to discuss the advantages of the income tax in the abstract. We have practical illustration of its operation in Wisconsin. I desire to call attention to some of its features.

Its first and chief merit has been an indirect one. It has toned up the entire fiscal administration in the state. This has been pointed out on several occasions by members of the tax commission. Their report for 1914 shows that the ratio of assessed to true value in that state had increased from 64.86 per cent in 1911 to 82.66 per cent in 1914. The total assessed value of all property (1914) was $3,172,989,154 and the average tax rate was a little under 1.4 per cent.1 As the assessed value approaches more nearly to the true value, inequalities tend to disappear. It is worth noting in this connection that the total wealth in Indiana, as reported for 1912 by the Federal Census Bureau, exceeded that in Wisconsin by 16 per cent. An equally efficient administration here would raise the assessed value to the neighborhood of three and one-half or four billions.

2

In the second place, the tax is inexpensive to administer. In the first year its administration cost 1.31 per cent of the tax assessed or 2.77 per cent of the tax collected; in the second year these rates were reduced to 1.11 per cent and 2.33 per cent respectively. The net yield of the tax in the second year was nearly $2,000,000.

Thirdly, it has introduced into the system a larger element of justice. Besides bringing about more equitable assessments of property, it has reached large classes of property and persons heretofore untaxed. It has distributed the burden of taxation more nearly according to ability. This statement is supported by the facts recited in the commission's report. Of the persons assessed in 1914 for income tax, 41,732 had incomes less than $1,000. This number, constituting 68 per cent of the total number, paid less than 11 per cent of the total tax. The average tax for each was $3.74. In contrast with this class there were 315 taxpayers having incomes of $15,000

1 Report, Wisconsin Tax Commission, 1914, pp. 34, 57, 126 and 157. 2 Under the Wisconsin law taxpayers are allowed to offset their income tax with their personal property tax.

or more, constituting a little over one-half of one per cent of the total number assessed, who paid 40 per cent of the total tax, the average for each being $1,794. The justice of this difference appears when it is added that the aggregate taxable incomes of these 315 persons was equal to more than 73 per cent of the aggregate taxable income of the 41,732 persons in the first group. Less than one per cent of the laborers and less than five per cent of the farmers were subject to the tax. Relative to the reputed inquisitorial nature of the income tax, the commission has this to say in its report for 1912:

"The assessment and tax rolls reveal nothing not already known to credit agencies and the business world generally. A man's taxable income and the tax thereon are matters of public record, but that is all: nothing is known of his exemptions or of his non-taxable income. . . No tax measured by ability to pay can be administered without asking searching questions. The more thoroughly these questions are asked the more certain honest people can be that the tax-dodgers are paying their fair share. . . . The old personal property tax would have been much more inquisitorial than the income tax if it had been enforced. It failed largely because questions were not asked."'

In the report of the Joint Legislative Committee on Taxation of the state of New York is found an instructive comment showing the trend of sentiment towards the income tax among those classes who are thinking seriously on the question of taxation. It reads as follows: "That the income tax is the best way of taxing both individuals engaged in business and general business corporations was the opinion of practically every business man that appeared before our committee, and of the tax committees of such representative commercial bodies as the Chamber of Commerce of the City of Rochester, of the Merchants' Association of the City of New York, and the Chamber of Commerce of the City of New York." This joint committee recommended unanimously an income tax for the state of New York. Connecticut and West Virginia have adopted an income tax for miscellaneous corporations, and more recently Massachusetts has enacted a law prescribing a partial income tax. These steps in so-called conservative states are significant of a decided movement towards the state income tax.

