Omaha daily bee., 1903-04-05
VALUE FOR TAX PURPOSES
Mesty Paper on Methods Of Assessing
TAXABLE Property.
txAMPlts FROM OMAHA BOARD OF REVIEW
Analysis 81 Elements thnt Are
Urged for Consideration
as Guides to VAL
nations.
Victor Rosewater in Political Science
Quarterly


Victor Rosewater in Political Science
Quarterly.
Value Is concisely defined in standard
treatises on political economy as the pur-
chasing power OF a commodity. What a
thing will exchange for, we are told, de-
termines its value. What 1t will exchange
for in money. determines lite price. The
older economists tried to distinguish be-
tween value in exchange and value in use.
end TO illustrate their meaning by citing
articles which might have little or no ex-
~ehangeable value and still be highly useful
and. per contra. articles which might com
mand colossal prices and yet serve no use
full purpose. These distinctions. however.
have been entirely brushed away by pres
emit day economic writer's who oonhne the
term value" to what vas formerly termed
exchange value" and refer to so-called
value in use simply as utility, OF which
value is the economic measure. Theoreti-
cally, all hat IL necessary to learn the
value Of IN article or service is to put 1t
on the market and ascertain what It will
bring either az a cash consideration or In
exchange for other articles or services.
But in all this we presuppose an absolutely
free field OF exchange, in which conditions
are no more favorable to purchaser than
60 seller, and a higgling of the market that
Will Dflnb ABOUT 2 DaTbeE On the DaSls VI
equivalence OF effective utility. Although
these conditions are seldom presented in
actual life, yet In taxation It becomes
necessary to FIX as near as may be the
relative value Of various articles OF prop
critics for purposes Of assessment, and often
without even the possibility Of expert
mental exchange upon the market. The
question then becomes a very practical and
a very pertinent one-how and by what
standards shall property values be determ-
ined in making up valuations which are to
constitute the basis of taxation.
In nearly sl our American common
wealths the revenue system, at least for
local purposes, is built up around the gem
eral property tax. The lew requires, as q
rule. the listing OF all property. real and
personal, tangible and intangible. at It's
true fair cash value. The law always has q
sale In contemplation-yet a theoretical
rather than an actual sale. According to
the provisions relating to real estate in a
Nebraska statute which may be taken as
typical, the property shall be listed "at
It's fair value estimated at the price It
would bring at a voluntary sale thereof
where public notice had been given and q
payment Of one-third cash and the balance
secured by mortgage upon the property"
In other words, not what a thing has sold
for, but what II would sell for under GER
tain conditions is to govern in arriving at
value for taxation. The property TO be
assessed may never have been upon the
market and have no prospect Of changing
ownership through sale, or il It has a
market price. this may include elements
quite abnormal; so that in order to esti-
mate its fair cash value allowance must
be made tor various factors and different
Critarta muQf ho aNnIiod 70 And a aottofoo-
tory measure of value. What then is the
determining factor? To answer this ques-
tion we must examine analytically a num-
Der of factors each by itself that, although
conflicting, are constantly set up as the
real basis for tax valuations.
I. SALE-Tf the value Of a commodity Is
Its purchasing power, why. should not a
recent sale fix Its valuation for assessment
and taxation? The fact that a yard Of
cloth, a plano or a city lot has Just been
bought for a given price is certainly good
evidence Of value, but does It necessarily
nx Its value? Property is often disposed
OF at forced sale-not. perhaps, at auction
to the highest bidder. but yet under more
or less duress or stress that impels its
owner 10 sacrifice It for less than It ought
20 ommand. The most common forms Of
forced sale are those by receivers Of bank
oA0 W VI
estates for whose settlement the heirs are
clamoring. National banks are required by
the national banking law to sell within a
stated period real estate acquired In the
transaction Of business, and In. order to
unload their real estate holdings they fire.
Quently make prices thai will move the
property in disregard OF settled property
values. The pressure 70 sell may come
from many different direetions,-from
necessity OF meeting maturing obligations.
from indisposition Of people changing their
place Of residence to TAX their property
I, with them or hold It as absentee owners,
: from philanthropic or superstitious mo-
tives, from selfish interests for advertising
purposes.
We may also have forced purchases as
we'll as forced sales. with the consequent
price above, rather than below. fair cash
value. The forced purchase Is found where
particular piece Of real property is needed
for a particular purposs.-for access to
railway traekage, for a drainage outlet,
Cor right Of way for ingress and egress. for