Of THE UNIVERSITY OF ILLINOIS 1 FEB 1915 Extracts From The Proceedings of The Conference on Taxation of The Six- teenth Conference For Education in The South .... RICHMOND, VIRGINIA, APRIL 17-18, 1913 Issued by the LEGISLATIVE REFERENCE BUREAU OF VIRGINIA RICHMOND: DAVIS BOTTOM, SUPERINTENDENT OF PUBLIC PRINTING 1914. 5F15DIRECT Gif I 59 | Conference on Taxation LU State Capitol, Hall of The House of Delegates *Governor William Hodges Mann, Chairman Dr. Douglas S. Freeman, Secretary. APRIL 17-18, 1913. 1. Method of Securing Efficient Assessments. T. S. Adams, State Tax Commissioner , Wisconsin. 2. The Assessment of Real Estate. Lawson Purdy, President Deportment of Taxes and Assessments , New York City. 3. An Effective Assessment System. Chas. Lee Raper, Dean of the Graduate School , University of North Carolina. 4. How West Virginia Has Worked Out the Assessment Problem. Fred. O. Blue, State Tax Commissioner , West Virginia. 5. Reforms in Assessment in the Southern States. Charles Lee Raper. 6. Resolution Favoring Permanent Tax Commission. 7. Resolutions With Reference to Raising and Apportioning School Funds. J. Y. Joyner, State Superintendent of Public Instruction of North Caro- lina. *In the absence of Governor Mann, who was ill, Mayor George Ainslie presided at the beginning, to be succeeded by Lieutenant Governor J. Taylor Ellyson, who presided over the remaining sessions of the Conference. Digitized by the Internet Archive • in 2017 with funding from University of Illinois Urbana-Champaign Alternates https://archive.org/details/extractsfromprocOOconf Conference for Education in the South. 5 METHOD OF SEGUEING EFFICIENT ASSESSMENTS. T. S. Adams. I will begin with the platitudinous statement that the methods of securing efficient assessment work will probably differ in different places. This is particularly true as between the States which seek reform through the program of separation, and those States which seek reform through the program of centralization ; i. e., centraliza- tion of the assessment machinery. While separation is recommended by a majority of the authorities, I have had no personal experience with separation. I do know, however, that reform may be achieved through the program of centralization. It will be safer, then, for me to describe what I have seen and know. I. Fifteen years ago, in Wisconsin, conditions with respect to the assessment of property were distinctly bad. The State equaliza- tion was in the hands of an ex-officio board, consisting of the Gov- ernor, State Treasurer and the Secretary of State, and at that time the State equalization, or State assessment, as it is known in Wis- consin, was made at a lower figure than the total of the local asses- ments. Dissatisfaction with this condition of affairs, together with a feel- ing that corporation taxes must be reformed, led to the appoint- ment of a permanent tax commission, and in 1901 the’ tax commis- sion was invested with the duty of making the State assessment, or State equalization. The commission took this work very seriously. The law apparently contemplated that this equalization should be made at 100 per cent of actual or true value, and the commission itself resolved to comply strictly with the law, although such pro- cedure was beset with many grave obstacles. More important still, the commission determined to make the equalization on a sound foundation of concrete facts. Instead of guessing at the probable value of property of the various counties of the State, they set to work to secure trustworthy data. Thousands of sales of real estate were secured ; information concerning the value of personal property was collected from the credit agencies, the statistical publications of the State and Federal governments and from other sources. At that time moneys and credits were subject to taxation in the State of Wisconsin. It was almost impossible to find out what the true value of the taxable moneys and credits was in the several counties. Apart from this difficult aspect of the problem, however, a State equalization was made on the basis of true value, as shown by con- crete facts. The appointment of a permanent tax commission and the carefully studied preparation of the State assessment were the 6 Conference for Education in the South , beginnings of reform. The State equalization is now satisfactory to the people and to the local districts of the State of Wisconsin. The commission knows the facts, and the people realize that they know the facts. Complaint from disgruntled counties that they are being forced to bear too large a share of the State taxes has practically ceased. The equalization of the State tax commission is accepted in good faith and the incentive to local under-valuation, arising from the desire to escape State taxes, has become an almost negligible factor in the State of Wisconsin. IT. This, however, was but a small opening wedge. County taxes were much heavier than State taxes. The State equalization did i;ot affect the county taxes. Moreover, the grave inequalities between individual taxpayers still remain. To remedy this situation a county supervisor of assessments was inaugurated and set to work. His task was to supervise the local assessors (it should be borne in mind that each city, village or town in the State of Wisconsin elects its own local assessor, and in the cities we are likely to have an assessor for each ward or for each two or three wards), to super- vise the local assessors and to secure for the county board the infor- mation on which the county equalization could properly be made. The county supervisor of assessments did not accomplish much in the State of Wisconsin. Local assessors were inclined, in most places to treat him with indifference or contempt. The average county board did not accept the equalization of property as recom- mended by him. In many places the supervisor did not gather the necessary information upon which to base a sound and trustworthy county equalization. The difficulty all arose from the fact that the county supervisor of assessments was appointed by the county board. In most cases he got the position because he was known in ad- vance to be “conservative.” A better word would be “pliable” or “dis- creet.” In other words, the county supervisor of assessments was sub- ject to the same influence, the same pressure, the same environment which makes the average local assessor timid, over-cautious and blind to the actual values of the properties, particularly the larger properties, which he is called upon to assess. We shall come back to the county supervisor in a few moments. The official that failed has since become, in a different environment, the cornerstone of an efficient tax system. But that is another story, to which we shall have to return. III. While experimenting with the county supervisor of assess- ments, two additional statutes of fundamental importance were passed. Both provide for appeals to the State tax commission. In the first case the appeal is against the county equalization, as made hv the county board. When, upon complaint and investigation, a Conference for Education in the South i county equalization is discovered to be inequitable, the tax com- mission is empowered to go into the county, with its own appointees, to secure the data necessary to make a correct and equitable countv equalization, and to impose the expense of this work on those counties which had wrongfully benefited in the first equalization. The other statute authorized any tax payer who felt himself aggrieved by the actual assessment of taxes in his district to appeal