transfers in his district is known to every assessing officer throughout the state, and studied and made use of by him in determining the assessment, the problem of cash value assessments would be practically solved, but when the consideration named is not the true consideration, but is false and misleading, this most important and universal factor for determining "cash value" must be absolutely abandoned.

COMMUNITIES RE-ASSESSED TO PAY EXPENSES OF RE-ASSESSMENT AND REVIEW.

"Require assessing districts found on review to be assessed at less than 'cash value' to pay the expenses of such review after the assessment period for 1917."

There are some districts in the state where taxpayers have not recognized that "cash value" assessments have come to stay. There are individuals throughout the state who will attempt to gain the office of assessor by promising, if elected, a reduction from the existing assessments. The community that would countenance such an attempt should be penalized for so doing. The honest supervisor who has followed the law and assessed at "cash value" should be protected from such dishonorable opposition, and it can best be done by compelling the district that has to be re-assessed because of an under assessment by its own officers, to pay all expenses of such re-assessment. The state and taxpayers in properly assessed districts, ought not to be called upon to pay any part of such expense. Where the difference between the assessment of the suprvisor and "cash value" as determined by the Board of State Tax Commissioners, does not exceed a certain per cent, say 5%, and may be simply a difference in judgment, the expense of determining the true valuation should not be borne by the offending district, but should the under-valuations exceed a certain fixed amount, the expense, as a matter of justice to the communities making a proper assessment, should be borne by the offending district.

CHANGES IN COUNTY EQUALIZATION.

"Amend the statute providing for the equalization of the several assessing districts of a county by the Board of Supervisors so as to include personal property in making the equalization, and in adding to or deducting from the valuations of the taxable property of a district, the total valuation of both real and personal property should be included."

"Provide that county equalization shall be at 'cash value." "

"Amend the law allowing an appeal to the Board of State Tax Commissioners from the equalization made by the Board of Supervisors by removing the restriction that, 'in such review of equalization, the Board of State Tax Commissioners shall not increase the aggregate valuation of the county.""

The present law requires the supervisors to "ascertain whether the relative value of the real estate in the respective townships, wards or cities, has been equally and uniformly assessed; and if found relatively unequal to equalize the same by adding to or deducting from the valuation of the taxable property in any township or ward such an amount as

will produce relatively an equal and uniform valuation of the real property in the county."

These restrictions may have been proper in the days when property was largely real estate, but the tremendous development in recent years of the industrial and commercial centers of the state, has been accompanied by a tremendous expansion of personal property, especially that of industrial and mercantile corporations, until there are many assessing districts in the state where the personal property very materially exceeds the real property. Any equalization under such conditions based upon examination and change in the aggregate of real property only, would result in great inequality in the total equalization for the county. The limitation in equalization to changes in real estate, sometimes leads supervisors to consider that their activities as to "cash value" assessment, should extend only to the real estate, and by some an endeavor is made to gain advantage for their district by keeping the valuation of personal property low.

The final paragraph of the Section authorizing an appeal to the Board of State Tax Commissioners from County Equalization which provides that the Board of State Tax Commissioners cannot increase the aggregate equalization they are reviewing, not only tends to defeat "cash value" but greatly increases the difficulties of the Board in their work. If the Board of State Tax Commissioners were not governed by this proviso, it could in most cases settle disputes as to equalization by few changes, which though increasing the aggregate, would not effect the valuations of any township, except those found improperly equalized, whereas, under the law as it now is, in case of additions to any township, reductions of an equal amount must be made in other townships to prevent any increase in the aggregate.

COUNTY EQUALIZATION TO BE MADE IN JUNE INSTEAD OF OCTOBER.

"Amend the section of the general tax law which requires the annual equalization to be made in October so as to require the equalization to be made the fourth Monday in June."

Boards of Supervisors are now required to meet and equalize in June every third and fifth year for the purpose of reporting such equalization to the State Board of Equalization. To require the equalization to be made in June instead of October every year, would not only make the practice uniform but would give the Board of State Tax Commissioners abundant opportunity to investigate appeals made against such equalization by any supervisor or assessing officer, and, in case of re-equalization, to complete the same without delaying the spreading and collection of taxes, as must now happen when numerous appeals are made.

CHANGES IN ASSESSMENT ROLLS.

"Require assessment rolls, outside of cities, to follow a geographical instead of an alphabetical order and to include colums showing 'land' values and building' values separately, as well as combined."

The Board of State Tax Commissioners in their field work have found

that valuing land and buildings separately is of great assistance in determining cash values and also in correcting "cash value" when changes have been made in buildings. In this connection each assessing district should be required to provide plats of all real estate showing land, improvements, buildings, highways, etc., to be kept posted to date by the assessor, and by him passed to his successor as part of the permanent records of the office. Assessing officers are frequently changed. The new assessor, finding no permanent records, except old assessment rolls to assist him and restricted as to the time he can employ in preparing his roll, and often unable to visit the property personally, is apt to be largely guided by the valuations of his predecessor. His work would be greatly facilitated by the existence of a plat book, recording the information and observation of previous assessors.

TAXATION OF INTANGIBLE PROPERTY AND CREDITS.

