REPORT OF STATE BOARD OF TAX COMMISSIONERS Members of Board WILLIAM A. ROACH, Chairman, Ex-Officio OTTO L. KLAUSS, Ex-Officio JAMES A. HOUCK, Appointive Member HISTORY Prior to the adoption of the present Constitution of Indiana in 1852, there was no state board to make original assessments of taxable property, nor any to review the assessments made by county boards on appeal. The State Auditor, however, was required to make original assessments of state bank stock for a time, and hear certain grievances of individual taxpayers on assessments made by county boards of review. In 1852, the General Assembly provided for boards of equalization in counties, congressional districts and the state. The county board consisted of the county auditor, the appointed appraisers, and the county commissioners; the district board, of the county auditors of the district; and the state board, of the State Auditor and delegates selected by the district boards. The state board was authorized to equalize real property, but was permitted to remain in session only ten days. In 1872, the Legislature provided that the State Board of Equalization should consist of the Governor, Lieutenant Governor, Secretary of State, Auditor of State, and Treasurer of State. It was given original jurisdiction in the assessment of railroad, telegraph and domestic corporation properties. The right to assess the last named class of property was repealed a few years later. A little later still the AttorneyGeneral was made a member of the board. Not until 1891, was there a State Board of Tax Commissioners, so called. It was made to consist in the beginning of the Governor, Secretary of State, Auditor of State, and two appointive members not of the same political party-the Governor making the appointments. In 1907, the Governor was dropped from the board and a third appointive member provided for, and thus it remains. The appointive members, taken in the order of their appointment and service, are as follows: 8-11741 1891-Josiah Gwin, 2 consecutive sessions Ivan N. Walker, 8 consecutive sessions (113) 1901-Parks M. Martin, 9 consecutive sessions Fred A. Sims, 1 session 1912-Eben H. Wolcott, 4 consecutive sessions 1915 Travis D. Scales, 2 consecutive sessions 1917-Strange N. Cragun, 1 session Philip Zoercher, 1 session NOTE-Fred A. Sims was an ex-officio member of the board for five sessions beginning in 1906, and was an appointive member in 1911, making his service to date six sessions. He was also made an appointive member of the board in August, 1917, and is serving at this time. W. H. Hart was an ex-officio member of the board for four sessions beginning in 1899, and was an appointive member in 1916, making his service cover a period of five sessions. ADMINISTRATION In compliance with the mandate of the statute and to better qualify themselves for the performance of their duties, the State Board of Tax Commissioners has carefully followed the tax and revenue legislation of other States, and has made extensive study of, and inquiry into the prac tical operation of methods of administration in foreign jurisdictions. The general property tax system is included partially or wholly in the statutes of all States, generally being employed in the assessment of real estate and some of the intangibles. Where constitutions have been sufficiently liberal, classified and income features have been adopted, applicable most specifically to personal intangibles. New York is notably most advanced in the fixing of a statutory low rate on secured debts, notes, mortgages, etc. This new departure has increased the duplicate in that State very materially, but sequestration has not been eliminated. In Ohio where it has been persistently sought to have the classification tax incorporated into the fiscal laws, in a statewide vote, the proposition has been three times defeated, the last time by 300,000 plurality. In Minnesota the rates on the classification tax have been increased in order to meet public revenues, and an effort is to be extended making classification applicable to all classes of property. The income statute of Wisconsin continues to assert itself very satisfactorily to the taxpayers of that State. It was adopted with practical unanimity by the legislature and the electorate. Classification and income, the two theories now considered by economists as to the solution in some form of development of the tax problems of the country, are having the crucial test in Minnesota and Wisconsin, and the success wrought by experience and actual application will go far toward shaping the judgment of practical taxing officials as to which system, if either, most nearly approaches a substantial solution of this most vexing problem. In Indiana the popular objection is the feature of discrimination which operates against tangible property. The immediate necessity is one of administration. The present law, properly re-enforced, by amendments, can and will clarify the situation and bring relief. The recommendation of this board is to limit the tax levy for all purposes to some specific maximum, ample provision always being made for schools and present bond issues. No excess of maximum levy for any public improvements shall be made unless authorized by vote of the electorate. The Tax Board makes the following suggestions as to amendments to existing statutes, and calls respectful attention of the next General Assembly to same: A nonpartisan tax board with powers of reassessment; equalization by classes; the assessment of domestic public utilities, the Public Service Commission, on request of the Tax Board, for the purpose of arriving at values of any such utilities, to furnish necessary information either from the records or special reports of its engineers; township assessors subordinate to the county assessors and both appointive and under the jurisdiction of