to the tax commission, and if it were made plain that any class or classes of citizens or property had been discriminated against in the local assessment, and that public interest would be subserved by a reassessment, that such reassessment could be made by the tax commission with its own appointees. We may briefly refer to these two statutes or processes hereafter as the re-equalization, and reas- sessment laws. These laws have been of enormous importance in the recent fiscal history of Wisconsin. In the past there was continued log-rolling in the several county boards when the time came to equalize the county taxes. Little cliques were formed, in which the representa- tives of certain districts got together in order to reduce their own by boosting their neighbors’ share of the county tax. There was strife in the average county between the city members and the rural mem- bers, each group trying to dump on the other’s shoulders taxes which properly belonged upon their own. The equalization report of the supervisor of assessments was more often thrown in the waste basket than not. All this has been changed. It soon became apparent that if the county equalization was seriously unjust, some of the aggrieved districts would appeal to the tax commission, and their complaint, if just, would be remedied at the expense of the districts respon- sible for the injustice. In probably 90 per cent of the counties at the present time, a careful, conscientious equalization of county laxes is made. The tax commission secures large amounts of infor- mation, which are supplemented by the work of the supervisor of assessment, and this material, together with statistics showing the meaning of the material, is transmitted to the county boards and usually accepted by them. The equalization is based on carefullv secured facts and is just. Until the last few years, one of the prime reasons for poor local assessment work has been the belief — onlv too well grounded, in many instances — that full value assessments would lead to an increase of county and State taxes. This feeling is gradually disappearing, rapidly disappearing. In many instances it may he said to have disappeared altogether. The reform is ac- counted for by the knowledge that the State and county equalizations will be made independently of the local assessments, and that poor 8 Conference for Education in the South. local assessment work is more likely to bring a penalty than a ence. No amount of State or county equalization can reduce in- equalities between man and man, between Taxpayer A and Taxpayer B. Here is the gravest inequality and the most fundamental. The reassessment statute goes to this deep-rooted evil. The common, ordinary taxpayer, ordinarily defenseless before discriminatory as- sessment work, has now only to appeal to the tax commission on a postal card, and if the records and facts in the office of the com- mission, or the information which the plaintiff himself brings to bear, make it plain that there has been discrimination and that the public interest will be subserved by a reassessment, such reassess- ment is made. The reassessment corrective has all the virtues of commission procedure. It can be made in the most informal way, and the plaintiff, as well as the defendant, can have as aid all the resources of a commission specializing in this line of work. The decision of the commission does not rest on the evidence submitted by the parties ; it is the duty of the commission to help get evidence. Quite as important, the reassessment statute gives the supervisor of assessments a club with which to compel the most recalcitrant local assessor to do better work. The supervisor himself has no right to make a local assessment, but he can, and frequently does, say to a local assessor, in substance : “If you continue in the future as you have in the past, I will make application for reassessment, and if this is granted, 3 r our district will be raked with a fine-tooth comb at its own expense.” And the reassessment, when made, is a splendid object lesson. Assessment reform in the State of Wisconsin emanates from spots, from distinct oases, which fortunately are becoming more numerous. These oases are the places in which the tax commission has in the past made reassessments. They constitute proof positive to the people of the particular district that a good assessment can be made, that it can be made without prohibitive expense, that it can be made resolutely and fearlessly, but fairly and tactfully, and that the honest and well-disposed people of a community have nothing to lose and everything to gain by an equitable assessment at full value. IV. Finally, in point of time, as the crown of the Wisconsin system, came the Wisconsin income tax. We are not now concerned with income taxation as such. But the Wisconsin income tax accom- plished two collateral results of vital importance in the assessment of property. First of all, it abolished the taxation of moneys, credits, securities and household furniture, and put in their place an income tax. By the exemptions noted, the assessors and the tax commission were relieved of the almost impossible task of assessing moneys and Conference for Education in the South 9 credits and those forms of household property which hardly have any ascertainable market value. Moreover, it reformed the prop- perty tax at just that point where it was most inequitable. To im- pose the old property tax, which in Wisconsin frequently exceeds 2 per cent, on the face value of moneys and credits which yield, we may say, on an average of 5 per cent., is to take in taxation, or attempt to take in taxation, 40 per cent, of the income from this form of property. Such taxation is despotic. It is unreasonable. It imposes on the assessor an inequitable and an impossible task. We are rid of this now in Wisconsin, thanks to the income tax. Most important of all,' the income tax gave to the State a set of county supervisors of assessments who are wholly relieved from illicit local pressure by reason of their appointment for long terms by the State tax commission itself, under civil service tests and conditions. I said before that the old supervisor of assessments, appointed by the county board, had been almost a failure. The new supervisor of assessments, who acts also as assessor of incomes, had proved to be a striking success. The office and the man have been transformed by the simple device of protecting the man in the office. Civil service and the appointment by a State board have w r orked the transformation. Several of the same men who had proved timid, ineffective and unsuccessful when appointed year by year by a county board, have been distinctly successful as super- visors, acting under the tax commission and holding office practi- cally during good behavior. Under the old regime, the whole pres- sure brought to bear upon this official was to reduce assessments, to maintain the status quo , to be “lenient,” “easy,” “nice.” Under the present system the pressure is all in the opposite direction. The tax commission keeps after the assessors constantly, urging them to obey the law absolutely, to be considerate and tactful to taxpayers, fair and impartial, but to be absolutely uninfluenced by illegitimate forms of influence or local “pull.” V. It may be worth while briefly to recapitulate what we have just been over. The Wisconsin system starts with a locally elected assessor, attempting to make annual assessments, in some 2,000 assessment districts throughout the State. Fortunately he has now to assess nothing more than tangible property. Practically noth- ing is subject to local assessment in the State of Wisconsin, beyond real estate, merchant’s and manufacturers’ stocks, farm animals and automobiles. The local assessors work under the influence of supervisors of assessment, who both supervise their work, make the assessment of incomes, and secure data upon which to base a scientific county equalization. 