siderably altered with respect to assessment of corporations generally. Considerable change was made in the listing and assessment of property and more stringent methods adopted, which are expected to greatly increase the valuation and discovery of property for taxation.

Little need be said with respect to the general system in vogue as applied to real and personal property in general. It is the crude general property tax by local assessment, through elective local officers, for local, county, and apportioned State taxes, mingled with the primitive equalization as between townships by county boards of review and among counties by a state board of equalization.

During the biennial period from July 1, 1897, to June 30, 1899, the State receipts from county levies were $4,055,767.75; from corporations, viz, insurance, telephone, express, and telegraph, $375,596.57; the remainder of State revenues being from officers' fees, collateral inheritances, and miscellaneous sources.

We will refer in detail to the provisions for the assessment and taxation of various classes of corporate property.

ASSESSMENT OF REAL AND PERSONAL PROPERTY.

The executive council, or State board of review, fix the rate of taxation for State revenues upon the valuation of taxable property within the State, the amount to be expended for general State purposes being fixed by the general assembly. The rates for ordinary county revenues, support of schools and other local purposes, are limited by statute. The amounts required within these limitations are levied by the board of supervisors in each county upon the assessed value of taxable property within the county. The exemptions of property are liberal, including as usual property for public and charitable purposes as well as property for family support and farms, young live stock, and teams, utensils, and other property essential to livelihood.

The board of supervisors constitutes the county board of review, and adjusts the assessments of the several townships, cities, and towns, and the State executive council acts as a State board of review for the adjustment of valuations of the several counties.

In the assessment laws it is especially provided that all property subject to taxation shall be valued at its actual value, meaning its value in the market in the ordinary course of trade, and assessed for taxation at 25 per cent of such actual value, the purpose of this unique method of assessment being to avoid the danger of excessive levies upon a basis of full valuation, there being a constitutional limitation upon the power to create municipal indebtedness.

The real and personal property of individuals and private corporations is taxable locally for both State and local purposes. Aside from the liberal statutory exemptions, it is designed to bring all kinds of property upon the rolls by uniform methods and rates, and to accomplish that object there appears to be considerable latitude in the construction of the term "double taxation," the evils of that injustice being apparently regarded as preferable to the escape of property from single taxation.

For the purposes of taxation, credits are expressly defined to include "every claim or demand due or to become due for money, labor, or other valuable thing; every annuity or sum of money receivable at stated periods and all money or property of any kind secured by deed, title, mortgage, bond, or otherwise, and all moneys of every kind, credits, and corporation shares or stock except as otherwise provided, notes, accounts, contracts, bills of exchange, judgments, choses in action, liens of any kind, and securities other than those of the United States."

It has been held that the taxation of a mortgage debt in the hands of a mortgagee and also of the property in the hands of the mortgagor does not constitute double taxation, and that, although the taxation of the property of a corporation to the corporation and the shares of its stock to the holders thereof may amount to double taxation, it is not unconstitutional.

The statute provides for a limited and conditional deduction of debts from the amount of money or credits listed by any person, being limited to the gross amount of all debts owing in good faith and not formed with a view to decreasing taxation, and it being specifically provided that no person shall be entitled to any deduction on account of any indebtedness contracted for the purchase of nontaxable property. Deductions for debts are made only from moneys and credits. The bill proposed by the tax commission omitted all provisions for deduction of indebtedness of any kind, from the amount of moneys and credits, but the legislature did not follow their plan in this respect.

LISTING.

An attempt is made to secure by law a fair and equitable listing of all the taxable property of individuals and corporations, the values, however, being fixed by the assessors. The local assessor is required to list and assess the property of each taxpayer with his assistance, the owner being required to list his property under oath subscribed by him and administered by the assessor, refusal to take which is declared to be a misdemeanor. The assessor is required to fix the value of property assessed, and at the time it is made, to notify the owner in writing of the valuation put upon his property, directing him to appear before the board of review and show why the assessment should be changed if he feels aggrieved. In case any person refuses to list property the assessor assesses it according to the best information obtainable, and adds to the taxable valuation 100 per cent. Any person who knowingly makes a false statement in regard to his taxable property is declared guilty of perjury.

