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41785311
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to The Bulletin of the National Tax Association
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208 BULLETIN OF THE NATIONAL TAX ASSOCIATION [Vol. IV
An address read at the meeting of the Minnesota Tax Association, January 16, 19 1
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No 8] MAY, 1019 209
nearly aswithmay
other assessment values,
be for byequ
so
throughout doing the
the power of taxation
state." as to such A
stitution property would in effect be surrendered
provides as or
foll
suspended, and an exemption, for practical
" The power of taxation sha
dered, purposes,
suspended would be granted
or contrary
contrato the
be uniform constitutional upon limitations.the same
shall be levied Courtsand
generally have held that a con-
collected
but public burying grounds
stitutional enumeration of exemptions, such
public hospitals, academies,
and all seminaries as we have in Minnesota,
of precludes
learnin the
property, granting of
and any other exemptions.
houses of The wo
purely public charity,
result, then, is that the legislature in thisand
exclusively for any
state has nothing to do withpublic
tax exemption p
from taxation, and there m
taxation personal except in one instance, to wit
property : It may ex- n
$200.00, forempt eachpersonal property not exceeding
household,
a family, as $200.00
the in valuelegislature
for each household, indi-
vided, that vidual the or head legislature
of a family. The legisla^
cipal corporations to levy an
for local ture must provide for the taxation of prop-
improvements upo
thereby without erty not exempt. It may classify such prop- to
regard
provided erty on a logical basis. that
further, But suppose it noth
.shall be construed to
should provide by classification affect
for the
existing law providing for the taxation of the
gross earnings of railroads." assessment of the land alone; what would
be the result? I predict that the tax levy
It is to be noted that under the constitu- would be held invalid as violative of the
tional provision just read : constitutional provision, which provides
(a) The; power of taxation cannot bethat no person shall be deprived of his
surrendered or suspended. property without due process of law. Such
(b) Taxes must be uniform upon thedue process of law provision is found in
same class of subjects. both the state and federal constitutions.
(c) Certain properties are specifically The Supreme Court of the United States,
exempted from taxation. in considering the 14th amendment to the
Federal Constitution, has made numerous
(d) The legislature is authorized to ex-
empt from taxation, personal property notdecisions affecting state taxation. Among
such we find holdings to the following
exceeding $200.00 in value for each house-
hold, individual or head of a family. effect :
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210 BULLETIN OF THE NATIONAL TAX ASSOCIATION [Vol. IV
of collection
powers, have a right to enforce Article 9 of our
in
of license or inspection fees, or part
privilegeread as foll
taxes ; but it must be kept in attention
"5 that
states cannot enact a revenuedebts
law by for works of internal
decor-
party in carrying on such w
ating the same with garments usually worn
where grants of land or othe
by police regulations. In other
beenwords,
made the
to the state, espec
courts will remove the cloak and investi- grant to specific purposes,
state shall devote thereto the
gate as to whether or not an act is a bona
and may pledge or appropr
fide police regulation or a revenue measure
rived from such works in aid
in disguise. Speaking generally, the law " 16. For the purpose of len
struction and improvement
will be tested by the result of its operation
and bridges, there is hereby
and subsequent legislation on the subject.
known as the ( state road a
The legislature may make any business re-
fund shall include all money
quiring police regulation pay the expenses
income derived from investments in the internal
improvement land fund, or that may hereafter
of regulating it. The amount of the fees
accrue to said fund, and shall also include all
required is, within reasonable limits, for the
funds accruing to any state road and bridge fund,
legislature. however provided.
The following cases afford illustrations "The legislature is authorized to add to such
of invalid police regulations : fund, for the purpose of constructing or improv-
In Foote v. Maryland , 232 U. S. 494, for ing roads and bridges of this state, by providing,
in its discretion, for an annual tax levy upon the
the two years that the Oyster Inspection property of this state, of not to exceed in any
Law had been in force, the result was as year one mill on all the taxable property within
follows : the state. Provided that no county shall receive
Percentage cf in any year more than three (3) per cent or less
Year Receipts Expenses receipts used than one-half (^2) of one (1) per cent of the
for expenses . total fund thus provided and expended during
such year."
