Show INEQUAliTIES IN OUR PRESET PRESENT TAX TA SYSTEM i r ra t SHOWN BY R HAMMOND The general property ta tax of or Utah rives v in rn operation before the 1 constitution tion lIon wis is adopted and was wis written n In- In into i 10 to lh the constitution m in very much the same form n n which it had been m in I operation open while Utah was as a territory ao 0 o it is really older than the State of i f Utah The fact that the s system stem was I made p part of our organic hhas liw h has h wide mide it impossible to mike any sub sub- substantial change e except through the lot lof of mending a-mending the constitution Consequently I compa I few chri have ha been made during the i he past pa t thirty five years gears At Atthe A the time the tho th constitution was as adopted our tar ta ta system was as a consistent fea- fea fe- fe he state government and was w ac formulated in m keeping with the ee e- e stage staige of industrial Cop de deve in m the state at that time A Ae Al- Al ost revolutionary changes change'S have ha taken place in m our mode of living m in mour in our means of earning a livelihood arin and nn the forms of wealth during the past t thirty thirty- thirty five years rs e but no ne ic barc ba alter t cn on has been made in m our tax ta ta system tem tt ha has St's oUI ou our systEm s sy of taxation i e t pac pace e with these these- developments deve t f mt I fl changes anges in m our economic and mJ s so- so social cial conditions Established at a trine when hen t the tha standard of sure measure ment meat v a persons person's wealth was as hIS ii d of property and posses posses- possessions has not the tax tar ta system now outlived its usefulness Today the they I standard of oj a persons person's wealth and ands 1 partIcularly his ability to pay taxes taxis es JS Is iba a ed cd more upon his e rings e r or Of InCome The perpetuation of the system of ola I taxation ta in Utah has undoubtedly re suited in m i a great man many inequalities I shall shill not att to paint these thee m in inequalities here nor is it necess ry to todo todo tido do so The home owner o the farmer real estate holder and all others hav- hav ng forms of tan tangible property are ell are aw a re re that they are ta tae taxed ed almost to the breaking point while tremendous incomes and fortunes inn thIs state go practically untaxed unta unta Some m see the entire earning power po of their prop properties being b m taken for forthe forthe the support of government end nd nd some few others are lIre even witnessing the gradual confiscation atlon of their real es estate es- es esMate tate Mate moldings holdings by the tax tae consuming I es-I not only the entire earning po potter Hr but on the principal itself r I IDo Do Does our tax system need revIsion I Let ilLet 11 us u e examine amme the basis upon which It is founded and see whether our present system meets the require lequire-I ments ments of today The annual prop prop- property property erty tax ta of o the past few f w years rs e has hasI hasi I i i keen een about This is for forstate state school county and municipal l purposes In addition to this thia amount I bout ut is now being raIsed I from special ta taxes es The greater g part I of this revenue comes conies from the g so soline nine tax and is used for road purposes soI I The b tax has been raISed frown levies les on property and almost all of it has tome Come frown from tangible prop I crt During the past year ear or two 1 J Jess s thin than one and one half per cent cento o of this has been raised from the tax tar ta on intangible property I 52 per cent of all the general property ta taxes es come came m fro real eal estate and buildings A little I more than 35 2 5 per Iper tent cent ent comes conies from mmes mines and utilities the I 1 he remainder I is 16 14 levied on live JIve stock and other othel of tangible personal property Is this situation w ng Should we to raise t 1 e a bulk of the revenue for the various arlous public pur- pur purposes pur pur-I j poses poles in the the- same manner that ue e weare eare are now doin doing Letus Leius Lei Let us look deeper nto nta the preb problem em and see if we can i find nd an to th this question I It I I t fc Examine the too situation from the of c ability to pay ta taxes s sI soi oi because after alfter aH all l that is one of the I questions many in any plan of Is there any consideration consideration 1 i tl n a property tax as to ones one's ones ability to pa pay 7 No because property own own- ownership does not represent taxable e e sty The sole question in m a property prop arty ta tax tae is a determination of the value of the propel ty in question True certain classes of property have havea a market value which is determined by their earning capacity but thIs is not true of all property nor is ms it I rue rue ruc of any an property at ill times i bet bee use there are circumstances s hen property has no earning capa- capa capacity city whatsoever but still has a mar mar- market maket ket value The