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TAXATION REFORM IN WISCONSIN. CHAPTER I. N1~D OF REFORM R1~cooNIzED. The history of taxation legislation during the first fifty years of Wisconsin's experience as a state is one of constant effort to patch, amend, and stretch the original taxation system, adopted by the founders of the state, to fit new conditions constantly arising. When the state was first organized and admitted into the union the cost of ad ministering the public business was comparatively insignificant, and the task of apportioning the expenses of administration among the taxpayers was not a difficult one. A general property tax, covering, as it did, real and personal property, was sufficient for the iiceds of the state, and, as both real and peisonal property were for the most part tangible, the work of placing a value upon all property was one about which there could be no serious controversy. But that condition did not continue long. The last half of the nineteenth century was a period of transition from the old to the new. Our grandfathers lived the simple life; they transacted their business in the simplest possible manner; they had neither great wealth nor extensive fields of operation; their plan of taxation was as simple as their private business, and it answered their purposes. Their successors changed all that. They built railroads, telegraph, telephone, and electric car lines. They organized great corporations doing business in every state in the union and in foreign lands. They borrowed millions of capital and invested it in industrial pursuits. They changed the entire financial, commercial and industrial systems. Incidentally, they amassed great wealth, a large proportion of which was of a character that made tax evasion easy. In point of fact this class of property termed “intangible” by the economists, could only be assessed when it was declared by the owners themselves, as there was no way in which the assessing officers could discover and value it. As the evolution of the business world progressed the efforts to adjust the taxation system to the new conditions became more persistent and earnest. Tax reform was not a political issue at any the during the fifty years flint closed the last century, nor has it been a real political issue since. 'E1here have been differences of opinion, it is true, concerning spccifle measures designed to remedy existing inequalities of tax burdens, but there has never been a political party, a faction of a part~T, or any considerable number of citizens who were opposed to ~iny measure that was demonstrably a reform or an improvement of the taxation system. During the last decade there has been considerable newspaper space devoted to the subject of taxation and political speeches made in this state have bristled with charges of conspiracy to evade taxes, but there ~has been no real issue at any the. The work of tax reform, or the iniprovenient of the taxation system, began years ago, before there was any talk of a “reform administration” of state affairs. Governors, members of the legislature, and private citizens all took part in the discussion and all were apparently animated by a sincere (Jesire to find a workable solution of the problem. That they did not succeed in speaking the final word on the subject is not their fault, nor would it be just to charge up more recent failures to the account of the present generation of reformers. They have been doing what they could, but the balance on the credit side of their ledger would have been greater if they had been less cocksure of the effiency of their remedies and less severe in their criticism~ of oihicr~ who o fl'cred suggestions. One of the most fruitful sources of inequality and injustice in the taxation system grew out of the old practice of undervaluation common throughout the state. In this practice the state set a bad example, which was followed by the counties, towns, school districts, and individuals in turn. Under the old law the state was supposed to levy a tax of one mill on the dollar of valuation for common school purposes, and the state board of equalization, estimating about how much money the common schools would require, fixed the valuation of the state to fit the one mill school tax. For a number of years prior to the change in the system the valuation of all property in the state as arbitrarily fixed by the state board of equalization, was approximately $600,000,000. County boards of supervisors, believing the state board of equalization would be influenced by the valuation of property in the county as established by the county cominittee on equalization of assessments, vied with each other in keeping down their assessed valuations. Township officers, in their efforts to evade as much as poSSi1)le of the state and county taxes, caused the undervaluation of property and assessors who had sworn to assess all property at its true valuation, violated their oaths. Individuals, encouraged by the example of the state, county, and township officers, contended for still lower assessments and ended by making false reports of the amount of their personal property, in some cases leaving out a large percentage of that property entirely. But, while the contest to shrink assesse values to the minimum was a sharp one, there were localities where it was impossible to follow the popular custom to the limit. In many cities of the state the necessity of making public improvements required that a fair rate of assessment be established and a.s little ProPertY' l)e l)erlnitted to escape taxation as~ possible. in many of those municipalities the real estate assessments represented from 60 to 70 per cent of the actual market value of the property, while the average in the rural districts was in some cases as low as 20 per cent. or less of the real value. This resulted ip unequal tax burdens and complaints were filed. The law required the taxation of mortgages, but it was ignored because the owner of die mortgage, believing that. iiiorigagc taxation was double taxation if the prOj)erty mortgaged was taxed at its full value, evaded the tax. Owners of stocks and