Each grain, ice, and coal dealer is assessable upon the average amount of capital used by him in conducting his business, estimated in manner provided.

Provision is made for the listing and assessment of stocks of merchandise by inventory at the average value of such stocks during the preceding year. This applies also to corporations engaged principally in mercantile business, such taxation being in lieu of any tax on corporate shares.

The property of manufacturers which enters into the combination or manufacture of products is listed and assessed in like manner with merchandise as to average value, the real estate, including machinery, being separately assessed. Corporations engaged in manufacturing are required to list their real estate, personal property, moneys, and credits in like manner as required of individuals, and when so listed and assessed the shares of stock of such corporations are exempt from taxation in the hands of their owners.

Personalty is listed and assessed each year, and real estate is listed and valued in each odd-numbered year, buildings erected thereon being assessed in any year. Although Iowa is distinctively an agricultural State and the property upon the whole less complex in character than in some of the States reported upon, the statutes requiring the assessment of property at its full value seem to have been, under former methods at least, universally ignored. This condition led to the appointment in 1893 of the special revenue commission to examine the revenue laws and report necessary and desirable changes; the present tax code, enacted in 1897, following in many respects the recommendations of that commission. The investigation showed at that time that realty was variously assessed at from 17 per cent to 60 per cent of its true value, averaging 38 per cent; that personalty was listed at about 36 per cent, a sufficient amount of personalty escaping altogether to bring the latter figure down to 20 per cent. This commission, in the consideration of remedies for the injustice of this varied undervaluation of property, unanimously opposed the suggestion of a proportionate valuation, as a rule fraught with evil results and operating in practical operation against the man of small means. It is claimed that under the provisions of the new code conditions as to valuation of both real and personal property have improved, and that under the listing systems in force property is more fully and adequately valued for taxation. Whether this belief is the proverbial result of the "new broom," or whether the change will result in permanent improvement, can perhaps be hardly determined at this time.

MORTGAGES.

Encumbered real estate is assessed to the owner at its taxable value, and mortgages are assessed as personal property to the owners thereof at their taxable value. It has been held by the courts that this practice does not constitute double taxation.

This subject received special consideration by the tax commission, and the following is their report upon and discussion of the subject:

"The exemption of the mortgaged part of realty from the assessment of such realty to the holder thereof and listing the value of such mortgaged part to the holder of the security was among the first suggestions made to members of the commission. The discussions on the subject which have been extensively indulged in for many years past had, moreover, attracted their attention individually long before their appointment. Several of the States had enacted the principle into law, and one (California) had made it a part of the constitution. But the commission is unanimous in the opinion that to adopt the measure would be unwise and illogical, and, moreover, unsatisfactory to those urging the change, and damaging to the interests whose benefit is contemplated thereby. Under the existing

law all realty is assessed as such. The commission can conceive of nothing which will improve this essentially just mode of taxation. Realty can not be hidden, and its market value is not difficult of estimation. Your commission can not but think it unwise to withdraw any part of it from the tax list merely because such part secures an indebtedness. The commission is not unaware of the fact that the measure in question does not in terms contemplate withdrawing the property mortgaged from taxation and that it proposes that taxation shall be borne by the mortgagee of the property. So far as existing mortgages are_concerned it amounts to the same thing. Where such mortgages are held in Iowa the law requires the securities to be listed for taxation, the same as other property, and taxes are paid thereon. In respect of obligations held in other States that are secured by such mortgages, they, of course, can not be reached for taxation by any enactment made subsequently to the execution of such obligations. Such legislation would be an impairment of the obligation of a contract.

"The effect, therefore, of adopting the measure proposed would, as to existing contracts, be simply to release mortgaged realty to the extent of the incumbrance from all taxation. In respect of contracts made after the adoption of such a measure, the commission is of the opinion that the fact that the mortgagee must pay the taxes on the mortgaged part of the realty would have the effect of compelling borrowers to pay a higher rate of interest, at least when obtaining money from beyond the borders of the State.

"The relief of the burdened holders of property is the ostensible object of the measure. This relief, if any, under existing contracts would be entirely at the expense of the public revenues. As to future contracts, it would be substantially neutralized by increased rates of interest.

