Show r STATE TAX MEN AND BANKERS IN ACCORD months of negotiation tion lead to agreement on changes broadening method of state or local taxation of national I 1 banks NEW YORK months of conference and negotiation between an american bankers association special committee and the committee of the association of states on bank have re bulled suited in an agreement on a form ot of amendment to the federal statute healing with state or local taxation of national banks that maintains the in of the protective principles of the section and la Is satisfactory to the commissioners committee says the american bankers association journal thomas B paton the organizations Celi general eral counsel in making the an Ho so says that previously pro posed amendments to the statute which Is to knon as section have been opposed when it was felt their terms would enable any state to place banks in a tax claas class by themselves the law as it stands today mr faton paton says permits state or local taxation of national banks or their shareholders in one or the other of the tour four following forms the share holders upon their shares a prop erty tax the shareholders upon their dividends IL personal income tax the bank upon its net income the bank according to or measured by its bet not income only one form of tax can ke be imposed except that the dividend tax may be combined with the third or fourth form it if other corporations and shareholders shareholder a are likewise taxed the conditions permitted are the tax on shares must be at no greater yate rate than on other competing moneyed capital altal pl tal the income tax on share hold ore re must be at no greater rate than six a net not income from other moneyed capital the tax on bank net not income labat 5 t be at no higher rate than on oth other e r financial corporations nor the highest rates on mercantile and manu factoring fac turing corporations doing business bu within the state the tax measured by net bank income ie is subject to the ame game limitations as the tax on net income of the bank but may include afire entire net not income from all sources states seek broader law national banks and their share hold fa era are taxed in different states under a diversity of systems be he says the S supreme court has held that the low millage rate on intangible personal property la to in violation of the present law where it results in national tank bank shares being taxed at a rate greater than that assessed upon corn coin moneyed capital A number of states unwilling to use the income methods permitted had the altema tire five of 0 either repealing the intangible tax law or limiting taxation of na lional bank shares at the intangible rate therefore they sought a broad nine ening of the permissive provisions also mr paton points out a su preme court decision held a states excise tax on corporations invalid chere where it included income from federal and local government bonds in the ex dee cise measure this created doubt as to some state bank excise taxes conferences have been held to some agreement which would protect the banks satisfy the tax corn COM missioners and avoid a contest in con grease gross mr paton says from the standpoint of the tax authorities the amin ain objectives have ben an amend kent meat which would permit certain state states to retain their low rate tax upon intangibles and at the same time do riv TIT an adequate but not excessive revenue from national bank shares and an amendment which would per alt certain states to tax corporations on an their net income excluding income from tax exempts and at the same time derive the same revenue from the banks aa as heretofore from the standpoint ot of the banks it has been deemed imperative to maintain the prote protective etive principles liles of section th the changes agreed on la in the proposed amendment the ex provision permitting taxation of bank shares no higher than the rate upon competing moneyed capital has been modified with respect to certain intangible tax states only by a provi ision ion under which instead of the moneyed capital limitation the rate ball not be greater than the rate upon the shares of other financial corpora gions nor upon the net assets of indi visuals vi duals partnerships or associations employed mp loyed in the banking loan or in vestment business nor higher than the rate assessed upon mercantile and business corpora eions with head office omeo in the state alao also an a added fifth alternative per method designated as a ape tax permits a state in place ot of an art ad valorem valoree tax on ba bank shares to sad 44 together total dividends paid the preceding year and the increase in ill capital surplus and undivided profits less additions to capital or surplus paid in by stockholders and to divide this total by the number of shares the state may tax the shares based upon this amount out but not to exceed the rate on other corporations in proportion I 1 to their net profits tale this method Is designed tor for states have heretofore taxed national lbanks banke upon their entire net income from irom all sources at a proportionate rate to that assessed upon business ica corporations 1 rP orations the amount which Is the basis ot of the tax la is the equivalent of pf the entire net income from all sources p but being assessed against the th shareholder upon ill his a property in the ta shares and not 16 tax upon the I 1 batik balk ft it I 1 not pea to the objection ft ha tat on exempt income |