Evening star., 1901-03-27
REFORM IN TAXATION
COMPENDIIM VI OF SYSTEM IN LARGER
STATES.
Assessment of Incomes TO Raise Rev.
enue for n state is Rec
commended.


with especial reference to corporations has
been prepared for the industrial couInis-
sion by MIR. George Clapperton OF Grand
Rapids. Mich. 1t has special reference to
the states OF Massachusetts. Connecticut,
New York. New Jersey. Pennsylvania,
Ohio. Indiana. Michigan. Illinois. wiscon-
sin. Iowa and Texas. which states were
selected for special Investigations because
of their industrial prominence and the
varied character,of their systems of cor
porate taxation
The inadequacy, under existing economic
conditions. OF the general property tax so
called, and it's utter failure. even under the
most rigorous and effective administrative
methods that have been devised. To reach
for taxation property of a corporate and
intangible character. are recognized I'm all
the states named the report accompany
ing the compendium says.
1T is clear that under this system there
are numerous forms Of wealth that do not
and cannot be made to bear just share OF
the public burdens, and which in large T-art
evade or escape taxation, and some forms
which, when reached at all under the pre-
Yaillng general property tax. are not equal
ly and uniformly but unjustiy and dis
proportionately taxed. as compared With
other property. The inevitable result is
that real estate and some forms Of per-
sonalty are unduly burdened with taxation.
These conditions under the search light
OF aggressive investigation have engende-ed
positive public and political agitation i'm
many of the states. and have inclined peo-
pie in every state, keenly alive to prevail
ing injustice. to vigorous criticism and de-
nunciation of 'tax-dodging" individuals and
corporations
The system Responsible.
while state tax officials. tax commits
sioners and writers upon taxation. with
considerable justification inveigh against
the efforts of individuals and corporations
to evade and escape just taxation. il should
in justice be said that there Is a lack OF
appreciation of the fact that the principal
cause Of these conditions is inherent in
the system itself, rather than i'm a gem
eTal desire to avoid just taxation. In all
the states named vast amounts of property
are virtually exempt from taxation. and
other property is unjustly and grievousv
burdened through the operation of bad
systems and injudcious laws. II is
less to inveigh against tax dodgers and
faulty administration unless the methods
OF taxing such classes Of property are
changed.
THE remedies seem to lie I'm the adop-
tion by the several states working in haT-
mony far may be, OF new and mod
ern methods based on correct principles
for the taxation of special forms of prop
erty, separate and distinct from the gem
eral property tax in respect to both valua-
tion and rates of taxation. and a thorough
administration thereof
IN the states investigated there has been
more or less departure from the general
property tax toward the adoption of spe-
cial methods for the taxation OF corpora
tions With few EXCEPTIONS however. ef-
forts in that direction have thus far been
devoid Of real method or design. and upon
the whole chaos is the only descriptive
term applicable to existing conditions in
commonwealth taxation.
Earning Powers as a Basis.
There is marked tendency in all these
sta at toward making earning mower the
basis of taxation for quasi-public corpora
tions Properly directed this must be re-
garded as the correct principle and capa-
bic of practical application to such corpora
tions under existing industrial conditions
There is also, however, a strong inclina-
ton to cling to the old system In part, and
to use this principle in conjunction with
some feature or factor of the property tax,
more particularly to use earning power as
basis of property valuations in connec-
tion with property tax or uniform rates.
Representatives Of corporate manage
ment and others animated usually not
so much by the fear of equal taxation as
of unequal taxation under the prevailing
systems.
THE great problem Of commonwealth
taxation, Of commanding interest in all
states. consists practically Of reform in the
methods of taxing corporations and indi-
vidual personally of an intangible charac-
ter, and an improved administration of
1.-The principles that taxes should be
levied in proportion to ability to pay, and
that, even under the general property sys-
tenn they are designed to be upon persons
rather than upon property, are generally
recognized. Under existing economic con-
ditions property is no longer regarded as
an adequate test of ability to contribute
to the support of the government. Hence
the marked tendency to apply different
tests to special classes of property own
ers. There is a growing class of citizens
ylor.r laru I'M sar S-a1a and
enjoy all the advantages OF society and
good government, who, though possessed OF
abundant ability to pay taxes. are under
existing systems, practically exempt from
taxation or inadequately taxed. This class
is receiving and must continue to receive
especial attention in the revision refor-
nation of taxing systems in the several
states.
Tax Incomes.
while a tax upon individual incomes is
generally conceded to be just and equita-
BILE in principle, it has been received with
disfavor and regarded impractical in its
operation. 1t is apparent. however. to the
careful student of commonwealth taxation
that because of its Justice and the increas-
ing efficiency Of state administrative meth
DDS that are being evolved, the idea of
limited supplementary state income tax Is
growing in favor and coming to be more
generally regarded as a practical measure
under state supervision.
such a tax has always prevailed in
Massachusetts, the present law of that
commonwealth, which the Legislature re-
Gently refused to abandon, imposing a tax
upon so much of the income of a profess
sion, trade or employment as exceeds the
sum of $1,000. but exempting income de-
rived from property subject to taxation.
While this law is imperfectly administered
1t is not infrequently suggested by emf
nent authorities upon the subject that
supplementary income tax of that charac-
ter imposed directly by the states under
modern methods of administration, would
become an efficient and practical source Of
state revenue. In conjunction with the
principle of taxing corporations upon earn
ing capacity it seems destined to receive
increasing consideration in the several
etates.'