter in our God-given advantages-our bound-
less natural wealth.
   Much the matter somewhere in our man-made methods.


                             IV.
                      THE HINDRANCE.
  Is not our method of taxation mandatory under the Constitu-
tion mainly responsible for lack of greater material progress
   Taxation since Government began, the most difficult of all
public questions-the need of readjustment from time to time is
everywhere admitted-a conclusive argument for provisions in
Constitutions, admitting of changes. by the Legislature-the
chosen representatives, fresh from the people-Constitutional
restrictions such as we have in Kentucky certainly are and must
continue to be injurious to the State.
   We are directly dependent for development upon an abun-
dant supply of available local capital, and this we limit, or repel,
bv taxation, in most of our Kentucky cities at a rate nearly equal
to prevailing rate of interest earned by capital in the great finan-
cial centers in the East, whence we must draw our increased
supply of money.

 
8



   A supply will never come in large volume with such a hin-
drance.
   Capital, like water, will flow to the point of least resistance.
   We have made the mistake. in my judgment, in Kentucky in
taking largely a theoretical view of this subject, without due
consideration of the important practical question as to how it
affects the interest and development of the whole State, when
compared with other States competing with us.
   We must (1o this, or we shall fall behind then. This must
be a clear proposition at a glance.


                              V.
               SEA\RCHI FOR IMPROVE D METHOD.
   A most careful investigation of policy in many States, extend-
ing over several years, by correspondence and personal visits by
members of the Joint Committees of the Louisville Commercial
Club and the Louisville Board of Trade, on Municipal Taxation,
of which the writer has been chairman, reveals wide and singu-
larly varying plans for raising revenue-some wise, some like
Kentucky, otherwise.
   In such a complex public question, involving great interests, if
a system is found, of proved success-raising ample revenue,
equitable, and notablbc in developing marked prosperity, it would
seem wise to follow in that line-to adopt that system-so far
as it may be made to meet differences in conditions.
   After most thorough and painstaking examination it is the
writer's conclusion that the State of Pennsylvania and the cities
of Pittsburg and Philadelphia furnish the very best of models for
Kentucky and all our Kentucky cities, and he believes if we now
follow them, the effect would be marked and give wonderful im-
petus to the growth of our Commonwealth.


                              VI.
                        A COMPARISON.
   A general exhibit of the Pennsylvania system and compari-
son with working of our own, will give the writer's reasons for
his conclusion and clearly illustrate he believes to every un-
biased student of the subject the great disadvantages with which
we have hampered ourselves, and which have, and are now stand-
ing directly in the path of Kentucky's great development.

 
9



   PENNSYLVANIA (1905 latest information obtained).
   Note characteristics of their system.
   No general property tax "at uniform rates."
   All property is classified, and within that class, tax is uni-
form, and no class is taxed more than once (none therefore
excessively), State and counties and cities deriving revenue from
different classes.
   State. No tax whatever on farm lands or city real estate,
but derives revenue from
   Public corporations.
   Personalty-all bonds, securities, etc (a low rate).
   Licenses, mercantile, banks, etc.
   (Factories-no tax.)
   Counties. Tax farm lands, each countv for its own local
needs. Alleghany County (Pittsburgh) rate is 26X2 cents on
100, and repayment by State of certain portion of tax on per-
sonalty, derived from that county.
   City (Pittsburgh, city second class). Taxes only real estate
inside corporation limits, and grades in three classes-a most
just provision-note the very low rates:
   Central, having all public utilities, at 1.30 on 100.
   Suburban, having partial public utilities, two-thirds of this
rate.
   Outlying, having few  public utilities, one-half.  Add for
schools 1 cent to 12 cents in respective districts, on 100.
   And vehicles, horses, etc., using highways at 1.30 on 100,
and this the only personalty taxed.
   City (Philadelphia, only city first class). Coextensive with
Philadelphia County, same plan as Pittsburgh, graded three
classes. 1.50 and down, for Central. etc. This of course covers
both city and county needs.
   And vehicles, horses, etc., 1.50 on 100 valuation and no
other personalty tax.
   And Cities-receive back from the State a certain portion of
license taxes collected in that city.
   In Pennsylvania. Rates named include entire taxes upon fol-
lowing classes:
   Banks and Financial Institutions are taxed annually one per
cent on actual paid up capital stock, or forty cents on 100 of
assets (capital. surplus and undivided profits)-each has option
of either plan.
   Manufacturers. Pav no taxes, except the local tax on the
plant-real estate.
   Is it any wonder that Pennsylvania has drawn to herself and
developed wonderfully these prosperity builders
   Kentucky and every State, pay large tribute to her wisdom

