HJ JNIVERSITY O IRLF A SURVEY OF THE REVENUE SYSTEM OF DELAWARE COUNTY, PENNSYL- VANIA, WITH ESPECIAL REFER- ENCE TO THE METHODS OF ASSESSMENT AND COL- LECTION OF TAXES BY GORDON WATKINS A THESIS PRESENTED TO THE FACULTY OF THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY FLANIGAN-PEABSON Co. Champaign, Illinois 1918 = - UNIVERSITY OF PENNSYLVANIA A SURVEY OF THE REVENUE SYSTEM OF DELAWARE COUNTY, PENNSYL- VANIA, WITH ESPECIAL REFER- ENCE TO THE METHODS OF ASSESSMENT AND COL- LECTION OF TAXES BY GORDON WATKINS A THESIS PRESENTED TO THE FACULTY OF THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY FLANIGAN-PEABSON Co. Champaign, Illinois 1918 ' CONTENTS CHAPTER PAGE I. INTRODUCTORY 1 Purpose and scope of the investigation, 1. Sources of informa- tion, 1. Method of presenting the information in this study, 2. II. THE ASSESSORS 3 The election of assessors, 3. The duties of assessors, 3. Time allowed for the work of assessment, 4. Compensation of assess- ors, 4. Equipment and instructions furnished assessors, 5. The Assessors' Association, 6. Conclusions, 7. III. ASSESSMENT AND TAXATION OF REAL ESTATE 9 Kinds of property taxed, 9. Methods of assessment, 9. Basis of assessment, 11. Inequality in assessment, 15. The tax rate, 17. Assessed valuation of real estate for alternate years covering the period 1906 to 1916, 19. Property exempt from taxation, 24. Rev- enue receipts from real estate, 31. Conclusions, 32. IV. TAXATION OF PERSONAL PROPERTY 34 Kinds of property taxed and exempt, 34. Method of assessment, 35. The basis of assessment, 36. The tax rate, 37. Assessed valuation of all personal property and the revenue receipts from these sources for alternate years from 1906 to 1916, 38. Conclusions, 47. V. MISCELLANEOUS SOURCES OF REVENUE 49 The occupation tax, 49. The dog tax, 54. The poor tax, 58. Other sources of revenue, 59. VI. RECAPITULATION OF THE ASSESSED VALUATION OF PROPERTY, AND A STATEMENT OF THE TAX LEVY FOR THE PERIOD 1906 TO 1916 60 Recapitulation of assessed valuation of property, 60. The tax levy, 61. VII. THE COLLECTION OF TAXES 62 Election of tax collectors, 62. Duties of tax collectors, 62. Com- pensation of tax collectors, 63. Operation of the system of tax collection, 63. Exonerations, 66. The Tax Collectors' Associa- tion, 69. Conclusions, 70. VIII. Summary and Conclusions 72 Summary, 72. Conclusions, 73. Bibliography 77 Index to statistical tabulations.. 78 CHAPTER I INTRODUCTORY 1. Purpose and scope of the investigation. In the following pages are set forth the results of a study of the system of assessment and collection of taxes in Delaware County, Penn- sylvania. The investigation was made with a view of finding out (1) The method of assessing both real and personal property; (2) The exact procedure followed in the collection of taxes; (3) The the other counties of the state. No plan of reorganization has been relation that exists between the tax problems of Delaware County and proposed, but some improvements which seem desirable and necessary have been suggested. If it were possible to study conditions in other counties of the state, some general or even detailed scheme of reform might be outlined. In the absence of such information, however, we do not feel that a suitable remedy can yet be devised. In an investigation of this kind questions arise as to whether each resident of the community is contributing his just share to the public treasury; whether there exist inequality and injustice in assessment, and whether the taxes are being efficiently collected. These and questions of a similar nature we sought to answer by a personal investigation of the conditions in Delaware County. The problem was approached almost wholly from the side of county revenue, and our discussion of taxable property includes only that which is subject to taxation for both county and local 1 pur- poses. Within these limits our specific aim was to find out what is taxed, and how well the machinery of taxation operates. This study has nothing to do with the amounts and direction of county and local expenditures and has no discussion of the purposes for which the revenue is expended. 2. Sources of information. * We gleaned most of our information from the annual assessment books covering the period 1906 to 1916 inclusive; the reports of the county controller for the years 1914, 1915, 1916 ; the records of tax collectors, and some minor sources. The remainder of our data was secured by interviews with the many officials who are directly con- iThe term "local" as here used refers to cities, townships, and boroughs. 2 REVENUE SYSTEM OF DELAWARE COUNTY, PA. nected with the tax system of the county the controller, the chief and assistant clerks in the county commissioners' office, the assessors and the tax collectors. We found very little conflict of opinion on most of the points in question, and in almost every case tangible evidence supported these opinions. Much of the data relative to the assessment and collection of taxes was difficult to obtain, because of the reluctance of officials especially assessors and collectors to discuss the methods and re- sults, of their work. Other important information was not available as, for example, definite statistics concerning the value of corporation property exempt from local taxation. This lack of information has made difficult a well rounded study of the revenue system, especially in regard to assessment and the collection of taxes. A great deal of the data was secured under the promise that the names of those giving the information would not be disclosed, and for this reason we have given no citation of authorities for cer- tain statements and opinions. 3. Method of presenting the information in this study. In, presenting the results of our investigation we ha\e kept in mind the probability that the information gathered may be of some value to those citizens of Delaware County who are interested in civic reform, and who wish to know in particular some facts regarding the working of the tax machinery. We have tried to be very careful in restating the opinions of officials whom we interviewed, so as to give them the meaning which originally they were meant to convey. After careful consideration of the results of our investigation we feel that the methods of assessing property and collecting taxes in Delaware County are inefficient and inadequate to meet the county's increasing need of revenue and that, if the county's future revenue receipts are to balance its growing expenditures, these deficiencies in the financial system should be remedied. We have tried to justify this position in the following study. CHAPTER II THE ASSESSORS 1. Election of assessors. The assessors are elected by the people for a term cf four years and may be reelected indefinitely. There are no specific require- ments for election to the office of assessor, and the primary condition for nomination seems to be that of good standing in one or the other political party, especially that one which happens to be in power at the time of election. No secret is made of the fact that assessors are chosen for their fidelity to a political party rather than for any especial fitness for the office. A noted politician expressed an opinion which is generally held by county officials, namely, that in choosing assessors no attention is paid to their ability to do the work, because the office is considered a compensation to minor individuals who render service to the party. While this seems to be generally true, in many cases very competent assessors have been elected to office and their work is evidence of the intelligence and care with which they execute their duties. 