sole question which wh the assessor must decide d is how ha mu much I a g yen en piece of property is worth orth 01 on c the market rc regardless of its post or present earning capacity Once this th t IS determined and the assessment placed en on the tax ta roll the levies are ai I applied against such valuation This brings us to the very heart of i the tax problem m in Utah Ut Mr l John JohnC JohnC Jol I C W W d rector of the depart department ment of af taxation ta and statistics II Ill Ill- Illinois I Agricultural association has s prepared some seme very cry ery significant m- m mI information ir formation relative to the income r re- re received I all sources in m Utah and andin m in other states of the nation Ills His 11 figures for Utah sho show that thit during the past fc v years the average an- an annual annual nual has been about i I per yeas sea ea Of this total only bout 25 per cent comes conies irom oni proper proper- property ty t while the remaining 7 75 73 per cent centor centor 1 or about is the result of o person peron 1 I services such suh as wages salaries commissions etc I How I la our ta tax system applied to this earning capacity of approximate approximate- approximately ly We levy lew i tax ta of O upon property which earns only enly 26 25 per cent of the income and we levy not one cent of tax tae on ont t the e source of which 75 45 per cent of the total In other words about incon income ie earned in m this state pays no state Or local tax The burden of the g ner- ner al ai tae ta c falls entirely upon that prop property property pro erty wh h cm ch produces only one one-f one fourth of all the fhe income meeme of the state and nd ir which has only one one- one fourth of the to- to total total tal earning capacity In the frail fin fin analysis all taxes ta must be pa d out of income It is of course ble bleI I to pa pay taxes ta out of capital as long Jong Jongas longas as capita remains but the alien cf i tax taC which every evelY year ear car takes part of the capitI and all of the rn- rn simply means that it is only onh a question t cf f time until the capital IS confiscated ted I To i a limited extent e tent this process s gom going on in m Utah toda On the th avera average e ire e we are not taking liking capital to t Pay property tare ta e but in m certain care care- carew w w are arc taking so much of the th income received frem the tang be 12 b property to pay the te tae C bill that lit ht littie tie income is left after t Ce ees are ar paid and the value of the property has bs d as a result In a afew few extreme e cases ses all an of the income mome II from the property has been absorbed in m the tax taC bill biB and the property itself itsel has been confiscated in m order to y p pi I the ta taxes es levied upon it Jt If we e are to present an accurate picture of the situation we e must look deeper into the t e problem relative e to the taxat on of property and the net ne I income which com comes from property The T ite net income whIch has been the average e return from fron I in the state each ye yeal l i dur durm during during ing m the past few fe sears ears includes the th inc i a from intangible property as asI a I I v tl il 1 as from all other kinds of prop arty But how ho niu mu-h mu h of this burden burder of 20 doe intangible proper proper- property property property I ty bear Earlier in m this diSCUSSIon we e stated state that the total re revenue re re recel received ed cel ed from intangible property mounted amounted to le less lags s th h n one and one I ha f per cent ot o the total receIpts receipt from rom general property taxes h es It IS is Imp ble to say just how much in- in m-I m in property there is in m the state federal tax taC returns I J t the income indicate te that there them is 5 at least WOl worth th of productive bie property owned by persons who pay a 3 federal income tax ta taIn In addi- addi addition addItion addition tion to this amount there is a great gleat I deal of f intangible le property prO 0 owned ned in m blocks by persons who do not come within the limits of the I federal e tax tae so that the situation shows shaws that l I tion in m Utah today clearly it is i 13 the tangible property that is paying pay paying mg ing the great bulk of the tax x that payI I intangible property I la is responsible for less than one and one half per cent of the total property tax tae and that no ta tax whatsoever is levied upon m- m in income come came Utah's problem of tax ta reVISIon therefore will be Ibe a readjustment mth inthe in m th the distribution of t f the tax burden Fo Fohlen thich hlen wiH shift part of if the cost of state and local government from tangible property v which his s been carrying the load to income or to intangibles which while they have havethe the to pay have not been to the tax to rolls here Sub Subsequent articles will show thIs Ivy 1 be dealt with under the pro pro- pro proposed posed constitutional amendments to tobe tobe tobe be vo va cd ed on next N November toI I |