National Tax Association

LEGISLATIVE AND NEWS NOTESSource: The Bulletin of the National Tax Association, Vol. 5, No. 3 (December, 1919), pp. 70-72Published by: National Tax AssociationStable URL: http://www.jstor.org/stable/41785342 .

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LEGISLATIVE AND NEWS NOTES

Miss Mary E. Elwood has resigned her position in the office of the state tax com- missioner of Connecticut to accept an appointment as state bank examiner. This is the first instance of the employment of a woman to that office in the state.

Mr. Fred T. Field, having returned to Boston after service in Washington as a member of the Advisory Tax Board, has become a member of the firm of Goodwin, Procter, Field and Hoar, with office at 84 State Street.

We have received from Mr. W. R. Loyd, of Birmingham, information as to the per- sonnel of the new state tax commission of Alabama which supersedes the state board of equalization. The chairman is John S. Mooring, who was chairman of the board of equalization from 1913 to 1915. The other members are A. A. Evans, also a member of the state board of equalization from 1911 to 1915. He is credited with the authorship of the income tax portions of the new revenue act. The third member is Thos. W. Sims, who was chairman of the preceding board of equalization and who will be remembered as a member of the executive committee of this Association.

Members will have doubtless received the reprint of the article by former vice- president of the Association Lawson Purdy on " The assessment of real estate ". We were particularly pleased to secure this pamphlet for distribution because of Mr. Purdy's recognized authority as an expert on the matters covered. We have since received requests for copies to be distrib- uted in the states of Tennessee and Ohio, where entire revaluations of the taxable property are to be undertaken.

An exhaustive and thorough revaluation of -all property in the state of North Carolina is now in progress, under the direction of the state tax commission.

At the annual convention of the Mining Congress, held in St. Louis, November 17-

22, one session was devoted to the taxation of mines. Among others, there were ad- dresses by Mr. R. C. Allen, of Cleveland, Ohio, A. P. Rannstedt of Wallace, Idaho, and George E. Holmes of New York City, members of this Association.

Considerable progress has been made by the committee on the taxation of mines ap- pointed by President Haugen. Ex- Presi- dent S. T. Howe, Messrs. C. M. Zander of Arizona, and R. C. Allen of Ohio met at St. Louis at the time of the annual con- vention of the American Mining Congress, for preliminary discussion and for plan- ning the work of the committee. The other members, so far as they have been appointed, are Professor E. L. Bogart of the University of Illinois and Mr. J. Parke Channing of New York City. We antici- pate very substantial results from the work of this committee.

We record with regret the approaching retirement from the state tax commission of New York of Chairman Walter H. Knapp, who contemplates a change due to the inevitable consequences of political tenure of office. Judge Rnapp, in kindly compliance with our request for coopera- tion towards the development of a tax com- mission department for the Bulletin, sends us notes of changes which will prob- ably be recommended by the commission in its forthcoming annual report, as follows:

Provision for making clear the exemp- tion of intangible personal property from taxation, in view of the operation of the income tax, both as to individuals and for- eign and domestic corporations.

Repealing the article of the tax law providing for a tax upon securities at a low rate and of the penalty section in the inheritance tax law, providing an addi- tional inheritance tax upon securities upon which an investment tax has not been paid during the life of the owner. The income tax is thought to cover the entire subject of taxation of intangible property.

Provision for amending both the per- sonal income tax law and the business cor-

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flit. 3] DECEMBER, 1#1# 71

poration franchise tax law, so as to provide for the distribution of some portion of both taxes to the school districts of the state. Under the school district unit Which exists in the state, the exemption of this prop- erty has caused serious complaint in some xiistricts.

Repeal of the special franchise tax law and the substitution therefor of a classified

f orm ross earnings

of taxation tax

together or some

with other

the simplified

assess- orm of taxation together with the assess- ment by local officers of the tangible real estate located in the local units. This proposition is not surprising in view of the great amount of uncertainty and liti- gation which has followed the attempt to administer the special franchise tax law, -applicable to public utility corporations.

Judge Knapp mentions with pardonable pride the unanimous affirmance by the ap- pellate court of the determination of the tax commission on a very important matter effecting the equalization of assessments in the large and important county of West- chester. The constitutionality of the act giving jurisdiction to the state tax commis- sion to interfere in county equalization matters was raised. The result is of con- siderable importance in the development of proper assessment methods in the state.

Note is also made of one instance of the indirect effect of the personal income tax law. This law distributes 50 per cent of the yield to the various local units in pro- portion to the assessed valuation of the real estate therein. The stimulus to increase -the assessments in order to secure a larger slice of the income tax, has turned out to -be effective in the city of Middletown, where assessments have been more than •doubled, and this result has been approved by the voters as indicated by the re-election -of their mayor and assessor under whom the increases were made.