2. The duties of assessors. Upon entering office the assessors are required to take an oath 1 of office, swearing to support the Constitution of the United States and the Constitution of the State of Pennsylvania, and to fulfill all the obligations that pertain to the office. The duties of the assessors are: (1) To assess all real and per- sonal property at their actual value the price at which a prop- erty would sell if offered at a public sale, well advertised; (2) To assess all occupations within their districts according to the schedule of assessments for such occupations; (3) To assess all dogs in their districts, and collect the dog tax in exchange for license tags which are furnished them by the county commissioners; (4) To enroll all able-bodied male citizens between the ages of twenty-one and forty- five who are liable to be enrolled in the militia of the State of Pennsylvania 3 ; (5) To administer the oath in the declarations of the value of personal property; (6) To serve notice of the time for hold- iThis oath may be administered either by the prothonotary or the county judge. -In each county in the State this enrollment is a part of the assessor's duty. REVENUE SYSTEM OF DELAWARE COUNTY, PA. ing appeals from dissatisfied property owners; (7) To report to the county commissioners full description and value of all assessed prop- erty within their districts. 3. Time allowed for the work of assessment. Each assessor is allowed sixty, seventy, or ninety days in which to complete the work of assessment. The time varies with the size of the tax district the borough, township or ward, as the case may be. The actual work of assessment begins about September 10th or 12th, at which time the assessors take out their assessment books. About the last of November or the first of December the books are returned to the office of the county commissioners, at Media. Later, usually about the end of December or the first of January, the as- sessors' books are again taken out for the purpose of adjusting the appeals made by dissatisfied property owners. 4. Compensation of assessors. In the State of Pennsylvania assessors are paid on the following scale: In first class cities, ten dollars per diem; in second class cities, five dollars per diem; in townships and boroughs, two dollars and fifty cents per diem. 3 Inasmuch as Chester 4 is the only city in Delaware County, the majority of assessors received two dollars and fifty cents a day. Once in three years there takes place what is known as the Triennial Assessment, at which time property is valu- ated anew. In case of additions and other improvements the prop- erty is given a higher valuation which stands for the subsequent three years, provided no further improvements are made that en- hance the actual value of the property. The Triennial Assessment involves much heavier work than the annual assessment, and neces- sitates the employment of assistant assessors in the larger tax dis- tricts. For this reason the assessors in first class or largest townships are allowed additional help of two assistants who are paid at the same rate as themselves. The assessor in any district may present a bill for payment of salary on any or each day of the week, except Sundays and holidays, during the period of assessment. While some assessors take advantage of this privilege, the majority do not present sLaws of Pa., 1913, pp. 264-65, and p. 559; 1907, pp. 232-33. In third class cities $2.50 a day. ^Population of Chester 38, 537 Abstract of Thirteenth Census of U. S. 1910, p. 64. Since then the population has grown considerably. THE ASSESSORS 5 their bills until the assessment is completed and all returns are in the hands of the county commissioners. With a few exceptions, all of the assessors whom we interviewed are dissatisfied with the present rate of pay for the work of assessing property and collecting the dog tax in boroughs and townships. So general is this dissatisfaction with the pay for the work of assess- ment, that the primary aim of the recently organized Assessors' Asso- . ciation is to increase the compensation. The few who seek no increase in salary point to the fact that the assessors in most cases do not deserve such an increase, for much of the assessment work is done at home and involves only a few hours of labor each day during the period of assessment. This is, unfortunately, a true indictment of many assessors in the county, and for this reason many county officials are not in sympathy with this aim of the Association. On the other hand, many assessors do their work very faithfully and there is no doubt that these more than earn their compensation. 5. Equipment and instructions furnished assessors. When the assessors enter upon their duties they are given the following equipment: an assessment book, which is blank; the mili- tary enrollment blanks, for the purpose of enrolling all able-bodied men between the ages of twenty-one and forty-five who are subject to enrollment in the state militia; personal property blanks, used for the declaration of the value of personal property; a copy of the classification and basis of assessment for occupations; a copy of the new act (1915) relative to the assessment and collection of the dog tax, which delegates to the assessor the additional duty of collecting the dog tax. From time to time, as occasion arises, the Eecorder of Deeds at Media, the county seat, sends to each assessor the records of property transfers in the latter's district in order that the assessor may know the latest sale and valuation of a property and assess it accordingly. Besides the above equipment the assessors are given a copy of instructions known as the "Precept of the Commissioners of Delaware County to the Assessors for the Triennial Assessment", and a smaller sheet of instructions. Although the former copy of in- structions is intended especially for the assessors of the Triennial Assessment, it is issued annually to all assessors. These instructions point out to the assessor that he must: (1) assess all property at its true value, by which is meant the price a property would bring at a public sale well advertised. This is stated to be necessary because 6 REVENUE SYSTEM OF DELAWARE COUNTY, PA. "real estate is assessed too low in Delaware County"; (2) after subscribing to oath of office, "to proceed to the place of abode of each and every taxable person" residing within the township and district, and make out and return to the commissioners of Delaware County, at Media "a just and perfect list of the names cf all taxable persons in the ward, township or district, arranging them in alpha- betical order as 'owners of real property', 'tenants', or 'single men', as the case may be " ; and all property taxable by law with a descrip- tion of the property, real and personal, together with a just valua- tion of the same, in the manner prescribed in the instructions; (3) to "assess all real estate, all personal property and all dogs"; (4) to assess all occupations within the district; (5) to enroll all able-bodied male citizens between the ages of twenty-one and forty- five who are liable to be enrolled in the state militia by the laws of Pennsylvania; (6) when township or borough lines divide a tract of land, the assessor is to make the assessment on that part of the premises only which lies within his own district. 