 
10



and foresight, as her customers. It is said that Philadelphia, with
a population of one sixtieth of the United States manufactures
annually one-twentieth of all the factory products of the country.
   The Government report for 1900 fixes value of Pennsylvania
manufactured goods that year at 1,834,790,860!
   Merchants-Wholesale, pay 50 cents per 1,000 actual sales
per annum.
   Philadelphia claims one thousand jobbing houses, doing an
annual business of 500,000,000 (sales), and large number smaller
Iouses.
   Merchants-Retail. 1.00 per 1,000 sales per annum.
   KENTUCKY (1906).
   Characteristics.
   All classes property taxed ad valorem alike at uniform rate.
.411 must be taxed at least twice. Once at one rate for the State,
at another cate for county. and if located in a city all taxed a
third time for city purposes, ad valorem.
   Couinties and Cities each fix their own rates.
   State rate fixed by the General Assembly is now fifty cents on
100 valuation, uniformly on each and every class of property
over whole State.
   To illustrate: In Jefferson County rate is 31 centsmakes
tax on farm lands and all other property 31 cents plus State tax,
5O cents, equal to 81 cents. In corporate limits of Louisville add
citv rate 1.80 to County and State 81 cents and we have a triple
tax rate equal to 2.61 on 100 on every species of property.
   Same system of course exacted in all other counties and cities,
in some more and others less than in Jefferson County and city of
Louisville, but everywhere bear in mind a State tax with county
tax, and if in a citv a third tax in addition.
   Banks and financial institutions obviously must be located in
cities, and hence nuist pay the triple tax-if law is strictly en-
forced-well nigh prohibitive for safe banking.
   Faftories also must be established in cities, because of labor,
transportation and banking facilities, and they must therefore
also pay this triple tax.
   And as if this were not sufficient, under Kentucky revenue act
of 1906. all incorporations (industrial) must pay to the State,
in addition, an annual "privilege" tax of thirty cents per 1,000
of capital employed (statement of this private matter to be filed
annually at Frankfort under oath), or they may (at their option)
pay this rate on their "authorized" capital-i. e., taxing capital-
not what they possess, but which possibly they may hereafter have.
This after the payment to the State of 1.00 on the 1,000 of
"authorized" capital, as a fee, at time of incorporation.
   Four distinct annual tax charges then in Kentucky, upon

 
11



every industry if incorporated, and located in any city. viz: On
valuation for (1) State, (2) county, and (3) city, and (4) this
privilege fee. Is this a policy to encourage industries
   Then in the city of Louisville, it will be seen
   Manufacturers,
   Merchants,
   Banks and all financial institutions.
   Real estate,
   Personalty.
   Even non-interest bearing deposits of cash in bank pay alike,
this year, the triple rate of 2.61 on 100 valuation.
   In Kentucky for State, county or city purposes, for farmers,
manufacturers, merchants, banks, real estate or personalty owner,
no deduction is permitted under the labia, for indebtedness-mort-
gage, notes for money borrowed, or other-all are taxed upon
valuation of entire gross assets-a great injustice to the large
debtor class.
   Another point-taxation in Kentucky of the property of her
citizens, in other States, held by them as stockholders-the prop-
erty paying full taxes where located, and receiving no benefit in
Kentucky, is manifestly unjust. It is a serious and direct restraint
upon trade and business interests, and is a narrow policy which
works an injury to Kentucky.
   A wrong is no less a wrong because legalized by the State.
   New Jersey, as an example, in her "Instructions to Tax-
payers," directs specially that no return is required of interests
in property located in other States, held by her citizens as Stock-
holders, provided the property pays taxes where located.
   A simple matter of justice-denied bv the State of Kentucky
to her citizens!
   "Equalization'-the Kentucky Revenue law provides that, all
Personalty subject to equalization, shall be subject to any change
made by the State Board at 1F rankfort, in assessment of farm
lands within a countv-whether increase or decrease.
   What an absurdity!
   Because the County Assessor's work as to farnm lands is ad-
judged incorrect, and changed by the State Board, the same per-
centage of change must be applied to Personaltv (Classes 19 to 74
in list embracing flersonalty of Farmers, Manufacturers and
Merchants stocks, Household Goods, etc.), of which State Board
can have no knowledge and hears no evidence. This after s-awortz
returns have been made by the taxpayer to the County Assessor.
   For instance, this year in Jefferson County this increase is
16 -one-sixth!
   Clearly without reason-arbitrary and unjust.
   How long will this tax feature be submitted to in this State

 


                               12


TABULATED-Latest obtained figures. Rates for other Kentucky



Cities may readily be made
for all.



up for comparison, for same system prevails



            crrIES

REAL ESTATE a-d improvements
      on 100.

