National Tax Association

AMONG THE TAX COMMISSIONSSource: The Bulletin of the National Tax Association, Vol. 7, No. 7 (April, 1922), pp. 207-209Published by: National Tax AssociationStable URL: http://www.jstor.org/stable/41785505 .

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Na 7] APRIL, 1922 207

AMONG THE TAX COMMISSIONS

Recommendations presented by the New York State Tax Commission in its Annual Report to the Legislature for the year 192 1

The report presented to the legislature by the New York State Tax Commission for the year 1921 is the first that has been made since the consolidation of virtually all of the tax assessing and collecting agen- cies in the state in July, 1921. The fol- lowing summary of recommendations is taken from the advance sheets issued by the tax commission.

"Among the general facts relating to taxation in the State, the Commission points out that the returns to the various localities of the State from the revenues from corporation and personal income taxes for the last fiscal year exceeded con- siderably the direct property tax now in process of collection by the localities. The report shows that the localities of the State received from the corporation and personal income taxes during the fiscal year ending June 30, 1921, a total of $31, 679,865. The direct state tax now being collected by the localities will amount to $22,340,343, or more than $9,000,000 less than the amount the localities received from the State as their share of the taxes mentioned, with a corresponding reduction in the local tax rate.

"Among the general recommendations made by the Commission is :

That the entire subject of exemption of real property from taxation be given the early and serious considera- tion of the Legislature.

" The Commission declares that ' for many of the statutory exemptions which now exist there appears to be little, if any, logical reason, and public policy would seem to dictate that the State should cur- tail existing exemptions and should scru- tinize applications for future exemptions with much greater care than has been ex- ercised heretofore.* The report shows that the assessed value of real property in the State for the year 1921 was $14,904, 199,178, of which $3,285,986,647 were exempt from taxation, an increase of 9.6 per cent over the exemption in 1920.

"The Commission urges that a tax of one

cent a gallon be placed upon the con- sumption of gasoline, estimating that this would bring additional revenue of about $4,500,000 annually. " It is recommended that the base for computation of automobile license fees be made the weight of the car, with a mini- mum fee of $8. The recommendation is made after an exhaustive study of the methods used in all of the other states. * Such methods can be adopted without materially increasing the fees charged and will provide an easy method of ascertain- ing the correct fee/ the report states. ' It will save a multitude of mistakes and much labor to fifty-five county clerks and four state offices.' "

It is urged that the license fees for motor trucks be increased at least thirty- three and a third per cent. An operator's license law is urged, requiring every driver of a car in the State to have an annual license. The fee is recommended at $1.00, as compared with the $2.00 fee now charged in New York City. Provision should be made for revoking or suspending the license in the case of conviction for serious offenses and the Commission should be given discretion to refuse reissue or renewal. It is especially urged in this connection that the license should be annual.

Another important recommendation urges that the specifications for lenses and headlight devices be made " more specific and accurate," to bring New York into line with other states where the most care- ful supervision of lights is made. The specifications should include provision, it is said, that all lamps should be twenty- one candlepower. On the subject of head- light lenses the Commission says: " About 140 different lamps have been approved and are in common use. The great majority of these are comparatively useless and insufficient to protect the traveling public."

A bond for at least $500 is recommended for all taxicabs operating in cities. "Many of these taxicabs are covered by chattel

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208 BULLETIN OF THE NATIONAL TAX ASSOCIATION [Vol. VII

mortgages," the report says. " The driv- ers are irresponsible and in case of acci- dent the injured party has no redress. It is believed a bond would tend to reduce the reckless and careless driving."

Because of the lack of a sufficiently large inspection force in the Motor Vehicle Bureau, it is declared considerable revenue is lost to the State. " Of greater impor- tance, however, is the fact that with proper inspection much can be done to prevent violation of the highway law and to protect the public from accident and theft."

Considerable attention is given in the report to the results of the consolidation of the tax assessing and collecting agen- cies of the State. The " consolidated " Tax Department has been operating only since July 1, 1921, but already, it is pointed out, the number of employees has been reduced from 1059, when the various bureaus were united, to 924. There has been effected a saving for personal service during the last six months of 1921 over the corresponding six months of 1920 a total of $218,000. Thousands of dollars have been saved in rental, it is stated, as well as in many maintenance and opera- tion charges.

The report shows that $98,739,154 were turned into the State treasury during the fiscal year ending June 30, 1921, by the various bureaus now under the Tax Com- mission. The largest single revenue pro- ducing agency in the State is the corpora- tion tax bureau of the Department. This bureau, during the last fiscal year, received more than $57,000,000. About $43,000, 000 of this went into the general fund of the State and about $14,000,000 were dis- tributed to the counties of the State. The receipts from this source during the last year exceeded all previous records by a large sum. The basis of this tax being net income, the Commission believes the business depression prevalent throughout the State and Nation will result in a con- siderable reduction in the revenue from this source for the present fiscal year. It is believed the decrease will be about $9,000,000. REVALUATION OF PROPERTY IN MINNESOTA

The assessment of real estate and per- sonal property in Minnesota will begin

May 1 and the Minnesota Tax Commis- sion has arranged to hold meetings in every county in the state for the purpose of in- structing assessors as to the laws covering their work. These meetings began March 31 and will be continued until April 29.