5 6. The Assessors' Association. The Assessors' Association of Delaware County was organized only a few months ago and up to this time (September 30, 1917) there have been held only a few meetings. As is the case with most organizations of this kind, there has been considerable difficulty in getting the members interested in its possibilities. The plans and purposes of the Association are as yet but vaguely and indefinitely formulated. The most prominent leaders of the Association, how- ever, state that its chief purposes are: (1) to increase the efficiency of the individual members by exchange of ideas and comparison of methods and results of each assessor's work; (2) to raise the com- pensation of township and borough assessors, and (3) to bring the assessors together in a social way at bi-weekly or monthly meetings. Although the men who organized the Association emphasize the necessity of improving the efficiency of each member, we found that the majority of the assessors believe its primary objective should be to increase their compensation. It is due to this fact that a large num- ber of county officials are as yet not very enthusiastic about the aims of the Association. It should not be implied that these officials sPrecept of the Commissioners of Delaware County to Assessors for the Triennial Assessment, 1915, pp. 1-3. THE ASSESSORS 7 are opposed to the organization of the assessors, but that they fear too much emphasis is being placed on increased pay and too little on increased efficiency. 7. Conclusions. (1) As to the method of choosing assessors. The chcosing of assessors for their allegiance to a political party rather than for their fitness to execute the duties of the office is partly responsible for the inefficiency of the assessment system in Delaware County. This has become a fact of so common knowledge that everywhere we went the same complaint of inefficient and ill-prepared assessors was made. There is no doubt that many of the assessors are well fitted for their work, but most of them are either unprepared or not inter- ested, holding the office only because, as one assessor stated, it was thrust upon them by the political machine. This is one of the funda- mental weaknesses in the revenue system of the county and should be remedied. (2) As to qualifications for office. Present requirements for election to the office of assessor are inadequate. Some test of ability should be prescribed by law, such as a knowledge of real estate values and proper methods of assessment, a knowledge of the laws govern- ing the assessment of property, et cetera. Some of the recently elected assessors frankly stated that they knew nothing of real estate values and proper methods of assessment. Under these conditions it cannot be expected that property will be assessed accurately or justly. (3) As to the time allowed for making assessments. Without a single exception the assessors complained of the brevity of time allowed for completing the work of assessment, and they stated that it is impossible to do the work efficiently in so short a period. The county controller and commissioners concur in this opinion. An extension of time for making the assessments in the larger districts is quite necessary if slipshod and careless valuations are to be prevented. (4) As to compensation of assessors. As stated above, assessors are generally dissatisfied with the present rate of pay for the work of assessment in boroughs and townships. This meagre salary ($2.50 per diem) is doubtless responsible for much of the inefficiency that characterizes the assessment system. Many capable men throughout the county cannot afford to leave a lucrative business or position to 8 REVENUE SYSTEM OP DELAWARE COUNTY, PA. assume the duties of assessor at the rate of two dollars and fifty cents a day. There is reason to believe that higher remuneration would attract more capable men to the office of assessor, and so result in a marked improvement of the revenue system. (5) As to equipment and instructions furnished assessors. The instructions given assessors are fairly complete, otherwise their equip- ment is very inadequate. They should be furnished with land maps showing location of units of property, a table of selling values ob- tained from the latest records of property transfers, and a filing system for recording and classifying their assessments. A few en- terprising assessors already have such a system of classification, in- stalled by themselves and at their own expense. The county might very profitably introduce this system throughout all of the tax districts. (6) As to the Assessors' Association. As stated above, the assess- ors place primary emphasis upon the possibility of raising their compensation through cooperative effort in the Association. It would seem that they might better and more easily accomplish this by first endeavoring to raise the standard of efficiency of their group and so justify an increase in compensation. Some assessors have this point of view and are already working toward this end CHAPTER III ASSESSMENT AND TAXATION OF REAL ESTATE 1. Kinds of property taxed. Pursuant to the several acts of the Assembly of Pennsylvania, the following real estate and improvements are taxed for purposes of county revenue 1 : all real estate, including all houses, land, lots of ground, and ground rents, mills and manufactories of all descrip- tions, furnaces, forges, bloomeries, distilleries, sugar-houses, malt- houses, breweries, tan yards, fisheries, and ferries, wharves and all other real estate, not exempt by law from taxation. 2 2. Methods of assessment. In dealing with the method, or methods, of assessment, of real estate, we touch a very important part of the revenue system of Dela- ware County. Naturally the data which furnish the grounds for our conclusions on this subject were secured largely from the assessors themselves, for it is they who are in a position to speak on questions concerning the methods used in assessing real estate. Every assessor possesses a great degree of freedom in the method of assessing realty, and for this reason it was necessary for us to interview the assessors themselves in order to find out what method or methods prevail. We sought to learn (I) whether land and im- provements are assessed separately or jointly, and whether they are reported as separate assessments; (2) what particular means are used in ascertaining the value of property; and (3) what degree of uni- formity obtains in the method of assessment. The larger number of assessors whom we interviewed assess both land and improvements together, relying entirely upon their individ- ual judgments in determining what should be the assessed valuation of both. The remainder of the assessors a very small minority assess land and improvements separately. The method of separating land and improvements for purposes of assessment is used in the city of Chester, and is gaining favor throughout the county, espe- iThe kinds of property listed are taxable also for local township and borough purposes, but we are concerned with them here only as they fur- nish a source of county revenue. sprecept of the Commissioners of Delaware County to tbe Assessors for the Triennial Assessment, 1915, p. 1. 