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must be confident that changes proposed will improve conditions before he can recommend them, and such changes must come to meet the wishes of the average opinion. They can not be hastened to conform to the views of reformers who always ride on the crest of the wave of progress, nor can they be long retarded to avoid offending those who would never change existing conditions. Legislation on the subject can not be made in advance of public opinion, and as a committee they were not satisfied that this mandate had yet been expressed in favor of radical changes.

The committee said the fact that no radical changes were recommended should not discourage those who believe that existing conditions can be improved, and invited continued agitation on the subject as the only way that intelligent public opinion can be created, in response to which changes in the law are sure to be made.

The reports and proposed changes in the taxation laws were also carefully considered and discussed in the assembly, and no material changes in the taxation system have yet been made. Thus the laborious work of the special tax commission appointed in recognition of “the widespread disatisfaction” with existing laws, composed of men of recognized ability and standing, resulting in the presentation of one of the ablest and most comprehensive reports ever made by à tax commission, and one of the most valuable contributions to the literature of taxation, has thus been unproductive of direct results in legislation.

These reports of the special tax commission and of the joint legislative committee form a most valuable study, and constitute one of the most interesting and instructive chapters in the modern literature of taxation, and an important object lesson in the obstacles to practical reform in long-established systems.

Therein is clearly and forcibly illustrated the wide gulf between conception and attainment; between scientific theories of taxation and the action of practical legislators upon the subject, and the fact that practical reform in taxation is attainable only in response to enlightened aggressive public sentiment along practical lines and under the direction of men in whom are combined ability and learning in the theories of correct taxation, with a practical knowledge and experience in business and political affairs.

The practical value of this chapter in the able and voluminous contributions of the Commonwealth of Massachusetts to the literature of taxation induced us to give it so considerable space in this report.

CONNECTICUT.

The distinguishing feature of the system of taxation existing in this State is the entire separation of State and local revenues, real estate and personal property in general being assessed and taxed locally for local purposes, and all State revenues being raised by special taxes, mostly on corporations, and not by direct property tax.

There are no constitutional limitations or provisions as to the power of taxation, the authority of the legislature in respect to matters of taxation apparently being supreme.

For the reason that there is no direct property tax for State purposes, the revenues of the State being raised largely from special taxes on corporations, little need be said for our purpose upon the system of local taxation.

PROPERTY TAX.
In respect to local taxation, the general property tax prevails.

The general plan of taxing property was adopted in 1819. Prior to that time Connecticut from her earliest history had pursued the plan of taxing incomes rather than property. Those engaged in trades or professions were assessed on an estimate of their annual incomes.

Real estate was rated for taxation not at its capital value, but in proportion to its estimated annual income.

Lands, as well as houses and buildings, were listed at fixed rates by statutes thought to represent, not values, but the average income they would produce, thus placing them beyond the control of assessors and preventing opportunity for evasion.

Although the system was to a great extent changed in 1819 to one of assessment on property valuation, the old theory of taxing property in proportion to income or productive capacity was partly kept up by listing real estate at 3 per cent and personalty at a larger proportion, frequently 6 per cent, of its true value.

In 1850 this distinction between real and personal property was abolished and all taxable property was made ratable at 3 per cent of its value.

This preserved the form only of an income tax, and in 1860 was abandoned and replaced by legislative provision for listing all property at its full value.

Prior to 1891 the revenues required by the State were in considerable part raised by the same methods employed for raising local taxes, and mingled with them in the direct tax upon local property. The result was the usual growth of the evils of unequal assessment and escape of property from the tax rolls.

While the statutes require the assessment of alltaxable property at the fair market value thereof, and not at its value at a forced or auction sale, the tax commission in its report of 1887 says that few, if any, town assessors value real estate at what they think it is fairly worth, but, on the contrary, first make appraisal of its actual value and then put it in the list at a certain proportion thereof, varying from 33 to 75 per cent; and that similar reductions are made in valuing personal property, though with less uniformity and more injustice.

This abuse was attributed to the payment by each town of a State tax of a fixed percentage of its grand list.

Although no State tax is now levied directly upon property, the habitual undervaluation of property, and failure to assess at all a large proportion of personalty, still constitutes the most prominent evil in the system of local taxation, which operates with special injustice to the small property owner in that State, according to the twelfth annual report of the bureau of labor statistics in 1896.

The bureau, in the report referred to, reports an investigation based largely upon statements of local assessors themselves, showing valuations varying from 50 per cent to 100 per cent of full value, the average percentage in the entire State being 69.6, which, froin the sources of information, would obviously be sufficiently high.

From this report, very few of the assessors, in their own statement even, pretend to assess full value, or 100 per cent.

