ination of their books without objection, but in Birmingham and Montgomery a considerable number of the larger taxpayers denied the authority of this Commission to examine the books of taxpayers. It became necessary to institute a test suit to determine whether or not the Commission was given by law the authority claimed. In the final decision of this test suit by our Supreme Court, the contention of this Board was sustained. In some respects, however, the decision of the Court is not so complete as to remove all doubt and we recommend that the right of the Commission to examine books be made clear, full and explicit in whatever law may be enacted by the next Legislature. We regard this matter as of the highest importance. In our judgment, no one thing which this Commission has been able to do has been and will continue to be of so much benefit to the State as the assertion of the right of the State, through duly accredited agents, to examine books of taxpayers. This right is fundamentally an essential of fair and equal valuations of property and without it there can never be even an approximate equalization of assessment. While equalization in Alabama is not yet an accomplished fact, it cannot be denied that the work of this Commission through the Tax Adjusters has resulted in a better equalization of property assessments in Alabama than ever before known in the history of the State. This better equalization of tax valuations, based on the common standard of sixty per centum of actual values, has resulted in a large increase in total assessment valuations and a corresponding increase in both State and county revenues. As a matter of general interest we submit below a statement of the average total of assessments for each four-year period since 1903: In comparing the past four-year period with the four-year period preceding, cognizance is taken of the fact that for three years of the latter period the assessment was made in 1916, when the ravages of the boll weevil had been unusually large and when there had been a great destruction of crops by floods. Notwithstanding the fact that the last four-year period includes the tax year 1919, in which the assessment was substantially the assessment made in 1916 under the 1915 Act, the increase is more than double the increase for any preceding period except the period 1907 to 1910, inclusive. If the year 1919 be excluded, the average annual assessment under the present law for the years 1920, 1921 and 1922 would be $951,203,603.00, an increase of $281,910,593.00, or over 42% as compared with the four-year period 1915 to 1918 under the 1915 law. We think the figures given in this report clearly show that the present law is the best under which the State has ever operated. Not only is there a better equalization of taxes, but the increase in assessment valuations and revenue, greater proportionately than under any previous law, shows that this increase is due, not alone to the natural growth and progress of the State, but to a better administration in the matter of assessing property, made possible by the Revenue Act of 1919. It has been claimed that the increase in assessment valuations of property has placed upon the people an excessive burden of taxation. During the past year when a political campaign for nearly all important State and county offices was being conducted, this claim of excessive taxation became the popular cry of nearly all candidates, more probably in most cases as a means to an end than from conviction. So far as we have heard, no candidate advocated a reduction of the activities of the State government for the public good and none offered a suggestion of a means by which these activities could be maintained with a material reduction in State income. If some unpopular feature of the present law,-unpopular because of its efficiency, is to be gotten rid of, additional taxes from other sources must be created if the usefulness of the State government is not to be impaired. The wisdom of abandoning a law, the efficiency of which has been demonstrated, and of substituting therefor one creating new taxes which may prove equally unpopular may well be questioned. But is it true that there is excessive taxation under the present law? If so, it is because of the high rate levied by the counties of the State,-not because of any State law, but because the citizens of the counties have voted and are continuing to vote upon themselves special taxes for schools and other purposes. Would they continue to vote in favor of these special taxes if they were already overburdened with taxation? But, however this may be, this Commission is convinced that no excessive taxes are being collected for State purposes. In support of this opinion we call your attention to the following facts: First. Figures submitted to you some months ago, which we do not think it necessary to reproduce here, showed that the tax rate in Alabama for State purposes is less than in any other Southern State except one and that it is the same as in that one. Second. Taxes cannot be excessive in at least fifty-two counties of the State, because in each of these fifty-two counties the taxes paid to the State, including property taxes, business licenses, hunters' licenses, mortgage taxes, solicitors' and trial fees and poll taxes, total less than the amount returned to the same counties by the State for public schools, court costs, Confederate pensions, feeding prisoners, etc. In other words, in these fiftytwo counties, taxes paid to the State are equivalent to an investment which is repaid in full each year and an added profit considerably more than the eight per cent which the State fixes as a fair return for the use of money. It is difficult to see how State taxes can be excessive under these circumstances. It is worthy of note that most