10 REVENUE SYSTEM OF DELAWARE COUNTY, PA. cially among those who are concerned with and interested in the tax system. An examination of the books of the assessors who use the method of assessing land and improvements separately levealed a remarkable clearness of procedure. Full description of pioperty is given and the assessed valuations of land and of improvements are listed in separate columns, thus: land $2,000.00; improvements, con- sisting of house, garage, etc., $5,000.00. Under this system there seems to be a nearer approach to accuracy than, where land and improvements are assessed jointly. In one tax district Ihe predeces- sor of the present assessor for fifteen years had assessed land and improvements jointly and all the property on the same street had been placed in the same class and assessed at the same valuation, regardless of advantages of location and the nature and quality of improvements. Under such a system of assessment the poor man who can afford a very humble residence and few improvements is assessed at a valuation equal to that of his wealthier neighbor who possesses a much better location and the best possible improvements. In the case of the former it is comparatively easy to ascertain the true value of the entire property, while valuation of the larger property is a more difficult task. Except in the few cases where land and improvements are as- sessed separately, no particular means is used and no extreme care is exercised in the valuation of property. While many assessors ap- pear to follow the assessed valuations fixed by their predecessors, others venture their own judgments and assess property at what they think it would bring at a forced public sale, which in the ma- jority of cases is believed to be about fifty per cent of the original cost of construction, but frequently amounts to only twenty per cent. An opinion current among assessors is that no property would bring at a forced public sale more than half of its actual value, 3 and in each case the actual value is arbitrarily determined according to the judgment of the assessor. It is hardly necessary to point out the fact that due to the conditions cited above there obtains in Delaware County not a sem- blance of uniformity in the method of assessment. The method va- ries with the individual assessor. Some assess land and improve- sBy actual value here is meant the price a property would bring at a voluntary public sale, well advertised. ASSESSMENT AND TAXATION OF REAL ESTATE 11 ments separately, others assess them jointly and by means of careful classification of property and constant observation of raal estate transfers in the community succeed in doing their work \ery thor- oughly. On the other hand, there are assessors who are content to follow the assessed valuations made by their predecessors, making no effort at new valuations. This lack of uniformity has led to wide- spread injustice and inequality, as will be shown later in the present chapter. 3. Basis of assessment. 4 (1) Percentage basis of assessment used by the assessors. Le- gally, all property should be assessed at its true value, which is inter- preted as the price that such property would bring at a -voluntary public sale, well advertised. In practice, however, this rule does not always hold good. At this point in our investigation we interviewed personally the assessors in each of fourteen representative tax dis- tricts of the county, and in every case received a statement of the percentage basis which the assessor uses in making his valuations. These statements were verified by examining assessments and real estate transfers in the district, and by interviewing persons other than assessors who were acquainted with the assessors' valuations. The results of the interviews with assessors are given in the table below. term "basis of assessment" as here used refers to the percentage of selling value at which property is assessed. The percentage basis re- quired by law is 100% or the actual value of the property, i. e. the price it would bring at a public sale well advertised. Assessors, however, set an arbitrary percentage of their own which varies with the individual assessor. 12 REVENUE SYSTEM OF DELAWARE COUNTY, PA. Table I. Showing at what percentage of its selling value prop- erty is assessed in fourteen representative tax districts. 5 Name of Assessor Tax District Percentage Basis Used 6 A 1 50% to 60% B 2 50% to 70% C 3 70% D 4 50% to 60% E 5 60% F 6 60% to 70% G 7 70% -H 8 50% I 9 70% J 10 60% to 70% X 11 60% to 70% X. 12 70% M 13 70% N 14 50% to 60% Assessors arbitrarily determine what is the selling value of prop- erty and then proceed to make what seems to them a fair assessment on the percentage basis which they are accustomed to use. The fol- lowing are some of the examples which assessors pointed out: Selling Value of Property Assessment $2,000 $1,200 3,000 1,500 1,800 1,000 1,000 500 2,500 1,200 2,000 1,000 1,000 500 5,000 2,500 6,000 3,500 ^Because the information here presented was received under promise of confidence, the names of assessors and tax districts are not given, letters and figures being substituted for them respectively. Where more than one percentage is given it indicates that the assessor does not know exactly what percentage basis he uses, therefore gave the writer an indefinite statement, as for example, in District 1, 50%-60%. Percentages in all cases apply to realty, whether improved or unimproved. ASSESSMENT AND TAXATION OF REAL ESTATE 13 Precaution must be taken in drawing conclusions from Table I. Many assessors do not hesitate to state that they believe much prop- erty is assessed as low as 18% and 20 % in districts other than their own. This is also the opinion of many other persons whom we inter- viewed, and many cases can be cited to substantiate these statements. Even where assessors claim to assess at from 70% to 100% of what they believe to be the selling value of property, an examination of their assessments showed they actually assessed at not higher than 50%. For example, in district No. 3, where the assessor claims to assess at 70% of the selling value of property, a piece of realty which was recently sold at $50,000 is assessed at $24,000, or approxi- mately 50% . 7 From Table I it is seen (a) that in fifty per cent of the districts studied the assessments are made on an indefinite basis, ranging from 50% to 70% ; (b) that if we take the lowest percentages claimed to be used by assessors, the average basis of assessment is 60%, and if we take the highest percentage basis claimed, the average basis is 65%. In order to ascertain whether assessors actually assess property at the percentages to which they make claim in the above table (Table I), we examined the assessment books to find out assessments of specific pieces of property in various districts, and compared these with the selling values set by the owners of such property. The results are incorporated in the following table: 7 For additional illustrations of this fact see Table II, page 14. 