to. We do not tax a New York resident, no matter how many millions he makes in Massachusetts. He may do a very large business in Boston and his residence may be in New York. We exempt the whole share of a brokerage partnership passing to the New York resident. That is a complete exemption. Is that a substantially similar credit? I doubt it technically but it is in essence and it ought to be so construed, in order to do equity. Now then, assuming for the moment that our residents do come within that credit provision of the New York income tax, because an income tax is assessed on them in the state of their residence, we come to the next point and that is how much credit is going to be allowed them. As I say, in Massachusetts we have three rates, one and one-half per cent on business income, three per cent on gains from dealings in intangibles, and six per cent upon interest and dividends. Take your broker for instance, a resident of Boston, with a branch office in New York city. He has a very large income from those sources, in Boston and also in New York City. If he is a resident of Massachusetts, he is going to be taxed as a resident for all of his income, wherever it comes from, which is right, as I understand the committee report. Now if he is to get his credit, how is he going to get it? He has to show the New York authorities just how much he is entitled to and that is an administrative problem of tremendous difficulty, as I proved by trying to work out two or three

cases.

K. B. CASTLE OF NEW YORK: I want to call the attention of the association to the compliment that was paid to this report by the New York State Bar Association when its committee very largely quoted from this report in the report which it made last winter. Its report consisted almost entirely of quoting from this report. I assume it was done of course with the consent of the committee and the officers. It was that that led me to take an interest in this association. I had rather assumed that this association was an organization of impractical theorists, but the report showed otherwise, and I very promptly desired to join the association and came here in consequence of that. Just a word in regard to this New York

state law. It has seemed to me that this law has unfortunately taxed the nonresident. It would have been entirely proper for the state of New York, consistently with this report, to have enacted a general business tax against residents and nonresidents and, if the words "property and" had been omitted from the section imposing a tax on nonresidents, then it would have been a tax on nonresidents engaged in business, and so, being a business tax, I think it would have been entirely proper. Is not the proper solution to take this whole question of taxation of nonresidents out of this present act and levy a general tax on business in the state and not attempt to violate the general provision that a resident should be taxed only where he resides on his income as such?

L. E. THOMAS OF LOUISIANA: I want to say that our state falls largely under the eleventh paragraph of page 44 of this report, and I presume nearly all the other states, at least over half of them, are in the same category. We need constitutional amendments to get away from the general property tax that has us tied. We are tied to the general property tax. These fine theories are splendid and we wish we could use them, and we will use them when we can get to them. We have the crowns over our heads but we haven't reached them yet. As a practical proposition, I want to say that we or dered five hundred copies of this report and have put them in the house and senate and distributed them to leading citizens in our state who take an interest in public affairs. It is largely a matter of education and we are trying to work to the proposition to come under the provisions of this spendid report which we received last winter and of which we ordered that number of copies for distribution. I would suggest that other commissions might profitably do the same thing in their states where it is necessary.

SECRETARY HOLCOMB: In a way perhaps representing the association, and the feeling of the association as to this report, I just want to say a word or two with respect to the work of this committee. I was privileged, as you perhaps noticed in the early pages of the report, to sit in with this committee at its meeting when the report was formulated, and I cannot ex

press the sense of satisfaction that I gained at the hard sincere work and careful investigation and discussion given to these questions by that committee. I think the association owes a very great debt of gratitude to the members of the committee and to Professor Bullock for giving us this great piece of work. With respect to the distribution of it, you may have perhaps noticed in the Bulletin where I have noted what has been done. It has been distributed very widely throughout the country; perhaps six or seven thousand copies, perhaps more, have been printed and distributed. It has been reprinted in full in the Missouri Tax Commission's report, also in the report of the Oregon Commission. It has been distributed widely not only in Louisiana but in Indiana, in Rhode Island and in New York. I have sent it to a large number of prominent people throughout the country and the requests for it come in almost daily. I think I ought to say this much and I hope that we all appreciate this work because it was done under great pressure. The gentlemen that came there from the west, the south, the north, and east, came at the expense of time and at a time of the year when they were busy, but they sat there, three sessions a day, six days in the week, at sustained conferences in which these discussions went on. The work was done with extreme care.

