adopted for the taxation of such property may be; and second, the general property tax cannot be bolstered up into a satisfactory system by the devices of limited rates and centralized assessment.

While centralization has approved itself, the method now in vogue for the selection of district assessors and members of boards of complaints is open to serious objection. These officers appear, upon the whole, to have been well chosen; but the conditions of their appointment have created, and will perpetuate, a suspicion of partisanship. Assessing officials should be removed as far as possible from all taint of partisan bias, and to this end the law should be so amended as to bring them definitely within the classified civil service. Unfortunately, the political situation in the state hardly warrants hope of the early adoption of such an amendment. In the recent state campaign, both Republicans and Progressives denounced the system of appointive assessors as tending to the creation of a political machine; and the incoming administration is virtually pledged to make the county assessor an elective officer, if not to restore the old system of township assessors. Such a change in the law would be particularly disappointing to those who hope to see the constitution so amended as to permit a radical revision of the tax system; for the success of such a revision will depend in no small measure on the experience and efficiency of the assessing corps. Moreover, it would be unwise to repeal the new law before it has had a fair trial, and return to a system of proved inefficiency. It is reported, however, that the governor-elect approves of central control of assessors, whether the assessors be elected or appointed. There is thus ground for hope that the state may retain most, if not all, of the advantages of the present system.1

1 The Repuplican majority in the legislature now in session (April, 1915) planned to transfer to county auditors the powers of district assessors pending the re-establishment

Perhaps in no other state has the theory of the general property tax been more vigorously defended and the legislation supposed to be alone necessary for the successful operation of the tax been more cheerfully provided; yet the result is at best a partial and, in all probability, a temporary success. At present, public opinion still insists upon the enforcement of the uniform rule. Nevertheless, it seems appropriate to conclude this paper with a suggestion of the lines along which a satisfactory reform of the property tax should proceed.

In view of the fact that the proposal to classify property for purposes of taxation has been so widely discussed in the state, it seems fairly certain that the first step in reform will be the adoption of a constitutional amendment providing for some degree of classification and according a low rate, rather than exemption, to intangible property. Advocates of classification in the state have seldom gone so far as to suggest the administrative measures by which the taxation of intangible property could be made effective; for the most part, they seem to have assumed that a rate of three or four mills would result in a satisfactory voluntary return of such property. The experience of Ohio as traced in this paper affords little warrant for such an assumption, but rather makes it clear that self-assessment should be avoided wherever possible. Intangible property should be reached through the taxation of the particular wealth which underlies it and gives it value, wherever that wealth can readily and certainly be identified. example, corporations whose entire property is in the


of the system of elective assessors. On the failure of this bill, the tax commission, at the request of the governor, removed all the assessors and the governor has made new appointments.

1 As I write, it is reported in the press that the tax commission will recommend that tax rates be further limited and that assessors be given greater power in the effort to secure a fuller assessment of intangible property.

state should be taxed on a valuation which takes full account of the value of stocks and bonds, and these securities should then be exempted in the hands of their holders.1 Similarly, real estate mortgages should be exempted, or taxed as an interest in real estate.

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principle, moneys and credits should also be exempted;. but since the dependence of their value on that of some particular wealth is less readily seen than is the case with securities, it would probably prove to be politically expedient to tax them at a low rate say three mills. As in Minnesota, this rate should be accompanied with the abolition of that most fruitful source of perjury the privilege of deducting debts from credits. The revenue should further be safeguarded by imposing the tax at the source where practicable for example, by taxing all classes of banks on their average deposits, and granting them the privilege of deducting the tax from the depositor's account.

There is stronger ground of principle for the taxation at low rates of investments representing in whole or part wealth outside the state. The obligation to pay taxes where one resides is not to be questioned in a federal state. In the case of most foreign investments, reliance would have to be placed on personal declarations, under such restraints as careful administration may provide. In the case of investments in the stock of corporations chartered or doing business in the state, however, it would be practicable to impose the tax at the source; it should be levied on that proportion of the value of the shares which represents property owned or

1 Such a plan would, indeed, at least for a time, increase the burden falling upon stockholders, but in the long run, interest rates on bonds would be so adjusted as to correct this. In any event, the plan proposed seems better than the present haphazard assessment of corporate bonds.

2 See Bullock, The Taxation of Intangible Property," State and Local Taxation, vol. ii, pp. 127-137, 164, 165; Taussig, Principles of Economics, vol. ii, pp. 539-541, and Seligman, Essays in Taxation, 1st ed., pp. 110-114.

This proportion

business done outside the state.1 could readily be determined by the tax commission, and could be applied as well to the bonds of foreign corporations, the assessment of which would, however, have to depend mainly on personal declaration. It must be admitted that political expediency might force the imposition of similar taxes on domestic investments; but' such taxes would be more equitable as among the owners of intangible property, and hence less objectionable, than those now imposed by the law.

For such a system of taxation there is much to be said on both theoretical and practical grounds. To a large extent, it will do away with the double taxation of property and wealth. Even where double taxation is not abolished, it will at least be mitigated by the lower rates on intangible property, and by the nearer approach to universality which may be expected to result from low rates and competent administration. There will then be less warrant for the cry of "unjust" double taxation, and the ethics of tax-paying will tend to reach a higher plane. Finally, the revenue results of such a system are not to be despised. From bank deposits alone, a tax of three mills would yield in the neighborhood of $2,500,000, or about two-thirds the yield of all taxes levied upon intangible property in Ohio in 1912 or 1913. The proposal made for the taxation of the securities of foreign corporations would not effect any material permanent reduction in the revenue from security holdings in foreign corporations, for the amount of such securities heretofore taxed has been relatively

1 In the light of the principle of "economic allegiance," the present exemption of the shares of domestic corporations, regardless of the location and taxation of their property, is indefensible. Nor can the franchise tax of three-twentieths of one per cent on the capital stock of corporations be held fairly to offset this exemption.

The writer believes that the distinction between the terms "property" and "wealth" should be strictly observed. Such phrases as "intangible wealth" have no meaning with reference to the taxation of moneys, credits and investments.

small. It does not seem extravagant to expect that under such a system as is here proposed, the yield from intangible property would be greater than can be permanently drawn from it under even the best administration of the general property tax.



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