14 REVENUE SYSTEM OF DELAWARE COUNTY, PA. Table II. Showing the selling value of certain selected parcels of real estate, the assessed value of the same property, and a compari- son of the basis of assessment actually used with those which assessors claim to follow. Aggregate Selling Total Assessed Percentage Basis Percentage Basis Value of Property Value of Same Said to be Actually Examined Property Used Used $12,300 $ 8,000 50% to 60% 65% 17,000 10,500 50% to 70% 61% 50,000 25,000 70% 50% 10,000 4,000 50% to 60% 40% 30,400 10,000 60% 32% 15,000 7,300 60% to 70% 48% 12,000 10,000 70% 83% 10,600 5,300 50% 50% 12,000 5,000 70% 41% 20,000 8,000 60% to 70% 40% 14,000 6,000 60% to 70% 42% 16,000 7,500 70% 46% 17,000 8,200 70% 48% 12,500 6,100 70% 48% It will be observed that (1) In seventy-eight per cent of the cases selected the actual assessment basis is lower than the percentage basis which assessors claim to follow; that in only one case is it the same, and in only two is it above; (2) The average actual percentage basis of assessment is forty-nine per cent of the selling value of property; (3) That if we take the highest average percentage basis claimed by assessors, which is 65.4%, the average actual -assessment is 16.7% less than it, and if we take the lowest average percentage basis claimed to be used, the average percentage basis actually used is 11% less. The foregoing statistics (in Tables I and II) clearly show that there obtains no uniformity in the percentage basis of assessment, but that the general tendency is 1 toward a basis ranging from 60% to 70% of the value which the assessors think a property would bring at a voluntary public sale, well advertised. In a few cases the as- ASSESSMENT AND TAXATION OF REAL ESTATE 15 sessors take as their basis of valuation what they believe the property would bring at a forced sale, i. e. a sale for mortgage or tax lien. Although the latter class of assessors are only few in number they defend their method as a just one, and contend that no property should be assessed at more than it would bring at a compulsory pub- lic sale, for at such a sale no property ever sells for more than fifty per cent of the price it would bring at a voluntary sale. For us at least, it is difficult to understand the logic of this position, for forced sales are the exception not the rule, and as such should not be the standard of assessment for all property. 4. Inequality in assessments. As a consequence of the lack of intelligent procedure in the method of assessment in the various tax districts, and the conspicuous absence of a uniform percentage basis of assessing property through- out the county, there is prevalent a great deal of dissatisfaction with property valuations. Not only is this true as between the different tax districts, but equally true as between property owners within the same district for, as shown above, very few assessors have a defi- nite percentage basis of assessment. Many cases of inequality in assessment were found throughout the county, among which the fol- lowing are notable: 8 sExamples cited in the table are only a few of the many that were collected from the several districts. Properties compared in each example are situated close to each other. These cases were cited by assessors who wished to show the defects of their predecessors' assessments. They plan to correct the inequalities as soon as possible. Selling values cited were estimated by assessors. 16 REVENUE SYSTEM OP DELAWARE COUNTY, PA. Table III. Showing Inequalities in Assessments/ No. of Exam- ple Dimensions of Real Estate Description of Improvements Total Selling Value Total Assessed Value 1 /A 20x150 \ B 50 x 150 Small house Large house, etc.. . $2,750 5,000 $1,600 1,500 2 / C 25 x 100 \ D 300 x 600 Small house Very large house, etc. . . 3,000 70,000 2,500 30,000 / E 60 x 200 Factory building 10,000 100 3 ^ F_ 60 x 275 Mill building 10,000 3,000 J G 20 x 50 Small house 2,700 1,600 4 \ H 50 x 75 Mod. large house. 5,000 1,500 J I 70 x 110 Two small houses . 6,000 2,900 5 6 \J 25 x 60 /K 25 x 75 \ L 25 x 80 Small house Mod. sized house Mod. sized house 3,000 3,000 3,000 2,500 1,200 1,700 7 /M 20x140 \ N 300 x 468 No improvements No improvements 3,000 3,000 8 /O 50 x 90 \P 40 x 80 f Q 25 x 50 Small hotel Small drug store Small house 3,000 1,600 1,800 1,000 2,000 1,200 9 \ R 30 x 60 Mod. sized house 2,500 900 10 /S 40 x 70 \T 20 x 45 J U 50 x 75 Mod. sized house Very small house Mod. sized house. . 3,000 1,000 5,000 1,200 800 2,000 11 ^ V 35 x 60 Small house 2,500 1 800 / \v 25 x 50 Small house 1,500 800 12 ^ X 30 x 55 Small house 1,800 900 ASSESSMENT AND TAXATION OP REAL ESTATE 17 The above cases were selected from a great number which were called to our attention in the several tax districts. In each example cited the properties compared are situated near each other. It is clear that inequality in assessment is not a condition peculiar to one but to the several localities. Dissatisfied property owners who be- lieve their assessments too high may appeal to the Board of Equali- zation the Commissioners of Delaware County. In most of the cases that came under our observation we found no trace of appeal be- cause of over-assessment, even where inequality was apparent. The only explanation for this is that the owners of such property either did not know they were over-assessed or that, knowing their own property to be assessed much below its real value, feared to complain against their neighbor's assessment lest their own be raised. What are the causes of this prevailing inequality in assessments ? Careful observation of conditions leads to the conclusion that these causes are : (1) Favoritism, which induces assessors to assess the property of their friends at a lower valuation than that of other persons; (2) Inability of assessors to make correct valuation of large property. Small property is much more easily assessed. Many as- sessors are frank to admit that when they come to the larger real estate and improvements they lack the knowledge of real estate values necessary to make a fair assessment, and consequently their valua- tions are haphazard; (3) As between districts the cause of inequality is found in the unwillingness of assessors to assess properly higher for county purposes than the valuations in other districts for the same end. Several assessors stated that they were cognizant of the fact that in neighboring tax districts assessed valuations were pur- posely low, in some as low as twenty per cent of the selling value, in order to lighten the burden of county taxation falling on them. A low assessed valuation of realty and a high local tax rate result in a smaller contribution to the county treasury and a larger amount for local expenditures. The county tax rate tends to remain con- stant at present two and four-fifths mills while the local tax rate fluctuates to meet rising or falling local expenditures. Each assessor is anxious that his district shall pay no more than its proportionate share into the county treasury and so adopts a low assessment basis. 5. The tax rate. In choosing between a low assessed valuation of property and a high tax rate, and a high valuation of property and a low tax rate,. 