The Richmond Virginian. (Richmond, Va.) 1910-1920, 1910-09-03
SEPARATION WILL
CURE TAX EVILS
DR.. Freeman Prepares Report on
Segregation of Municipal and
State Revenues.
PLAN NOT FEASIBLE
AT PRESENT TIME
Political Economist Believes In
heritance Tax Would be Neces-
sary--Recommends Partial
Separation Trial.

Declaring that the separation Of tax
desirable for the State. but citing fig
ures to show that such separation Is
now impossible. the first report of Tax
Commissioners Douglas S. Freeman has
been filed with the Virginia Tax Com
mission.
DIR. Freeman's report includes an
elaborate preliminary survey of the
general theory of separation, which, he
concludes. liz in the main the best poll
cy yet proposed for the solution of the
problems of equalization. While the
system is inelastIc and has other dis
advantages. IL is well calculated to undo
the evils of underassessments and may
properly be reckoued as the most SCI
entific policy of tax reform yet pro-
posed.
Separation in Virginia.
THE only question 10 be asked" says
the report, before recommending q
policy Of separation for Virginia is
whether or not the finances of the
State are in such a condition as to
warrant the change in the system OF
collecting the revenue
Estimating that the natural basis of
separation Ia the state would be 10
give the counties and cities the exclu-
sive right OF taxing real estate and
personal property. while reservtng TO
the Commonwealth the right of exclu-
stve taxation OF public service and
transmission companies, the report
shows that this change would cause a
deficit OF $l,745, 000 the annum on the
basis of the present revenue and ex-
peaditures OF the State. To meet this
deficit the State would have TO seek
new subjects of taxation. Allowing
that the reduction in criminal ex-
peuses and in the cost of collecting and
asse sstnE taxes would reduce the de-
felt To 81, Loco, the State, TO meet
this. would have only the taxes now
derived by the counties and cities of
the State from railroad and other pub
lie service companies. These taxes, as
the report shows. amount to total OF
SSse.S6a.@3- which would stili leave the
State TO meet deficit of s574,0l7.54
from other sources.
The report takes up the suggestion
tina, this lesser deficit be met by sepa-
rating for the exclusive use of the
State the licenses now levied by the
towns. but insisted that even under
such a pla nit would be advisable TO
leave to the cities and towns the -po-
Iced licenses" liquor, junk dealers and
pawn brokers, for the protection of
the towns and cities.
The total amount of licenses levied
under municipal ordinances in the
State lis sSs3. 637. and OF this sum at
least sSS7. 200. the amount OF the po-
Iced licenses, would have to remain
with the cities. In such a case. DIR.
Freeman says, the State would only
derive about s5s6000 the year from
separating licenses, which sum would
81 tn % rafr , 50
of government
An Inheritance Tax.
The only alternative. save that OF
increasing the assessment OF railroad
property, Is to levy special Inherit
ance tax. This. DIR. Freeman estimates,
would bring in about $4,000 the
year TO the State under the provi-
sions OF a law which would exempt
from taxation all inheritances OF less
than $1,000, and tax all others at one
cent. DIR. Freeman suggests, however.
that as an inheritano etax LIS one OF
the best possible taxes, and one which
could be used without damage in times
of financial distress, 1t hardly seems
advisable TO recommend such a tax
at this time.
The only possible basis of separation,
concludes the report. is. first. to sep
arate for the use OF the State all rail-
road and public service corporarfsn
taxes; second. separate all municipal
licenses except the poffced licenses;
third. TO levy an inheritanve tax.
To this plan the report raises sew
erai objections. chief among which
are. first. the margin between rev.
enue and expenditure In too small TO
be safe in times of financial uncer-
tainty: second, that the system is In
elastic. and. third. tina many small
towns and some counties, as we'll as a
few cities. would be seriously injured
by the change.
Concluding that separation was In
advisable for the present. IL not en-
tirely impracticable. the report recon-
mends that partial separation be un-
dertaken as soon as possible, and that
as the Investigations OF the commrs-
sion showed new taxes which could be
separated, that these be given the
State and that a consequent deduc-
ton in the tax rate be made.
DR.. Freeman says: The commission
think regrets very much that sepa-
ration appears to be impossible. for
several members had hoped that q
feasible plan might be worked our.
While we have not altogether aban-
doned hope, We shall certainly not at
tempt any policy of separation thar
does not show clear benefit to the
people OF the State and certain sta
bility to the finances Of the Staes,
which would be lackting under any
plan hat could be formulated at this
time"
sixnal Men Striln