10 Conference for Education in the South. The supervisors of assessments, in turn, work under a permanent tax commission, each member of which is appointed for a term of eight years. The tax commission itself makes the assessment of most of the public utility corporations, makes the State equaliza- tion and assists local assessors in the assessment of the smaller public utilities. The tax commission maintains a corps of engineers and appraisers, who are used not only in the assessment of those corpo- rations exempt from local taxation but in assisting local assessors who have particularly difficult forms of property to appraise, and in securing the materials necessary for the State and county equali- zation. VI. Recent examinations of the tax commission, based upon careful and extended study, indicate that taxable property in the State of Wisconsin at the present time is assessed at not less than 73 per cent, of its actual market value. In many districts in the State of Wisconsin at the present time — not so many as should be, hut still in a considerable number — careful and equitable assess- ments at full value have been made. I have briefly described the path of reform in the past few years, because it is difficult, or almost impossible, to state what particular elements of this program are most accountable for the reform which has been achieved. I personally, however, am convinced that, so far as machinery goes, the most important parts of the Wisconsin system are: 1. The appointment of supervisors of assessments under civil service conditions. 2. The reassessment statute. 3. The existence of a permanent tax commission, upon which the whole system above described rests. So far as methods go, the good results achieved are to be ascribed, most of all, to the habit of basing findings on fact, to the careful and continued collection of concrete information such as sales records and inventory records ; the use of trained appraisers and the general habit of substituting specific information for skillful guessing. Most important of all, perhaps, is the spirit in which the tax commission and the supervisors have worked. From these parts of the taxing system at least, politics has been practically eliminated, and in these parts of the system there is a disposition to take the office and the task very seriously — a feeling that a great evil exists and that a great opportunity is at hand. It would be hard to exag- gerate the last point. About four-fifths of the evil ascribable to poor assessment work in the past has been due to indifference, indo- lence and a deep-rooted conviction that good work was neither pos- sible nor worth while. VII. The methods which I have been discussing have been tried Conference for Education in the South . 11 and shown to be both helpful and practicable. Wisconsin, however, had very much to learn, very much more to do, and about these remaining defects of the Wisconsin system I can only say: “These things, in my opinion, should be done.” I fervently wish that here also it might be possible to describe progress actually achieved. At the root of the evil which still exists is the underpaid, over- worked, untrained local assessor. Our local assessors, like those in most States, are elected for short terms, paid totally inadequate salaries, and in hundreds of districts are virtually warned in ad- vance that if they perform their work faithfully they will not be re-elected. The more I learn of our local assessments, the deeper my wonder becomes that such good work can be done under such adverse conditions. There are actually hundreds of conscientious local assessors, accepting the office year after year, not because they want either the office or the salary, but because an appreciative local community insists upon their retaining the job. In a very large number of districts, however, the office goes to the inefficient man, who has failed in other walks of life, or to the political henchman, who takes the job primarily “to look after” his friends. It is fatal to expect accurate, conscientious assessing work under such conditions. The ultimate remedy will probably be found in the appointment of local assessors by the State tax commission or by the supervisors of assessments, under civil service tests ; their retention in office during good behavior, together with a compensation adequate for the brains and backbone required in this difficult work. This remedy would, in most States, require a constitutional amendment. It is probably many years away. I personally, however am surprised at the frequency with which I hear the plan recommended by people whom I had supposed to be indissolubly wedded to so-called local democracy. If it is impossible in the near future to appoint assessors by civil service tests, much can be done even now. First of all, the assessor can be appointed or elected for a much longer term. The longer term will enable the ignorant man to learn and the timid man to put away from him for a time the fear of losing his office. Moreover, it would enable the man to stick continuously by his job. By making the local districts fairly large, it would be possible to keep him at work twelve months in the year. Where the district cannot be enlarged, however, we might still have the long term, the fairly permanent assessor, by providing for a complete assessment only once in three or four years, instead of as at present, in inanv States, an annual assessment. Under the present constitution in Wisconsin we have at least one assessor for each town, city or village. 12 Conference for Education in the South . We cannot enlarge the districts so as to justify the use of the whole time of a well-paid man. But if we can get a well-paid man who will make a thorough assessment once, say in four years, and spend two or three months in each year in making such revision of this quadrennial assessment as can be made in two or three months, we should, with the other features of this system — the county super- visor and the tax commission — have achieved something which, if not Utopian, would at least be highly satisfactory. To recapitulate, the assessor must be given time enough to do his work in a business-like way; he must be retained in office long enough to attract the kind of men who resent and refuse to place themselves in an office from which they are likely to be kicked as soon as they become efficient; he must be protected from illicit local pressure and from boards of review or superior local officers, bent upon protecting some one industry or some particular group of taxpayers. Finally he must, in most cases, be paid reasonable wages for the work which he does. All these things can he secured by a system which would provide for a quadrennial or triennial assess- ment, to he made by local assessors, appointed or elected for three or four years, paid adequate salaries and working under the general control of a permanent tax commission, armed with the powers, particularly those of re-equalization and reassessment — with which most of the later State commissions have been invested. What is worth doing is worth doing well. That is an old saw. It requires to be supplemented with the newer truth that what is well done must in the