port, they stated that a conscientious effort was being made to have the real property of the state assessed at its true value. In only two cases was it found necessary to order the reappraisement of a taxing district. As there are over 2500 taxing districts in the state, this speaks well for the fairness of the valuation. Previously the assessed valuation had been about fifty per cent of the true valuation. A table published by the tax commission of 1906 of the sale value and the tax value of real estate properties transferred in four counties during the year 1906 showed that the assessed value was respectively 43, 50, 36, and 37 per cent of the sale price,11 and this they regarded as typical. In the case of the smallest properties, worth from $350 to $750, the assessed value was generally higher than the sale price, showing an added discrimination against the small property owner. Some of the larger properties were assessed as low as 10.8 per cent of their sale price.

Whether this effort to secure the true cash valuation of property for taxing purposes, as the law has always provided, succeeds or not, the movement is in the right direction. The main evil in Ohio in this connection arises mainly in the resulting inequality between individuals, or between individuals and corporations, rather than between different counties, for the rate of state taxation, which is distributed according to the local assessments, is very small— only .134 cents per $100. The tax commission of 1906 recommended the abolishment of this levy and the complete separation of state and local revenues, but this was the only recommendation made by them upon which the legislature has not acted favorably up to the present time. As all the revenue thus collected by the state is for school purposes and is turned back to the counties after its collection, there is really no tax for state purposes upon general property in Ohio to-day. But since the school taxes are collected according to wealth and redistributed according to the number of children of school age, the effect of the discontinuance of a state levy for this purpose would be to deprive some of the poorer districts of needed funds for education. It hardly seems likely, therefore, that this advice will be followed, nor desirable that it should be.

Not content with providing by these various measures for an increase in the amount of property returned for taxation, the legislature, acting upon a recommendation of the governor,12 pro

ceeded to limit the tax rate, and thus to protect the tax-payer from local and legislative extravagance. Since it was certain that the revaluation in 1910 of the real property in the state, and especially the efforts of the tax commission to secure its appraisement at its true value, would result in a very large increase of taxable property on the duplicate, the tax limit law was passed to prevent any rise in the total amount of taxes levied. The provisions of this curious law are as follows:13

Inclusive of sinking fund purposes, the maximum rate of taxation that may be levied for all purposes in any taxing district, is limited to ten mills on the dollar (1 per cent) of the taxable property. If such rate will not produce an amount equal to the tax revenues of 1909, plus six per cent for the year 1911, nine per cent for 1912, and twelve per cent for any year thereafter, or is insufficient for certain specified emergencies, then the rate may be increased to fifteen mills on the dollar (1.5 per cent). Any additional tax beyond this maximum must be approved by a majority of the voters of such taxing district at a general or special election. The spending power of local spending bodies, and of the legislature so far as this depends upon revenue from the general property tax, is thus confined within definite limits, proved by experience to be sufficient; and any increase, beyond a slight one to correspond with the growth of the state or community, is to be decided by a referendum of the voters immediately concerned. In this way the tax-payer is protected against the collection of unnecessarily large taxes through the application of the old high rate to the increased valuation of property. If the valuation is high the rate must be kept low. This was not sufficient to satisfy Governor Harmon, however, and he not only withheld his signature from this act (though allowing it to become law), but in his message the present year urges that the extreme maximum for all purposes be fixed at ten mills instead of fifteen.14

After a struggle whose issue was in doubt until the last day of the session this demand was carried out by the passage of the act of May 31 (House Bill No. 186), and at the same time a long step forward was taken in the direction of uniformity and control of local finance. A board, to be known as the "budget commissioners," consisting of the county auditor, the mayor of the 13 Act of May 10, 1910. 101 O. L. 430.