With respect to business taxation, so far as the nonresident is concerned, I see this tax on the nonresident in New York to be sustainable in law only on the theory of a business tax. If it were a general income tax on the nonresident, I should doubt its constitutionality, but assuming it to be a business tax, for the right to do business in the state, I think it can be sustained, as thus differentiated from the theory of a general income tax, which I understood from Mr. Bell to indicate his thought.

MR. TOBIN: As one of the counsel of the Davenport committee of New York, I think it might be well to explain to those present that we believe what New York has done has been a merger of a business tax, as Mr. Holcomb has said, and a personal income tax. New York state was much in need of revenue. The state was falling short on account of the large

loss due to the repeal of certain revenue-producing measures, to the prohibition laws, and the like. That in itself caused the state of New York and its subdivisions a loss of something like seventeen millions of dollars so that it was quite necessary that they should obtain new sources of revenue. We were

fearful of presenting two bills before the legislature at that time. The committee was appointed some time in February and had very little time indeed to bring in something upon which the legislature might act at the session then going on, so we conceived the scheme of merging the business tax and this personal income tax in one bill. I am quite satisfied in my own mind that if there had been more time to consider it we would have brought in separately a business tax bill and a personal income tax bill. While I am discussing the subject, I would like to say that in a conversation with Mr. Powell, he said that the law might be unconstitutional on the ground of violation of our home rule provision, which we used to talk about but which we have gotten over of late. That point was very thoroughly discussed by the Mills committee which was the committee preceding the Davenport committee, and there was not one member who came out and said the bill proposed by the Mills committee would be unconstitutional on the ground of the home rule provision. I myself and I think all the lawyers that were attached to the committee and all the legislative leaders of New York and the governor's counsel, feel that there is no need to worry about the main features of the bill which has now become a law. There is retained by the local assessor the power of assessing tangible personal property. We have taken away from the local assessor intangible personal property but left with him tangible personal property, so it cannot be said that the law is unconstitutional. Of course there will be some test cases but that is usual with any new statute which is passed.

A. J. MAXWELL OF NORTH CAROLINA: I would like to express as strongly as I can do so, the appreciation of the work of the report of this committee. I would like to say as to our state board, that we already have well under way in North Carolina the machinery for adopting the recommendations of this

report. To do this an amendment to the constitution is necessary. We have in our constitution a provision that we have been unable to find in any other state, against taxing income derived from property that is taxed. Influenced largely by the report of this committee, our general assembly, which met in January, adopted with practical unanimity, an amendment to the constitution to strike out this provision, and that was done, even without substantial opposition to it. This committee has recommended a system of revenue that for North Carolina certainly, and I anticipate for many other states, would make it possible to derive all necessary state revenue from sources other than the general property tax. I do not assume any one here enjoyed more than I did the running discussion we had during our morning session with reference to segregation, as that term is generally understood. We had an amendment to our constitution submitted in North Carolina a few years ago expressly authorizing that and, largely upon the advice of the former chairman of the state tax commission, that amendment was not adopted. While it is pretty generally recognized now as unsound to separate property into two classes, one class to be taxed by the state and another by the county, I can see no sound reason why the desired result may not be reached in a way that is perfectly sound, if the state revenue is raised by a system that touches in a broad way practically everybody. That proposition, as I recall, was suggested by the gentleman who is now presiding over this session, Professor Plehn, two conferences ago. I believe I found his suggestion in the record. It strikes me as desirable because certainly there is a difficulty in our present form of taxing property for the dual purpose.

MR. ADAMS: Simply to bring it within the rules I would like to read this proposed resolution:

"That the Committee on Inheritance Taxation be continued with such additional members as the President may appoint and with power to act, subject to the approval of the Executive Committee."

CHAIRMAN PLEIN: The resolution will be referred to the resolutions committee.