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In California and Wyoming3 land and the improvements thereon must be separately assessed and in the former cultivated and uncultivated lands of the same quality and similarly situated must be assessed at the same value. Plowing is not to be considered as adding to the value of land in New Mexico and North Dakota, nor are the cultivation upon it of orchards, forests or hedges in Colorado and Nebraska."

In nine states the assessment of the property of public utilities, such as railroads and telegraph lines, or corporations owning property in more than one county, is especially provided for

-usually by requiring that it shall be by a central board. Indeed, as a matter of practice, in more than half the states, central boards, usually called tax commissions, have been created and given not only this duty, but the duty of supervising all assessments. The recent investigating commission of Ken. tucky? went so far as to propose the establishment of

a permanent Central Tax Commission in charge of all taxation in the State and responsible for the just administration of the tax laws, which sball specifically:

a. Have and exercise strict supervision over the local assessment officers, instruct and guide them in all their work, and after the term of office of the County Assessors recently elected has expired, to organize a corps of expert assessors, under civil service rules, to take the place of the one hundred and twenty County Assessors who now work without supervision, instruction or training. Create larger assessment districts by the combination of counties into groups, so that assessors shall have work enough to occupy them the year round.

b. Take the place of the present State Board of Equalization.

c. Exercise control over the local boards of supervisors and guide them in their work.

d. Do the work of assessing railroads, franchises, bank stock and other property now assessed by er officio boards.

e. Look after the license taxes, inheritance taxes and all other taxes.

3XIII, 2; XV, 1.

VIII, 6; XI, 177. 5XVIII, 7; IX, 2.

La., 226: Mich., X, 5; Miss., IV, 112; Mont., XII, 16: N. D., XI, 179; Okla., X, 19, 21, 34; Tex., VIII, 8; Va., XIII, 171, 176, 179; Wyo., XV, 10.

"Report of the Special Tax Commission of Kentucky, 1912-14, p. 9.

231. Conclusion.

Finally, equalization is regulated by a few constitutions, and most of them have something to say about the collection and payment of taxes.

In conclusion it may be said that no one attempts to defend the taxation systems of American states. As has already been intimated, however, “what we do not like is that we are taxed, not that we are stupidly taxed," and not until recently has the burden of taxation been sufficiently weighty to emphasize the injustices of our methods. The very sincere and genuine study of the situation by state commissions and university classes during recent years, encouraged by some forward steps on the part of our law-makers, renders the outlook, however, decidedly hopeful.

TENNESSEE NOTE.—The distinguishing feature of the Tennessee system of taxation, says the federal report on the revenue systems of the states, “is a carefully worked-out system of privilege taxes upon the exercise of various occupations which supplement the general property tax." The constitutione makes mandatory the taxation of all property at the same rate, according to its value, "so that taxes shall be equal and uniform throughout the state.” The legislature is permitted to tax merchants, peddlers, privileges and the incomes from stocks and bonds that are not taxed ad valorem.

One thousand dollars' worth of personal property must be exempt to each taxpayer and the "direct product of the soil" must be exempt in the hands of the producer and his immediate vendee. The legislature may exempt the property of the state, counties and municipalities used exclusively for public purposes and that of religious, charitable, scientific or literary institutions. Goods manufactured of the produce of the state must not be taxed otherwise than to pay inspection fees.

The courts have been very strict in construing the provisions of the constitution that all property must be taxed. Even public bonds cannot be exempted."

Adult male citizens of the state, unless exempt by law on account of age or other infirmity, are required to pay a small poll tax.

se. J., Cal., XIII, 9; Colo., X, 15.

Se. 9., Colo., X, 3; La., 48, 233, 243; Okla., X, 30; Tenn., XI, 11; W. Va.,
XIII, 6.

1 Wilson, Congressional Government, 131.
*Wealth, Debt and Taration, 660.
3I1, 28, 29, 30.

*See Railroad v. State, 55 Tenn., 663; Memphis. Etc., Ry. Co. v. Gaines, 3 Cooper's Chy., 604 (611) ; see, also, Reelfoot Lake Levee Dist. v. Darson, 97 Tenn., 151.

*Keith v. Funding Board, 127 Tenn., 441.

The system of taxation actually in force includes all of the kinds of taxes named. There are over one hundred taxable privileges," including the inheritance of property and a number of special corporation taxes.

The administration of the taxation system is left principally to the assessors elected by the voters of the counties, and to the county court clerks. There is some ineffective supervision by the comptroller's office and boards of equalization appointed by the county courts and mayors of cities review the assessment of property. The property of railroad, telegraph and telephone companies is assessed by the railroad commission. There are two ex officio state boards of equalization, one for reviewing the assessment of the railroad commission, the other for the assessments of the county assessors.

Dissatisfaction with the widespread under-assessment of property and also with the law governing back assessments led to the appointment by the governor in 1915,- of a special tax committee composed of six citizens who served without pay. They made a number of recommendations, among them (1) the creation of a permanent tax commission with stringent supervisory powers over the local assessors, including power of removal from office; (2) the taxation of the income of certain kinds of intangible property in lieu of the property itself, and (3) the nearly complete abolition of back assessment. The bills in which they embodied their proposals were not considered by the legislature, but a separate act was passed changing the back tax law somewhat in accordance with their recommendations.

Incomes from stocks and bonds not taxed ad valorem must be listed as personal property

Acts of 1915, ch. 101.
sib., sec. 20; Acts of 1893, cb. 174. State v. Alston, 94 Tenn., 674.