14 Gov. mess., Jan. 2, 1911, p. 4. A bill carrying out this suggestion passed the House.

largest city in the county, and the prosecuting attorney, is hereafter to be constituted in each county in the state. The county commissioners, city councils, township trustees, boards of education, and other public taxing bodies must submit to them annually comprehensive budgets setting forth the receipts and expenditures of the past year and the needs of the next year. The budget commissioners are to examine these budgets and if they find that the total amount of taxes to be raised exceeds the maximum allowed, namely three mills for county taxes, five mills for municipalities, and two mills for township purposes, they are to adjust the various amounts so that the total shall not exceed ten mills. "In making such adjustment the budget commissioners may revise and change the annual estimates contained in such budgets, and may reduce any or all the items in any such budget, but shall not increase the total of any such budget, or any item therein."

The total amount of taxes was limited for 1911 to the amount levied in 1910, plus six per cent for 1912, nine per cent for 1913, and twelve per cent for any year thereafter; but in no case to exceed a maximum rate of ten mills on the dollar for all purposes. If the county commissioners, city councils, or other similar bodies deem these rates of taxation insufficient, they may send a resolution to that effect to the deputy state supervisor, and the additional levy may then be submitted to the voters of the district at the next November election, but such increase shall not be for over five years. If a majority of the electors voting thereon favor the increase the additional taxes proposed may be levied. The same act that placed these striking limitations upon the taxing power of local bodies also fixed definite rates for the support of the common and normal schools, Miami, Ohio, Wilberforce, and Ohio State universities, amounting in all to .4175 mills on the dollar of the taxable property in the state.

This act also placed limits upon local indebtedness, as well as upon the tax rate. The net indebtedness incurred by any township or municipal corporation may not exceed 2.5 per cent of the total value of all property listed for taxation; but upon vote of the electors additional bonds may be issued up to 5 per cent.

Finally, the act provided for removing all penalties upon property not listed for taxation prior to 1911, and for starting fresh with January first of this year. In order to induce tax-payers to declare the whole amount of their property, it was enacted that no back taxes or penalties should be assessed upon any omitted prop

erty, if such property were declared for taxation in 1910. But beginning with January 1, 1911, back taxes and penalties are to be collected from all omitted property, for five years preceding the date when it may be discovered. It was hoped that this exemption and the limitation of the tax rate would lead to the declaration of much property that had hitherto evaded taxation. The slate had been wiped clean of accumulated penalties in much the same fashion in 1826, when the general property tax was first introduced; and now that the administration of the tax was to be made so much more strict, it seemed equitable to allow immunity under certain conditions to those who had been evading taxation, if they would give evidence of a disposition to deal fairly in the future. ERNEST L. Bogart.

University of Illinois.

TAXATION IN ILLINOIS

Illinois is the third State in the Union in population and in manufacturing; it contains the second largest city in the United States and many other important cities; and in its complex social and industrial life it must be classed with the most highly developed communities in the country. Yet the forms and methods of taxation are still, for the most part, those which originated in the times of its pioneer settlement; and reached substantially the present stage of development when the state was still mainly agricultural and when the mining and manufacturing industries and corporate forms of business organization were only beginning.

The principal basis of taxation for state, county and municipal purposes is the general property tax, prescribed by the state constitution; and the valuation of property for taxation is made under a law which now openly provides for assessment at a fraction of the fair cash value. Assessments are determined mainly by township and county officials, with practically no administrative supervision by state officials; and a complicated statute regulating the aggregate tax levy is practically ignored in most counties. Railroad property and the capital stock of some classes of corporations are assessed by a state board of equalization, whose organization and powers are by no means adequate. There are some sources of revenue, in addition to the general property tax: by contract, the Illinois Central Railroad pays to the State seven per cent of the gross earnings from its original charter lines, and these lines are exempt from the general property tax. The state also receives some revenue from a tax on insurance premiums, from corporation fees, from a tax on inheritances, and small amounts from miscellaneous fees. Local districts also have some revenue from fees, licenses and special assessments.

Legislation

A brief historical sketch will show that the present situation has developed mainly by chance and with no definite steps toward a systematic scheme of taxation adapted to present conditions. The first state constitution definitely provided for a general property tax; and the early methods of assessment and collection were regulated by various statutes. An act of 1827 provided for a state tax on lands, which were grouped in three classes, and authorized a county tax on town lots and a few specified classes of