ffing run be well paid for. The only part of the general program of this Conference about which I have any doubt is the part which suggests that whatever reform is achieved, must be achieved without added expense. The things which I have described cost money. They inevitably result, to he sure, in finding additional sources of revenue, which much more than compensate for the additional administrative expense. But the reform is worth while, whether it costs more or less, and whether it results in dis- covering new sources of revenue or not. However, the whole pro- gram can be worked out without additional expense. If we would substitute for the annual assessment common in so many American States the triennial or quadrennial assessment, we could do well in three or four years what we now do most inefficiently once every year, and at no additional expense. Moreover, there are many offices which might he completely abolished or consolidated with other offices, finding in this substitution the means with which to defray the expense of real reform. In Wisconsin, for instance, the town treasurers do little or nothing’ that could not he better done by other officials or parts of our administrative machine. We could easily Conference for Education in the South. 13 save in the State of Wisconsin $100,000 by abolishing the town treasurer, without impairing the machinery of collection — indeed, while actually improving it. This amount of money, in Wisconsin at least, devoted to the local assessment work, would probably be ample to accomplish the further and future reform which has been described. THE ASSESSMENT OF REAL ESTATE. Lawson Purdy. Assessing real estate is a profession, demanding technical skill and experience. Assessors, therefore, should be appointed, not elected, and should hold office during their good behavior. Assessors should he adequately paid and required to devote all their time to their official duties. It follows that the smallest assess- ment district should he large enough to employ fully all the time of one assessor, aided by a sufficient number of clerks. If a county is adopted as the unit for assessment, a single assessor may be able to perform all the work, with proper clerical assistance, in many thinly populated rural counties. Too much, however, should not be demanded of an assessor, and there should he a sufficient number af deputy assessors to do the work efficiently. Any man performing the duties of an assessor should give all liis time to the work, and the compensation should he sufficient to obtain the services of men of proper ability and character. Assessments should he made annually, in order that the assess- ment may take account of changes in value, and in order that the assessor may be kept well informed of all changes in his district. Adequate tax maps are the essential foundation of proper assess- ment work. For the lack of such maps, hundreds of thousands of acres of land escape assessment throughout the United States annu- ally. Without maps, the assessor generally performs his work in the dark ; he does not know what he is assessing, and the valuations are often little better than guesses. Without maps, comparisons between assessed values are difficult and often impossible. While maps based on accurate surveys are always desirable, and in cities essential, good maps can he made for rural work at very little expense. Such maps have been made by using the United States Topographical Survey as the foundation. The method of preparing such maps is described by Mr. Edward L. Hevdecker in a paper printed in the proceedings of the New York State Tax Con- ference. 14 Conference for Education in the South. Assessors waste a great deal of time in the search for the actual considerations for the sale of real property. Dealings in real prop- erty are charged with a public interest, and the actual consideration for sales should he a matter of public record. Ao deed should he recorded unless it contains or is accompanied by a statement under oath of the actual consideration for the transfer. It is always desirable, and in cities it is essential, that the value of land, exclusive of the improvements, should be separately stated in the assessment roll. This should be required by law. One of the methods employed to great advantage in assessing the value of land is to show, on a map prepared for the purpose, the value per front foot for lots 100 feet deep on every side of every square in the city, and in the case of unplotted land, the value per acre. Such maps aid the assessor in his work and furnish the best means of publicity for the work, to the end that criticism of the assessment may be in- telligently made. In determining the value of buildings, the cost of reconstruction new represents the maximum of value. The cost of reproduction of all types of buildings should be determined and expressed by a factor representing the value per square foot of floor space. When the building is old, depreciated by wear and tear, or obsolete, a suit- able reduction must be made in the factor employed below that factor which would represent the cost of reproduction new. The use of building factors is necessary in order that comparisons may be made intelligently. Publicity is the safeguard of both the assessor and the property owner. Land value maps should be reproduced and published, or in small places be opened for public inspection, consideration and criticism. It is generally desirable also that the assessment roll, showing the value of the land separately should be published for the use of the citizen. Such publication must show the assessment roll arranged geographically; that is to say, all the lots in a city block should be shown consecutively on the four sides of the block, and the assessment for all the blocks should appear in order of position. The same plan should be followed in publishing the assessment roll of the country district, and in this case the area of the land should be shown, while in the case of city lots the dimensions should be given. Conference for Education in the South 15 AN EFFECTIVE ASSESSMENT SYSTEM. Charles Lee Raper. There are, I think, two prime objects of the assessment of prop- erty for the purposes of taxation: (1) To place the maximum of values upon the tax hooks; (2) to render the maximum justice to each citizen as a taxpayer, as a bearer of the burdens of the govern- ment. The State must have sufficient revenue to enable it to per- form its necessary functions of protecting the life, rights and prop- erty of its citizen and of developing 1 the physical economic and social conditions in which he must live. Taxation is by far the large source of revenue to all our units of government. The system of taxation of a people, therefore, more fully crystallizes the effectiveness or ineffectiveness, the justice or injustice, of government than any other thing; the administration of the tax system and of the courts em- bodies the greatest and most vital points in the relationship of the citizen and his government. The experiences of the American Revo- lution and of the French Revolution abound in proofs of this statement. To secure these objects of the assessment of taxables and of gov- ernment, it is absolutely necessary to have a system of assessment, a machinery, which possesses the ability to know the values and the courage to place them upon the tax books, without discrimination and with the utmost justice to all the taxpayers. This machinery must, I think, be both State-wide and local in its composition and in the scope of its authority. (1) A State tax commission, with