FACT9RIES, Plant on 104).
      All other gross assets on 100
      License on Sales   . .
MERCHANTS, Wholesale.
      Gross Assets on 100 Value
      License on Sales on 1000
MERCHANTS, Retail.
      Gross Assets on 10.).
      License on Sales on 1000
BANKS AND FINANCIAL INST.
      Gross Assets on PIU0 Value
      Capital paid up.
PERSONALITY - Bonds, Securities,
      etc. on 100.
CASH an hand.
      In Bank without interest



Population U. S. Census. 1900
Total Annual Revenue allsourcessay
Total Value Real Rstate, say . . . I



1906
Louisville

2.61

  2.61
  2.61
  None

  2.61
  None

  2.61
  None

  2.61
  None

  2.61
  2.61
  2.61
  205,000
  2,800.000
95,000,000



1905



   Pittsburgh

J 3 Classes as to
   Location
1 80, 86c, 65c
   As above
     None
     None

     None
  50c

     None
     1.00

 40c or option
   1 per cent.

      40c
      None
      None
      320,000
    (1,000,000
    465,000,000



  Philadelphia

 3 Classes a to
   L ocation
11.50, Si 00, 75c
   As above
   None
   None

   None


   None
     1.00

 40c or option
 I per cent.

     40c
     None
     None
     1,300,000
     28,000,000
   ,184,200s000



                   STATES.                        Kentucky  I Pennsylvania
Area Square Miles.0                                46,928
Number Counties.119                                               67
Population Census 1900.2.147 000                                 6,102,000
Total Revenue 1910, say.5,506,000                              3,000,000
Total Assessed Value Real Estate.485,000,000                    2,766,830,000
Number Manufacturing Establishments 1900            9,560        52,186
Capital Employed.104,000,000                                 1,661,649,000
Wage Earners .62,900                                             734,000
Kentucky has far too many-adding largely to expenses.

    NOTE that assessed values of Real Estate in Pittsburgh are five times
the Louisville valuation and within five per cent. of total values in whole
State of Kentucky.

    JNote, then, based on taxes paid under strict letter of Kentucky
laws:
    Banks in Kentucky (Louisville as example), taxation has
been raised from 75 cents on 100 assets (old Hewitt act) to 2.61,
increase of about 350 per cent-they pay as compared with
Pennsylvania (Pittsburg or Philadelphia rate 40 cents on 100),
therefore six and one-half times as much. Is it remarkable, our
small banking capital
    Manufacturers. See foregoing table. No comment necessary.
It speaks volimes of itself.

 
13



   Merchants-Retail. Estimating ad valorem tax at 2.61
equals say eight times more in Louisville than Pittsburgh or Phil-
adelphia.
   Merchants-Wholesale. Estimating ad valorem tax at 2.61,
sav twelve titmes more in Louisville than f'ittsburgh or Phila-
deiphia.
   Personaltv. Bonds, securities, etc., in Pennsylvania 40 cents
on 100; Louisville 2.61 (4.00 on 1,000, as against 26.10),
equals six and one-half times more, almost confiscation of income
of four per cent investment, and in Kentucky we simply drive out
all non-interest bearing cash, which can get out, by 2.61 per
cent tax. Pennsylvania does not tax at all.
   Real Estate. With all the exaction in taxation in Kentucky of
other interests, real estate in Louisville and other Kentucky cities
is taxed at rates at least double that in Pittsburgh.
   Has real estate had any relief then under our narrow, short
sighted policy Clearly not in the matter of taxation. Values
are certainly depressed, and buildings and improvements restricted
by taxation on capital, and especially upon mortgages issued,
whether for improvement of farms, or construction of buildings in
cities.
   Instead of a decrease in taxes on real estate as was predicted
by the advocates of the uniform ad valorem system, we have had
an actual increase from 42'2 cents on 100, last rate for State
under old Constitution, to 50 cents now under the new.
   Without exception. so far as writer has found, invariably, low
taxation on capital and on all personalty, secures greater values
for, and lower rate of taxation on, real estate.
   Numerous comparisons further of other States might be made
to demonstrate Kentucky's tax hindrance; several are given be-
low as evidence of this.
   MISSOURI. St. Louis has much more favorable svstem than
ours (Louisville) for factories and merchants. She leads Louis-
ville in manufacturing tobacco (more than double)-and the leaf
is one of Kentucky's great staples-and now North Carolina
(1905) has advanced and following Missouri, leads Kentucky,
Kentucky ranking third. Kentucky ought easily to stand first in
this large interest.
   The present distinguished Governor of Missouri is quoted
as publicly strongly favoring radical changes in taxing personal
property.
   INDIANA and MICHIGAN direct the deduction of indebtedness
from amounts due tax pavers, and other States do the' same.
   TENNESSEE, our next Southern neighbor, by her Constitution
omits all taxation upon products of her soil in hands of pro-
ducer, or first purchaser, or in hands of a manufacturer, whether

