Spirit of Jefferson. [volume] (Charles Town, Va. [W. Va.]) 1844-1948, 1926-04-14
KENTUCKY TAX lessons BUR-
DEN ON REAL ESTATE
intangibles Produce Larger Revenue
Proportion Under Classification
Plan.

That the Classification Amendment
to the Constitution of West Virginia
will lessen the burden of taxes on real
estate is indicated by the experience
of other states where the plan now
before the people OF West Virginia has
been put Into effect This is support
ed by the report Of the State Tax
Commission of Kentucky for 1924.
This report shows. among other
things. that In 1917 real estate taxes
In Kentucky produced more than ~
per cent Of the states revenue from
direct levies. while intangible personal
property produced only about seven
and one-half per cent OF the total.
In 1924. seven years later, under
the operation OF the classification law,
the proportion OF direct taxes pro-
duced by real estate had dropped to
Al per cent of the whole, while the
revenue from intangibles had increas-
ed to almost 25 per cent of the total.
Expressed In dollars the revenue
from taxes on intangibles increased
from $37s.00o In 1917 to $1.9S4,000 In
1924.
Moreover, the Kentucky Commission
reports that In 1925 a still further
marked increase was shown In the
assessment of intangibles
The West Virginia legislature OK
1925 submitted to the voters pro-
posed Property classification Amend
ment' relating to Section ] of Article
X of the state constitution, to be acted
on In the November elections this year.
This section now reads:
Taxation shall be equal and uni
form throughout the State, and all
property, both real and personal. shall
be taxed In proportion to its value, to
be ascertained as directed by law. No
one species of property from which a
tax may be collected, shall be taxed
higher than any other species OF
property of equal value, but property
used for educational, literary, scien-
tific, religious or charitable purposes;
all cemeteries, and public property,
may, by law, be exempt from taxation.
The Legislature shall have power to
tax, by uniform and equal laws, all
privileges and franchises of persons
and corporations"
The proposed amendment would in
sert after the word value as last
used, the following words:
except, that money, notes, accounts
receivable, and bonds shall be taxed
at rate not to exceed fifty cents on
each one hundred dollars of the true
and actual value thereof, and the rev.
enue derived from this source shall
be apportioned by the Legislature
M of ha fafo
In proportion to the levy laid In said
units, upon real and other personal
property"
Proposal TO classify money and In
tangibles for a low rate of taxation is
not new In West Virginia. In fact,
hackers of the Proposed Amendment
declare there is every reason to be-
lieve that the state legislature would
have long ago adopted the plan had
1t not been for the barrier lnterposed
by the Constitution. In the mean
while many other states have adopted
1t and by reason of Its application
have obtained larger revenues and at
the same time attracted capital for
development.
1t is an open secret that the applica-
bility of the normal tax rate to In
tangibles has forced capital into hid
Ing that money Is invested In nom
taxable securities which might other
wise be brought to light and loaned
for the commercial, and still more inn
portant, the industrial development of
the state
There Is q growing impression among
business experts that the future OF the
10, Nixof rxfo 10,
wrapped up largely In the industrial
development of the state, since trans
portation costs are so vitality affect
ing our principal product. Therefore
taxation methods which Will at once
Increase the revenue from intangibles
and attract outside capital to the
state, are Of the utmost Importance to
all the people.
Much money is now being loaned on
West Virginia property, but. as all
who are familiar with the facts know,
securities produce only small per
centage of the direct tax total while
real estate groans under the burden.
It has not been found possible to have
these securities listed for taxation and
1t Is contended, If not indeed recog
nized, that the application OF the ex-
listing tax rates to such securities II
made general would necessitate a
widespread Encouragement Of loans,
the probable withdrawal of many and
perhaps foreclosures to an extent that
would rock the business foundation Of
the commonwealth.
As 1t is, however, the intangible
properties are not generally listed and
the state derives comparatively little
benefit from assets of this class. The
experience of Kentucky, and other
states, 1t is pointed out, is that when
a fractional tax Ia levied against prop
erty Of this class 1t increases In vol
ume and new and old intangibles are
brought forth and listed, and there is
a consequent increase In the states
revenues from this source.
Application of this plan, as In effect
In some of the other states is as fol-