18 REVENUE SYSTEM OF DELAWARE COUNTY, PA. the prevailing practice in the tax districts of Delaware County is to linquent taxes presented above 12 will reveal the fact that many of the tax collectors of Delaware County are not putting forth the strongest efforts in the collection of county revenue. As was previously shown 13 delinquent or unpaid taxes in Dela- ware County amount to one-eighth of the total tax duplicate or levy. From this it might be seen that the tax system is weak not only as to assessment but also as to collection. Just what constitutes the best remedy is difficult to say. Some persons interested in the question urge very strongly a unification of the state laws which deal with tax collection. In 1915 a codification of such laws was attempted for the State Legislature, but no simplification or unification resulted. It is pointed out by the advocates of tax reform that the laws dealing with the collection of taxes are still very contradictory and it is difficult for the collectors to learn what are the legal requirements of the office. Other persons approach the problem from a different point of view and urge the necessity for passing a law requiring all lists of "See p. 53. isSee pp. 64-65. i3See p. 64. THE COLLECTION OF TAXES 69 exonerations to be submitted under affidavit. Such a law, it is con- tended, would assure a closer collection of revenue since the collectors would hesitate to return unreasonable lists of exonerations before do- ing their best to collect the taxes from delinquent individuals. Still other persons believe that reform must come by electing to office more intelligent and public-spirited tax collectors. At this juncture, how- ever, it should be stated that the tax collectors of Delaware County are a fairly representative body of men. An opinion current throughout the county is that the office of tax collector, like that of assessor, is likely to be a political football. In many cases, therefore, collectors are chosen, not because of their fit- ness for office, but for allegiance to a political party. The confession of the assessors who told the writer that they cared nothing and knew less about the work of assessment and took it only because invited to do so by political leaders might justly have been made by many tax collectors. Reform, it seems to us, must come both from the statutory side by way of unification of numerous acts dealing with tax collection, and from the political side in the election to office of men who are fitted for the work it entails and who are interested in the welfare of the community. 6. The Tax Collectors' Association. Much is being done to better the system of tax collection by the Tax Collectors' Association of Delaware County, of which Mr. J. B. Simpson, a public-spirited and intelligent man, is president. The aims of the Association are: (1) to increase the efficiency of the tax collectors and to generally improve the collection system, (2) to in- crease when necessary the compensation of the collectors, and (3) to bring the collectors together in a social way. The meetings of the Association offer opportunity for free exchange of ideas and general discussion of the difficulties and problems that confront the collectors. In this way, as was pointed out above, the tax collectors get light upon many legal technicalities, ignorance of which has in the past resulted in unnecessary litigation. Many helpful suggestions are received from the discussions and there is no doubt that the work of tax collection is greatly improved by the activities of the As- sociation. 70 REVENUE SYSTEM OF DELAWARE COUNTY, PA. 7. Conclusions. ( 1 ) As to the election and qualification of tax collectors, there is great need for the selection of men who are better qualified for the duties of the office. Although the collectors in Delaware County are .a fairly efficient body of men, there is room for improvement. (2) As to compensation, there is current among collectors the opinion that they are underpaid and, perhaps, as in the case of as- .sessors, an increase in pay would induce more competent men to accept the office. (3) As to delinquent taxes, there is much room for improve- ment. The statements of the county controller and the statistics on unpaid taxes quoted in the foregoing pages 14 show that it is impera- tive that something be done to compel a closer collection of taxes. Some suggestions for reform have been set forth in this study, 15 and they constitute what seem to us to be the most promising lines of pro- cedure. (4) As to exonerations or exemption from responsibility of col- lecting taxes from persons who seek to escape them, greater care should be exercised by the commissioners in granting the requests for exemption. At present the laxity in the method of examining such requests encourages collectors to make unreasonable pleas for exoneration. One official attributed the abuses arising in this con- nection to the fact that the tax collectors are permitted to submit lists of exonerations without an affidavit. He thinks that if an affi- davit were required the collectors would not be so apt to make un- reasonable requests for exonerations before making a strenuous effort to collect the total amount of the tax duplicate. It has been demon- strated repeatedly that the requirement of a sworn statement has been responsible for the increased revenue from intangible property. For example, one assessor, by impressing upon the minds of owners of intangible personalty the penalty for perjury or refusal to declare its true valuation, and by the rigid requirement of an affidavit, has 1 increased his assessment of such property from $17,000.00 to $180,- 000.00. The requirement of an affidavit might have the same effect in stimulating a closer collection of taxes. "See pp. 64-65. p. 71. THE COLLECTION OF TAXES 71 Besides the necessity of compelling tax collectors to submit ex- onerations under affidavit, we would call attention to the possi- bility of eliminating some of the undesirable consequences of exon- eration by urging the county commissioners to make a more careful and stringent examination of the tax collectors' reports, especially as to unpaid taxes. With the introduction of these two improvements there would doubtless follow a closer collection of all taxes. (5) As to the Tax Collectors' Association. If the Association maintains the aim set by its leaders to increase the efficiency of its members and not to make increased compensation the primary ob- jective of its efforts, there is no question but that it will serve as one of the best agencies for the reform of the tax collection system. CHAPTER VIII. SUMMARY AND CONCLUSIONS The salient points which have been presented in the foregoing pages regarding the revenue system of Delaware County, Pennsyl- vania, may be summarized briefly as follows : 1. The equipment and compensation of the assessors are inad- equate to assure efficiency. There is little doubt that an increase in pay would induce more capable men to run for the office of assessor. 2. The basis of assessment varies betAveen townships, boroughs and wards, and even between different parts of the same district. The valuation ranges from less than twenty to seventy per cent of the selling value of the property. 3. There is a marked conflict between local township and bor- ough and county interests, the localities preferring a low assessment and a high tax rate in order to bear as little as possible of the burden of county taxes. 4. There are many evidences in almost every locality of gross inequality in assessments, the tendency being for smaller properties to be assessed at almost their true value while larger properties are assessed at much less than their true value. 5. Land and improvements are assessed jointly, except in a few localities where the method of assessing them separately has been adopted. The latter method is proving the more successful and just. 6. The heaviest end of the county tax burden during the last ten years has been borne by realty, although realty has borne a de- creasing proportionate share of the burden during that time. 7. During the last ten years intangible personal property has borne an increasing share of the tax burden, while tangible personalty has shown a decreasing proportionate share. 