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APPENDIX 
by stock brokers or by dealers in stocks, but by investors all over the 
United States, and particularly by small investors; that the tax in its 
present form falls inequitably upon different stock transactions—a 
defect which cannot be practically remedied; and that the tax impairs 
the mobility of American capital and the American machinery of 
credit—a result carefully avoided in the less wealthy but competitive 
European centers of credit. 
In this country, a Federal stock sales tax has been in force during 
the years 1794-1800, 1812-18, 1862-70, 1898-1902, 1914-16 and 1917 
to date. Similar taxes on stock sales and transfers by states of the 
Union were inaugurated in 1905 by New York State, in 1914 by 
Massachusetts, and in 1916 by Pennsylvania. 
The U. S. Internal Revenue receipts from the Federal tax on stock 
transfers will be found in Appendix IIb. 
Stock-brokers, of course, pass the tax back directly to their cus- 
tomers; this practice indeed is compulsory under the Constitution of 
the Exchange. Dealers in stock indirectly yet effectually do the same 
thing by widening the “span” between prices at which they will buy 
and will sell. Thus the burden of the tax really falls upon investors. 
The tax is based upon a 2 cents per share charge on each share 
of $100 par value, and, scaling down, 1 cent per share of $50 par 
value, 15 cent per share of $25 par value, etc. No-par shares are 
arbitrarily taxed at the rate of $100 par shares. These taxable values 
have in practice little relation to market values, and thus many serious 
inequalities in the tax rates arise. Recently two $100 par shares were 
taxed just alike, though one sold in the market for $1,400 per share 
and the other for $5 per share. 
Comparison with European stock sales or transfer taxes estab- 
lishes the following facts: (a) taxes on the American security dealer 
are the highest in the world; (b) America is the only country which 
taxes the professional security trader as heavily as the investor; (c) 
while the American investor seems to be taxed lightly, his burden is 
really heavy because of the indirect burden of the tax upon the dealer 
which is shifted to him. Abroad, the tax as it applies to dealers is 
light enough to be absorbed by them, thus freeing investors from this 
heavy indirect tax burden. 
European security taxes, however, differ considerably from ours, 
not only in respect to rates, but also to the particular security opera- 
tions upon which they are imposed. The British tax corresponding 
to our stock sale and transfer tax is imposed upon the transfers of 
registered issues, but not upon their sale; it is always referred to as 
the “transfer tax.” The British have established a compensating tax