While taxable personal property that can be seen and handled is, according to the reports referred to, listed and taxed with great inequality and discrimination, but a small portion of the intangible property, such as notes, bonds, book debts, stocks, mortgages, etc., all of which are taxable, has ever been listed, and this portion is decreasing each year, although such property is rapidly increasing in amount and value in that State.

PROPERTY DIRECTLY TAXABLE.

All real estate not exempt is subject to taxation and assessed by local assessors, and set in the list of the town where situated.

Personal property in this State or elsewhere not specially exempt for the purpose of taxation includes all notes, bonds, and stocks (not issued by the United States), moneys, credits, choses in action, and all vessels, goods, chattels, or effects, or any interest therein; and such property belonging to a resident in the State is required to be set in his list in the town where he resides, at its then actual valuation, except when otherwise provided; but money secured by mortgage on real estate in Connecticut, when there is no agreement that the borrower shall pay the tax, is set in the list and taxed only in the town where said real estate is situated.

These provisions do not include money or property actually invested in merchandising or manufacturing carried on outside of the State, and the list of any person need not include any property situated in another State when it can be made satisfactorily to appear to the assessors that it is fully assessed and taxed in such State to the same extent as other like property owned by its citizens; but this does not apply to moneys loaned by residents of this State to parties out of the State as money at interest, nor to bonds issued by or loans made to any railroad company located out of the State; when such bonds are owned and loans made by residents of Connecticut, they are subject to taxation as other personalty or may come within the tax on investments hereafter referred to.

It has been held by the supreme courts of the State and of the United States that foreign mortgage loans are taxable under present laws against the holder, notwithstanding the borrower may pay the taxes on the mortgaged property where situated. (Kirtland v. Hotchkiss, 100 U. S., 491.)

Money loaned at interest with the agreeinent that the borrower shall pay the taxes thereon, and secured by mortgage of real estate in Connecticut, is exempt from taxation to an amount equal to the assessed value of the land mortgaged, as valued and set in the assessment list of the town where it is situated, but the excess of such loan over such valuation is assessed and taxed in the town where the lender resides, in the same manner as other money at interest. While realestate mortgages are taxable to the holders as other personalty, in practice the holders do not pay any tax, the borrowers paying all that is paid.

The whole property of every corporation in this State whose stock is not by law liable to taxation and which is not required to pay a direct tax to the State in lieu of other taxes, and whose property is not by law expressly exempt from taxation, is liable to taxation in the same manner as the property of individuals.

Real estate owned by a corporation not required for the transaction of its appropriate business, unless specially exempted by law, is taxable.

The real estate of any such corporation is assessed in the town where it is situ. ated and the personal estate where it has its principal place of business, and the stockholders of any corporation the whole property of which is assessed and taxed in its name are exempt from assessment or taxation for their stock therein.

Shares of capital stock of any bank, national banking association, trust, insurance, investment, turnpike, bridge, or plank-road company, owned by a resident of the State are set in his list at their market value in the town where he resides, but so much of the capital of any such company as may be invested in real estate on which it is assessed and pays a tax is deducted from the market value of its stock in its returns to assessors.

The cashiers or secretaries of all corporations whose stock is liable to taxation are required annually to inform the assessors of each town, city, or borough of the names of the stockholders residing therein, the amount of stock held by them and its market value, and a penalty is imposed for failure to comply with this provision.

The cashier of each bank, the treasurer of each savings bank, and the secretary of each corporation is required upon request of assessors of any town, city, or borough to inform them of the name of any person therein owning stock or bonds held by such corporation as collateral security for any indebtedness or liability and the amount and description thereof.

The owner of any share of the capital stock of any corporation who transfers such share to another with the intent of evading the provisions of the tax law forfeits to the town in which he resides 1 per cent of the value of stock so transferred.

No person is assessable for manufacturing materials or manufactured goods on hand beyond the amount of capital actually invested and surplus earnings, nor at a less sum than the present true value of his real estate and machinery belonging thereto, unless reduced by indebtedness as provided by law.

The interest of any trading, mercantile, manufacturing, or mechanical business is assessed where the business is carried on.

The average amount of goods kept on hand for sale during the previous year is the rule of assessment and taxation; but merchants are liable to assessment for any amount due them from responsible persons beyond their liabilities.

A resident of any town indebted to another resident of the State in such manner that the debt is liable to be assessed to the creditor may have the amount deducted from his list, and it is then added to the list of the creditor.

Assessors who may omit any real estate or any amount equivalent to its valuation from the list of any person because of indebtedness secured by mortgage on such real estate, or the board of relief who may reduce such list for such cause, are required to add the amount of such indebtedness to the list of the creditor, if resident in the same town, and if he does not reside in such town, to make a list against him embracing such indebtedness, and notify him in writing of the same.