8. The occupation tax is of no great value as a source of rev- enue, is difficult to collect, and in the opinion of those connected with and interested in the revenue system it should be abolished, and in its stead a uniform poll tax of $1.00 should be established. 9. The tax on dogs is an insignificant source of revenue, involves a heavy cost of collection, and its abolition is advocated. SUMMARY AND CONCLUSIONS 73 10. Except the tax on liquors, the minor sources of revenue add very little to the county treasury. 11. There has been rapid growth in the county income from 1906i to 1916, an advance from $204,249.50 to $460,857.19 in that period. 12. The system of tax collection, like the system of assessment, is deficient at many points, and immediate reform is necessary. 13. The Tax Collectors' Association and the Assessors' Associa- tion are endeavoring to increase the efficiency of their respective members, but as yet there has been no marked development due, we- believe, to the tendency of both organizations to place emphasis upon increased pay as the primary objective of their efforts. A careful examination of the data presented in the foregoing pages will, we believe, warrant the conclusion that the method of assessment and valuation of property and the system of tax collection in Delaware County are defective, and that if the growing expendi- tures of the county are to be met without deficit and consequent ac- cumulation of debt it is very necessary that some plan of reorganiza- tion and reform be introduced immediately. Just what constitutes the most adaptable and effective remedy it is difficult to determine until facts similar to those given in the foregoing pages are collected for the other counties of the state. The problems of the several counties are in all probability very much alike, and for the sake of uniformity there should be introduced by means, of a state law a general plan of reorganization that will bring the necessary improvements for all of the counties. Throughout this discussion it has been stated that the great de- fect in the revenue system of Delaware County is the lack of uniform- ity in the method of assessment and a corresponding lack of unifica- tion in the laws under which the revenue is collected. Inasmuch as these conditions are not peculiar to Delaware County we are of the opinion that if the necessary uniformity were introduced in the rev- enue system much would be accomplished thereby toward a satisfact- ory solution of the difficult problems that confront the several counties, of the state. Fortunately the desired changes could be effected with- out) the trouble that ordinarily accompanies constitutional amend- ment, for the state legislature in Pennsylvania is singularly free from constitutional restriction on its taxing power. As a tax expert 74 REVENUE SYSTEM OF DELAWARE COUNTY, PA. has observed, "The constitutions of Massachusetts, Connecticut and Pennsylvania contain almost nothing to limit the power of the legis- lature. All these states have profited by this freedom from consti- tutional restraint." 10 The truth of this observation is shown in the following quotation of the constitutional provisions for raising rev- enue in Pennsylvania. 17 Article IX. Section 1. All taxes shall be uniform upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under the general laws; but the legislative assembly may, by general laws, exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private or corporate profit, and institutions of purely public charity. Sec. 2. All laws exempting property from taxation, other than the property above enumerated, shall be void. Sec. 3. The power to tax corporations and incorporate property shall not be surrendered or suspended by any contract or grant to which the state shall be a party. Sec. 9. Any county, township, school district, or other mu- nicipality incurring any indebtedness, shall, at or before the time of so doing, provide for the collection of an annual tax sufficient to pay the interest, and also the principal thereof, within thirty days. Article III. Section 1. The general assembly shall not pass any local or special laws exempting property from taxation. Another factor which tends to simplify the introduction of nec- essary improvements in county revenue systems in Pennsylvania is the well defined separation of the sources of state and local rev^ enue. 18 This separation became quite complete as a result of the Act of June 8, 1913. Pursuant to this Act moneys at interest, mortgages, agreements, and other evidences of wealth were made subject to tax- i6Mr. Lawson Purdy, State and Local Taxation, 1907, p. 55. iTPurdon's Digest, 13th Ed. p. 111. isProperty taxable for local purposes has been enumerated in the fore- going pages. Space does not permit enumeration of kinds of property tax- able for state purposes. SUMMARY AND CONCLUSIONS 75 ation for county purposes. Previous to the enactment of this measure these several kinds of intangible personal property were taxed for purposes of state revenue, although three-fourths of the receipts was refunded to the counties to help them meet their expenditures. This change in legislation made the counties quite independent units of government as regards sources of revenue and consequently the state is no longer deeply involved in the problems that arise in the revenue systems of the various counties. The difficulties that now exist are intra-county and arise chiefly out of the practice that obtains in the several boroughs and town- ships of trying to escape a just share of the burden of county tax- ation. Whereas previous to 1913 the counties endeavored to escape their just share of state taxation, now the localities within the county try to evade the county tax. This is done, as previously pointed out, by having a low valuation and a high tax rate. The earnest efforts of assessors to save their constituents from a fair proportion of county taxes, by undervaluation of property in their respective dis- tricts have led to widespread inequalities as between townships, boroughs, and wards. To secure equality in assessment and a just distribution of the burden of county revenue some means must be devised of assessing all property on the same legal basis, namely, one- hundred per cent or its selling value. Such true valuation, however, seems a remote possibility until more capable assessors are chosen. The question now arises as to the possible solutions of the many problems of county taxation. It might be suggested that state con- trol and centralization are the necessary remedies. Such control could be exercised by the Auditor-General or some other official, or even a state tax commission. In view of the complete separation of the sources of state and local revenue state control and state central- ization seem hardly necessary in Pennsylvania. The alternative, therefore, would seem to lie either in improvement of the present system of many local assessors, or, in the introduction of county boards of assessment. The great need of improvement in the present system lies in the fitness of assessors for the office.