Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1935-03-21
ON TAX LIMITATION

Supporters in the Legislature OF
the proposed constitutional amend
ment for tax limitation on real and
tangible personal property frequently
argue that their proposal aims large
1y at helping the small taxpayer.
But analysis of the bill and its
probable effects gives cause to won
der whether it is not the large prop
erty owners who will benefit princi-
pally by the plan. An understanding
of the proposal raises the question:
Is not the absentee landlord class
back of this bill? For it would be
these absentee landlords, living per-
haps i'm Chicago or New York, or
some other removed place but reap
ing profits from property in Mime
sofa, who would gain greatly if such
a limitation were put through.
Also standing to gain largely by
the plan are those absentee land
lords" whO while living in Mime
sofa, derive their incomes from bust
ness and Industrial properties which
they do not occupy or use themselves.
In these categories fall the big min
ing companies, the large holders of
city and farm real estate, and SINH
lar promoters.
Now, to see how the proposed limf-
tation would work out, let us make
some comparisons.
First, take the case of the owner
of $4,000 urban homestead. Under
the present law he pays taxes on a
valuation of % per cent. Assuming,
for purposes of illustration, that he
lives in a city where the tax rate
is 100 mills. he pays a tax of 500
on an assessed valuation of $1,000,
or full and true value of $4,000.
Under the ~ per cent cOnstitu-
tional limitation for urban property
he would pay base tax of $50 on
his full valuation of $4,000. But it
must be noted that the proposed
amendment does not apply to taxes
necessary to retire bonded debts of
the municipalities incurred before
the limitation takes effect. So this
homestead owner would be subject to
taxation for debt retirement purposes.
1t is understood that the Limitation
amendment would autom atically kill
the present assessment classification
law: therefore taxes for debt retire
ment would be levied on the true
value of the property.
Assuming that there is a 10 mill
levy for such purpoes-and this is
fair average estimate-he will find
another $40 added to his tax bill
making total of 500. the same as
under the present system.
However. it is anticipated that ii
the limitation is approved 1t Will be
necessary to impose some sort of sales
tax as replacement for the real
estate tax revenue lost. This will brins
the homestead owners total tax bill
higher than before. The sales taA
would bear most heavily on the small
taxpayer, because such tax must
largely be levied on the necessities
of life. which make up the principal
part OF his purchases.
When we skip from the homestead
owner to the owner of real estate
worth 100000. we find that the latter
of 40 per cent. which would mean that
his present tax. under the 100 mil
rate. is $4,000. However, under the
proposed tax limitation his base tan
would be S1.50O and his tax for debt
retirement $1,000. making a total O
$4,000. The tax cut for the owner o.
100000 in real estate. in other words
would be 37ia per cent.
Now to go on to- the iron minin:
properties. With a total advaloren
or real estate levy on iron ore TO
local and state purposes Of pa pc
cent. plus 10 mill levy for bond re
tirement. million dollar mining
property would pay total of $3.50
under the tax limitation plan. A
present the mines pay on a so pc
cent valuation. so that a million dol
lar mining property now pays $4,000
in taxes when taxed at the rate c
100 mills.
IL seems obvious. therefore. tina
the large property holders and at
sentee landlords would gain most b