[Morning Session.]
Mr. GREGG called up the special order for this hour, being his bill, [S. 4] to provide for the taxing of all banks, national as well as others, for municipal purposes.
The report of a majority of the Committee on Banks was also read, recommending the passage of a substitute, which simply provides that bank stock shall be taxed for municipal and all other purposes in the same manner as other personal property, and that where the stockholder is not an inhabitant of the State the stock shall be taxed where the bank is situated, otherwise, where the stockholder resides.
A minority report was also read recommending the passage of the original bill.
Mr. GREGG hoped the minority report would be adopted and Senate Bill No. 4 passed. The substitute bill is defective in many of its provisions. It has no provision by which the city authorizes may ascertain - the amount of capital stock, the number of - shares it is divided into, and names of stockholders, the amount held by each one, etc. The original bill contains such a provision, requiring the sworn statement of the officers as to these facts. This provision he deemed essential to the effectiveness of the bill, and its absence from the substitute bill was a fatal defect. Again, the original bill makes the tax an absolute lien on the shares of stock, which insures its easy and certain collection from both residents and non-residents. Still further, the substitute bill provides that a stockholder, who is a resident of the State but not of the city where the bank is situated, shall be exempted from taxation in said city. This he believed was unfair. All the property in a city should be subject to taxation for municipal purposes. He caused to be read a clause from a law passed by Congress in 1872, expressly declaring that national bank stock may be taxed for State, county and municipal purposes, provided that the taxes asssessed shall not be at a greater rate than is levied upon other monied capital, and that the shares of non-residents of the State shall be taxed in the town or city where the bank is located. This, he said, disposes of the vexed question whether national bank stock might be taxed for State, county and municipal purposes. He had been told that the amount of national bank stock in Indianapolis is over $7,000,000. As the rate of taxation for municipal purposes is 1 1-2 per cent. Indianapolis loses annualy by the present exemption of that stock stock over $100,000. The same may be said, though of course the figures would be less, of other cities in the State.
While on this subject he called attention to an act passed in 1871, to provide for common schools in cities of 30,000 inhabitants and over. It might have been entitled a bill to provide for common schools, in the city page: 332[View Page 332] of Indianapolis, for no other city in the State has the requisite number of inhabitants to take the benefit of the act. This bill provides that the school tax shall be levied as a muni-icipal tax, and the levy may be twenty-five cents on the hundred dollars of taxable property. The school tax being levied as a municipal tax, and no law being enforced to subject bank stock to municipal taxes, of course for the last two years this great amount of National Bank stock has laid clear of school tax in the city of Indianapolis and the school fund of that city has lost very largely thereby probably from seventeen to twenty thousand dollars annually.
He believed it to be the imperative duty of the Legislature to provide for the equal taxation of all property in the State, as required by section 1, Article X, of the State Constitution, in the following language:"
The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation ; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious or charitable purposes, as may be specially exempted by law."
Mr. BROWN was not much in favor of the principle embodied in the bill, even if the enactment would be legal, which he doubted. The original law of Congress, for the incorporation of national banks, provided that the stock should not be taxed other than that of the Slate banks was taxed, and the charter of the Bank of the State of Indiana provides that its stock shall not be taxed for municipal purposes. Since that there have been some other laws of Congress with which he was not very familiar. But it is questionable whether they interfere at all with the original act. At any rate it is a very grave question whether the banks that organized under the original law of Congress, and before any of these subsequent acts were passed in reference to the taxing of their stocks, can be taxed in this State beyond the taxes that were authorized by law at the time of their incorporation. Even if the late law of Congress does provide for the levying and collection of taxes for municipal purposes, it is a question whether they can be levied or collected on banks organized under the original law. Again, he was not in favor of taxing a man who lives out of a city and owns a few shares of stock in a city bank, for the purpose of keeping up the city government. Take the city of Seymour, in his county, for instance. They have a bank there with a capital of $50,000, some of the shares being owned by men who do not live in the city, and have no interest in it beyond their snares in the bank. They have simply invested their means in an institution for the accommodation of the people of Seymour. Is it fair to tax them to maintain the city government, the fire and police departments and all the municipal officers? He thought not.
Mr. NEFF. Suppose a man living in this city owns a thousand head of cattle in Jackson county - is he not taxed on them there?
Mr. BROWN. The personal property follows the person, and is taxed where he resides.
