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THIRD SESSION

WEDNESDAY MORNING, AUGUST 31, 1910

CHAIRMAN, HON. J. O. DAVIDSON, WISCONSIN

PROGRAM

1. THE PROBLEM OF TAX REFORM IN IOWA.

John E. Brindley, Assistant Professor of Economics,
Iowa State College, Ames, Iowa.

2. DISCUSSION.

3. TAXATION WORK IN KENTUCKY.

William A. Robinson, Member State Tax Revision Commission, Louisville, Ky.

4. TAXATION WORK IN WEST VIRGINIA.

T. C. Townsend, State Tax Commissioner, Charleston,
W. Va.

5. DISCUSSION.

6. TAXATION WORK AND EXPERIENCE IN OHIO.

Allen R. Foote, President Ohio State Board of Commerce,
Columbus, Ohio.

7. DISCUSSION.

THE PROBLEM OF TAX REFORM IN IOWA

BY JOHN E. BRINDLEY

Assistant Professor of Political Economy at the Iowa State College, Ames, Iowa

ONE of the important problems now before this Association is the cause of the failure of the general property tax. It is both appropriate and necessary that the alleged failure of this tax should be examined historically and critically, because it has formed in the past, and in fact still forms, the very heart and framework of the revenue systems in all the States of the Union.

I shall therefore deal with the problem of tax reform in Iowa primarily from the standpoint of general property taxation for the purpose of determining, first, the basis of that failure which all authorities are more than willing to concede; second, what remedies, if any, may successfully be applied; and finally, the place which this tax may reasonably be expected to hold in a reconstructed and scientific revenue system.1

As a condition of sane thinking along this line it is imperative first of all to distinguish clearly between mere forms of administration and underlying principles of contribution. The general property tax, as ordinarily understood, means two very distinct things: first, local assessment plus ex officio and therefore perfunctory equalization, or, in other words, fiscal decentralization; and second, the ad valorem principle of assessment. Any criticism of general property taxation which fails to differentiate between economic theory and practical administration is almost certain to be superficial and unscientific. Much of the literature written against the general property tax,

1 In doing this I shall merely state certain conclusions reached in my "History of Taxation in Iowa," recently completed, and now being edited and published by The State Historical Society of Iowa.

even in recent years, has consisted of indiscriminate generalities rather than clear specific statements. It is therefore desirable that the whole problem be considered carefully in order to ascertain to what extent this tax is a fiscal anachronism, and to what extent it is composed of elements which have stood the test of time and are likely to endure as important factors in the field of state and local taxation.

I

Judged by the standards of administration, the general property tax of Iowa has been a failure for at least half a century. The administrative breakdown was apparent, even at the opening of the Civil War.

At the opening of the territorial period, 1838–1839, a revenue act was passed providing for the election of a county assessor, the assessment roll, when completed, to be corrected by said official, assisted by the clerk of the Board of County Commissioners. In 1840 an amendatory act made provision for the appointment of deputy assessors. Three years later county assessment was abolished, and provision was made for the annual election of township assessors, the assessment roll to be examined and corrected by the Board of County Commissioners.

The advocates of township government, however, were not yet strong enough to make their favorite system permanent. County assessment was reintroduced in 1845- the completed assessment roll still being examined and corrected by the Board of County Commissioners. As an index of the careless adminstration at that time, the sheriff was made ex officio assessor in 1847, and by the Code of 1851 the correction of the assessment roll was placed in the hands of a county board composed of the county judge, clerk, and treasurer. Finally, a state board of equalization was created by giving to the Census Board the important right to level up or level down "any of the assessments" in the various counties on condition that they preserved unchanged, as far as practicable, "what would have been the aggregate amount of valuation had no such equalization been made." It is not necessary to interpret the exact meaning of this nebulous provision, which from the first was a mere statutory form.

In a very real sense the Code of 1851 was thus an important turning point in the revenue history of Iowa. With county levy, assessment, and collection, -the latter being made by the county treasurer or his deputy, with the correction of the assessment roll in the hands of a special county board, and finally, with the important right to change any assessment vested in the State Board of Equalization, the law at that time certainly gave some promise of an efficient revenue system. But the strength of the Code of 1851 was more nominal than real. The delicately poised machinery of assessment and equalization soon proved to be in a position of unstable equilibrium, and during the two following decades the local units of government rapidly appropriated the substance of fiscal power, while the shadow of authority remained with the county or was transferred to the State. The period from the Code of 1851 to the Code of 1873 was essentially one of fiscal decentralization. During that time a series of acts were passed which laid a sure foundation for the administrative failure of the general property tax.

The township system of assessment was temporarily reintroduced in 1853 by a law, extreme in character, which provided for annually elected township assessors, and further stipulated that such assessors should meet at the office of the county judge to classify the several descriptions of property and act as a county board of equalization. In a word, the whole work of assessment and equalization, save for the nominal functions of the Census Board, was in the hands of township officials. The county board of equalization was in reality a township body, not a distinct and separate county body, the local assessors being given the right to equalize the results of their own labors; and thus for the first and last time in the revenue history of Iowa the county, judged from the standpoint of assessment and equalization, was practically blotted from the fiscal map.

The pendulum of revenue administration swung in the opposite direction in 1857, when county assessment was once more established, the assessor to be elected biennially, and, when necessary, assisted by one or more deputies appointed by the county judge. It appears from a study of the act that the county board, composed of the county judge, clerk, surveyor,

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