The foregoing review of past efforts to secure a more satisfactory taxation article in the constitution suggests that the people of the state are not ready to take a progressive attitude on the question of taxation. At the present time, public discussion of the tax question would seem at most to be of educational, rather than of immediately practical, value. Nevertheless, agitation for constitutional revision continues. As I write (December, 1914), the Columbus Chamber of Commerce is directing a campaign to induce the next legislature to re-submit the proposal to exempt public bonds; and during the past summer, a number of organizations under the active leadership of the Ohio State Board of Commerce initiated an amendment to the constitution which sought to provide a classified property tax, together with a narrow limitation of aggregate tax rates.1 The proposal cannot be considered a satisfactory solution of Ohio's taxation problem. The inclusion of two such distinct projects in one amendment doubtless contributed to the decisive defeat of the proposal at the November election, and robs the vote of significance as an indication of popular sentiment on classification.


Having now sketched the taxation situation as it developed under the immediate impulse of the recommendations of the commission of 1908, we may next examine Ohio's two most recent efforts to make the general property tax in fact what it is in name. I refer to tax rate limitation and centralized assessment.

The text of the proposed amendment, with explanatory matter, is published in pamphlet form by the Ohio State Board of Commerce (Columbus), and may also be found in the Ohio Journal of Commerce for August 15, 1914.

? The vote on the amendment was 223,873 for and 551,760 against.

Soon after the reduction in the state levy on general property in 1902, attention was called to the rapid increase in local taxes. This increase had in fact begun somewhat earlier, altho in popular discussions it was commonly dated from 1902. It was asserted that the tax-spenders," finding their opportunity in the reduction of the state levy, were indulging in a riot of extravagance at the expense of the "tax-payers."

This view appears to me to have originated in the opposition of certain business interests to the development of special corporation taxes for the use of the state government. It is undeniably true that the development of special sources of revenue made possible the reduction of the state levy, but it by no means follows that that development was unwise, or that it was in any sense a cause of increasing expenditures. It is easy to show that the phenomenon of increasing local expenditures is not confined to Ohio,' and has other causes than official extravagance. It would, of course, be too much to claim that there has not been unwise and even

1 The following table (compiled from the Reports of the Auditor of State) shows the per cent increases of local levies for the years specified over those of the year next preceding. For purposes of comparison, the per cent increases of state expenditures (compiled from Bogart, Financial History of Ohio, p. 141, and Auditor's Reports) are also given. Per cent Increase of Local




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Per cent Increase of
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The expenditures of 146 cities in the United States increased 86.4 per cent from 1902 to 1911. (See Financial Statistics of Cities, 1911, p. 17.) In the same period, local levies in Ohio increased 71.5 per cent. Local levies provide the funds for the greater part of local expenditures, and therefore indicate fairly well the trend of local expenditures. City and village levies, not including those for public schools, increased 63 per cent from 1902 to 1911, while those for other local purposes, excluding schools, increased 65.1 per cent and school levies increased 89 per cent.

corrupt expenditure, but there can be little doubt that the principal causes of increasing local expenditures are the growth of population and the emergence of new needs.

The neglect of these considerations by the active representatives of the business interests of Ohio, as well as their attitude on various projects of legislation, gives color to the view that, in their desire to limit their own tax payments, they have been led to oppose the development and extension of the functions of government, and thus, in many cases, to place themselves in opposition to social progress. Nevertheless, their demand that tax rates be limited as a means of enforcing economy in public administration met with popular favor. The supposed advertising value of low tax rates was also urged. The argument for limited rates was put on firmer ground when it was shown that the prevalent evil of under-assessment of tangible property tended to force nominally high tax rates, and thereby to discourage the return of intangible property, the escape of which, in turn, operated to keep rates high. This phase of the argument approaches the common error of many advocates of a classified property tax in believing that a low rate of taxation will of itself bring intangible property out of hiding. To many, this belief in the "coaxing" power of a low rate became the principal reason for advocacy of rate limitation, a view which received some corroboration from the fact that the leaders in the agitation for low rates had also been leaders in the effort to secure classification.1

The approach of the first quadrennial appraisement of real estate in 1910 was an auspicious time for the inau

1 It should be borne in mind that in Ohio individuals and miscellaneous corporations are required by law to declare their personal property for taxation, and that this list stands unless assessing officials can show that it is incorrect, or can persuade the taxpayer to modify it.

guration of a state-wide campaign to secure a closer observance of the constitutional rule requiring the taxation of all property at its true value in money. It was also an auspicious time to secure converts to the rate-limitation propaganda, since the argument lay on the surface that the increase of tax valuations, if unaccompanied by rate limitation, would give the "taxspenders " an opportunity greatly to increase the amount of taxes collected without incurring the political odium which commonly attaches to an increase of rates. And finally, the experience of West Virginia under legally limited rates 1 was cited as proof of the causal connection between low rates and high valuations, altho that connection obviously runs the other way.


Governor Harmon was interested in the plan, and what was practically an administration measure was introduced in the General Assembly and passed in an amended form May 10, 1910.2 The title of the act is significant:

"To secure an equitable valuation of property for taxation by limiting the tax rate, limiting the power to issue bonds, removing certain penalties for improper valuation. . . ."

This act imposed no restrictions on the amount of taxes to be raised so long as the rate did not exceed ten mills on the dollar; but if the amount which could be raised by a rate of ten mills, exclusive of additional amounts (over those levied in 1909) authorized for

1 See T. C. Townsend, "Taxation Work in West Virginia," State and Local Taxation, vol. iv, pp. 165–178 (1910).

101 Ohio Laws, 430. The governor's recommendation is found in his Message, 1910, p. 6. The bill is described by Bogart, American Economic Review, vol. i, pp. 515-516. The popularity which the proposal had achieved is well illustrated by the statement of the Cleveland real estate appraisers before the Senate committee on taxation, that they had appraised realty at full value, but would enter the tax valuation at 40 per cent of full value unless the tax rate were limited. And these assessors had sworn to assess all property at its true value in money!

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sinking funds or for specified emergencies, or by vote of the people, should be less than the amount levied in 1909, plus certain percentages for years subsequent to 1910, then the rate might be increased to a maximum of fifteen mills, exclusive of levies for sinking fund and interest. Governor Harmon withheld his signature from the bill because of this elastic limit, and insisted that the amount of taxes levied in any year should be limited to that levied in 1909, and that the rate be limited to ten mills unless more should be "authorized by vote on propositions stating specifically purpose and amount." 1 The act of May 31, 1911, fortunately provided somewhat less rigid limitations. It made the levies of 1910 the norm by which future levies were to be determined. Except for emergencies or by vote of the people, levies made in 1911 might not exceed this norm; those of 1912 might exceed it by 6 per cent; those of 1913 by 9 per cent, and those of any subsequent year by twelve per cent. The levy was further restricted by limiting the tax rate to ten mills, exclusive of sinking fund and interest purposes, but this rate might be increased for emergencies or by vote of the people to a maximum of fifteen mills. Levies for service of debt were, however, still outside this limit of fifteen mills.2 Levies for specific purposes were also limited and an ex-officio budget commission was created in each county to supervise the enforcement of the various limitations laid down in the law.

Opinion is sharply divided as to the merits of this socalled Smith one per cent law. Mayor Baker of Cleveland has publicly characterized it as "conceived in iniquity and born in sin." It has equally warm deThe influential Ohio State Journal has re


1 Governor's Message, Ohio Executive Documents, Pt. I, 1910, pp. 70-71.
2 See below, p. 493.

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