Evening star., 1939-10-07
Productivity Gauge
For Assessments Held
Within Laws Scope
VoIuotion Engineer
Points to Sensible
Yurdstick on Realty

Although legislation is required to
restore some reasonable relationship
between the tax on real property and
the tax on other forms of property,
employment of an assessment proce-
dure that adopts recognized real
property appraisal techniques is pos
sible without new legislation, under
present assessment law. 1t is prac-
ticable. It is called for by the clear
intent Of the law, and it would do
much to alleviate the intolerable and
unfair burden of taxes now carried
by real estate, George L. Schmutz,
Los Angeles, nationally known valu-
alton engineer points out in the cur
rent issue of the Appraisal Journal,
technical quarterly of the American
Institute of Real Estate Appraisers.
Recognizing the fact that to be
practicable, tax valuation methods
must be readily understandable by
the deputies, and they must be or
ganlzed so as to be easily and uni
formly applied to all similar prop
critics In the assessing Jurisdiction
Mr.. SchmutZ, co-author of THE
Economic Approach to Valuation
Procedure" and author of pioneer
ing text on condemnation apprais-
ing, stresses these three points: Cd
That all taxable property should be
on the assessment roll: CD that the
productivity of real estate is the SEN
sible yardstick by which to measure
its value for assessment purposes;
90 that improved property should
be valued as one property, notwith-
standing the necessity of breaking
down that value into its components
land and improvements.
Touches on Income Value"
City and county assessors of the
country, who in recent years have
come more and more to use the
income of property as the deter
minant of its value, have been asked
by the Committee on Real Estate
Taxation of the National Associa-
tion of Real Estate Boards to give
careful consideration to the article,
which discusses in detail the legal
and practical considerations in en-
ployment of the income principle
in tax valuations. The committee
urges assessors to give recognition
to the principle and to employ it
in their evaluating processes.
THE technique for adopting this
principle in this country does not
require revolutionary legislative
changes" Myers Y. Cooper, chair
man of the committee points out.
'The machinery has already been
Set up in several States and in 9TH
ers the assessing officials have in
terpreted the statutes as giving them
authority to use income in COM
putting taxable value"
Changes in property uses and
economic trends have brought great
need for sound and scientific esti-
nation Of property values. On pro-
ductivity as a yardstick for measur-
Ing the ability of a property to pay
taxes, Mr.. Schmutz said:
1T is common knowledge that a
city property producing net income
of $4,000 year is worth more than
one capable of producing only 81 900;
that tract of farm land which will
produce 20 sacks of barley per acre
Is worth more than a tract produc-
Ing 10 sacks; that a section of graz
ing land which will feed 20 cows
during the summer is worth more
than section which will feed only
10 cows. These are facts known to
all.
Zone Sensible Yardstick.">
There thus appears ample war
rant for a mature consideration of
the productivity of property, urban
and agricultural, preparatory to the
formation of a conclusion of value
and the spreading of the assess
ment. The warrant for such con-
,sideration becomes stronger when
we recognize the fact that produc-
tivity is the yardstick by which the
buyers in the market gauge the
relative worths of various proper
ties. Viewing the matter through
the eyes OF persons who form the
market and do the buying, it is
seen that productivity is the one
really sensible yardstick.
BY this 1t is not meant to advance
the cause of appraisals based upon
income only. Far from it. The
practicability or advisability of such
a procedure is most questionable.
But rents should enter more strong
" than they now do into the
assessors consideration in apprais-
ing urban properties, and crops pro-
duced should enter into agricultural
land values. 1t would be impractical
and exorbitantly expensive for
assessors to make detailed appraisals
Of every income producing property
for assessment purposes, but the fact
efficiently considered. Beyond any
question of doubt, income is the best
vehicle of equalization of real estate
foY va1Io tiop