large powers over all assessments and over all the local officers of assessment, can, I think, alone meet the requirements of the State- wide machinery. The term of its office should be from six to eight years. Its members should he appointed by the Governor — not elected; efficiency and justice, not politics, should be the aim of all assessment. They should be experts and as non-partisan as possible. Their salaries should be large enough to attract men who have brains, character and courage, and who can afford to devote all their time and energies to their official duties — in the Southern States from $3,500 to $4,000 I think large enough. Wherever such a body has worked, taxation has become more effective and equitable; more revenue has come* to the State, the rate of taxation has frequently declined, and the burden of taxation has been more justly placed upon the citizen. (2) A permanent county or local office of assess- ment. In the Southern States, where the county is most generally the chief unit of local government, this office should he as wide as 16 Conference for Education in the South. the county (or parish, in Louisiana) ; in the larger towns and cities the unit of assessment should he the municipality. The office, whether of the county or municipality, should be under the direc- tion and supervision of the State tax commission, and its members should be selected by this commission — at least, with its sanction. The local office should assess all the taxables in its territory except those of State-wide significance, which should be assessed by the State tax commission. The salary of the chief official in the local office should be large enough to command the undivided services of a man of ability and courage. Wherever the local assessment office has been permanent, efficient and under vital supervision by a State tax commission or commissioner, it has resulted in larger revenue to the State and more justice to the taxpayer. Such machinery of assessment would work well in the Southern States, where the constitutional requirement is, with the exceptions of Virginia and Georgia, that the legislature must tax all kinds of property at a. uniform ad valorem rate, and where the State, county and town levy practically the same taxes. It would work well in those States where the legislature has the constitutional right to make classes of taxables and to levy different rates upon these classes, as it may do in about a dozen States, as it does notably in Pennsyl- vania and Maryland. It would work well in those States which have segregated sources of revenue for the different units of administra- tion — the State, the counties and the municipalities. The present system of assessment stands for inefficiency and in- justice; it places values on the tax books unequally in the same township, county and State ; it places a penalty upon the more honest, conscientious and honorable citizen; it penalizes him by a heavier burden of taxation ; it places a penalty upon the more tangible forms of wealth, upon the more progressive community or county. With the new machinery the State should work toward some classi- fication of property for purpose of taxation. The experiences of Pennsylvania and Maryland with a special class for credits prove, I think, the efficiency and justice of such classification. Credits and moneys, if listed at all, are self assessing, while the value of land, etc., are only estimates, and these estimates vary widely, though honestly made. The forest as a special form of property has become so important as to demand that the State promote its growth by making it a special class for tax purposes. The forest, because of its influence upon climate, its ability to serve as a reservoir for the rainfall and the fact that timber has become so fundamentally im- portant in the cost of house building, should be fostered and pro- tected to the widest possible degree. Forest land should, I think, be assessed as land, and its timber as timber, and only when it is Conference for Education in the South 17 cut and sold. Tlie question of the classification of property for taxa- tion can, however, be considered only in terms of the conditions as they exist in the various States. With the new machinery, the question of segregating the sources of revenue for the different imits of administration could he worked out according to the conditions in the various States. There is now a tendency toward making the taxes on franchises, corporations, incomes, and inheritances the chief source of State revenue, leaving to the counties, townships, school districts and municipalities the taxes on realty, personalty and police license. Such a tendency should, however, not go too far, and should not be without a strong and sure guide. The State must always be a powerful force in the administration of all the units of government within its territory, though each unit should have sufficient independence and separate- ness to enable it to perform jts tasks with efficiency and justice. HOW WEST VIRGINIA HAS WORKED OUT THE ASSESS- MENT PROBLEM. Fred O. Blue. Assessment is the problem of direct taxation. West Virginia has not yet worked out that problem. We claim, however, to have made much progress in that direction in recent years. Our land, our topography, our resources and our industries are so varied that proper assessment for taxation is a complex and difficult under- taking. About 9,500 square miles, or about 6,000,000 square acres, of the State are underlaid with bituminous coal of different veins and qualities, and we are the second State in production of coal. With an annual production of 207,000,000,000 cubic feet of natural gas, or about 40 per cent, of all the gas produced in the nation, we are first of all the States in the production thereof, and fourth in value of crude oil produced. Our hills and mountains are covered with splendid timber of many species. We have valleys rich, fertile and well watered, and valleys narrow, poor and sterile; a thousand hills and mountains covered with native blue grass, on which feed the best of cattle, and also the steep, barren, rugged, rocky mountain standing unproductive in its grandeur. Up and down the valleys, through and under and around the hills and mountains are the rail- roads; over the hills great pipe lines carry our oil and gas. The Eastern Panhandle, where runs the silvery Potomac, has the finest fruit lands and the greatest fruit production in the nation, great quarries of limestone and prosperous farms. In the Northern Pan- 18 Conference for Education in the South. handle, the Ohio, the Kanawha, the Monogahela and the Greenbrier valleys, great mills and factories where some toil in sweat and flame, while others farm the fertile bottoms and graze the blue grass hills, while others dwell in the great towns and cities, with their banks, markets, and avenues of commerce. The rapidly growing and de- veloping southern tier of counties, with their superior coal. The central and eastern counties with cloud capped mountains, either covered with virgin forests or stripped to nakedness ; the little cabin where dwells the honest toiler on the stubborn mountain side, or his more fortunate brother in the foothills or the fertile bottoms where one may see on a single farm rich grain growing, sheep and cattle grazing, oil and gas produced and coal mined ! Does not assessment in West Virginia present some difficulties ? I shall discuss my subject under two heads: First, change of the system; second, results in figures. Our legislature was convened by Governor White in extraordinary