* Although, as is generally agreed, the work of assessment is the most important phase of a tax system, it is entrusted in the counties of Pennsylvania, as in other states, to men who possess little or no knowledge of real estate values and who in most cases either guess at valuations or take those set by their predecessors. As a writer on taxation has put it, "They 76 REVENUE SYSTEM OF DELAWARE COUNTY, PA. represent neither the worst nor the best abilities of the communities they serve and are not usually elected because of their special fitness for the task entrusted to them." 19 If the present system is to be re- tained, therefore, it would seem that more capable assessors must be elected. The second possibility of reform under a system of local control lies in the introduction of boards of assessment for the several count- ies. Already such a solution has been tried in the larger counties and municipalities of the state. 20 Public officials do not agree as to the success of such centralization in the hands of boards of assessment. The system, however, has never been tested in the smaller counties and the writer believes that it might be more successful than the pres- ent methods of assessment. As already stated, the introduction of a general reform measure would be unwise, if not impracticable, until the conditions that obtain in other counties of the state are ascer- tained. For this reason the writer is unwilling to suggest any in- novations other than the election to office of more capable assessors, the elimination of the evil that arises from the desire of boroughs, townships and wards to escape a just share of the burden of county taxation, and unification of the laws under which revenue is collected. isProfessor M. B. Hammond, State and Local Taxation, 1908, p. 113. of Pennsylvania, Act of June 13, 1911, pp. 893-894. BIBLIOGRAPHY Acts of The General Assembly of Pennsylvania under which revenue is collected, with opinions and decisions of the Courts, arranged by E. B. Hardenburgh, Auditor-General, 1904. State Printer, Harrisburg, Pa., 1904. Compendium and Brief History of Taxation in Pennsylvania with Sta- tistics, et cetera, arranged by W. P. Snyder, Auditor-General, 1906. State Printer, Harrisburg, Pa., 1906. Taxation for State Purposes in Pennsylvania, et cetera, by Frank M. Eastman. Kay and Bro., Philadelphia, 1908. United States Census, Special Report on Wealth, Debt, and Taxation, 1913. First Annual Report of the Controller of Delaware County, Pennsyl- vania, 1914. Second Annual Report of the Controller of Delaware County, Pennsyl- vania, 1915. Third Annual Report of the Controller of Delaware County, Pennsyl- vania, 1916. Assessment Transcripts for Delaware County, Media, Pa., 1906 to 1916. The Session Laws of Pennsylvania to 1916. Report of Committee on Revision of the Corporation and Revenue Laws of Pennsylvania. State Printer, Harrisburg, Pa., 1911. General Laws Relating to Taxation. Legislative Reference Bureau, Harrisburg, Pa. 1914. INDEX TO STATISTICAL TABULATIONS PAGE The percentage basis of assessment, Table I 12 Comparison of actual percentage basis of assessment with that claimed to be used by assessors, Table II 14 Inequalities in assessment, Table III 16 The tax rate in the various boroughs and townships and in the city of Chester 19 The assessed valuation of all taxable property, the assessed valuation of real estate and the percentage which real estate assessments bear to the total assessed valuations, for alternate years, 1906 to 1916, inclusive, Table IV 20 The total assessed valuation of all property taxable for local purposes, the assessed valuation of real estate, and the percentage which the as- sessed valuation of real estate bears to the total assessed valuations, for alternate years, 1906 to 1916 inclusive, Table V 23 Assessed valuation of property exempt from taxation compared with the assessed valuation of taxable real estate and the total assessed valuation of all property in Thornbury borough for 1916 26 Assessed valuation of real estate exempt from taxation compared with the assessed valuation of taxable real estate and the total assessed valua- tion of all property in Middletown township for 1916 27 The amounts of property exempt from taxation and the percentage which these bear to the assessed valuation of real estate and the total assessed valuation of all taxable property in each district of Delaware county for 1916, Table VI 28 County revenue receipts from real estate and the percentage these bear to the total receipts from all taxable property, real and personal, from 1906 to 1916 inclusive, Table VII 31 Assessed valuation of horses, the total assessed valuation of all property, the percentage which assessed valuation of horses bears to total assessed valuations, from 1906 to 1916 inclusive, Table VIII 38 County revenue receipts from the tax on horses, and the percentage which these bear to the total revenue receipts from all taxables for alternate years, 1906 to 1916 inclusive, Table IX 39 Assessed valuation of cattle, the total assessed valuation of all taxable property, and the percentage which the assessed valuation of cattle bears to the total assessed valuations, for alternate years, 1906 to 1916 inclu- sive, Table X 40 80 REVENUE SYSTEM OF DELAWARE COUNTY, PA. PAGE Revenue receipts from the taxation of cattle, and the percentage these bear to the total receipts from all taxables, for alternate years, 1906 to 1916, inclusive, Table XI 41 The number of horses assessed, the total assessed valuation and the av- erage assessed valuation for Delaware County, and the price per head for horses in the United States, for alternate years 1906 to 1916 inclusive, Table XII 42 The number of cattle assessed, the total assessed valuation and the aver- age assessed valuation for Delaware County, and the price per head for cattle in the United States, for alternate years 1906 to 1916 inclusive, Table XIII 43 The assessed valuation of omnibuses, hacks, cabs, and other vehicles for hire, alternate years 1906 to 1916 inclusive, Table XIV 44 The assessed valuation of intangible personalty and the percentage which this bears to the total assessed valuation of all taxable property, alternate years 1906 to 1916 inclusive, Table XV . 4& Revenue receipts from intangible personalty, and the percentage these bear to the total receipts from all taxables for the alternate years 1906 to 1916 inclusive, Table XVI 46 Schedule of assessments and classes of occupations taxed 49 Schedule of assessments required by law, and the assessment bases fol- lowed by the various assessors, showing a lack of uniformity in basis for the same occupations 50 Assessed valuation of occupations, and the percentage which this bears to the total assessed valuation of all taxable, for alternate years 1906 to 1916 inclusive, Table XVII 51 Revenue receipts from occupation tax, the total receipts from all taxable property, and the percentage which occupation tax receipts bear to the total receipts for alternate years 1906 to 1916 inclusive, Table XVIII 52 Revenue receipts from taxation of dogs for alternate years 1906 to 1916 inclusive, Table XIX 56 Cost of collecting and other expenditures involved in taxation of dogs 57 Percentage of tax burden borne by each class of taxable property for alternate years, covering the period 1906 to 1916 inclusive, Table XX 60 The tax levy for county and state purposes and for the maintenance of the poor, alternate years 1906 to 1916 inclusive, Table XXI 61 Recapitulation of the tax collectors' statement, 1914, 1915 and 1916 in- clusive, Table XXII _ 65 UNIVERSITY OF CALIFORNIA LIBRARY f r