Mr. FULLER. Suppose a merchant has a store in Indianapolis, and lives outside of the corporate limitswhere is that property taxed ?
Mr. BROWN. Where he lives, of course.
Mr. FRIEDLEY, of Lawrence. Suppose all the merchants of Indianapolis should conclude to reside without the corporate limits.
Mr. BROWN. They ought to be taxed on all their personal property where they reside. I am like the boy who said the horse was seventeen feet high - I stick to it. [Laughter.] The 69th section of the act provides that the tax shall be a lien on the shares of stock. The 70th section provides that nothing in this act shall be so construed as to exempt from taxation for municipal purposes the shares of capital stock of any bank or banking association organized the laws of this State or the United but that all such shares may be assessed for local purposes at the same rate as other property. Mr. Brown held that the act passed at the special session contains every thing was in the bill. But, since there were some doubtful questions involved, he moved that the bills and the two reports be referred to the Committee on the Judiciary, to investigate and report whether any further legislation is needed on this subject.
Mr. DWIGGINS thought the substitute bill of the majority of the Committee should become a law. The only difference between Senators seemed to be whether the stock should be taxed in the city where the bank is situated, or where the stockholder resides. The only argument in favor of the former proposition is that the city furnishes the gas, the fire department and the police to protect the property. If he came to this city and loaned a thousand dollars, and took a mortgage on a house in this city, the mortgage was not taxed. But it is proposed if a mancomes here and invests a thousand dollars in bank stock, to tax his share. He did not see any reason for the distinction.
Mr. FULLER. Suppose a gentleman living in the country has taken stock in a manufacturing establishment in the city of Indianapolis, is not he in business here, and is not that business taxed?
Mr. DWIGGINS. Yes, sir.
page: 333[View Page 333]Mr. FULLER. Well, is not it the same with a bank?
Mr. DWIGGINS. No, sir, I don't take it as a parallel case.
Mr. D. was in favor of taxing stockholders where they reside, if they live in the State. If not, they must be taxed in the city where the bank is located. The Senator from Dearborn [Mr. Gregg] complained that by the law passed at the last session authorizing the levying of taxes for school purposes, this bank stock was not taxed, and the schools were losing that tax. Now, if $350,000 of that bank stock is owned by gentlemen living outside of the city, and that stock is taxed for school purposes at all, it should be taxed to support the schools where these gentlemen reside, to educate their children, and not the children of Indianapolis.
Mr. NEFF. What will you do with section 62 of the present revenue law? That provides for the taxation of bonds in cities where they are located.
Mr. DWIGGINS. It provides that they shall be taxed for State, county and township purposes, not for municipal. The 70th section provides that the stock shall not be exempt from taxation for municpal purposes.
Mr. NEFF. Take the two sections together.
Mr. DWIGGINS. If they can be taxedfor municipal purposes under this law, as he believed they could, they should be taxed in the cities where the stockholders reside, and not where the bank is located.
Mr. CHAPMAN. Suppose there is a bank in this city with a capital stock of $700,000, half owned by a resident of the city and the other half by a man who lives just outside the corporate limits. Would it be fair to tax the shares of the former and exempt that of the latter?
Mr. DWIGGINS. It is very easy to putextreme cases, and I will answer by putting another. Is it right that a man living at a distance from here should pay a school tax for the benefit of the children of a man who lives in Indianapolis? No law operates with equal and exact justice upon all persons. The best we can do is to make the laws apply equally to the greatest possible number.
Mr. WINTERBOTHAM. The revised law enacted by Congress on the subject of National Banks, contains two restrictions, that they shall not pay taxes at any larger rate than the bank capital held by private citizens. Now in the city of Laporte there was a bank chartered by the State, with a capital of $200,000 and deposits amounting to $400,000. That bank is doing a large business, three times what the National Bank is doing. He asked whether National Bank could be taxed when the State Bank was exempted. He did not think it would be equitable or legal to tax a National Bank, and exempt under a State law, the Bank of the State of Indiana.
Mr. GREGG. The law of Congress as it now is, provides that we shall not tax the stock of National Banks at a greater rate than is levied on monied capital belonging to individuals residing in the State. It don't tax the notes of banks at all.
Mr. WINTERBOTHAM. It seems to me the bill is in clear violation of the law of Congress; and with that understanding I shall vote for the motion of the Senator from Jackson [Mr. Brown] to refer the bill to the Judiciary Committee.
The Senate here took a recess till 2 o'clock.