"The man who loans money naturally prefers to pay his taxes where he resides and where he more directly receives the benefit of its payment and where he may have some voice in the matter of taxes imposed upon it. All other things being equal, he will select that field for investment which gives him that privilege, and which has in it the least element of uncertainty. It is sometimes claimed that he does not pay taxes at his home upon the investment. The commission knows of no State or Territory throughout the Republic the laws of which do not contemplate the taxation of the credits held by its people, and we have no right to assume that their laws are not complied with. Moreover, whether such securities are or are not taxed in other States, the commission thinks it as much as we can do to reach all assessable property of our own people without raising questions concerning the taxation of those in other States. It is not necessary to discuss the question as to the State to which the lender is under most obligation, that where he resides and has perhaps accumulated his money or that which temporarily affords him an investment. His course will not depend upon the determination of that question. He is the sole judge as to whether he shall send his money to this State or another, and the greater favorableness of the conditions will determine him. Those who to-day are furnishing our people the cheapest money on their farms have already largely inserted clauses in their mortgages requiring the borrower to pay any taxes that may be levied upon the obligations secured by the mortgages, and reserving the option, in the event of the assessment of such taxes, to declare the whole amount due and collectible at once.

"It is claimed by some that the conditions are such that our needs in this direction are principally supplied by citizens and corporations of our own State. This is not true. Our cheapest money comes largely from the insurance companies and savings banks of New England, and while our own loan and trust companies may be the owners, as appears of record, yet they are in fact held by Eastern investors or by Eastern trust companies to secure the debenture bonds issued by the local company. One Iowa company, in its recently published report, shows a larger amount in outstanding debenture bonds and mortgages than is embraced in the capital of all the banks in the city of Des Moines. The taxation of foreign mortgages would be the harvest of the local money loaner by reason of advanced

rates.

"Again, what special reason is there why the foreign holder of Iowa mortgages should be taxed and the farmer exempted more than the wholesale merchant in the East should be taxed for the amount due him from the local merchant, and a corresponding exemption made to such local merchant? The wholesale merchant may not receive interest on his investment, but he has its equivalent in the profits on its sales. If this rule were applied, how many local merchants would obtain a credit on their purchases that would allow them to carry their customers to the extent now possible? Against all deductions for indebtedness there are other reasons:

"1. The landowner, the man with stock, and the owner of fixed permanent property, which would include as well corporation stocks, would not have the opportunities enjoyed by the merchant, the broker, the dealer in grain or

stock, or the speculator or dealer in any of those commodities which are readily exchangeable, to increase or shift their indebtedness to meet the visit of the assessor. Merchants could order their supply of goods for six months or a year in advance, giving their notes without interest therefor, yet using due care that the goods should not be in stock nor in transit until after the date fixed for assessment.

“2. It would open the door to the creation of all manner of contingent if not fictitious indebtedness, until much of the property now upon the tax books would have taken wings in pursuit of the already elusive 'moneys and credits' of the capitalist and stock of the farm, which, year by year, is thus steadily declining in its average assessed value.

"3. Another reason is that the man doing business largely upon borrowed capital would, if allowed to deduct his indebtedness, have a decided advantage in the matter of taxation over his competitor doing business on his own capital. Thus the tendency would be to multiply indebtedness, to drive out of the State the capital even of the business man where the assessor could not find it, and cause him to do business upon his credit, backed, possibly, if necessary, by his untaxed investments in other States as collateral. If this is regarded as fanciful, it may be said that it is done to a very considerable extent by shrewd Eastern business men, and is made a matter of complaint by the tax authorities of other States. "The commission caused inquiry to be made as to the working of the proposed measure where it has been enacted into law, and especially in the State of California, where, as stated before, it is a constitutional provision. The tenor of advices from that State is to the effect that borrowers pay the taxes on mortgages through enhanced rates of interest. Some of the letters say that both borrowers and lenders are satisfied with the status, the former because their assessments are reduced, the latter because their net returns from the investment are as good (after paying the taxes) as before the present system was adopted. Other States which have adopted the measure have considerably modified it, and one has abandoned it entirely. In most of these States the parties have directly or indirectly inserted a stipulation that the borrower shall pay the taxes. The State of Oregon has given the proposed measure a very thorough trial. In 1882 it was enacted into law in that State. At the next session of the legislature, however, an act was passed making valid all contracts by which the borrower agreed to pay the tax on the debt, even though the latter bore the maximum rate of interest allowed by law. This agreement is said to be always exacted; as may be well believed, and the lender paid no tax. Finally, after 10 years' of experience with the law, the legislature of Oregon, at the instance of the same interests which had procured its passage originally, has just repealed it, and adopted the plan recommended in this bill, of prohibiting any deduction whatever on account of indebtedness."

