The agitation in recent years for some method of taxing credits and corporate stocks which will not take from thirty per cent to fifty per cent of the income, and for the relief of owners of forest growth, had much to do with the call of the convention of 1912, as it had with the call of the convention which is to assemble in June, 1918.

The long line of decisions and opinions of the court, holding that whatever property is declared taxable by the legislature must be appraised on the same plane of value and taxed at local rates, frustrates any attempt at classification or partial relief. Total relief may be secured by specific exemption or omission to declare particular property taxable.

The case of money and credits was finally disposed of in 1911 by an opinion of the court then rendered, 76 N. H. 588, and, in 1913, standing wood and timber were denied taxation at a less rate than imposed on property in general, 76 N. H. 609.

The subject of constitutional limitations in tax legislation in New Hampshire is fully covered by the above opinions and cases cited.

It may well be doubted whether the court will ever again be so complacent as it was in 1883, when, by a dictum pronounced by the chief justice, an exception was found to the constitutional rule of equality in the case of the savings bank tax, which was declared to be an "anomaly, resting on grounds of public policy, and universally understood to have acquired the position of an exception to the constitutional rule of equality." Railroad v. The State, 62 N. H. 648.

This case has never been regarded by the court as an authority for constitutional amendments by prescription, or permission to the legislature to classify other property.

The convention of 1912 consumed much time in the discussion of taxation, and was unanimous in submitting to the people three amendments, one of which related to the inheritance tax above mentioned.

One would permit taxation upon the incomes of public service corporations in lieu of a direct tax upon their property.

The third amendment would destroy the effect of the words "proportional and reasonable" in connection with the taxation of growing wood and timber and money at interest, and would permit the levy of a graduated tax on incomes from stock of foreign corporations and money at interest, except incomes from money deposited in savings banks in this state received by the depositors.

By a small vote each of these amendments failed of ratification at the polls.

Had the third proposed amendment been divided so there could have been a separate vote on the wood and timber proposition and on money at interest and incomes, there is reason to believe the latter part of the amendment would have been adopted, for the amendment as presented received a very large adverse vote in Coos County, where is located the large timbered territory.

It was felt in that section that whatever exemption might be granted to that class of property would necessarily be added to the already overburdened farms.

This fear may have been unfounded, but it existed then and exists now.

The Joint Resolution approved April 21, 1915, relating to the call of the constitutional convention in 1918 was partially the result of a peculiar episode during the 1915 session of the legislature.

Because of a suggestion in governor Spaulding's inaugural address, a bill was introduced in the legislature providing for the taxation of interest and dividends instead of invested capital.

The legislature requested the opinion of the court on the question whether any constitutional provision would be violated by imposing a tax at the uniform rate upon money received as interest or dividends upon the classes of securities mentioned in the bill, and exempting the securities:

A majority of the members of the court found no constitutional objection to the imposition of such a tax.

When the bill came on for hearing before the committee having it in charge, it was attacked from four angles; first by the class who believe that a credit is property; second by the owners of corporate stocks now untaxed, though they did not offer that as a reason for their opposition; third by representatives of savings banks because the resultant tax would be about one mill on the dollar of the capital value, while the bank tax is seven and one half mills; fourth by many of those who advocate a fixed tax on intangibles but who regarded the proposed tax as too low.

While the third and fourth class of opponents did not favor the bill, they were in accord with a proposition to classify intangibles and tax them on a reasonable basis, and the legislature favored the consideration of an amendment to enable this to be done. Hence the call for the constitutional convention, when the question will again be discussed as it was in 1912. The temper of the people may be tried by the submission of amendments under which the present scheme of taxation may be entirely overturned.

The removal of the words "his share" from Article 12 of the Bill of Rights and the word "proportional" from Article 5, Part II, of the constitution would leave the legislature practically unrestricted in tax legislation.

If this was followed by the amendment to Article 6, Part II, proposed in 1912 (Journal, page 92), reading as follows: "The public charges of government or any part thereof may be raised by taxation. The subjects of taxation may be divided, according to their kind and value, into classes differently taxed," full warrant would be given for indefinite classification.

Substituting the word "uniform" for "proportional" would accomplish the same result.

Slight amendments would open the door for the introduction of an income tax in addition to, or in place of, the general property tax.

A tax on incomes from invested capital would doubtless make a stronger appeal than a tax which could be levied on all incomes, including those derived from labor, employment, and business gains.

General income tax laws exist in Wisconsin, Oklahoma, Massachusetts, Missouri and Delaware; and partial ones in West Virginia, Connecticut, Montana and New York.

It has long been maintained by Professor Seligman and other students of taxation that "the general property tax has everywhere broken down in our state and local finance. It has become, in large part, a tax on real estate, whereas what is needed at the present time is primarily a taxation of personal property and especially of intangible wealth."

It is true that eighty-two per cent of the local taxes raised in New Hampshire for the year 1917 is levied on real estate, and but three per cent is derived from intangible wealth.

It is also true that but a small fraction of what is termed "intangible wealth" is taxable in this state.

The non-taxable list of intangibles include all United States obligations, bonds and notes of the state of New Hampshire and its municipal subdivisions bearing interest at five per cent or less, notes at five per cent or less secured by mortgages of New Hampshire real estate, stocks of all corporations except New Hampshire national banks, and deposits in savings banks are not taxable to the depositors.

From an income tax standpoint, and taking the average rate of taxation in the state this year, $1.78, a tax on a four per cent bond would be equivalent to fifty-five per cent income tax.

The federal war revenue bill just enacted does not impose an income tax of that amount until the individual

ure and not a scientific scheme of taxation for ordinary times.

Even in England the income tax ranges only from twelve per cent to thirty-four per cent.

A twelve per cent tax on the income of a five per cent bond is equivalent to a six mill tax on the bond itself, and is double the tax in Massachusetts, where the tax is six per cent on incomes.

The language of the amendment to Article 5, Part II, proposed by the convention of 1912 is as follows: "but the said general court. shall have full power and authority to specially assess, rate and tax growing wood and timber and money at interest, including money in savings banks, and to impose and levy taxes on incomes from stock of foreign corporations and foreign voluntary associations and money at interest, except on incomes from money deposited in savings banks in this state received by the depositors; and it may graduate such taxes according to the amount of the incomes, and may grant reasonable exemptions; provided, that if such taxes be levied on incomes from stock and money at interest, no other taxes shall be levied thereon against the owner or holder thereof."

This amendment provided for the classification and special assessment of growing wood and timber and money at interest, and a restricted income tax, and is somewhat clumsily inserted in the article.

The three subjects embraced in the above proposal might well be offered separately, and a fourth added, viz., an all inclusive income tax conforming to the federal income tax; and the amendments might be added to Article 5 rather than inserted in its body.

GROWING WOOD AND TIMBER.

Add at the end of Article 5 the following:

Provided, further, the said general court shall have full power and authority to specially assess, rate and tax grow