The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1926-03-10
Tax Commissioner
Discusses States
Taxation Problems

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and that the true test Of ability to
pay should be the proceeds or earn
ings. One manufacturing plant may
be running full time and making
large profits, another may be run
ming only part time land earning
little or nothing. One farmer may
have favorable conditions. and make
large profit. Another may have
climate reverses and suffer loss.
More Equitable.
Railroads, Thorcsen said, arc taxed
on the theory of their ability to pay
which is determined on the basis of
sworn reports of their operations and
holdings made to the tax commits
sioner's office. Telephone compan-
les cannot be handled the same way,
he said, because few telephone COM
panies have adequate accounting sys-
TENS. Since one system may make
big profits and another no profits the
property tax is unjust, he said, and
recommendation has been made that
telephone properties be placed on an
ability to pay" basis by levying a
gross earnings (which, though not
perfect, is far more equitable"
Telephone companies, he said, are
not the only property owners suffer
ing under the present inequality.
The farmers are the ones to suffer
che greatest inequality under the
past and present method of assess
ing. The principle of ability to pay
does not enter into the assessment Of
farm property whatsoever. In assess
ing farm real estate the assessor
places an arbitrary value upon the
property. This value is arrived at
partly by speculation and in part
from pride in the home community.
No systematic effort has been made
TO ascertain what the property is
actually worth. No property is worth
more than what it will bring in re-
turn in earnings. The inequality Of
valuation Of farm property. as well
as other real estate, is not due to
the law. The law provides that prop
erty shall be assessed at what it
will bring in voluntary and open
sale. 1t is in the application of the
law that the inequality arises. Farm
lands pay approximately 62 per cent
OF. all general property taxes levied
IN the state. The law requires farm
lands to be assessed ut their sales
value. Ability to pay taxes is not
taken into consideration except as
reflected in sales value. The Unit
ed States Department Of Agriculture
recently made survey covering 81
counties in rs states. One Of the
conclusions Of the Bureau, as a re-
suit of this survey, is particularly
interesting. The value of farm lands
covered by this survey was found by
capitalizing the annual cash rental.
The current long term mortgage rate
Of interest was used in capitalizing
the net cash rental, it being assumed
that the farmer as rule has the
alternative Of selling his farm and
investing the proceeds in such mort
gage securities. The department
found that the valuation as thus
determined was only approximately
une-third of the sales value as re-
ported by the Census Bureau, and
that consequently two-thirds of the
sales value of land was purely
speculative value.
Sales Value Used
Assessors have no authority to as
scss land on its economic value, but
must assess it ut its ordinary sales
value. The assumption of the statute
is that sales value and economic
value are the same, the theory of
the law evidently being that man
will not pay more for property than
the amount he can realize by the use
of such property. Assessors should
be governed by sales values in nor
NAL times and shoald not base their
Judgment Of land values on inflated
prices. Considering the earning pow
err as the proper basis for taxation
it is the observation Of our depart
ment that city property is assessed
at considerably less than rural prop
erty.
"Another reason why farmers are
required to carry heavier tax bur-
den is because business is we'll or
ganized to protect it's own interests.
The farmers on the other hand have
been hopelessly disorganized. In or
der to continue . progressive state
and nation, one that will develop
al it, people and all it's resources
and industries, we need look with
particular care that the. burdens are
nd iusted 90 that NIL may be able to