6. IS AN INCOME TAX CONSTITUTIONAL? The objection will be raised that my proposed remedy offers no relief to Indiana because an income tax would be unconstitutional. If that be true, there is no relief for this state under the provisions of our present constitution. None of the substitutes for the personal property tax which have been proposed would have any more chance of standing the test of constitutionality than an income tax would have. And there is no genuine relief possible so long as we blindly and doggedly insist upon applying the general property tax to personal property. I shall not undertake to discuss the question of constitutionality. But I should like to call attention to a bit of history. The constitution of 1816 contained not a single clause or word conferring the power of taxation upon the general assembly. But that body proceeded to impose taxes without any question being raised as to its legal authority. The power of taxation was implied in the very nature and existence of the state; and inasmuch as the constitution placed no restrictions upon that power, it was plenary-unlimited-except by certain provisions of the federal constitution. The present constitution declares: "The general assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; and shall secure a just valuation for taxation of all property, both real and personal, excepting such only, for municipal, educational, literary, scientific, religious, or charitable purposes, as may be especially exempted by law." (Article I, Section 10.) It does not say that the general assembly can levy no other taxes. The state can do so, and it has done so. It has levied a poll tax; it has imposed an excise tax on foreign insurance companies; it has levied an inheritance tax with progressive rates. None of these are authorized explicitly by the constitution and none of them are prohibited. The general assembly still has full power to prescribe taxes except as it is restricted by the constitution and laws of the federal government and by the provisions of the state constitution relating to the taxation of property. I will close the discussion of this point by leaving with the constitutional lawyers this question: Has not the general assembly the same power to levy an income tax as it had to levy an inheritance tax? If an

income tax is not in conformity with our constitution we should change the organic law.

V

CONCLUSION

I have shown the unfortunate conditions in this state. I have pointed out the inadequacy of various substitutes which have been proposed from time to time for the unjust, ineffective, and hopeless personal property tax. I have cited the experience of Wisconsin to show that a state income tax is just and practicable. I have submitted the outline of a law which seems to me to contain fair and reasonable rates and provisions a measure which would relieve us of false pretensions in attempting to tax intangibles which everywhere escape except when in the hands of the defenseless or conscientious, which would relieve business men of the necessity of perjuring themselves for fear of confiscation of their property or of the ruinous competition of others who escape taxation, which would tone up the whole tax system of the state, secure fuller and fairer assessment, make possible the reduction of tax rates, relieve industry, and avoid driving it from the state. Do the conditions which are essential to the successful administration of an income tax exist in Indiana? Are the people loyal and conscientious enough to deal squarely with the government when given an opportunity to be honest? Are they intelligent enough and willing to stand for greater centralization in tax administration for the sake of efficiency and justice? I cannot prove by logical demonstration that they are. I can only hope and believe that they are. Let us give them a chance to show whether or not they are. Conditions could hardly be made worse under an income tax. The correct solution of the tax problem is one aspect of that great task which sooner or later Americans must face-the harmonizing of discipline and democracy.

DIVORCING THE ASSESSOR FROM POLITICS

FRED A. SIMS

Former Member State Board of Tax Commissioners of Indiana

Your association, gentlemen, has given to our city and to our state both an honor which we appreciate and a great favor which is of special benefit. Coming to us at this time, when our people are awakened and interested in this most important subject, it will be of great aid and assistance both in giving impetus to the movement as well as assisting materially in solving this vexing and difficult problem. This conference will, indeed, be of much service and benefit to our people. May I thank you, too, for your generous invitation to read this paper.

If, in the discussion of this question, the Indiana situation may color too strongly such remarks as may be made, your indulgence is sought for the reason that what may be said will be more or less apropos to the subject as well as the familiarity of the writer with these conditions.

In dealing with this question it would seem of small benefit to discuss the ideal rather than the practical. You gentlemen who have given so much time and thought to the subject of taxation in its varied forms are keenly aware of the shortcomings of our different systems, no feature of which stands out more prominently than the assessor; and we would probably agree, could the question be determined by this convention, upon an ideal plan which would be productive of satisfactory results if put into effect and properly enforced. But we must take into account that which can be done under our political institutions, and anchor action upon a stable basis, if possible, which may withstand the attack of changing sentiment and conditions.

The assessor occupies, perhaps, as unenviable a position as an officer as any of our public servants. The hangman is the only one which occurs to mind to be in a worse situation.

Abused and disliked almost as much as his ancient collateral ancestor the publican-he is blamed by the individual whose property he lists and condemned by the body politic for lax