TAX LEGISLATION IN KENTUCKY

Mr. P. N. Clarke, Secretary of the Ken- tucky Tax Reform Association, writes as follows concerning tax legislation in Ken- tucky : " At the biennial session of the Ken- tucky Legislature, January 2nd, to March 15th, 1922, not less than sixty bills re- lating to revenue and taxation were in- troduced, but only two of any importance were enacted into laws. These were to extend the powers of the State Tax Com- mission to enable the revision of local assessments of individual property which was heretofore limited to classes of prop- erty and left too much to the local asses- sors. The other measure designated print- ing establishments and newspapers as manufacturing concerns and exempting their machinery and raw materials from local taxation. " A bill sponsored by the Speaker of the House of Representatives seeking to re- peal that part of the classification law, adopted in 1917, providing that intan- gible personal property, farming imple- ments and manufacturing machinery, raw materials and products in process shall be taxable for State purposes only, was passed by the Legislature under peculiar circumstances but was vetoed by the Gov- ernor and the now well-established System of classified taxation remains in force."

CONSTITUTIONAL AMENDMENTS ON TAXATION

The Illinois constitutional convention has proposed a new revenue article, after long and at times acrimonious discussion. The draft as it stands after the second reading appears to retain the general property tax except as there is substituted therefor a tax on all incomes derived from intangible property. Authority to impose a general income tax is also given, but with some rather peculiar limitations and privileges in the determination of rates, deductions and exemptions.

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Ko. 7]x APRIL, 1922 20»

Another attempt will be made this fall to break the uniform rule in Ohio, if the plans which are now going forward to place an amendment on the ballot by initia- tive petition are carried out. The amend- ment will definitely omit reference to the uniform rule of taxation, but it will not prevent the retention of this system if the

legislature really prefers it. A liberally inclined legislature could, on the other hand, go far in revising and reforming the Ohio taxation system under the pro- posed amendment as it now stands. There will be a hard fight on it but the chances appear favorable to success.

ADMINISTRATION OF FEDERAL INCOME TAXES

Address of Robert N. Miller, Washington, D. C, at the Tax Conference held at the Annual Convention of the American Mining Congress, Chicago, October 18, 1921. Reprinted from the Proceedings.

When the federal tax administration writes to a taxpayer that more income or excess profits tax is due from a taxpayer than has been paid for any particular year, there are three possibilities : the Government may be right, the return may be right, or neither may be right. The Government has a valuable background gained in the study of other cases, but is sometimes handicapped by lack of detailed knowledge as to the particular case and by other disabilities, due to the size of its organization. The taxpayer, on the other hand, has unique knowledge of his own business, but often lacks full understand- ing of the legal effect of the facts when considered in the light of the conventional rules which experience has developed in the Bureau. He often fails to realize that some of the facts are material in the tax questions. No satisfactory solution of the whole difficulty can be reached until some combination of experience can be made by which each group will get the knowledge which it needs and furnish the knowledge in which it is proficient. It is unfortunate that the law should be so complicated to administer, but it is nevertheless true. It is a fact that any heavy income tax law is complicated, for the accurate determina- tion of net income is inherently hard. We have not only an income tax law, but also a law involving invested capital - another source of complication. There appears to be no chance of getting rid of the excess profits complications in the returns to be filed next spring.

Since the decision of these questions in any tax case lies primarily with the Gov- ernment, it is the taxpayer who must take the initiative and bring the Government to

his way of thinking, if he can. That this burden falls on the taxpayer rather than the Government is unfortunate; but here, too, we must deal with this as a fact.- It must be admitted, also, that in taxing systems, both present and past, it has prac- tically always been the same.

It is, perhaps, profitable to consider a few of the principal difficulties which harass the Government in the tremendous task of auditing millions of returns. The taxpayer has always known it was hard for the taxpayer; now he is beginning to realize that the Commissioner of Internai Revenue is in no easier position. The best reason for studying the problems of the Department is that such study is help- ful to the taxpayer in presenting his case» To understand the difficulties which must be removed before a judicial body can be convinced is obviously the first step toward actually and legitimately convincing it.

1. Probably the greatest difficulty which confronts the Commissioner is the fact that he is not free to pay the salaries ap- propriate to the responsible and difficult work his technical assistants and deputies must do. All of the Secretaries of the Treasury and Commissioners of Internal Revenue who have held office since heavy taxes made this a vital issue, including the present officers, have fought for better salaries for the men who must supervise this difficult technical work. Some success has been met with, but the taxpayer is still suffering from this difficulty. Inex- perienced men are, of course, slow; but this is not the most serious thing. Inex- perienced men, who have not a clear back- ground, based on the examination of many cases, nearly always lack the courage to

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