Show STATE TAX MEN HEN ANO BANKERS IN ACCORD months of negotiation lead to agreement on changes broadening method of state or local taxation of national banks NEW YORK months of conference and negotiation between an AMO american bankers association special committee and d the committee ot of the association 0 of f states on bank taxation have resulted in an agreement on a form ot of amendment dment to the federal statute am dealing essing with state or local taxation of national banks bank that the in I 1 ot of the protective principles of the section and it Is satisfactory to the th commissioners committee says thi the american bankers association journal thomas B paton the organizations general counsel in making the announcement no says that previously IT proposed amendments to the statute which Is known u section have been opposed when it was felt their terms would enable any state to place banks in a tax class by themselves the law as it stands today mr paton says ays permits state or local taxation ot of national banks or their shareholders in one or the other ot of the tour four following forms forma the shareholders upon their shares a property tax the shareholders upon their dividends a personal income tax the bank upon its net income the bank according to or measured by its net income only one form of tax can be imposed except that the div dividend idena tax may be combined with the third or fourth form orm it other corporations and shareholders are likewise taxed the conditions permitted are the tax on shares must be at no greater rate than on other competing moneyed capital the income tax on shareholders ers must be at no greater rate than on net income from other moneyed capital the tax on bank net income must be at to no higher rate than on other financial corporations nor the highest rates on and manufacturing fac turing corporations corporation doing business within the state the tax measured by not net bank income is subject to the same limitations as the tax on u net income of the bank but may include entire not net income from all sources states state sek seek broader law national banks and their shareholders are taxed in different ettea under a diversity of 0 systems he says the XI S supreme court has held bold that the th low mellage rate on intangible personal property Is in violation ol of the present law where it results in national bank shares being taxed at a rate greater than that assessed upon om em paling moneyed capital A number ot of states unwilling to use me the income methods permitted had bad the alternative ol of either repealing the tax laws or limiting taxation ot of national bank shares at the intangible rate therefore they sought a broadening ot of the p permissive provisions also mr paton points out a supreme court decision held a states 0 excise x raise tax on corporations invalid w where here it included income from federal and local government bonds in the ex x else clee measure this created doubt us as to some state bank excise taxes conferences have been held to reach some agreement which would protect the banks satisfy the tax commissioners ners and avoid a contest in con gross gress mr paton says from the standpoint of the tax authorities the th main objectives have been an amendment which would permit fortain tates states to retain their low rate tax upon intangibles intangibles and at the same mama time derive an adequate but not excessive revenue from national bank shares hares and an amendment which would permit certain states to tax corporations 0 on their net income excluding income from tax exempts and at the same time derive the same revenue from the banks as heretofore from the me standpoint of the banks it has been bea deemed imperative to maintain the protective principles principle ot of section the changes change agreed on ill in the proposed amendment the or existing provision permitting taia taxation tion ot of bank shares no higher than the rt rate upon competing moneyed capital capita has haa been modified with respect to certain intangible tax states only by a provision under which instead of the moneyed capital limitation the rate shall not be greater than the rate upon the shares chares of other financial corporations nor upon the net assets ot of individuals vi partnerships or associations employed in the banking backing loan or investment business nor higher than the rate assessed upon mercantile manufacturing and business corporations with head in the stats state also art an added fifth alternative permissive method designated as a specific tax permits a state in place ot of an ad valorem valoree tax on bank shares to add together total dividends paid the preceding year and the increase in capital surplus and undivided pr profits olits less additions to capital or surplus paid in by stockholders and to divide this total by the number ot of shares the state stata may tax the shares bated based upon this amount but not to exceed the rate on other corporations te in proportion to their net profits this method la is designed tor for states which hwe bare heretofore taxed national banks upon their entire net met income from all sources at a proportionate rate to that assessed upon business busl neis corporations the amount which Is in the basis ot of the tax Is the equivalent ot of the tha entire net income from all sources but being assessed against the shareholder upon his prope property ripy in the shares and not a tax upon the objects 2 bank it Is not open to the object objection as an indirect tax on exempt income |