bonds, rCj)rcSentiflg in most cases property that was already taxes, refused or neglected to report their “intangible” assets to the assessor and thus another large class of values, assessable under the law, failed t.o appear in the assessment rolls. In this way the work of educating the property owning public in the gentle art of evading taxes went. on from year to year. Johnson's excuse for evading his taxes was that; Robinson evaded his. Brown knew thin 1: Jon ('S had n ol. rcjmr~ ed his 1 iiorf gages and re fused to list his own bonds, wi ii Ic Sch iii id I Iii d his wa Ichi when t heassessor made his rounds because Smith's l)~11101 organ had been overlooked. Certain conscientious citizens refused to swear to die valuation placed by themselves on their personal property because they knew it wa.s too low, and yet if they reported it at its true value they would be paying more than their fair share of the taxes. And yet all this the the tax reformers ~cre busy with the laws in their attempts to find a remedy for the manifest evils that were so prominently noticeable in the system. New laws ~vere passed at. every session of the legislature and old laws were amended or repealed. The courts were appealed to the and again and judicial decisions were added to the complicated mass of literature which the student of the subject of taxation was called upon to wade through. In an article printed in The Milwaukee Sentinel on Ma rehi 28. 1897, K. K. Kennan reported that there were 8S9 Wisconsin Supreme Court. decisions hearing on 'tax questions. No attempt has been made to compute the number of bills introduced in the legislature or the number of measures passed relating to taxes and taxation, but they unquestionably run UI) into the thousands. But the remedy was not found because the methods employed were inadequate and futile. No s stematic attempt was made to establish a systeni of taxation, the efforts being confined to the work of piecing and patching, to stretching and contracting, to boring holes here. an (1 filling holes there, to lopping off in one place and adding on in another. Many of the new laws were contradictory. It wa~ difficult to find two amendments that harmonized with each other, and the courts were kept busy construing the conflicting provisions with the hope of bringing order out of chaos. 'fhie members of the. Wisconsin legislature were, however, traveling a path that would lead theni to results later on. Or, it may be more accurate to say, will lead them to results, for, while great improveniei~t has been iiiade, the end sought has not. been attained as et. One of the first, if not the first, efforts to shake down the chaotic mass of taxation laws into some semblance of a system was made in I S7~, when StLIIe Senator F. W. von Cotzhausen of Milwaukee in— I roduced bill No. 465, entitled “A bill to provide for the collection of certain statistics with a view to more fully equalizing the stated taxes.” rule immediate inspiration for die introduction of this measure was the filing of a large number of petitions asking the legislature to repeal the laws exempting church and other property from taxation. A committee was appointed, of which Senator Cotzhausen was chairman, to consider the matter, and they w'orked industriously in their efforts to determine the value of the property the exemption of which was complained of. Incidentally it occurred to the corniiiiilee I limit it would he it wise p1iiim to have a coimimissloil flpi)OiIItcd to prepare for the legislature such statistics and other information relative to propem'ty in the state as would be of use in framing taxation laws. The bill was passed, but on March 10, 1873, Gov. Washburn returned it. with his veto to the senate, explaining that the expense of gathering the statistics would be great, and that they would not be reliable when gathered, as the actual value ~f property could not be ascertained by examining the records of sales, the consideration named in the' deed being in many cases merely nominal. “A consideration of $1 named in a deed will pass the title as well as $10,000,” said the governor. Manifestly the governor was mistaken in this instance, as it is to the sales records of real estate that all authorities now go to make comparisons between assessed and actual values, leaving out of consideration as a matter of course all transfers where there is any reason to l)ehiCvC the real purchase price is not named in the deed. But, however mistaken Gov. Washburn rńay have been, there was not enough senthent behind the movement to pass the bill over his veto and it was permitted to drop for the the being. At the next session of the legislature, 1874, Assemblyman Oshorn revived the matter hr introducing joint resolution No. 18A, which was worded as follows “Resolved by the assembly, the senate concurring, that the governor designate three suitable persons to revise the laws for the assessment niid collection of I:i xes, fl iid whose dnty it shall be' to report to the next session of the legislature ~vitliiii five days after the coinniencenient of the session.” nitely postponed by the assembly on Feb. 25, 1874, on report from the committee of the whole. lt will be remembered that the Msembly that year was made up of reformers—progressives they would be now called—as the election of ~.873 had been carried by the grangers, their majority in the assembly being overwhelming. Gov. William R.. Taylor had been elected to succeed Gov. Washburn and a clean sweep had been made of the lower house, the republicans holding the senate by a majority of one. No one will accuse the granger majority in the assembly of conspiring to defeat taxation reform legislation. It was simply and solely inability to grasp the needs of the situation that defeated the resolution. Marvin Osborn, the author of the resolution, was elected to represent the First district of Rock county. He was a republican and a farmer. Had the granger assembly seen fit to pass his resolution the work of revision would at least have had a beginning. As it was, it was delayed for twenty-three years.
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