Recommendations thus far made have to do with bettering the administration of the existing general property tax system, and do not require changes in the constitution to become effective. The Board of State Tax Commissioners is strongly convinced that the changes in and additions to existing laws here recommended, would not only better the administration of the present tax system, but would tend toward equalizing the burden of taxation. They would not, however, solve the problem most urgent at this time,—that of relieving the constantly increasing pressure of taxation upon the visible properties of the State. The remedy most frequently suggested, that of diverting the taxes paid by public service corporations from the primary school fund to the general fund of the State, would be difficult to accomplish inasmuch as it would require an amendment to the constitution and radical changes in tax laws and school laws.

Two other solutions appeal to the Board of State Tax Commissioners as worthy of study on the part of the legislature; both of which, while requiring changes in the constitution, would appeal to the taxpayer, because they would not simply transfer from one fund to another fund taxes now actually levied and at the full amount such property should pay, but would result in the taxation of much property now escaping taxation altogether, or paying an inconsiderable sum. We suggest,

First, modifying the present general property tax system at a uniform rate, by allowing the classification of property, and the application of a different rate to different classes of property.

Second, the substitution of a graduated income tax for all intangible personal property taxes.

The taxation of intangible property has always been the weakest spot in every general property tax system, because the location and valuation of such property is always difficult, and often impossible without the co-operation of the owner. Taxation of such property at the uniform rate has been a failure not only in Michigan but wherever attempted; the owner justifying concealment of such property on the ground that his certificates or securities are but evidence of his participation in the ownership of the property already fully taxed, or that the taxation of such property at the uniform rate would be confiscatory of income. Failure to successfully tax intangible property made little difference in the early days of Michigan because property was then mainly real estate,

but the tremendous commercial and industrial development of the present day has been accompanied by an equally wonderful expansion in intangible property, and the extreme development of that most useful of modern, commercial instruments, the "limited liability corporation" with its accompanying secured debt feature. To-day, a large part of the wealth of our State is in intangible property and failure at this time to properly tax it, whether as a result of legislation or administration, relieves many from all taxation.

The problem has been met in some of the states most progressive in taxation matters, by the classification of property and the applying of a different rate of taxation to different classes; and the experience of these states has been that, while intangible property does very largely seek safety in concealment when taxed at the uniform rate, there is a rate which it will recognize as just and which it will not endeavor to evade. We do not undertake to suggest what that rate should be, but a tax rate of five mills per annum would not in our opinion be unjust.

Classification of property and the applying of a different rate to different classes of property would, to be sure, require a constitutional amendment, but we believe such amendment would be favorably considered by the voters of the State. It would not only enable us to add to the tax roll hundreds of millions of dollars of property now in concealment, but it would enable us to repeal the present mortgage tax and substitute for it an annual mortgage tax, and to tax bank deposits without confiscating the entire income from such deposits. We suggest that those who are prepared to make changes in the constitution in the hope of securing greater equality of burden in taxation, while retaining the general property tax system, will seriously consider an amendment to the constitution authorizing classification of property and the application of different rates to different classes of property.

The substitution of an income tax for personal property taxes has been for some years part of the tax system of the State of Wisconsin. We are not prepared to say that it has in its present form proved entirely successful, but we do believe it could be so modified as to accomplish the purpose the State Tax Commission has ever in mind,—“relieving the pressure of taxation upon visible property by more efficient taxation of intangible property."

STATE EQUALIZATION 1916.

Reference has already been made to the importance of state equalization in any scheme for securing "equality of burden," and to the extent and importance of the duties of the Board of State Tax Commissioners with reference thereto. The report of the meeting of the State Board of Equalization for 1916 has already been published giving in detail the proceedings of that Board. We deem it proper, however, to include in the report of the Board of State Tax Commissioners their letter and report to the State Board of Equalization, together with a supplemental table comparing the equalization as recommended by the State Tax Commission with the equalization as made by the State Board of Equalization.

"Lansing, August 21, 1916.

To the Honorable State Board of Equalization, Lansing, Michigan: Gentlemen :—In accordance with the requirements of Act No. 261 of the Public Acts of 1905, we herewith transmit to your Honorable Body our report as to the approximate cash value by counties of the properties of the State subject to the general property tax.

The Board of State Tax Commissioners, acting under legislative enactments, has since 1911 been engaged in the task of placing the assessment of general property on the constitutional basis of cash value, for this purpose co-operating with local assessing officers wherever possible and making re-assessments where such cooperation could not be had or where examinations by field men of the Board of State Tax Commissioners indicated that cash value assessments had not resulted from co-operation.

At the time of making the report to your Honorable Body in August, 1914, eighteen counties had been re-assessed and 21 other counties had been placed at cash value through the co-operation of assessing officers and the field men of the Board of State Tax Commissioners, and those 39 counties were included in the report for that year at the figures thus determined, with slight variations. As the valuation of those counties had been determined by actual examinations and appraisals, justice and equity demanded that the method of determining the cash value of the remaining counties of the State should correspond, as nearly as possible, to an actual reappraisal, and the method adopted was the classification of all property upon the assessment roll, and the examination and appraisal of a sufficient amount of the property of each class to be fairly representative of that class, and a comparison of valuations thus adopted with the local assessor's valuation of the same. The examiners who did the work in the counties reassessed, or who assisted supervisors in their work, were delegated to make these examinations and valuations, and the total amount of property examined was approximately 17.68% of the real estate and 34.44% of the personal property. In the more