Evening star., 1930-12-08

Il
| Comparison of the burden Of real
property taxes in different cities" the
report said, cannot be made by using
the tax rate alone. Such comparisons
| are meaningless unless it can be es-
| tablished that the bases of assessed
valuations are the same. Two cities
may have the same tax rate, but the
actual burden in one may be twice that
In the other because of higher basis
for assessments. Conversely cne city
may have twice the tax rate of another,
but the actual burden may be the same
because of a lower bass for assess
ments. Therefore, attempts to compare
WaShington'S tax rate of SIT per thou
| sand on real property with Baltimore's
tax rate of $24.13, or Minneapolis tax
rate of $3.50, as is so frequently done.
results in hopeless confusion. To make
such comparisons mean something, at
! tempts have frequently been made in
taxation stud es to establish compare
BILE adjusted tax rates for the various
cities.
The usual method employed to ad-
| just such rates is to apply the ratio
of assessed valuation to fair or market
value to the actual tax rates; for eX-
ample. in a city, where the actual tax
rate is $25 per thousand and the as
sessed valuation of property is so per
cent OF its fair value on the average,
the adjusted tax rate would be shown
as $3.50 per thousand; in a city where
the actual tax rate is $40 per thousand
and the assessed valuation of property
is 80 per cent of its fair value on the
average, the adjusted tax rate would
be shown as SIG per thousand.
'AS to what this ratio Is in the three
cities cited above no two authorities
agree. The Bureau Of the Census in
table % of its report on financial sta
tisticS of Cities for 1923, lists the re-
ported basis CT assessment in practice
in terms of per cent of estimated true
value as follows:
Ratio Used by Cities.
Washington 100 per cent Baltimore
90 per cent and Minneapolis 40 per
cent. The Detroit Bureau of Municipal
Research in its 1923 report on COM
paTative tax rates of 235 cities, which
is published annually and has at va
r!ous times been printed in the House
hearings on the District appropriation
bill and in the Congressional Record,
gives the following ratios of assessed
to market value: Washington 80 per
cent, Baltimore 80 per cent and Min
neapolis 81 per cent.
I'm a memorandum on the District
OF Columbia tax rate prepared early in
1880 by the assessor of the District, he
offers still a third set Of ratios as fol-
lows: Washington 90 per cent, Balti-
more IS per cent and Minneapolis 80
per cent.
These widely varying results, OBJ
tained by the use of the same method,
indicate rather conclusively that the
method is unsatisfactory. The Bureau
Of the Census states that its reports
showing the ratio of assessed to true
vam. ere based upon estimates OBJ
tanned from city officials and that the
figures are only approximately correct.
The Detroit Bureau of Municipal Re-
search frankly admits that until cities
give more attention to the problem of
determining the ratio Of assessed to
true value exact information relative
to the tax burden will remain mys-
terry
I'm collecting the data for the bu-
reau's report it has been found that
generally no records are maintained
from which reliable ratios of assessed
valuation to fair value can be deter
mined. Ratios which have been used
in adjusting tax rates on this basis are,
for the most part, mere gueSseS, and
the resulting adjusted rates are of no
specific interest, but are useful only in
indicating general trends.
Adjusted Tax Rates.
For the purpose of establishing ad-
justed tax rates fer the cities covered
by the bureaus survey, which constitute
a limited group in the same population
class, it is believed that an adjustment
of assessed valuations Of property for
the other cities on the basis of WASH
ngtonS assessed valuation per capita
would produce comparable results
Washington'S assessed valuation per
capita was, therefore, applied to the
population Of each city to determine its
adjusted assessed valuation. Then, by
dividing the actual tax levy by the
adjusted assessed valuation, the adjusted
tax rate was established. This method
meets the objection that consideration
is not given to the varying price levels
of property in the several cities, which
Is often made to the first method de-
scribed above.
Furthermore, 1t is manifestly unfair
TO compare tax rates and tax revenues
In washington with those in other
cities without taking into consideration
the large property holdings of the Fed
eral Government which are exempt from
taxation. To establish compara able tax
data for Washington it is necessary to
determine and include the amount the
Federal Government would pay in taxes
TO the District Of Columbia on its prop
erty holdings used for the transaction
OF the Nations business II 1t were SUBJ
1ect 70 tax Therefore, two computa-
Tons OF adjusted assessed valuations
and tax rates were made, the first on
the basis Of Washington's assessed VAL
uations per capita exclusive of all Fed
eraI property holdings, and the second
on the basis OF Washington's assessed
valuation per capita, including the
property holdings of the Federal Cow
eminent other than park property and
property used for the exclusive beneflt
OF the District government"
When the Federal property holdings
are included, Washingtons assessed
real property valuation was nearly twice
the average for the other cities
'$5,u2S.l5 compared with $l,522.33).
ana It's assessed personal property val
tne average Of nine comparable cities
($A'o4o.S6 compared with $523.7T.
Tax Levies Per Capita.
Excluding the Federal holdings the
tax levies per capita for Washington
were $4,000 for real property and SO
Ior personal property, and including the
Federal holdings they were ISL so and
$l3.l9, as compared with averages for
the other cities of $48.64 and Sll.52. re-
spectively. Therefore, in spite of the
fact that Washington had the lowest
real and personal property tax rates of
all IA cities with a single exception in
the case OF personal property its high
assessments considered in connection
with the Federal Governments property
holdings OF taxable nature resulted In
levies which on per capita basis were
actually higher than the average OF the
other cities.
Most cities seem to prefer low basis
OF assessment with high tax rate, al
though obviously $40 tax rate on a
$4,000 assessment Is the same as a $40