1909
1910.... 43^72 14, 99* 34% In the case of Cook v. Iverson , 108
Minn.
In Bartles Northern Oil Company 388, v.
our Supreme Court held that
public is
Jackman , 150 N. W. 576, which highways
the are included in the pro-
hibition contained
North Dakota Oil case, the statute had in section 5 of Article 9,
to the effect that the state shall not be a
been in force five years, with the following
result : party to the carrying on of works of in-
ternal improvement. In that case, the court
Percentage of
Year Receipts Expenses receipts used further held that the power of the legisla-
for expenses .ture to aid in the construction of highways,
1909.... $45,603.55 $8,988.75 19%
1910
by appropriating money raised by a general
191 1 tax levy, is limited to the manner and
1912 amount prescribed by section 16 of Article
1913.... 119,494.97 13.382.79 11%. 9. In this connection I am informed that
In the Ohio Oil case, Castle v. Masona ,proposed constitutional amendment for
it was shown that the inspection lawlegislative
of consideration has been drawn,
and will remove all limitations as to the
Ohio, adopted in 1908, had the following
result : taxation of motor vehicles and provide for
Percentage of the distribution of funds derived from such
Year Receipts Expenses receipts used taxation on so-called trunk highways of the
for expenses . state.
1908
1909
Some people entertain the belief that all
1910
constitutional limitation as to taxation and
191 1.... 107,972 40,835 37% exemptions should be removed so that the
1912
legislature from time to time might provide
1913
for the raising of public revenue in any
In consideringmanner which it deems
the proper. A so-called
limitations o
wide-open
tion, especially intaxviewamendment would,
of generally
the g
speaking,
spirit, which is so bring about such result. Person-
commendable an
ally I do not believe
spread at the present that if all limitations
time, it is im
to note the were removed a chaotic orof
provisions disastrous result
sections
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No 8] MAY, 1919 211
As a result of the war nearly all of interest determines the relation of the
govern-
ments, national, state or local, are assessed
faced bycapital value to net rentals.
the necessity of providing for larger Any attempt
ex- to foresee the future course
penditures than in the past, and of land has
there values must consist in an analysis
of each the
been some question as to whether of the above-mentioned factors.
Some
sources of revenue previously relied on of them are much affected by purely
will
be sufficient for the present need. local Inas-
circumstances; some on the other
much as the general property tax, hand more
are nation-wide phenomena, and it is
specifically the tax on real property, thisissecond
the class alone concerning which
chief reliance of local governments the following
in the notes are submitted.
United States, it is essential to ascertain Concerning immediate prospects there is
whether more revenue can be raised from not much to be said. This is dangerous
this source. From many sides comes a ground for prophets. One fact, however,
negative opinion : the rate of tax is now as is to be emphasized: the number of busi-
high as can be successfully administered or ness failures, and the amount of their lia-
tolerably borne; this is the opinion of the bilities, has been very small since April,
taxpayers and of many tax collectors, and 1917, and getting smaller right along. The
it is one I have no desire to dispute. But percentage of business firms failing in 1918
the yield of a tax depends not only on its was the smallest in thirty years ; the num-
rate, but also on the value of the taxed ber of firms in business decreased slightly,
property, and that value is the subject of but it was through solvent withdrawal, not
this paper. bankruptcy. Bradstreeťs figures for the
The value of land is fundamentally de- first three months of this year show a
termined by the demand for it. In cities smaller number of failures than for thirty-
this means the demand for buildings of all eight years past, with a total of liabilities
sorts, and for sites for them, and this de- considerably smaller than usual in the last
mand in turn results from the conditions decade. The year 1915 seems to have
weeded out the weaklings of business, and
or prospects of business and the growth of
population. if there is no more trouble in Europe, busi-
Besides the demand for buildings, the ness prospects are far from gloomy.
cost of erecting and maintaining them Whatever may be the case with respect
comes into the determination of landto business, there is another source of de-
values. This includes costs of material
mand for city land - the demand for resi-
and of labor, and taxes. Finally, the rate buildings, which depends of course
dential
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