 
                              14

in raw state or finished product.
   CALIFORNIA deducts all mortgage indebtedness from assess-
ment of real estate.
   NEW YORK taxes mortgages 50 cents on 100 at time only of
record, and no subsequent tax.
   OHIO even, with many of our unwise tax features (borrowed
of her by us), exempts from all taxations all bonds used for public
improvement.
   In Kentucky any city bonds issued for sewers or other public
works are taxable for State and county purposes, the same as
though the place of issue and the public work for the public good
was in another State or a foreign country, the work serving to
increase taxable values.
   Others could be added.



                             VII.

             THE INEVITABLE GENERAL EFFECTr.

   It is plain that it is unwise to tax those classes of property
which are great factors in upbuilding, in excess of the taxation
upon same classes by other States-classes easily movable, and
always located at point offering greatest advantages, and always
avoiding points exacting greater annual tribute.
   Again, it is now a fact well established by experience that low
rate of taxation upon capital or movable property (personalty),
results in not only lower rates on real estate (or fixed property),
but also enhanced values, to the benefit of the owner, because
of the large increase of wealth, or capital, attracted to the locality
or State.
   Further, a reasonable rate on personalty encourages building
operations and improvements thus adding to taxable real prop-
erty-brings out larger returns, and yields a larger actual net
revenue.
   An example: In Baltimore, under a rate on bonds, securities,
etc., same as real estate, say 1.50 on 100 (equals say 35 per cent
of income of four per cent investment). Assessment ran down
to about 6,000,000, revenue say 90,000. Under amended law
at a rate of 30 cents on 100 (equals eight per cent of four per
cent income), assessment increased to 100,000,000, yielding the
city 300,000 income.
   One of the most distinguished political economists of this
countrv has said "taxation on personalty is more productive of
perjurv than revenue."

 
15



                            VIII.

         EXPERIENCE, AS TO CAPITAL, ESPECIALLY.

                   Take Louisville Banks.

   A remarkable exhibit of effect of our system of taxation,
changed under Constitution of 1891:

   1890, year prior to (late of new Constitution. we had 20 banks:
      Capital. .....                         9,926,800
      Surplus . .....                         4,339,818



      Total . .................
Deposits, 20,980,381.

In 1900 (ten years later) we had
   Capital . ...................
   Surplus . ..................



........ 14.266.618


onlv 13 banks:
..  ........6,373,600
........ .2,426,800



      Total . ...                        8,800,400
(Deposits not given in report at hand.)



In 1905 13 banks:
   Capital ...... 6,423,500
   Surplus . ......                        3,039,100

      Total . ......                     9,462,600
Deposits (November, 1905), 38,672,830.



   In 15 ycars, 7 less banks, about one-third less capital
surplus, deposits nearly double.



and



Trust Companies ipl Loitisville:
   Capital, and surplus, 1896, say .......... 3,150,000
   Capital and surplus, 1905, say ........ . 4,500,000
I have no report of other years, or of deposits.



In Kentucky, 1905, all Banks and Trust Comtpanies:
   Capital, surplus and undivided profits,
      about . ...............  .......... 43,000,000
   Deposits, about ..................... 93,000,000
I have no report for State for 1890 or 1900.

 

16



   I find from Dun's Review (January, 1906), the following
report of banking business in Pittsburgh alone. Note remarkable
growth:
   1890 (May) 59 Banks, etc.
      Capital, surplus and undivided profits. . 24,000,000
      Deposits .......    ................... 71,000,000
   1905 (November) 93 Banks.
      Capital, surplus, etc .........