BANKS.

Private banks or bankers are required to furnish to the local assessor a sworn statement of the amount of moneys, the actual value of credits, amount of deposits and bills payable, the actual value of bonds and stocks, and all other property pertaining to their business.

Their real estate is specially listed and valued for taxation the same as other real estate.

The aggregate actual value of moneys and credits, less the amounts of deposits and debts owing, and the aggregate actual value of bonds and stocks, except such as may be exempt or otherwise taxed in this State, and all other property pertaining to the business, is assessed locally at 25 per cent of its actual value.

Shares of stock of National banks are assessed to individual stockholders where the bank is located, the officers of such banks being required to furnish the assessor with a list of stockholders and the number of shares owned by each, and to list to each stockholder the total value of his shares.

Shares of stock of State and savings banks and loan and trust companies are assessed to such banks and companies and not to the individual stockholders. To aid the assessor in fixing the value of such shares, these various corporations are required to furnish him with a verified statement of property, similar to that required of private banks, together with surplus earnings, and the assessor, from such statement and such other information as he may obtain, fixes the value of the stock, taking into account the capital, surplus, and undivided earnings, the real estate being deducted and assessed separately, as other real estate.

The fact that stock in a National bank is assessed to the shareholder, while savings banks are taxed upon capital stock and the shares are not taxable to holders, does not render the tax on National-bank stock to the holders illegal, as in violation of the Federal statute, providing that the tax on such stock shall be no higher than that imposed on other moneyed capital, and no greater than on the other class of banks.

It has been held that the holder of stock in National banks may set-off against it indebtedness owing by him, based, according to the Iowa statute, on actual consideration. Whether the owner of shares of stock in a State bank can set-off debts against the tax on such stock, taxed directly to the bank, does not appear to be entirely clear.

This class of property is taxed, with local property in general, at local rates, and under the more strict provisions for obtaining a certain, uniform, full valuation of such property than in the case of property in general taxed locally, the burden of taxation would appear to be correspondingly greater.

SHARES OF CORPORATION STOCK.

The shares of stock in any corporation organized under the laws of the State for pecuniary profit, except as otherwise specially provided for, are assessable to the owners thereof at the place where its principal business is transacted, the assessment being on the value of such shares on the 1st day of January in each year. In such cases the amount of capital in real estate is deducted from the value of shares, such real estate being assessed as other real estate, and the property of such corporations, except real estate situate within the State, is not otherwise assessed. Verified annual statements are required to be furnished to the local assessor, showing authorized capital stock and number of shares thereof; number of shares issued, and par value of each; amount paid into the treasury on each share, and the total capital paid in; description and value of each tract of real estate; date, rate per cent, and amount of each dividend declared and amount of capital on which it was declared; gross and net earnings, respectively, during the year, and amount of surplus; amount of profit added to sinking fund; highest price of sales of stock between the 1st and 10th days of January of the current year; highest sales of stock during the preceding year, and average price of sales. The assessor has the power to fix, arbitrarily, the value of such shares of stock upon the facts contained in the statements furnished or upon any information within his possession or that may come to him.

All such corporations are liable for the payment of taxes so assessed to shareholders, and may recover taxes paid from stockholders, having a lien therefor upon the stock and unpaid dividends enforceable by sale of the stock.

It is not very clear just what kinds of property are in practice assessed under these provisions. One officer says in regard to them, "It looks as if the legislature had provided a way to assess all the property it could think of and then threw in this section as a drag net to catch anything that might be found."