All of the above, coming from Judge Knapp in the closing days of his adminis- tration, leaves us with a distinct feeling of regret that the state should be deprived of Iiis services just at a time when the effect 9Í two terms of devoted service was begin- ning to show itself in tangible results.

The work of the Michigan board has always been interesting and instructive. The following comment upon its recent activities furnished by Secretary Burtless •will therefore be of value to those from the

other states who look to Michigan for help in the difficult problem of securing a just equalization of values throughout their states.

" Equalization of values between the several counties in the state has been the item of greatest interest among taxing offi- cials of the state this year. For a number of years the state board of equalization consisted of the auditor general, secretary of state, state treasurer, superintendent of public instruction and the chairman of the board of state tax commissioners. Under the law the board was required to meet and equalize the state twice in each five-year period and the tax commission was re- quired to furnish the board an estimate of the true cash value of each county. While the estimate required has been very care- fully made prior to each meeting of the board, it has never been accepted as the basis for equalization. The legislature of 1919 amended the law so that the board now consists of the auditor general, state commissioner of animal industry, and the three members of the board of state tax commissioners. The estimates prepared by the tax commission were published in ad- vance of the meeting of the state board of equalization and were the basis of all dis- cussions. After a full hearing, and ex- pressions of satisfaction with the estimates from representatives of nearly every county, they were finally adopted, with slight changes, as the basis for the equalization. " As a result of the equalization, all but thirteen of the eighty-three counties of the state will pay a smaller proportion of the state tax than under former equalizations - the thirteen counties being the industrial centers which have been to a great extent under-assessed. It is the firm conviction of the tax commission that the present equal- ization will result in the fairest distribu- tion of the state tax in the history of the state. Under the amended law the equal- ization must now be made annually instead of twice in five years. " The gathering of data upon which to base the estimates occupied the entire at- tention of the members of the board and their entire field force until August first. Since that time the review of local assess- ments has been the principal activity of the department and by December first ten counties will have been completely re- assessed, and all property placed upon the

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72 BULLETIN OP THE NATIONAL TAX ASSOCIATION [Vol. V

assessment rolls at true cash value as re- quired by the constitution and laws of the state. In some cases individual assessments have been increased several hundred per cent, and in one county the average increase was approximately two hundred per cent. With the close of this year's work upwards of ninety per cent of the entire state will have been reassessed by the board since 1912, when the work of reassessing the state was begun."

There has been a recent revival of re- quests for the extremely useful pamphlet issued by this board in 1913, which will be remembered under the title " Cash value assessments ".

We have not heretofore noted the legis- lation enacted at the special session of the Montana legislature, which adjourned in August. Much of this was of considerable importance.

An act was passed providing for the taxation of the property of freight-line

companies based upon the gross earnings derived from both intrastate and interstate business, at the rate of 5 per cent.

The inheritance tax law was amended with reference to the inheritance tax oh intangible property of non-resident dece- dents.

Provision was made for an increase in the salaries of the county assessors, the amounts ranging from $1500 to $3500 per annum.

An act was passed providing for the establishment of a fund to aid those desti- tute because of losses resulting fro» drought, hail or unfavorable climatic con- ditions, and providing for a levy of taxes in that connection.

An act was passed providing for the submission to the electors of an amendment to the constitution to create a board of ex- aminers and a board of administration looking to the general establishment of reforms in administrative methods in the state, including budget reform.

A PRACTICAL CONSTRUCTION FOR A WORKABLE INCOME TAX

ALLEN RIPLEY FOOTE Net income is the most logical subject

of taxation. The taxation of income, from whatever source derived, should take the exacted tax from the corn-crib instead of taking it out of the seed corn. The differ- ence in effect upon production between these two exactions must be patent to the most uncritical observer.

Net income is a concrete fact capable of exact demonstration by any intelligent tax assessor working under the provisions of a properly constructed income tax law.

When the amount of net income subject to a tax has been determined, the assess- ment and collection of the tax to be paid to any taxing government can be easily and accurately accomplished.

The theory that no subject of taxation should be taxed by more than one taxing body is sound as an administrative and economic proposition; but under our com- plex system of federal, state, county and local governments, it is unworkable. The desired degree in efficient administration can be developed, however, by the adop-

tion of a rule providing that but one tax return shall be required for the taxation of any subject.

The securing of correct income tax re- turns on which to base an assessment for the payment of the tax required is difficult for the government and annoying for the taxpayer. It is obvious that when revenue from the taxation of net income is sought by several taxing authorities there should be uniformity in the requirements to which the taxpayer must respond. This uniform- ity can be established only when the gov- ernment having the broadest jurisdiction and exercising the greatest power under- takes the work of framing the instructions and securing the returns. It is clear that instructions satisfactory to the federal gov- ernment will be equally so to each of the several states. It is equally true that every taxpayer would much rather have that re- turn used as a basis for the assessment of a state income tax than to make a separate return for the state under different in- structions.

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