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 8. 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 engaged 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 provided for specific State taxes in section one of this article. (As amended Nov. 6th, 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 legis lature 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. 6th, 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. 6th, 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.

SOME DUTIES OF THE BOARD.

A more complete history of the Tax Commission and its work will be given in subsequent pages prepared by Hon. A. F. Freeman, member of the Board. From July, 1899, to December 31, 1900, the Commission has prosecuted its labors in this State. The field opened to them under the act creating the Board was an exceedingly wide one. The duties were not only many, but carried with them great responsibility and a vast amount of labor. There were no precedents, rules, organization, blanks or guide.

A Tax Commission in Michigan, with executive powers, was an untried experiment. It was known by its members that the law was on trial, and that if it fulfilled the expectations of its friends it would require fearless and faithful performance of duty. How well such duties have been performed must be judged by results.

It was well understood that if the law be followed and justice be done to all, without regard to rank or station, that it meant both social and political ostracism with the governing and political forces that control in the State. Many of the duties were not pleasant or agreeable. Approval and compliments are better appreciated generally than censure and criticism, and especially so when coming from those who have been fast and long-time friends. Taxation is the disagreeable function common to every government. The assessing officer who permits men to tax themselves, who seldom asserts his prerogative, who passes the hat instead of making an assessment, is too frequently the man who "holds on," is patted with approval by favorite interests, and continued in office.

The powers that control and manipulate do not respect such men, but they realize and reciprocate. The great majority of assessing officers in Michigan are honest and faithful, and dare perform their whole duty; but an experience of eighteen months has shown that in taxation the millions almost always find their men, but that men do not find their millions.

Among the many duties devolving upon the Commission.were the following:

I. To see that all taxable property in the State be placed upon assessment rolls at actual cash value.

To confer with assessing officers and to complain of and prosecute violations of law.

III. To receive complaints regarding illegal assessments and take steps to regulate the same.

IV. To visit the several counties in the State, investigate assessments, receive complaints, etc.

V. To gather reports from officers regarding all matters affecting taxation.

VI. To get valuation of all properties of corporations paying specific taxes and the rate of taxes paid if based on actual valuation.

VII. To inquire into the revenue systems of other states and countries by correspondence and published reports.

VIII. To report to the legislature the whole amount of taxes raised in the State, and to fully classify the same.

IX. To report to the legislature the total valuation of properties directly assessed, with the average rate of taxation thereon, and the valuation of corporations paying specific taxes, with rate on such valuations.

X. To be present at the regular meetings of the State Board of Equalization.

XI. To report to the Governor on or before the 15th of December each year the workings, findings and recommendations of the Commission.

In accordance with the last requirement above named, many subjects are herein touched upon. Those considered most important have been accorded most space, but in no instance has a subject been given the full discussion and consideration it has seemed to require.

No thought has been taken of the effect these discussions might have, nor whether they would please or displease any element, faction or locality. The highest good of the State and the best method of securing it have been the only considerations.

REAL ESTATE.

There is no ground upon which to discuss the abstract question of justice and equity in the assessment of property for taxation. If we are to levy a tax upon property values, it is right that every class of taxable property shall pay its equitable share of the same. Any proposition that may be advanced looking away from this rule in the slightest degree can be denounced in such terms that the highest pitch of sentiment will be raised against it. Practical economy and sentiment, however, do not always harmonize any more than do practice and theory.

Every state and civilized country has come to know that there is but one class of property that can always be found; that cannot hide or evade the assessor, and that is real estate. It is almost universally conceded and believed that to levy all taxes on lands would be a monstrous injustice. No part of the $515,690,620 collected during the fiscal year ending June 30, 1899, by the general government for its maintenance, was from real estate, but every dollar was collected from personal property through indirect taxation.

Because real estate cannot hide or escape the assessor, every state

levies a direct tax upon it. It has become the one sure and reliable source of taxation, though every other class of property fail.

In 1899 but 14.6 per cent of the total assessed property of the State was personal. In this year, 1900, owing to the efforts that have been made to reach hidden effects, the per cent of personal is 24.5.

The ratio between real and personal, in 1899, was 86 to 14. In 1900 it was 76 to 24, or it has been increased approximately from one to six in 1899 to one to three in 1900. There is no state in the Union with so high per cent of personal to real estate as Michigan has at this time.

The total assessments of real and personal property for 1899 and 1900 were as follows:

PERSONAL PROPERTY.

Since time began with civilized nations and states the greatest problem of taxation to the economist has been to discover how and in what manner personal property could best and most certainly be reached for taxation.

Legislators have used more time and writers more ink upon this subject than upon all other revenue problems. At least eighteen hundred years of experience, without the slightest recorded variation, ought to be worth something in the making of tax laws.

Among some of the truths that have been universally verified are the following:

First. That all property cannot be taxed alike or by like methods. Second. That the machinery for taxation must be suitable to the kind of property to be taxed.

Third. That taxation to be effective must be certain.

Fourth. That as far as possible the state should provide a system whereby it may not have to rely solely upon the statements of persons to be assessed, either for the extent or value of property.

These rules or maxims should be present in the enactment of every revenue law.

1. Mortgages.

2. Notes.

CREDITS AND INTANGIBLE PROPERTY.

3. Bank deposits.

4. Bonds.

5. Moneys due on land contracts.
6. Building and loan associations.
7. Open accounts and other credits.
8. Bank stock, etc.

No phase of taxation has occupied more time and thought by students of the subject than the taxation of credits. They are of so many kinds; they are so easily hidden and so difficult to find by the assessor, that the best theories often fail when put to a practical test.

Paragraph 7, Section 150, of Act 154, of the Public Acts of 1899, contains the following provision: "To make diligent investigation and inquiry concerning the revenue laws and systems of other states and countries, so far as the same is made known by published reports and statistics and can be ascertained by correspondence with officers thereof, and with the aid of information thus obtained, together with experience and observation of our own laws, to recommend to the legislature at each regular session thereof, such amendments, changes or modifications of our revenue laws as seem proper and necessary to remedy injustice and irregularities in taxation and to facilitate the assessment and collection of public revenues."

The Board of State Tax Commissioners, in pursuance of the above requirements, have not only made observations regarding the inadequacy of our own tax laws, but have also made diligent study of the tax systems in other states, so far as the same could be done by examining their laws and reports, and through correspondence.

No branch of the subject of taxation is of greater immediate importance to the people of Michigan than the one relating to the assessment and taxation of credits. That the legislature might have summarized information at hand regarding the different systems by which credits are assessed in the several states, we append the same to this report, and also here call attention to some of the defects in our own methods, by which escape from taxation is made easy.

No system for the taxation of credits, nor in fact of any other class of property, can be made perfect. Human ingenuity has never yet devised a plan of taxation not found to be in some particulars inequitable in practical operation. Hence it must be remembered in the outset that perfection cannot be realized.

Generally speaking, we cannot rely upon the statements, verbal or written, of those who are to be taxed, for the extent, number or valuation of intangible property. The majority of men are strictly honest, but with others, in the matter of taxation, experience has shown an elastic public conscience not exhibited in any other department of business affairs. We must put into the hands of the State and its assessing officers, the tools and facilities for making an assessment, without requiring any more information than is absolutely necessary from the person to be assessed. The farm, the house and lot, the store and the factory are all open and visible, and the assessor places upon them his valuation, or at least exercises his judgment upon them. This rule extended is the most important primary maxim to be observed in the making of any tax law, whether it be federal, state or municipal.

WEAKNESS OF THE PRESENT LAW.

The principal avenues through which credit assessments are avoided,