The tax law as in force in 1907 is compiled in R. T. Shannon's Tax Digest and Criminal Cost Laros, obtainable from state con

1Acts of 1907, ch. 602.
2Acts of 1897, ch. 5 and ch. 10.

Memphis, Nashville and a few small towns assess the property of the city for city purposes; the county assessor assesses the same property for state and county purposes.

*Acts of 1915, Senate Joint Resolution No. 27.

Lien and mortgage notes were defined as bonds and it was hoped that under the clause of the constitution permitting the taxation of the income from bonds not taxed ad valorem, this exception to the general property tax might be valid.

Acts of 1915, ch. 124. The Committee's report was published separately and also in the Appendir to Legisaltire Journals. 1915, No. 6. For a brief account of the work of the committee, see article by present writer in Proceedings of the Ninth National Conference of the National Tax A8sociation, p. 272. For brief account of current Tennessee conditions, see, in addition to the Committee's report, Official Report, first annual convention of Tenn. Manufacturers' Association (1913), p. 20; Publications of Public Efficiency League of Knoxville, I, 1,


Public CREDIT.

232. Explanation of the Use of Public Credit.

The custom of using public credit as a means of financing public expenditures, though of mediaeval origin, did not attain to the hugeness of its present proportions until the nineteenth century. It is made possible by the constitutionalism in government that has grown up during the last two hundred years. “The broad theory of constitutional liberty," says Professor Adams,

is that the people have the right to govern themselves; but the historical fact is that, in the attempt to realize this theory, the actual control of public affairs has fallen into the hands of those who possess property.

It follows from this that when property-owners lend to the government, they lend to a corporation controlled by themselves. The confidence which they repose in government does not rest upon sentiment or patriotism, nor does it show greater integrity on the part of people now than in former times; its simple interpretation is that the possessing classes have made their conception of rights and liberty the efficient idea of modern times, and that in some way the moneyed interest has captured the machinery of government. Our modern political society is properly characterized as commercial constitutionalism, and out of this fact arises such guarantee as exists that moneys borrowed by governments will be repaid.

While admitting the truth of these statements students of finance lay equal stress upon the modern custom of making use of credit in the conduct of all business as explanatory of the expansion of public credit. It is doubtless true also that when states, like individuals, find that their credit is good, the temptation to use it is likely to wait only for a special occasion to prove irresistible. The occasion in Europe was the vast need for funds to prosecute the Napoleonic wars. The occasion in the American states was the great enthusiasm for internal improvements, for the quick attainment of desired means of com

1General References: Adams, H. C., Public Debts; also science of Finance, Part II. Book III: Bullock, C. J., Selected Readings in Public Finance : ch. 20. 24; Plehn, C. C.. Introduction to Public Finance, Part III.

Public Debts, 9.



munication, which the Jacksonian Democracy decreed should be met by the states instead of by the federal government. The occasion in American cities was the progressive increase of necessary expenses incident to their phenomenal growth in the latter half of the nineteenth century. These expenditures were enormously augmented by the insistence upon unnecessary outlays by owners of suburban real estate who saw in public improvements, such as streets and boulevards, paid for with borrowed money, a means of rapid increment in land values without the corresponding decrement which a high tax rate would entail.

Such a practice invited disaster—which was made inevitable 233. by ignorance and neglect of correct administrative methods. Against Careless administration is usually incident to popular govern-Indebtedness. ment, and was in the United States of that time at least, countenanced by a none too strict ideal of care and honesty in private business dealings. Furthermore, there was a deplorable lack of judgment in many of the public improvement schemes which were conceived and undertaken. Naturally reaction followed.* Constitutional clauses framed in the thirties requiring the leg. islatures to provide internal improvements gave way to or were supplemented by severe restrictions upon the borrowing power. In the constitutions as they stand today prohibitions of indebtedness are very prominent.

One state forbids the loan of its credit "for any purpose whatever," and the issuance of “any interest-bearing treasury warrants or scrip;" and fifteen others? prohibit the creation of debts by the state except for specified purposes,—with reference to liabilities previously incurred;' in order to supply deficiences of revenue' or expenses not provided forl or of any extraordi.

The bond issues for the benefit of private companies were, of course, expected to be repaid by those companies.

"Concerning the repudiation measures which have been enacted in the states of Ala.. Ark., Fla., Ga., La., Mich., Minn., Miss., N. C., S. C., Tenn., Va., see W. A. Scott, The Repudiation of state Debts.

"See, e. 9., Mich. Const., 1837. For provision of Tenn. Const., 1834, see Art. XI, sec. 9.

Ark., XVI, 1.

?Ala., XI, 213; Colo., XI, 3; Fla., IX, 6; Ga., VII, sec. III, 1. sec. XII, 1; Ind., X, 5; La.. 46; Mich., X. 11; Minn., IX, 7; Mo., IV, 44; 0., VIII, 3; Pa., IX, 4; Tex., III, 49 ; Va., XIII, 84 ; W. Va., X, 4; Wis., VIII, 4, 9.

Ala., Fla., Ga., Ind., LA., Mo., O., Pa., Tex., Va., W. Va. Several constitutions expressly provide for the assumption of pre-state debts,-e. g., Okla., I, 4.

"Ala., XI, 213; Colo., XI, 3; Ga., VII, sec. III, 1; Ind., X, 5; Mich., X, 10; Mo., IV, 44 ; 0., VIII, 1 ; Pa., Ix, 4Tex., III, 49; Va., XIII, 184'; W. Va., X, 4.

10., VIII, 1.

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