Monday, April 6, 2009

2 Cent Documentary Taxes

Bank check with 2 cent documentary stamp paying required tax.
Bill of foreign exchange. Tax stamps, both US and French, are on the back.

The Revenue Act for the funding of the Spanish-American War required taxes on certain documents representing business transactions. Hence the term "documentary tax": Tax stamps were applied directly to the documents representing the transaction, such as bank checks and stock transfer receipts. Specific to the current concern of this blog for the 2 cent documentary stamp, the following transactions were taxed at the rate of 2 cents:

1. Stock Transfers: All sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares of certificates of stock for each $100 in face value or fraction thereof;

2. Bank Checks: For each bank check, draft, or certificate of deposit not drawing interest, or order for the payment of any sum of money, drawn upon or issued by any bank, trust company, or any person or persons, companies, or corporations at sight or on demand;

3. Bills of exchange (inland), draft, certificate of deposit drawing interest, order for the payment of any sum of money, otherwise than at sight or demand, or any promissory note except bank notes issued for circulation, and for renewal of the same, for each $100 in value or fraction thereof;

4. Foreign bills of exchange or letters of credit (including orders by telegraph or otherwise for the payment of money issued by express or other companies or any person or persons), drawn in but payable out of the U.S., if drawn drawn in sets of two or more, according to the customs of merchants or bankers, for each $100 or fraction thereof for each instrument;

5. Certificates of profits (e.g., certificates of deposit, interest-bearing notes, bills of exchange, money orders), for each $100 face value or fraction thereof.

Of course, 2 cent stamps might have been used to pay multiples or fractions of other tax rates. but these were the uses of single 2 cent stamp.
**Note: This is the first instance of "virtual collecting" I've done on this blog. The images of the documents above were taken from sellers' images available on eBay. As I've written before, I currently live in Nairobi, Kenya, and do not have my collection with me. I work with scans of my collection. It is easy though, to borrow images of the web to demonstrate my point on occasion.

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