Evening star., 1935-06-22
REALTY VALUATION
BY INCOME URGED.
Association Official Calls
Present System an
Obsolete One.

system Of valuing property for ia,
purposes is urged for all real property
owners and all States by Paul e
Stark, Madison, Wis, chairman Of the
National Committee on Real Estate
Taxation of the National Association
Of Real Estate Boards, in communi-
cation to members of the committee
and in a statement released today.
Emphasizing the principle that
ability Of property to yield income is
the most accurate measure Of its value
for tax purposes, Mr.. Stark places be-
fore the more than 500 members OF
the committee representing the prin-
cipal urban communities of the coun-
try threefold plan of action to put
this principle into effect. He urges:
l. Introduction into Legislatures OF
the various States of measures making
it mandatory for assessing officials to
value properties for tax purposes by
Capitalizing their income.
2. Pending such legislative action,
encouragement of property owners to
seek immediate relief through court
procedure to secure fair assessment,
basing their case upon the principle
that taxation should be on the basis
of income.
8. Encouragement Of property own
ers to bring before the boards Of ap-
peal of the various States as may be
provided by law, through appeals from
the local assessors, the matter of fixing
value for tax purposes by the income
method.
Laws Amendment Asked.
The association as a principal plank
Of its platform for real estate tax relief
asks the laws of all States be amended
to compel assessment officials to con-
slider this factor of income in making
their tax valuations.
The courts as well as the legis-
latures have already opened the road
for attack on this problem" Mr.. Stark
points out. "In at least seven States
the State law already includes in
some form provision for an income
base for real estate assessment. In
at least 81 States the principle is
recognized, either in law, by court de-
cisions or by action Of the boards Of
tax appeal. For example. in a series
of decisions in Connecticut, Florida,
Massachusetts, Minnesota, Nebraska,
New Jersey, New York, Oklahoma,
South Dakota and Texas, 1t has been
held that earning power Of property
may be considered IN arriving at fair
value. These laws and these decisions
rkv
of justice recognize the unfairneSS Of
our present method Of tax assess
mentS. They are attempting to pre-
vent confiscation by Government
through its power to tax. The State
Tax Commission of Utah, for exam
pie, has invited the State Realty AS
Sociation tc submit suggestions as to
use and income as an assessment base.
The Supreme Court of the United
States has held as follows: The value
of the property results from the use
to which it is put, ana varies with
the profitableness of tina: use. There
is no pecuniary value outside Of that
which results from such use.'
Ability to Pay Stressed.
Abandonment of the ad valorem
system and employment Of the in
come method of assessment" Mr..
Stark said, will permit real estate to
share in the cost of government in
accordance with ability to pay. Only
by an income method of assessment
can all properties be on such equal
footing in the payment Of their share
of Government costs.
once this principle is established,
home ownership will be more attrac-
tive"
From the point of view of general
welfare, Mr.. Stark says of the obso-
lete ad valorem system of tax assess
ment of real estate:
THE ad valorem system has failed
because too often it has led to con-
f1scation. The tax, having no relation
to income, became a capital levy.
There was a time when Government
gave to its people land in order that
home owning might be encouraged
and our country developed. That
policy made us a great people. Now
that process is being reversed. Gov
eminent Is taking away the homes Of
its people by the taxation method.
This, continued. could destroy home
ownership, and no country can long
survive the destruction of its homes.
THE ad valorem system has failed
because it has been large con-
tributing factor to our recent deluge
of foreclosures. The discouraged real
estate owner each year saw the tax
bill grow in relation to his income.
There was NO hope for him and
he quit.
Tax Delinquencies Cited.
THE ad valorem system has failed
because it has created an alarming
tax delinquency in all parts of the
country, thus depriving local govern
ment of a large per cent Of its income.
In many cities the patient payless
teachers were all that stood in the
way of the utter collapse of the edu-
cational system. Such delinquency
does not exist under other forms of
taxation because they are based upon
ability to pay.
The ad valorem system has failed
because it has substituted guesses for
facts. It persistently clings to the
delusion that cost Is value. The as