session in the summer of 1904, to consider subjects relating to taxa- tion and revenue. The laws enacted at such session, with subsequent amendments, constitute our present system of taxation. Among the most important and far-reaching changes in our laws were: (l)The creation of the office of State tax commissioner; (2) change in the basis of valuation from the “f air cash value” to the “true and actual value;” (3) assessment of real estate from every ten years to annual assessment thereof ; (4) making each county a unit for assessment purposes ; that is, one assessment district for one assessor, with suffi- cient assistants, to be appointed by the county court, upon the recom- mendation of the assessor; (5) the assessor to follow the instructions of the State tax commissioner, unless contrary to law; (6) the assessor to assess both real and personal property and to make out the land books; (7) the establishment of boards of review and equali- zation in each of the several counties; (8) requiring reports to the State tax commissioner from all public service corporations; (9) the Board of Public Works to assess the property of all public service corporations ; (10) the owner of property to make affidavit to his return, and the assessors not permitted to accept the return without the same being sworn to; (11) forfeiture of a certain per cent, of personal property for failure to return same for taxation; (12) fixed times for meetings of all levying bodies to fix preliminary levies and publication of the levies and the valuation upon which the same were to be based, together with detail statement showing the purposes for which the money to be raised shall be expended, with the right to any citizen or the State tax commissioner to he heard in protest against the levy or any item included in the estimate. Among other duties of the State tax commissioner are: “To see Conference for Education in the South. 19 that the laws concerning the assessment and collection of all taxes and levies, whether of the State or of any county, district or muni- cipal corporation thereof, are faithfully enforced. To this end he shall advise the auditor in the preparation of all proper form and books for the use and guidance of assessors, and shall perform all such other duties as may be required by law. He shall from time to time visit the several counties, * * * shall inspect the work of the several assessors.* * * In conference, or by writing or otherwise, he may inquire into the proceedings of any such officer, make to him such suggestions respecting the discharge of his duty as may seem proper and shall give such information and require such action as will tend to promote full and just assessment through- out the State and the diligent collection of all taxes and levies.” The State tax commissioner thus became the central directing energy in the assessment of property. These changes in the laws have brought good results. Perhaps I can give no better statement of the condition relative to the assessment of property before the ses- sion of 1904 than to quote from the first report of Hon. Charles \Y. Pillion, the first State tax commissioner of our State, wherein he says : “Opposition is always to be expected in any method of taxation, and especially in this State, where for twenty-five years the people have been permitted to tax themselves, re- turning only such property, and at such valuations as the owner deemed prudent, keeping in view the other charitable demands that might be made upon him during the year, the assessing officer simply passing around the hat and accepting gratuitously the mites cast in.” The time limit forbids me going into further details as to changes in our law and discussion thereof. Discussion of these laws would be in the abstract. We come now to the second proposition, which shows in concrete the effect of our laws relative to assessment of property, and expresses what we have accomplished in our under- takings. In 1904, the last year of the old system, real estate in West Vir- ginia was assessed $168,000,000, personal property $80,000,000 and public utilities $30,000,000, a total of $278,000,000. The transi- tion period from the old to the new was during the years 1903 and 1906. In 1906 real estate was assessed $475,000,000, an increase of $307,000,000; personal property was assessed $194,000,000, an increase of $114,000,000; public service property was assessed $209,000,000, an increase of $179,000,000, making a total increase 20 Conference for Education in the South . of the assessed valuation of property in the State of $600,000,000. The total assessed valuation of all property in the State in 1904 was $278,000,000, and the assessed valuation of the same property in 1906 was $878,000,000. The assessed valuation of the same prop- erty in 1912 was $1,168,000,000, distributed as follows: Real estate, $634,000,000 ; personal proptry, $239,000,000 ; public service prop- erty, $295,000,000. It is true, of course, that there has been a natural increase in the valuation of property in the State during the years from 1904 to 1912, yet the material increase in the value thereof for assessment purposes has been mainly because of more efficient methods in use, growing out of the change in our laws relat- ing to assessment of property. In 1904 the average tax rate in West Virginia was $2.15 for all purposes on every $100 valuation; in 1912 the average tax rate in the State for all purposes, including municipalities, was 85 cents on every $100 valuation. This rate of 85 cents represents the average rate during the last six years. To throw further light upon this subject and to illustrate the results of more efficient assessment of property in the State, atten- tion is called to this: In 1904 $2,095,000 was the aggregate levy for district school purposes by local school boards, and to raise this amount a levy of 75 cents on each $100 valuation was necessary. In 1912 $4,582,000 was the aggregate levy for district school pur- poses by local school boards, and to raise this amount a levy of 39 cents on every $100 valuation was necessary. To have raised in 1912 the amount necessary for the year, upon the valuation of prop- erty for 1904, even allowing and adding to such valuations the natural increase for each subsequent year, would have required a levy of $1.24 upon every $100 valuation of property. These few figures, illustrating in concrete form the effect of our efforts to work out the assessment problem, speak more to the point than any other language I can employ. What is true in respect to our levies for school pur- poses is only illustrative of the benefits we are getting in all other lines, such as county and municipal taxation. Just one other illustration of figures, and I am through: In 1904 the State laid a direct tax of 25 cents for State purposes, and 10 cents for school purposes, making a total direct tax collected by the State of 35 cents upon every $100 valuation. In 1912 the State, for all purposes, laid a direct tax of 1 cent upon every $100 valuation, and returned to her public schools a much larger sum, under the 1 cent direct tax, than she gave to the schools in 1904. Conference for Education in the South. 