REPORT.

State of Michigan,

Office of Board of State Tax Commissioners,

Lansing, December 15, 1904.

To His Excellency, A. T. Bliss, Governor of Michigan:

In compliance with the law, we herewith submit to you the third report of the Board of State Tax Commissioners covering their work for the years 1903 and 1904.

F. O. GULLIFER,

Secretary.

TAX LAWS.

The report by this Commission, published in 1901, contains a discussion of the tax laws of this and other states, and so full an account of the workings of the Commission that it is not deemed necessary or advisable to go over the ground again, except in a brief way, confining ourselves principally to the operations of the Commission in its efforts to carry out the law during the years 1903 and 1904.

CONSTITUTIONAL PROVISIONS.

Finance and Taxation.

Article XIV, Section 1. All specific State taxes, except those re ceived from the mining companies of the Upper Peninsula, shall be applied in paying the interest upon the primary school, university and other educational funds, and the interest and principal of the State debt, in the order herein recited, until the extinguishment of the State debt, other than the amounts due to educational funds, when such specific taxes shall be added to, and constitute a part of the primary school interest fund. The legislature shall provide for an annual tax, sufficient with other resources, to pay the estimated expenses of the State government, the interest of the State debt, and such deficiency as may occur in the resources.

Section 2. The legislature shall provide by law a sinking fund of at least twenty thousand dollars a year, to commence in eighteen hundred and fifty-two, with compound interest at the rate of six per cent

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per annum and an annual increase of at least five per cent to be applied solely to the payment and extinguishment of the principal of the State debt, other than the amounts due to educational funds, and shall be continued until the extinguishment thereof. The unfunded debt shall not be funded or redeemed at a value exceeding that established by law in one thousand eight hundred and forty-eight.

Section 3. The State may contract debts to meet deficits in revenue. Such debts shall not in the aggregate at any one time exceed fifty thousand dollars. The moneys so raised shall be applied to the purposes for which they were obtained, or to the payment of debts so contracted.

Section 4. The State may contract debts to repel invasion, suppress insurrection, or defend the State in time of war. The money arising from the contracting of such debts shall be applied to the purposes for which it is raised, or to repay such debts.

Section 5. No money shall be paid out of the treasury except in pursuance of appropriations made by law.

Section 6. The credit of the State shall not be granted to, or in aid of, any person, association or corporation.

Section 7. No scrip, certificate, or other evidence of State indebtedness shall be issued, except for the redemption of stock previously issued, or for such debts as are expressly authorized in this constitution.

Section S. The State shall not subscribe to, or be interested in, the stock of any company, association or corporation.

Section 9. The State shall not be a party to, or interested in, any work of internal improvement, nor engage in carrying on any such work, except in the expenditure of grants to the State of land or other property: Provided, however, That the legislature of the State, by appropriate legislation, may authorize the city of Grand Rapids to issue its bonds for the improvement of the navigation of Grand River.

Section 10. The State may continue to collect all specific taxes accruing to the treasury under existing laws. The legislature may provide for the collection of specific taxes from corporations. The legislature may provide for the assessment of the property of corporations, at its true cash value, by a State Board of Assessors, and for the levying and collection of taxes thereon. All taxes hereafter levied on the property of such classes of corporations as are paying specific taxes under laws in force on November sixth, A. D. nineteen hundred, shall be applied as (As provided for specific State taxes in section one of this article. amended Nov. 6, 1900.)

Section 11. The legislature shall provide a uniform rule of taxation except on property paying specific taxes, and taxes shall be levied on such property as shall be prescribed by law: Provided, That the legislature shall provide an uniform rule of taxation for such property as shall be assessed by a State Board of Assessors, and the rate of taxation on such property shall be the rate which the State Board of Assessors shall ascertain and determine is the average rate levied upon other property upon which ad valorem taxes are assessed for State, county, township, school and municipal purposes. (As amended Nov. 6, 1900.)

Section 12. All assessments hereafter authorized shall be on property at its cash value.

Section 13. In the year one thousand nine hundred and one, and every fifth year thereafter, and at such other times as the legislature may direct, the legislature shall provide for an equalization of assessments by a State board, on all taxable property, except that taxed under laws passed pursuant to section ten of this article. (As amended Nov. 6, 1900.)

Section 14. Every law which imposes, continues or revives a tax shall distinctly state the tax, and the object to which it is to be applied; and it shall not be sufficient to refer to any other law to fix such tax or object.

HOW MICHIGAN REVENUES ARE RAISED.

In Michigan, as in other states, various methods are used for collecting the revenues necessary for the support of the State, county and township and other municipal governments, and a brief classification of these methods might be of interest.

1. The total amount of revenues raised in Michigan for the support of State, county, town or municipal governments for all purposes is approximately $33,000,000.

That portion of these revenues raised by a direct tax upon property for the year 1904 is $29,700,000. The amount raised by indirect tax is approximately $3,300,000.

a. The direct tax is assessed and levied primarily by supervisors and by other assessing officers in cities and villages, upon what is supposed to be the true cash value of property. The rate of taxation is found by dividing the amount to be raised by the total value of the property to be assessed. It also includes all assessments, and taxes levied thereon by the State Board of Assessors.

b. Indirect taxes are assessed by a great number of methods, some for State, others for county, and still others for town, city or village purposes. Among the chief sources of revenue from indirect taxation are the following:

Upon the business of selling brewed or malt liquors, both at wholesale and retail, $500 per annum.

Upon the business of selling spirituous or intoxicating liquors at wholesale, $500 per annum.

Upon the business of selling at wholesale and retail spirituous and intoxicating liquors, $800 per annum.

Upon the business of manufacturing brewed or malt liquors for sale, $65 per annum.

Upon the business of manufacturing for sale spirituous or intoxicating liquors, $800 per annum.

One-half of all moneys paid to any county treasurer under the provisions of the above law, after deducting his fees, is paid over to the treasurer of the township, city or village where the moneys were collected, and the balance is placed to the credit of the general fund of the county.

The law provides, however, that in the northern peninsula all of the moneys paid to the county treasurer, after deducting his fees, shall be placed to the account of the township, city or village from which the same was collected.