By special statute the assessors are required to take from all persons giving in tax lists a rigorous sworn statement in form prescribed, but the listing statute is not enforced. Personal lists of taxable property are, in practice, filled in by estimate of assessors, and corrections made by local boards of relief upon application and showing.

The following grand list for 1899 shows the classes of property assessed locally for taxation, and the assessed valuation thereof:

Grand list for 1899, October 1.

Dwelling houses (with land up to 14 acres)
Land.
Mills and investments in manufacturing operations.
Horses
Neat cattle.
Sheep
Swine and poultry.
Farming and mechanic utensils
Clocks, watches, etc.
Musical instruments.
Household furniture and libraries
Carriages, etc...
Bridges, etc., stocks.
Bank insurance, etc., stocks.
State stocks ..
Railroad, city, etc., bonds
Stores, merchandise and trade
Quarries, fisheries, and mines
Investments in vessels, etc.
Money at interest
Money on hand..
All other taxable property
Addition by board of relief (township board)

Total.
Deduction by board of relief.

Valuation. $255, 913, 932

63, 752, 308 105, 101, 733

3,496, 632 3, 190, 281

20, 647

6, 271 93, 126 359, 729

914, 450 1, 398,963 1,879, 757

147, 124 32, 707, 119

173, 232

690, 320 35, 428, 463 1, 103, 804 1, 182, 590 1,508, 231 1, 103, 312 3,821,819 3,854, 243

517, 848,086

9, 704, 337

Added by board of eqnalization

508, 143, 749 62,020,000

State valuation...

570, 163, 749 STATE REVENUES.

The principal revenues of the State of Connecticut are derived from the following sources:

RAILROADS.

With the exception of certain real estate not used directly in the operation of railroads, no railroad property is assessed for local purposes, but all the property of a railroad is assessed as a unit for State purposes only, at a rate fixed by law.

This method is based on the assumption that the market value of the stock and bonds and floating debt of a railroad company represents the taxable value of all its property, and that the rate fixed by law-1 per cent of such valuation-is practically a fair average as regards taxes paid by other interests, and what it would pay if assessed proportionately in each taxing district through which its line passes. It appears to be generally

regarded in the State as a just system. Each company operating in the State is required to deliver to the controller of the State a verified annual report, showing the number of shares and different classes of its stock and the market value of each share; the dividends paid on each class during the preceding year; the amount of its funded and floating debt, and the market value of any such indebtedness which is below par in value; the number, amount, and market value of any unpaid bonds secured by mortgage; the amount of bonds issued by any town or city in aid of the construction of such road, such bonds being specially exempt by statute; the amount of money on hand; the amount paid for taxes during the previous year; the whole length of the road, and those portions thereof lying without the State.

Every railroad company is required to pay annually on or before November 25 to the State 1 per cent of the valuation of said stock made and corrected by the State board of equalization, and of the par value of funded and floating indebtedness as contained in such statement, or if any of such indebtedness is worth less than par, then of its valuation fixed by said board after deducting from the valuation the amount of any obligations or of their market value, if below par, hela in trust for said company, as part of any sinking fund belonging to it, and from the amount required to be paid for taxes the amount of taxes paid on real estate not used for railroad purposes; and the valuation so fixed by said board is declared by law to be the measure of value of such railroad, its rights, franchises, and property in the State for purposes of taxation; and this tax is in lieu of all other taxes on its franchises, funded and floating debt, and railroad property in the State.

When any part of a railroad lies in Connecticut, the company owning such road pays 1 per cent on such proportion of said valuation as the length of its road lying in the State bears to the entire length of the road.

But in fixing the valuation the length of any branch thereof in the State of less value per mile than one-fourth of the average value per mile of the trunk road is excluded, and every such branch is estimated at its just and true value, and assessed at said rate.

In the case of any railroad company, which during the 2 years preceding the making of the annual return has paid regular dividends at the same annual rate per cent on all or any class of its shares of stock, the market value of each share of said stock is by law declared to be the average of the closing bids or prices offered for said stock or any shares thereof, during the 12 consecutive months preceding the making of such returns, as regularly published by any board of directors, unless the State board considers it desirable that the market value thereof shall be otherwise ascertained.

In all cases where, for any reason, it is not possible or feasible to fix the market value of any stock in the manner described, the value in the return is fixed at the price of the last reported market sale of such stock, and the board may fix and determine the valuation according to the best information they can obtain.

From the judgment and determination of the State board of equalization as to valuation there is no appeal except through the courts.

The amount of taxes paid by railroads in this State in 1899 was $965,502.92. Individuals are not taxed either on the stock or the securities of railroad companies in the State held by them.

STREET RAILWAYS.

The foregoing methods and laws with regard to the taxation of railroads apply also to and include all street railways of every description. The amount paid by street railways in 1899 was $138,502.78.

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