the State Tax Board. There is much agitation as to remedial agencies through constitutional amendments, but these if adopted by the General Assembly would require an affirmative popular vote, which spells delay. The board would also recommend that a substantial increase be made in the salaries of county assessors and also in the per diem of township assessors. These assessors as a rule are conscientious and hard-working officers, but their remuneration is entirely too low. The suggestions as above recited will apply, if enacted into statute, to any system of taxation, and make administration more certain; indeed, administration is the factor of greatest reliance for the faithful execution of any statute. These recommendations are from the practical side of the situation as it exists in the State. When incorporated into law, after being whipped into shape by well considered legislative judgment, they will double the present duplicate, substantially reduce the levies, and give a more just measure of valuations and equalization. EXEMPTIONS The Constitution specifically names the six classes of property that may be exempt, and the courts have uniformly held that the present statute must be strictly construed. In spite of these restrictions by legis lative enactment and unwarranted constructions of the law by minor taxing officials, millions of dollars are exempted from the duplicate. On appeal to the State Tax Board many of these erroneous conclusions would be reversed, as they are without warrant of law, but in the absence of appeal the wrong is continued from year to year. Fraternal exemptions by legislative action continue to be far-reaching, and the amendments heretofore adopted by which these exemptions are made possible should all be judicially reviewed with a view to the repeal of those not within the letter and spirit of the Constitution. It is safe to say that five hundred millions of dollars, when questionable tax exempt securities are considered, now escape from the duplicates. Each session of the Legislature seems to be burdened with increased demands for the exemption from taxation of certain and new classes of taxable property. Already the amount that is nontaxable under the law has grown to very large dimensions. Mortgage exemptions have increased until they were $69,664,010 in 1915. Tax exempt gravel road, county and municipal bonds are estimated to be over $61,400,000 and are constantly increasing. In 1911 the General Assembly exempted building and loan associations as such from taxation and provided that the holders of shares of stock on which loans have been made should be assessed thereon individually. The impossibility of securing information in order that this part of the law be successfully carried out renders this practically a dead letter, as no method was provided whereby assessors might ascertain who the holders of such shares were, and practically none is listed for taxation by the holder. The combined capital of the various associations is probably now in excess of $63,000,000. DELINQUENT TAXES Since the year 1911 there has been a substantial decrease in the amount of delinquent taxes. Appended below is a table showing the changes for the several years: Section 10411 Burns' Revised Statutes, 1914, provides that annually in November before delinquencies of former years are carried on the duplicate, it shall be the duty of the auditor and treasurer of each county to review and carefully examine the list of delinquencies, and to leave off all those which are uncollectible. This is now being done in practically every county and as a result a large amount of these delinquent taxes are dropped from the duplicate each year and carried to the insolvent record. The dropped-tax in Indiana amounts to approximately $1,000,000 yearly. The present law, in relation to collection of delinquent taxes, seems to be inadequate and not sufficient to secure satisfactory results. The treasurer's books should show that he had made personal demands for payment of the tax and give a reason why each individual delinquent tax was not collectible. In addition to the table showing the total collection of taxes, abstract of duplicate by counties and townships, and rate for taxation in each, appended hereto. we also present for your consideration a comparative statement of the total taxables for the different classes of property for the years 1912, 1913. 1914, 1915, 1916 and 1917: Totals .$2,120,943,320 $2,133,662,092 $2,199,523,803 NOTE--The several amounts under separate items for the different years, set out above, are obtained from the operation of the "general property tax" statute, except the item of "Transportation," which is properly an excise tax, levied under a special statute. It will be noted that there is a very substantial increase in the valuation of personal property in the years 1916 and 1917 over the other years herein shown. This is due to the increase in the number and the price of live stock and cereals, and not to intangible personal property, very largely a result of the war. With the increasing growth of non-taxable securities there is a constant decline in the amount of moneys and notes and mortgages listed for taxation, the excessive tax rates in many localities causing the people that have money to invest in non-taxables. The taxable values of real estate as given in the table above are gross, from which must be deducted mortgage exemptions which has grown to the enormous amount of $69,664,010 for the year 1915, showing an advance of $7,115,858 since 1913, in which year the mortgage exemption was $62,548,152. In 1916, the mortgage exemptions amounted to $73,241,874, and in 1917 further increased to $74,135,205. Attention is also called to the amount of money raised for taxation purposes for the year 1915, with the various funds to which these taxes are apportioned. |