of pull, personality, and politics, and you are going to have a much different result. I recognize what Professor Rawles has said; I agree with him heartily in the Wisconsin idea. The truth is, I admire very much the altruistic features of the Henry George theory; but I think in both of them you will have to have a campaign of education, certainly in the Henry George theory. But what I plead for is this, that any law which this convention may adopt must depend upon its administration. Dr. Ely was not far off when he said: "He who hopes a perfect tax to see, hopes for what is not and never will be." MR. A. E. JAMES, of New Mexico: I listened with a great deal of interest to Mr. Rawles' paper outlining a possible tax on incomes for Indiana, which follows in all its substantial details the Wisconsin law. I would be the last to detract in any way from the wonderful pioneer work Wisconsin did in an income tax, but it has always seemed to me that, in some features at least, important mistakes were made, mistakes which go to the very fundamentals of the thing that an income tax ought to accomplish; namely, the taxation of the person on the basis of the income that he enjoys. I refer particularly to the taxation of corporations feature of the Wisconsin law. At the present time substantially 60 per cent. of the Wisconsin income tax is assessed not on individuals, but on corporations, is assessed not on the basis of ability to pay, but is an excise upon corporation earnings, net earnings if you please; but it bears absolutely no relationship to the earnings of the individuals who put up the capital to finance those corporations. The individual may own stock in a Wisconsin corporation which is subject to the maximum rate under the law, six per cent, or approximately that, he may not have a taxable income under that law at all, and yet he will be forced to contribute his proportionate part of the income tax in that state. Furthermore, the Wisconsin income tax is a long way from a solution of our tax problems in the broader sense. The maximum amount assessed there is about four millions of dollars out of a tax of forty millions or more. It is a solution of our tax on intangible property. It is not a solution of our general property tax problems. The Wisconsin tax provides for the exemption or substantial exemption of the tangible personal property of all persons who have taxable incomes. That feature, it seems to me, is illogical. It grew historically out of the desire entirely to exempt tangible personal property. After thinking about it ever since that law went into effect, I have been wholly unable to see and I know Mr. Lyons of the Wisconsin commission feels the same way-any difference between tangible personal property and any other kind of property. I do not see any reason for exempting tangible personal property if we are adhering to the principle of a personal property tax, or of the property tax. There is a clear line of demarcation between tangible and intangible properties, but I do not see the same line between tangible personalty and tangible real property. MR. NILS P. HAUGEN, of Wisconsin: You have reference to the offset provisions? MR. JAMES: Yes. It does not seem to me that the income tax, if we are going to try to put it into actual practice, should apply to anything but personal income, that the individual owner of the corporation should be assessed for everything that he gets, by corporate return or otherwise, but that the corporation which is the mere intermediary should not be subjected to the corporate income tax, thereby making the owner of the corporation pay by indirection more than he would pay if he were half owner or part owner of a partnership. That feature of the Wisconsin tax has always seemed to me illogical and unreasonable. The other provision, that is, the taxation of the income taxpayer on all his income within the state, excepting from property located without the state, and the taxation of a nonresident on the basis of his property located within the state, seems to me to violate the rule of personal taxation. Professor Rawles recognizes that and says there is a combined tax; but the property tax meets the demand for the taxation of property, so why should you undertake to make the income tax serve two functions when in all propriety it ought to serve only one, the taxation of the person where he resides and to which place he owes his economic allegiance? MR. LAWSON PURDY, of New York: There seem to be in the United States very few places where assessors are selected by competitive examination. I suppose there may be some in attendance here who do not know that in the city of New York they are so selected, and it may be a matter of encouragement to them to know that fact. For about thirty years assessors in the city of New York have been selected after competitive examination, and the law requires that one out of the first three who are rated highest in the examination must be appointed. If more than one, three, for instance, are to be appointed, three out of the first five must be appointed. For the last five or six years the mayors of the city of New York, Mayors Gaynor and Mitchel, have issued executive orders that appointments must be made in the order of eligibility on the list-one, two, three-unless reasons appear to be very strong against it, and then only after the personal approval of the mayor. No such approval has been given by the present mayor for appointments in my department. The result is that in the main skilled men are appointed. They are under no fear of removal so long as they do their work faithfully. There has been no removal in at least ten years for any cause other than a very grave dereliction, and those cases have been exceedingly few. In the city of New York there are about 100 men holding office today after appointment under the system which I described. I should think that at least 20 of them have been deputy assessors, as we call them, for twenty years or more, at least 20 more for fifteen years or more, and fully one-half for ten years. There is this to be said about those men. There are only a very few of them who are delegated to that distressing task of attempting to assess persons for personal property. Most of them are engaged in a man's job of assessing real estate. |