Omaha daily bee., 1903-04-05

completing the symmetry Of a store build
ing or a nne residence. A part owner Of
property, real or personal, may be forced
10 buy or sell to adjust control. In all
these cases a monopoly price is exacted
witch may never again be maintained and
the purchaser may truly be said to have
given more than the property is fairly
worth. To assess II for taxation at the
purchase price would be over-shooting the
mark az much as taking the price Of a
forced sale would be undertaking. the
property.
In connection with sale prices as the
basis Of tax valuations we occasionally
meet complications arising out OF the dim
Guilty Of separating the different component
parts Of the transaction. For example,
A may be the owner Of three pieces Of real
estate. lots 1, 2 and 3. Of which two are
desired by B. A asks $1,000 for each lot
and insists upon selling all three or none.
B offers 1000 for lots 1 and 2, and finally
COMPROMISES by buying all three for $4,000.
He regards the purchase price Of lot 3 as
$500 and asks to have its assessment for
taxation placed at that figure. Or. again,
a man may buy a tract Of land consisting
VI SEVERAL bANNNhg I'M ~
The FIRST he may get at a bargain. and be
forced to pay a fancy price for the last.
Manifestly the fair valuation Of the whole
property may be represented neither by
the price Of the first nor Of the last, nor yet
Of the whole. To allow sales such as these
to furnish the standard for assessment not
only for the property directly concerned
but also for that adjacent or similar to It,
for all valuations must be relative, would
on one side prevent all equity in taxation
and on the other destroy all stability In
assessments.
2. OFFER-when actual sales prove not
altogether trustworthy, mere offers to ouy
or sell must be subject to equally de-
ceptive vagaries. That a commodity OF a
piece OF real estate is held by it's owner
at a certain figure, no more hxes It's value
thai that, when placed on the Market
only Inadequate offers are made Tor It's
purchase. One person might oher only a
few dollars for q gold nugget weighing q
pound and another hold a paste diamond for
the price Of a genuine stone, yet neltner
would give any reasonable Indication OF
the true value which the assessor aims to
get at. Property may be on the market
for years without ~eliciting any oner at all
Yet no one would contend that 1t had lost
It's value or that 1t should be exempted
from taxation. The very fact that an oner
TO buy or sell has failed to ripen into an
exchange must be taken to discredit It as
the basis for assessing the property, since
It proves conclusively that one Of the in
terested parties refused, to accept the
others valuation as a proper equivalent.
8. COST OF PRoDUCTIoN-Cost Of pro-
duction, though closely akin to sale price.
is still slightly differentiated from 1t. The
cost of building a house Is q good Index
to value II the work Of construction is OF
recent date, but what IL cost to build a
house ten years age, or even last year. 10
not conclusive evidence Of present value.
The house may have been extravagantly
erected, or It may have been q loss to the
contractor. The owner may have put his
own labor or supervision into II without
including the value Of such labor In the
cost figures. Some OF the construction
work may simply have replaced other parts
DESTROYED or discarded. An example In
point has come under notice, where a
wealthy man, preiudiced against new build
ings. bought a residence for $50. 000-a price
generally regarded as exorbitant-tore out
most of the interior and remodeled the
exterior at an additional cost OF some
$50, 900, and then found the property on
the assessment roll for only $4,000.
For the taxation Of intangible person.
atty the cost Of production basis is out OF
the question. The cost OF producing a
franchise is indeterminable, while the coss
OF procuring 1t through the usual channels
depends entirely upon the methods EN-
ployed. TIL cost Of producing many arti-
cles which are Joint products or by
products is likewise elusive, because the
cost Of each component cannot be sep
arated, nor has the cost any direct infu-
ence on the market price beyond setting
limits below which it cannot permanently
fall. Cost of production goes up and doWa'
often changing with the seasons, while
assessment valuations are made no oftener
than once q year. To adjust the tax TO
either high Or low period would work In
Justice as much as to go back with valua-
tions to cost prices Of long ago years.
4. COST OF REPRoDUCTIoN-As q
guide to value, cost Of reproduction mas
the advantage of contemporaneity over cost
of production, but is subject to the same
limitations though In perhaps lesser de-
gree. In this connection the question OF
Insurance affords an Instructive sidelight
and the amount OF insurance carried upon
buildings, stocks Of merchandise and per-
sonal property II often Of the utmost as
| sistance to the assessor In making MS
valuations. Insurance where carried In fun
constitutes the owners estimate OF the cost
Of replacement or reproduction in the event
Of total loss by IRE. Property, however. 10
usually under insured and emily infrequently
over insured. AS q rule the so per cent
clause operates to enforce insurance at
least up to h amount and 1t lie not to
be presumed that the prudent business man
win pay premiums on policies In excess Of
the amounts he may recover for destruction
Of his goods. But It must always be re-
membered that insurance gives merely q
glimpse at an estimate OF value and that
the estimate Of insurable value depends
upon the same factors that are considered
independently in computing assessments for
taxatien-
s. EARNING PowER-If our revenue
system we're based exclusively On income,
earninG power alone would be the de-
termininG factsr In taxation. That we rely
for the most part On the property tax en-