21 REFORMS IN ASSESSMENT IN THE SOUTHERN STATES. Charles Lee Raper. Reforms in the assessment system must, I think, be made in two directions: (1) Toward a permanent and efficient State office of assessment — a State tax commissioner or commission, which pos- sesses exceptional ability and large powers over all assessments and over all officers of assessment; (2) toward a permanent and efficient county or municipal office of assessment. What movements in these two directions are now in progress in the South ? Let me answer with a brief statement concerning assess- ment in the various States. I. (1) Virginia has had no State-wide office for the supervision of the work of assessment or the equalization of assessments. There has been a State Auditor of Public Accounts who has had the power to issue general instructions to the local officers of assessment, but he has in no vital way directed or supervised their work. The need of State direction and supervision is, however, coming to be recog- nized. The legislature in 1910 provided for the appointment of a special commission to consider the question of reform in assessment and taxation. This commission appointed Dr. Douglas S. Freeman as its expert, and, largely through him, made an exhaustive and highly valuable investigation. Its report and recommendations were submitted near the end of 1911. It recommended that the legislature create a permanent, non-paid tax commission, composed of nine exist- ing State officials, with a paid executive officer — a State tax com- missioner — and that this State body should be yested with ample powers to direct and supervise all the work of assessment. It was suggested that, after the assessment system had been made effective, the legislature might consider the problem of segregating the sources of State and local revenues, and perhaps, of making classifications of property for tax purposes. Little has, however, been done toward enacting the excellent recommendations into laws, and Virginia is still far from an effective system of assessment. (2) North Carolina has had since 1891 a State-wide body for the assessment of public service property — from 1891 to 1898 a rail- road commission, since 1898 a State Corporation Commission. The corporation commission has since 1901 served as a State tax com- 22 Conference for Education in the South. mission and a State board of equalization, as well as a State bank commission. Its work in assessing the public service corporation, banks, etc., has been done with considerable efficiency, but it has never done anything toward equalization of assessments among the counties and townships of the State. The legislature which has just adjourned gave much heed to the demands for a separate and well- paid tax commission. The finance committee incorporated such a plan in the regular assessment bill ; the Senate was, I think, ready to adopt the plan; the lower house refused to make into a law this section of the bill. The chief reason for the action of the House was, I think, the fact that it had been agreed that a constitutional amendment should be submitted to the voters within the next two years, which would, if ratified vest in the legislature the right to change the whole system of taxation and assessment. ISTorth Caro- lina is, therefore, on the point of some important reform. (3) South Carolina has had no State tax commission or com- missioner, and there is now a slight movement toward such a body, though the comptroller general has for years advocated its creation. There has been a State board of equalization, composed of the chair- man of the county boards of equalization. But this board has met only once in four years, to equalize the assessments of realty among the various counties. It has been non-expert in its composition, and its pay has been insignificant ($3.00 a day for a few days) and it has only perfunctorily, if at all, equalized assessments. There has also been a State board of assessors, composed of regular State offi- cials, for the assessment of the public service corporations. The chief State officer of assessment has been the comptroller-general. He has issued instructions to the county auditors; he has assessed the licensnse fees due from foreign corporations owning property or using their capital in South Carolina ; he has heard complaints from persons illegally or erroneously taxed, and appeals from the county boards of equalization. He has, however, had little influence toward securing efficient or equitable assessment, (4) Georgia has no State tax commission or commissioner, and there is little force demanding the creation of such a State-wide office. The comptroller-general of the State has assessed the public service corporations, but his assessments have been subject to arbitra- tion, in case the corporation has demanded it. In all cases of such arbitration the comptroller has chosen a member of the State rail- road commission to act as the State’s representative. The comptroller has also had some power over other assessments, but he has not secured anything like equalization of assessments among the various counties of the State. Georgia has really had no equalization of assessment. 23 Conference for Education in the South. (5) Florida, like Georgia lias liad no State tax commission or commissioner, and there is at present slight prospect of the creation of such an office in the near future. The comptroller of the State has exercised some general supervision over the county assessors. He and two other regular State officials have constituted a State hoard of assessors for the public service, and their work has been done with fair success. He has, however, had no effective influence in securing equalization of assessment among the counties. There has, in fact, been no State equalization of assessments. (6) In Alabama, prior to 1897-1900, the auditor of the State was the only State-wide official who had any control over assessment, and his control was nominal. The office of State tax commissioner (of back taxes) was now created, in order that the Seate treasury might secure more revenue. The commissioner was to be appointed by the Governor for a term of four years, and he was to receive $2,400 a year. In 1910 the legislature provided for the appoint- ment of a State tax commission of three members. They were to he appointed by the Governor, and could be removed by him, with or without cause. The commission was given full powers of equaliza- tion of assessments among the counties, and large powers over the local officers of assessment. The tax commission was to assess only the franchises of the public service; a special State board of four members should assess their property. Alabama has, therefore, taken a far step toward efficiency and justice in assessment. (7) Mississippi has had no State tax commission or commissioner and no State board of equalization. There has been great inequality of assessment between the various counties. The State railroad com- mission has assessed the public service corporations with a fair degree of equality. The inefficiency of the assessment of the other property has been well marked. But there is now reasonable hope that at an early date a State tax commission or commissioner will be created. A bill providing for such an office had considerable sup- port at the last session of the legislature. (8) Louisiana has had no directing or supervising State official or board, and there is no important movement toward the creation of such machinery of assessment. In 1910 a State board of equaliza- tion was formed. It was authorized to issue instructions to the parish assessors and to examine yearly the abstracts of assessments filed by the parish assessors with the State auditor. It was em- powered to summon the assessor to appear before it and explain his assessments. This board has had some success in equalizing assess- ments among the parishes of the State. (9) In Tennessee the comptroller of the State treasury has been