RECOMMENDATIONS. Numerous defects and inconsistencies in the existing laws have come to the attention of the commission in the course of the supervision and administration of the assessment of property throughout the state during the past two or three years, which should be cured by amendments. A discussion of the several laws needing correction would seem unnecessary. The commission have noted many changes deemed essential to make the assessment laws more harmonious and efficient, which will be embodied in one or more bills to be submitted to the committees of the legislature. Upon the subjects of taxation discussed in the report which have received the most careful consideration of the commission," the following recommendations are submitted: (1) That the law imposing a tax of one mill on each dollar of the assessed valuation of the taxable property as determined by the state board of assessment for the common school fund income be changed to a specific appropriation of a stated amount for that purpose. In the event a specified appropriation is not made, then the one mill tax should be limited to $700,000 annually for the ensuing biennial period. (2) That the power of assessing the property of express, sleeping car, equipment and freight line companies by virtue of Chapters 111, 112, 113, and 114, Laws 1899, be transferred from the secretary of state, state treasurer and attorney general, and vested in this commission as the state board of assessment. (3) The passage of an act for the taxation of gifts, inheritances, devises, bequests and legacies, in conformity with the law proposed in Chapter IV of this report. (4) That all existing laws requiring and providing for the assessment and taxation of credits as property or for exemption from assessment on account of debts owing, be repealed, but leaving in full force and effect the existing laws for the taxation of the shares of stock of banking corporations, capital of private bankers, and the taxation of trust companies and all other corporations or organizations representing moneyed capital. (5) That the value of railway property be ascertained and determined by a state board with requisite powers and that taxes be levied on such valuation at the average rate of taxation throughout the state, such taxes to be paid into the state treasury for the use of the state. The said board should also be the state board of assessment to ascertain and determine the valuation of the general property of the state as the basis for the apportionment and levy of state taxes among the several counties of the state. (6) That the laws for the assessment of the shares of stock of state and national banks and the capital of private banks be made more definite and certain by amendment. That from the cash value of the shares of stock of an incorporated bank there be deducted the assessed value of such real estate as shall be necessary for its immediate accommodation for a banking house in the convenient transaction of its business. No other real estate owned by a banking corporation should be deducted from the value of the shares of stock. (7) That the tools of mechanics and others, and the other classes of property specified in Chapter IX be exempt from taxation. (8) That the state adopt a system requiring all departments, institutions and officers to file with the governor of the state thirty days prior to each session of the legislature, an estimate of the appropriations which will be required for the ensuing biennial period, and that the appropriations therefor be included in one legislative act. MR. HAUGEN'S DISSENTING VIEWS ON THE DISCUSSION OF THE SUBJECT OF CREDITS. I agree as to all of the foregoing report except so much thereof as treats of the taxation and recommends the exemption of credits. I dissent from that part of it which recommends that credits be exempted from taxation, my reasons for such dissent being in part as follows: First. The report itself shows that with the supervisory system provided in 1901 credits have been assessed more fully in 1902 than ever before, and I cannot agree to the prediction made in the report that this standard will not be maintained. On the contrary I believe that with the experience gained and with a better knowledge of the law and the means of its enforce ment, assessors and supervisors of assessments will make much fuller assessments of credits in the future. The effort made under the legislation of 1901 and the expenditures incurred would be almost entirely wasted were the recommendations of the report to be enacted into law at the present time. The legislature of 1901 made it the duty of the commissioner to exercise general supervision over assessing officers "to the end that all the taxable property in the state shall be placed on the assessment rolls at the true cash value." Under section 1036. Stat. 1898, as amended by chapter 346, 1899, then and now in force, the term "personal property" included "all debts due from solvent debtors, whether on account, note, contract, bond, mortgage or other security, or whether said debts are due or to become due." It was largely, I believe, for the purpose of reaching this class of personal property that the office of county supervisor of assessments was created and his term of service fixed at three years in order that a more systematic effort than had previously prevailed might be made to place all kinds of property, including credits, on the assessment rolls. The proposition of the report to abandon the work thus laid out after only one year's trial, which is shown to have been at least to some extent successful, is premature. Second. I do not agree to the broad proposition that credits are not property. There seems to be a difference of opinion among economists on the subject. Third. No state has as yet exempted credits and the step would be without precedent in this country. Fourth. The claim made by Prof. Plehn, cited in the report, that the entire burden of the tax on credits is shifted to the debtor, is a subject of controversy at the present time in California, as I am informed. Prof. Seligman, of Columbia University, a leading, if not the leading authority on the subject of taxation in this country, says in his work, "Incidence of Taxation," p. 187: "Other things being equal, the more general the tax, the narrower the taxless field to which the person concerned can migrate; the less general the tax, the greater the chance that the tax will be shifted." Fifth. It may be true as the report states that "direct taxation of credits as property has long been abandoned in nearly every civilized country except the states of the American Union." The report does not specify the countries referred to. I have to some extent examined consular reports made to the state department at Washington and published in 1888 on the subject of taxation, and as far as my investigation goes I have failed to find a single country which does not in some manner impose a tax on the creditor either in the form of an income tax or in some other way. They have substituted the creditor for the credit. Before exempting credits it certainly seems reasonable that a thorough investigation should be made in order to ascertain whether some method of reaching the creditor would not be as practicable here as elsewhere. This feature of the question the report entirely ignores. NILS P. HAUGEN, Second Ass't Com'r of Taxation. |