peatedly referred to it editorially as "the best law ever put upon the statute books." It is impossible to give a complete and accurate statement of its results. It is quite probable that in some places extravagance has been checked, but it is even more certain that desirable expenditures have often been prevented.1 The law seems to have borne most heavily on permanent improvements in school districts and in the larger cities, altho its full effects are doubtless not yet apparent. A number of taxing districts which had made little or no levy in 1910, because of an accumulated surplus, suffered considerable inconvenience through the limitation of levies to a percentage of the levy of 1910, rather than to a percentage of expenditures drawn from tax revenues. Careful financing in that year was thus penalized by inability legally to make adequate levies in succeeding years. Budget commissions have not infrequently been forced to disregard the law in order to enable some of the local governments to exist and transact business. Sinking funds, in particular, have been neglected. An act of 19132 relieves this situation by eliminating that limitation of total levies which referred to the 1910 levy. It also changes the constitution of the budget commission in such a way as to give to school districts and larger cities greater influence in determining tax levies.3

In some cases, the difficulties experienced under the law were aggravated by reason of the prevalent belief

1 See the criticism of the law by Mr. A. J. Nock in Collier's, June 15, 1912, and the comment thereon by Professor Bogart, American Economic Review, vol. ii, pp. 973, 974. For the point of view of school men, see J. F. Orr, Ohio Teacher, vol. xxxiii, pp. 354-359 (March, 1913).

103 Ohio Laws, 552.

• In counties where the greater part of taxable property is within cities and villages, the prosecuting attorney is displaced as a member of the commission by the solicitor of the largest city, who is ex-officio the legal adviser of the school board. In other counties the president or a member of the school board takes the place of the prosecuting attorney on the commission.

that levies for sinking fund and interest must come within the fifteen mills limitation. It is clear that in taxing districts heavily burdened with debt, such an interpretation might prevent highly desirable expenditures, even when the total levy was smaller in amount than the levy of 1910, as increased by the proper percentage. This interpretation was rejected by the supreme court during the legislative session of 1913, when it affirmed the decision of the lower court approving a levy in excess of fifteen mills in order to provide for debt not yet existing, but about to be contracted on authority of a vote of the people. The decision drew from Governor Cox a special message urging that the legislature remove all ambiguity in the act and restore the maximum limitation, because tax-payers had been induced to return large amounts of property for taxation at full value, on a virtual pledge of the faith of the state not to exact a rate of more than fifteen mills. His recommendation was followed, and the law now forbids a rate in excess of fifteen mills, even tho it should prove impossible to provide for the barest needs of local government and also to provide for the debt.4 Eminent legal authority, including the attorney-general and Mayor Baker of Cleveland, hold that this absolute limitation renders the law void, since it seeks to deprive the taxing district of the power to provide for its lawful obligations; but the point has not been passed upon by the courts.

1 Roose v. State, 87 Ohio State, 513.

5

3

Reported without opinion.

Governor's Message, January 29, 1913.

103 Ohio Laws, 57. For the road tax in excess of this limitation, see below, p. 502.

In many cases, this contingency has been provided for, at least temporarily, by an

increase in the assessed valuation of property in 1914. See below, p. 511.

See F. W. Coker,

Administration of Local Taxation in Ohio," Annals Amer.

Acad., May, 1913.

Notwithstanding the difficulties experienced under rate limitation, it has been proposed to write the ten mill limit into the fundamental law. The administration has at times lent a sympathetic ear to the suggestion, but an initiated amendment to the constitution, which proposed a more rigid limitation of the tax rate than the state has yet tried, was defeated at the November election. The proposed amendment also provided for a classified property tax; if rate limitation could have been voted on separately, it seems not unlikely that it would have been approved.

While the influence of the Smith law on expenditures is a mooted question, it is possible to speak much more definitely of its influence in inducing the voluntary return of property which under the higher rates had escaped taxation. It must be remembered, however, that the agitation in favor of more honest returns and truer valuations of property, which was described above,1 affected assessing officials as well as tax-payers; in particular the work of the appointive city boards of review showed the effect of this stimulus. An increase in assessed valuation may accordingly reflect heightened administrative efficiency as well as the "coaxing power of low rates.2

"

We may take as the basis of our comparison the assessed valuation of property as it stood in 1910. The tax limit act of 1910 became effective January 1, 1911, and therefore had no effect on the assessment of personalty in 1910, while the real estate appraisal of 1910 did not become effective as a basis for tax levies until 1911. When property was being appraised in 1911, however, not only was the campaign for listing at true value

1 See p. 501.

It should be added that the law indemnified" tax-dodgers " for past sins by enacting that penalties for evasion should not go back of 1911. 102 Ohio Laws, 266, Section

2.

renewed and the rate limitation act in force, but it was also apparent that the legislature would soon impose still further restrictions on the tax rate. Moreover, the assessment of public utilities and the equalization of the valuation of bank shares and of real estate was now entrusted to the tax commission. The combined result of these forces was a marked increase in the amount and valuation of all kinds of property on the tax duplicate. The assessments fixed in 1912 and 1913 are, however, a fairer test, because the tax limit law was then better understood. The subjoined table1 shows the percentile increases in the assessed valuation of various kinds of property over the valuations of 1910:

1 Tables I and II are derived from the following figures compiled from the Reports of the Auditor of State for 1910-12, and of the Tax Commission for 1910-13. The figures are not in entire agreement. I have used those given by the commission for public utilities and for banks in 1910, altho this figure may include bank realty. The figures for miscellaneous corporations, 1910-12, are arrived at by subtracting the valuations taken for banks and utilities from the amounts for incorporated companies. All intangible property of corporations which is separately stated by the auditor has been assigned to miscellaneous corporations. Finally, I have felt warranted in increasing the 1910 total for corporate personalty by the amount of the discrepancy in the auditor's statements.

PROPERTY VALUATIONS BY SPECIFIED CLASSES, 1910-1913

(Amounts in millions of dolllars)

It is apparent from the above table that the most noteworthy increases in taxable valuations have occurred in those fields in which the influence of the state tax commission has been strongest. In other words, the great additions to the grand duplicate of the state in the three years following 1910 are for the most part due to central assessment or equalization of the valuations of banks, public utilities and real estate,' rather than to fuller returns of their property by tax-payers under the inducement of limited rates. Even in those cases where the assessment is based directly on the declaration of the tax-payer (individuals and miscellaneous corporations), improved assessment work, as previously noted, has contributed to the increase of valuations. Altho relatively much less than in the case of assessments definitely fixed by the tax commission, the increases in the valuations returned to county auditors and local assessors are yet considerable; within the three years

1 The discrepancies between the reports of the auditor and tax commission make it seem not improbable that these increases are too low in the case of banks. But the classification of corporate property is necessarily somewhat provisional.

The original valuation of real estate as fixed by the assessors in 1910 showed an increase of 126 per cent over the amount then on the duplicate; to this valuation the tax commission added nearly $500,000,000, or 25 per cent. See Report of the Tax Commission, 1911, Appendix.