that the most serious obstacle in the way of proper equalization, aside from a good assessment, is the lack of information upon which to arrive at proper conclusions regarding values of all kinds of property in all parts of the state. The commission will, therefore, undertake to gather the facts upon which it will be possible for the State Board of Equalization to base its future action.

REVIEWS.

At the conclusion of the county equalization the commission was called upon to review the action of the boards of county commissioners in two counties-Dunn and Williams-in so far as they related to equalization of lands and town lots respectively. The complaint in Dunn county was in the nature of objection to the assessment and equalization of lands throughout the county without regard to differences in value. Commissioner Wallace went to Dunn county, conducted a hearing and investigation and, acting upon the information thus obtained, the commission entered an order which resulted in the classification of the lands based on average values in different localities. The commission also advised that work be undertaken immediately looking to the improvement in the assessment in this respect for the year 1913. Work has already been undertaken along this line, and improvement in 1913 is confidently expected.

In the matter of the Williams county assessment, Commissioner Birdzell conducted a hearing at Williston and ascertained the facts upon which the commission could intelligently review. the action of the board of county commissioners on the reduction of the valuation of city lots in the City of Williston. Under the facts as disclosed at the hearing the commission was satisfied that there was no legal basis for the reduction, consequently the former valuation was restored and the State Board of Equalization in acting later upon the item of lots, acted upon the basis of the original valuation as returned by the City Board of Review and Equalization.

ASSESSMENT OF BANKS.

A committee representing the State Bankers Association appeared before the state board of equalization asking for a reduction in the assessment of bank stock, basing its claim upon the statement that bank stock is assessed too high in proportion to other property in the state. Mr. Hunt, speaking for the committee presented figures in support of his argument. Mr. Hunt also made an informal request of the tax commission that they

investigate the assessment of bank stock in North Dakota and suggest means of improving the system in the interest of a more equitable assessment. The commission deemed the matter of sufficient importance to merit investigation and the result of its work appears elsewhere in this report in the form of a discussion under the chapter title "Assessment of Bank Stock."

CHAPTER II

THE GENERAL PROPERTY TAX.

Carl C. Plehn, the eminent tax authority of the University of California, says: "The general property tax may be defined as the tax on which the base is the entire amount of property, real and personal, owned by the taxpayer. It is a favorite for local purposes in the United States and Switzerland but has passed entirely out of use in all other countries except Prussia, Holland, and a few minor states, where it is used as a supplemental tax and takes on an entirely different character.

Under the federal constitution the states are prohibited from levying custom duties, leaving to the state and the local districts the following methods of taxation: (1) General Property Tax; (2) Poll Tax; (3) Business Tax; (4) Inheritance Tax: (5) Income tax; (6) Licenses and fees; (7) Special Tax. The seventh class differs from all other classes in that it partakes of a corrective nature, and in a great many instances, such as liquor licenses, it is invoked primarily for the purpose of regulation. The special tax is used altogether for local, specific purposes such as building roads, laying sewers, water mains, and paving.

The property tax originated as a tax on persons rather than property; and was self assessed to maintain among themselves such public institutions as schools, military companies, libraries, roads, etc., before they were provided by the State. As late as 1840 when the centralization of the functions of government had become general, the property tax was purely local. Even today the declaration of the taxpayer as the basis of listing and valuation yet lingers. While this tax is as old as the colonies themselves, it varies in the various states. While these various classes do not differ so much as to who or what is taxable, they are quite different in their administrative features. Roughly speaking, there are three systems which may be divided as follows:

THREE SYSTEMS OF TAXATION.

(1) New England or township system. In a general way this prevails north of the Ohio River and as far west as the Rocky Mountains. In one extreme it is characterized by intense local self-government; the tax districts being small, usually a township, and the administration extremely democratic, all power

springing from the taxpayers themselves.

The state revenue is apportioned in a lump sum to the local taxing districts which control their own assessments and levies without interference from any central authority, county or state. The other extreme of this system is such as is in vogue in our own state, where we have the township assessor, but a more or less loose control by county and state boards. In a state, such as Rhode Island, there is little need for central control, as the state tax does not exceed ten per cent of the entire levy, while in a state like Indiana, on the contrary, there is much need of central control, as nearly onehalf of the total levy is for state purposes. The increasing proportion of the state to the local tax is one of the chief reasons for centralized control; another is the growth of public service corporations. While the local assessor may be well qualified to judge of the value of land, horses, and cattle in his own assessing district, he has little ability to judge the value of twelve miles of a railroad which may be a part of a transcontinental system. It is the unity of assessment which calls for centralization of authority.

(2) The Southern or County system extends, roughly speaking, south of the Ohio River and west to Louisiana. Here the county is the unit of taxation rather than the township. There is also a general tendency to make the regular county and state officials ex-officio members of tax boards, or to constitute them taxing authorities. The assessment is usually under the supervision of the county court and is done by the county assessor and his assistants, who receive a commission on all taxes collected in lieu of salaries. In these states the sheriffs or treasurers are usually tax collectors. The laws are stringent and great dependence is placed upon the listing and valuation of property by the tax payer under oath. It differs in this from the New England. System, where, though the oath exists, little attention is paid to it.

(3) The Western system is modeled on the laws of Missouri, and roughly speaking, lies west of the Rocky Mountains. It is the county system with less autonomy than the southern system. While the county is the taxing unit, less authority is exercised by its taxing officials, all authority flowing from the state. Here the county assessor system prevails, but each assessor is under the supervision of state authority, and assess according to a system furnished him by state officials. The oath exists but it is not important. It also differs from the southern system in that there is a board of review which equalizes between individuals, such as the township boards of review in this state. There are also county and state boards of equalization and, in most instances, tax commissions.

DISUSE OF GENERAL PROPERTY TAX.

The causes which have lead to the disuse of the general property tax throughout nearly the entire civilized world are many, but chief among them is the inability of taxing officials to reach all classes of property with a uniform ad valorem tax. While theoretically we tax property uniformly, practically it is anything but uniform-many classes all but totally escaping the tax burden, while the increasing demand for more revenue falls with an ever increasing burden upon other classes of property. This unequal distribution of the tax burden has led to a great and growing discontent with the system for the past forty years.

This discontent from 1867 to 1876 led to the appointment of six special tax commissions which were unanimous in their condemnation of the general property tax, but widely differ as to the remedies proposed. These commissions have been followed by many special and permanent commissions whose reports pile complaint upon complaint until the student of taxation is confronted with the evidence of financial discontent without parallel in the fiscal history of any other country. C. J. Bullock, professor of economy of Harvard University, says: "Everywhere the story is the same. Existing laws are ever unenforced, yet if enforced, prove destructive to industry and highly unjust in their operation. upon individual taxpayers.'

The invariable result is that personal property tends to escape taxation and the burden falls more and more heavily upon real estate, until today, land bears more than eighty per cent of the state and local tax burden in the United States.

The listing and assessment of land is simple as compared with the listing and assessment of personal property; yet even with real estate there are almost as many ratios of value as there are assessors. The result is that certain tracts of land in the same assessing district, as well as the land of one assessing district as compared with another, bear an unjust share of the burden of taxation.

U. S. CENSUS REPORTS.

The inequality of the general property tax is apparent when the returns of the United States Census are compared with the returns of the assessors. In April, 1910, the enumerators gathered data on all farm property in North Dakota, and while their returns are not infallible and undoubtedly present many inaccuracies, yet they unquestionably represent the owner's appraisment of his property. Every farm house in the state was visited, and, as is evidenced by the returns on live stock, they saw much better than did the assessors.