LOCAL GOVERNMENT AND TAXATION 63 



use of towns and cities. Until 1923 this stock was a part of the town 

 inventory against which taxes were assessed proportionately. 



State-Collected Revenues Shared with Towns 



Taxes collected by the state and returned in whole or in part to 

 municipalities to be used for general municipal purposes include the 

 following: 



Interest and dividend tax 



Insurance tax 



Railroad tax 



Savings bank tax 



Building and loan association tax 



For the fiscal year ended January 31, 1940. the portion of these 

 taxes distributed to towns amounted to $1,148,787, or approximately 

 five percent of the total revenue received by towns and cities. They 

 deserve attention here in view of their position in the revenue system. 

 The explanation of these tax items is exclusive of state aid, which is 

 paid from the general funds of the state treasurer. State aid is treat- 

 ed in a later section under the respective headings for which the aid is 

 granted. 



Before the legislative session of 1923, intangible personal prop- 

 erty was taxed as property in accordance with the rule of proportion- 

 ality and was included in town inventories for that purpose. The 1923 

 legislature enacted an income tax law which removed this class of 

 property from the local assessment rolls and taxed the incoine there- 

 from at the state average rate^' of taxation levied upon other prop- 

 erty. In general, the tax base is income from interest and dividends 

 received by persons, corporations, partnerships, and trusts. The laws 

 provide certain exceptions and allow an exemption of $200. This tax 

 is assessed by the state tax commission on January 1 and is payable 

 on October 1. Interest at 10 percent is added after October 15. Al- 

 though the tax is paid directly to the state treasurer, the tax commis- 

 sion is responsible for its administration. The total revenue, minus 

 the cost of administration, is distributed on December 31 to towns 

 and cities where the owners of the taxable income reside. 



All capital stock insurance companies organized and doing busi- 

 ness in the state are required to report to the state treasurer on Mav 

 1 the amount of their paid-up capital stock. The state treasurer then 

 levies and collects a tax of one percent of the paid-up capital. Three- 

 fourths of the tax so collected is distributed to the towns and cities, 

 in the proportion shares owned bv the residents of each town bear to 

 the whole number of shares. The remaining one-fourth is retained 

 by the state and included in its general fund. 



The state tax commission is authorized to assess the taxes upon 

 railroads and other public service corporations, except buildings used 

 by telephone and telegraph companies for office purposes which are 

 assessed locallv. The rate of taxation is the average rate on other 



*■&>" 



*» The state average rate is a weighted average rate of all locally assessed taxes. 