of the complaint of excessve taxation comes from the fifty-two counties favored, as here explained, in the distribution of State funds. We attach hereto, Exhibit B, a statement showing the amount paid into and received out of State funds by each of the counties in the State. Third. In the assessment of property there has been no over-valuation, as has been frequently claimed. This Commission, through its field agents and tax adjusters, had examinations made of the deed records in each county of the State, covering a period of several months just before and after October 1st of the tax year. Deeds do not always express the true consideration for the conveyance of property, even when they purport to do so. It has grown to be almost a custom to express in conveyances a consideration less than the true one in order that tax officials may not find out the real value of property. Nevertheless, from reports furnished this Commission only a few instances were found,-not more than a dozen in the entire State, -in which the assessment exceeded sixty per cent of the consideration shown by the deed. The reports as a whole showed that the average assessment was a fraction more than forty per cent of the sale price as expressed in the recorded conveyances. Of the 32,818,560 acres in Alabama the Federal census classes 19,576,856 acres as "land in farms" and estimates the value of these farm lands, with improvements thereon, at $543,657,755.00. Assessments in this State on the same class of property, as nearly as comparison can be made, total approxi mately $230,000,000.00, or about forty-two per cent of the Census estimate. We believe that the percentage of actual value at which assessments have been made, as shown by the record of deeds and by the United States Census, represents fairly the general level of all assessments in the State and that there never has been, except in a few cases where errors were made, any over-valuation of property by tax officials. A further evidence that there has been no over-valuation of property is the small number of appeals by taxpayers from the decision of tax adjusters. There are in round numbers some 300,000 tax assessments made in this State each year. Of the total number of assessments made in the entire State the appeals from the decision of the Tax Adjusters to Court of County Commissioners or Boards of Revenue were 460 in the year 1920, 85 in the year 1921, and 148 in the year 1922. These appeals could have been made by taxpayers dissatisfied with valuations fixed by the tax adjusters without expense and without even the necessity of the employment of an attorney. The fact that so few appeals were made indicates that taxpayers were not dissatisfied, but believed that all assessments were being made on a basis of equality and as provided by law. 4th. It can hardly be said that excessive taxation exists when expenditures by the State for the direct and immediate benefit of the people exceed the total amount of taxes paid. In Alabama the entire cost of government and many other State expenses of indirect but material benefit to citizens of the State are more than met by income derived from sources other than taxation of the property or people of the State. In other words, the total amount of taxes paid by the people and on the property of the State is not sufficient to meet State expenditures for schools, public health and Confederate pensions. In substantiation of this statement we invite attention to the following: The several statements above cover a period of eight years, though any one year would have served as an illustration. We thought it best, however, to cover the last eight years lest it might be thought that we selected some one year in which the facts supported our statement when the facts were not the same for other years. RECAPITULATION OF PUBLIC UTILITY ASSESSMENTS Steam Railroads: Tangible Intangible Total. Docks and Terminals: Tangible $ 92,276,929 $101,702,490 $103,983,077 $106,648,771 12,990,926 12,314,605 10,477,657 5,745,404 $110,267,855 $114,017,095 $114,460,734 $112,394,175 $ 1,013,000 $ 1,222,313 $ 1,222,913 $ 1,222,913 $ 1,013,000 $ 1,224,313 $ 1,224,913 $ 1,223,913 Intangible Total Express Companies: Tangible Intangible Tangible Intangible Total... $118,228,527 $124,390,191 $132,614,486 $138,071,154 18,143,324 17,858,940 11,743,211 3,757,259 $136,371,851 $142,249,131 $144,357,697 $145,828,413 The foregoing "Recapitulation of Public Utility Assessments" shows the aggregate of the assessments of the public utilities of the State, both as to tangible and intangible assessments for each year of the present administration. The tangible assessment is based as nearly as possible at 60% of the reproduction cost of that part of the property which is fixed and cannot be sold, except as junk, in any other way than in its fixed condition for the purpose for which it is being used. This is always done where the usual net profits are sufficient to pay a reasonable return on such valuation. As to property which is movable, such for instance, as rolling stock upon steam railroads or street railroads, this is valued, as to tangible value, at 60% of new stuff of the same kind, less depreciation. Where a public utility is usually making a net profit of more than enough to pay a reasonable return upon the 100% value ascertained as before said, an intangible assessment is made by capitalizing the whole usual net profits at the then prevailing rate for money borrowed for use in such an enterprise, then taking 60% thereof and deducting therefrom the tangible assessment. The residue thus obtained is the intangible assessment, where the enterprise is of a permanent nature with a probable future at least equal to its pact. Examples of such property are the L. & N. Railroad, Central of Georgia Railway, and many other pub |