TAX ADMINISTRATION 165 
comprises the tax base. The value of the shares is assessed 
to the individual shareholders, but the tax is paid by the 
bank. Except to the extent that the bank may be able to 
increase its real estate deduction by an amount in excess of 
its book value, the tax is equivalent to a tax on the assets of 
the bank, other than the real estate, that are not offset by 
liabilities other than the capital liabilities, including surplus 
and undivided profits. If the real estate deduction is equiva- 
lent to the book value, the result is a 1009, assessment of the 
book value of the stock less the real estate, which is separately 
raxed. 
This method of taxing banks is open to objection, aside 
from the fact that other forms of property are not assessed 
at full value. The larger the surplus, the larger will be the 
taxes assessed against the stock of the bank. Also, the larger 
‘he value of the real estate, the smaller will be the amount of 
taxes, for real estate is not ordinarily assessed at full value. 
The present method of taxation thus furnishes an inducement 
for a bank to keep its surplus low and its real estate invest- 
ment relatively high, in order to reduce taxes to a minimum. 
A surplus of considerable size is most desirable as a buffer for 
the protection of depositors, while an unusually large real 
sstate investment is not generally to be desired. 
It is the 1009, assessment feature, however, that has 
aroused the most opposition. Bank statements are matters 
of public information, and the bank has no means by which 
it can “window-dress” its statement for purposes of taxation. 
In the face of much lower assessments for other forms of 
property it can hardly be contended that the 100% assess- 
ment of bank stock is equitable. In several cases, the bankers 
have contended for a 75%, assessment as a compromise. 
Although 75%, is higher than the assessment ratio for prop- 
erty in general, the bankers probably gauged the situation 
correctly in proceeding on the assumption that the most that 
could be hoped for was a moderate reduction of the assess- 
ment ratio and not an immediate reduction to the average 
level at which property throughout the state is assessed. 
In the Boonville National Bank! case, the bank contended 
that the action of the assessor in assessing bank stock at 
1 Boonville National Bank v. Schlotzhauer, 317 Mo. 1298.