Omaha daily bee., 1902-10-22
PROBLEMS OF ALL TAXATION
subject ~ Discussed In Lecture by
Prof Edvard a. Ress at Com
RreEnti0naI Church.


PROBLEMS Of Taxation" was the subject
of a lecture delivered at the First Congre-
g~ational church last night by Prof. Edward
A.. Ross, under the auspices Of the Univer-
sity Of Chicago, being one Of the regular
series Of lectures Of the extension course.
The lecturer said, III part:
The fiscal problems that perplex us per-
tain to the raising of state and local
revenues. Our federal system Of taxation
Is not seriously criticized as a means of
raising revenue and its success is attested
by Its supplying ample funds with little
sensible burden to the people. Our irst
problem OF taxation arises In connection
with the sharing of state expenses among
the various counties. Most of our states
have no taxes of their own, but raise
money by levying certain additional mills
on the valuation of property as sscertained
py local assessors. Our ,endeavor to spread
the state burden evenly over the entire
mass of property locally assessed is an in
Vitation to counties to keep their assess
ment low and thus dodge some of the state
tax. There will be no local objection II all
the property In a county Is assessed at n
quarter of, its true value and its citizens
will thereby succeed in lodging three
fourths of their just share Of the burden OF
the state government. But other counties
are equally shEewd and thus there is be-
tween localities a. rivalry which brings as
sessment down to an absurd figure. In the
same state we find property assessed all
the way from par to one-twenty-hfth of
One remedy for this u~nbearable state of
ltAk Is III OItROn Drill MS DIO=
vides that after 1895 the counties shall CON
tribute to the state treasury a certain per-
centage of their local expenditures. A
county that raises for its own purposes
twice as much as another county must pay
twice as much to the state. This. might do
If there were not other considerations
which urge the state to open up for itself
distinct sources of revenue. The favorite
and time-honored source OF our local rev.
foundation OF! thin tax Is the common senti-
ment of ~fatrntss in a democracy. This sys-
TEN appeals so much to the average man, IL
is so rooted In American tradition, that
only recently has the mountain of adverse
evidence that has been plling up the last
IL. Now, however, there is a unanimous
opinion among all students or American
actually administered has Come to be one
of the worst taxes known In the civilized
world, The tap root of the evil Is that
ton of new forms of wealth and The In
creasing complexity of economic relations,
Pp Hrs3Sn9f PtopeTty, MhlSn constitutes nearly
escapes assessment until the system has
become a farce. e
The tax puts a premium on dishonesty
and debauches the public conscience. Men
who make honest returns perceive that the
tax rate Is SO much the higher on account
of the e~vasions of others and therefore
they are paying not only their own dues.
but also the dues of their dishonest neigh
bors. ....tr
There are several ways Of recasting the
general property tax to obviate these evils.
One suggestion is to exempt intangible per-
sonalty. Let mortgages be taxes as an in
terest in the and mortgaged. Exempt
stocks and bonds and tax directly the cor
p%oration that issue them. Another pro-
posal is to exempt all personality and tax
only real estate. The farmers object to
this, as their capital is to an unusual de-
gree in the form of real estate, but statis-
tics show that In three-fourths of the
states country property as listed by the as
property, so that the farmer would expert
ence more relief from the exemption of per-
sonalty than would the city man. At pres
mer is not the recasting of the general
property tax, but the RELOCATING of II to a
MN MINOR he Place lace n IN our bv revenue revenue system: This
of revenue. One of these is the inheritance
tax. Another promising tax is that on
road, tracks and ~right-of-way was under
taken by. local assessors they often en-
tered such property at the value OF the ad-
tacent farm land, moreover, gross %inequali-
ties in the ASSIGNMENT of the same railroad
IN neighboring Runties demonstrated that
with the proble5 For this reason there Is
m a ma ~ eSs S : nv ~ az ra lHqgs f aSd s si%lisr
There is, however, another and a greater
difficulty. in applying the general property
posed to be worth what some one will give
for 1t. But the inability of an owner to
pay taxes depends on what the property is
worth to him. Now, I'm the case of a cor
p~oration these two values may greatly
diverge. The poles and wires of a tele-
phone company are worth a great deal
when wrought into a line and equipped for
telephony; they are worth very little when
disintegrated into reels OF rusty wire and
stacks of secondhand poles. Yet the latter
is all the value that the courts of Ontario
allow them under the general property tax.
Owing to the fact that the market value
OF corporate securities reflects prospective
profit rather than present profit 1t has
been argued that the true basis for the
taxation of corporations is their net earn
ings. But in such case. Of course, they
must be put In a class by themselves and
taxed at a different rate from that on
property. This special treatment gives a
fine chance TO hoodwink the people. Miehi-
gan, after trying the plan several years,
has gone back to property-including fran
chise--as a basis for railroad taxation: Z
BY means of taxes ON Inheritance, on cor
porations and on Incomes II would be pos
sible for the commonwealth not only to pay
its own expenses. but TO come 10 the relief
of the local units. The revenues received
from the public service corporations, for
instance, might be returned TO the munici-
palities they operate In, and that from the
railroads might be distributed among the
counties In proportion to mileage.