the supervisor of assessments, but his influence has not secured 24 Conference for Education in the South . equal or efficient assessment. He, the State treasurer and secretary of State, have for a number of years constituted a State hoard of equalization. They have had their other tasks, and they have done little toward equalization of assessment among* the various counties. The public service corporations have been assessed by the State railroad commission. .V bill is now pending in the legislature for the creation of a State tax commission, with the possibility of early passage. (10) West Virginia, like practically all our States, long had an ineffective and inequitable system of local assessment. A radical change was made in 1904- 7 05 toward one of the most effective sys- tems of assessment in the United States. The legislature now created the office of State tax commissioner, authorized the Governor to ap- point for a term of six years a man of ability and character, and provided him a salary of $4,000 a year. He was made independent of politics ; he could not be reappointed, and he could not be removed except for incompetence or malfeasance. He was given large power over the whole system of assessments by the counties. The results have been excellent: (1) An increase in assessments from $278,- 000,000 in 1904 (under the old system) to $1,063,000,000 in 1909; (2) a decrease in the tax rate for State, county, school, road and town purposes from an average of $2.15 per $100 in 1904 to 85 cents in 1909. II. Reforms in the local machinery have been few and of slight im- portance, and may be seen from the following statement : (1) Virginia has had no State equalization of assesment between the various counties, and there has been practically none within the county. The work of assessment has been performed by commis- sioners of the revenue or by assessors of land. The commissioners have been elected for a term of four years, from one to four in each county and one in each town. The assessors of land have been chosen every five years. There has been but the slightest change in the system of assessment for many years. (2) North Carolina has long had the township as the unit of assessment. The county commissioners have chosen one list-taker or assessor for each township ; in the reassessment year, every fourth, three. The list-takers have received the pay of $2.00 or $3.00 a day for a few days in the year. There has been a nominal board of equalization in each county, hut it lias never really equalized the assessments within the townships or the county. (3) South Carolina has for a number of years had a permanent Conference for Education in the South. 25 county auditor, who has had general supervision of assessment in his county, and who in some counties has himself assessed the local property. In most of the counties the work of assessment has been done by a township board of assessors or a board of commissioners and by a town board of assessors, who have worked under the super- vision of the county auditor, and whose pay had been about $2.00 a day for only a few days in the year. There has been a county board of equalization, of different composition at different times, and whose clerk has been the county auditor. (4) Georgia has for years had the county tax receiver, who has been an elective officer, and who has assessed all the property except the public service, subject to new valuation by a board of arbitrators in case the owner should demand it. There has been no county equalization of assessment. (5) In Flordia the county assessor and his assistant, in case he has one, have made the assessment of property. Where there have been assistant assessors, the county assessor has directed and super- vised their work. The county commissioners have served as a board of equalization and of review, in case the assessor and his assistants could not agree in their review. (6) Alabama has had an elective county assessor. His assess- ments have remained unchanged unless the owner of the property has appealed to the court of the county. There has been no real equal- ization of assessment in the county. Equalization between the coun- ties has not, until recently, been anything but nominal, and the State tax commission has, I think, not yet made a large success of State equalization. (7) In Mississippi the county assessor has been without any vital State supervision. His assessments have been supervised by county supervisors of assessment, who have acted as a county board of equali- zation, and who have achieved some success in equalizing the assess- ment of the county. (8) Louisiana has had the parish assessor, whose assessments have been reviewed by a parish board and whose assessment abstracts have been reviewed since 1910 by a State board of equalization. (9) In Tennessee the unit of assessment has, since 1907, been the county. Before that date it was the civil district or the county. The county assessor in Tennessee has, unlike his prototype in other Southern States, received a fair remuneration for his work — from $4,000 down, depending upon the population of his county. He has, therefore, been a permanent officer. He has had the power to appoint deputy assessors, in case of necessity. There has also been a nominal countv hoard of equalization. (10) West Virginia has had, since 1904-’05 a permanent assessor 26 Conference for Education in the South , for each county, with a permanent office and with a salary ranging from $2,100 to $1,000. He has worked under the direction and supervision of the State tax commissioner. He has had from two to four assistants, with pay from $300 to $600 a year. Assessment in West Virginia has, since the reform, been comparatively equal and effective. RESOLUTION FAVORING TAX COMMISSION. The following resolution was unanimously adopted by the Con- ference on Taxation: “Resolved, That where conditions are such as to insure the selection of efficient and non-partisan members, a per- manent State tax commissioner or commission, with ample power of supervising and equalizing assessments, is the first essential step towards efficient and equitable taxation, and that such commissioner or commission is necessary, whether a program of separation of State and local revenue he followed or not. METHOD OF RAISING AND APPORTIONING SCHOOL FUNDS. J. y. Joyner. Hon. J. Y. Joyner, representing the State Superintendents of Public Instruction, submitted the following resolutions to the Con- ference, which were discussed and adopted : “Resolved, 1. That the best interests of the schools require that funds should be appropriated by the State and should not be subject to the changing or fluctuating policies of dif- ferent legislatures, but should be fixed by constitutional rather than statutory provision, and should be based upon either a milage valuation or some specific proportion of the total State income from taxes. “2. That we favor a constitutional State and county tax for public schools sufficient to provide not less than a seven months’ term in every public school, the State tax to be 27 Conference for Education in the South . apportioned from the State treasury to the various counties, and the county tax to remain in the county where it is collected. . “3. That we favor a voluntary urban and rural district school tax, supplementary to the State and county tax, for the benefit of the schools of the district in which it is voted. Basis of Apportionment. “It is agreed that the State school fund should be appar- tioned upon the basis of average school attendance instead of the total school population.”