average citizen feels that it is a perfectly legitimate thing for him to beat the tax-gatherer if he can do so with safety and shunt the burden onto the shoulders of his less fortunate neighbors, instead of carrying a fair share of it himself. But on the whole we regard the three mill tax in Minnesota as a long step forward, over conditions as they existed prior to its enactment, and we are gradually getting a better and better assessment of it as the years go by. If we could be assured of competent assessors in every assessment district, we could probably double the assessment. The failure to secure a full assessment is due largely to the lax character of the assessor's work in many assessment districts.

We have in Minnesota a large number of very competent men who, from a feeling of duty, accept the office of assessor. They certainly do not accept the office because it is a profitable or a pleasant job. They seem to do excellent work and get excellent results under this three mill tax law, but like other states, we have a great many very incompetent men selected as assessors, and where, of course, one of these men lands on the job, the results are poor.

We have stimulated the work in Minnesota by making reassessments in a great many districts, and it does stimulate the work. In making reassessments we have followed the plan of selecting the assessor in the county who has made the best assessment in his own district, and offering the job to him. Sometimes we are able to get him to do the work; more often we find that he is too busy with his own affairs to go out of his own town or village to make an assessment. Then we offer it to the second man on the list, and if he refuses, we turn the job over to one of our field men,. some of whom have developed great capacity for uncovering this. kind of property.

Now, in any community people would much rather have one of their own people doing this work than to have some outsider come in. They are apt to resent outsiders; but these outsiders do excellent work, and in every township and village where a reassessment of money and credits has been made, the result has been to largely increase the assessment of that kind of property, and it also tends to improve the assessor's work in that community for many years thereafter. The next regular assessor is almost sure to return fully as much as the special assessor did the year before. So these reassessments are of real value.

I think that I have taken up enough of your time with our troubles and our problems. We are convinced on the whole that the money and credit tax law in Minnesota is a good thing. Personally, I would prefer an income tax, if we could have the right kind of a one, but unfortunately in Minnesota, as in many other states, our constitution is in such shape that it seems at present impossible to have the kind of an income tax law that would be worth:

while, and so we are compelled to adhere for the present to the three mill tax, and we may even have to dismantle this very desirable tax unless the federal law providing for the taxation of shares of national banks is amended. I thank you.

S. S. KALISHER: Just one question. It is a simple one. May I ask if the tax, for instance, on bonds applies, whether or not interest has been paid or interest has been received by the bondholder?

CHAIRMAN LORD: You mean government bonds?

MR. KALISHER: No, railroad bonds, any corporation bond.

CHAIRMAN LORD: Yes, it would apply to that kind of property unless secured by a mortgage on Minnesota real estate. We have a mortgage registry tax in Minnesota, and where a mortgage is recorded in this state the note or bond which it secures is exempt. It would apply to stock in corporations whose property is not assessed in Minnesota, like stock in a silver mine, if it had any value, in some foreign state.

PHILIP ZOERCHER of Indiana: When you passed that law you put on a statute of limitations barring the collection of taxes for previous years, did you not. In other words, as they call it in our state, you gave an immunity bath to those who did not give in their intangibles for previous years?

CHAIRMAN LORD: There is nothing in the law providing for that, and you could not say with definite certainty that because a man returned, we will say, $10,000 this year, he had the same amount a year ago.

MR. ZOERCHER: But suppose in the return he made that it would show that he had that two or three or four years ago. Did you attempt to go back?

CHAIRMAN LORD: Yes, we went back six years, but it was not because the law had any provision of that kind. We felt that good faith demanded that sort of thing, fair dealing.

W. A. HOUGH of Indiana: I want to ask if under that law you permit deduction of the indebtedness from the assessment that is placed against money and credits.

CHAIRMAN LORD: No deduction for debts whatever.

MR. HOUGH: And the tax is levied on the face value of the note or mortgage or whatever form it may be?

CHAIRMAN LORD: Not necessarily the face value; on the actual selling value, following the same test that is applied in the general property tax.

MR. HOUGH: In regard to assessments, you have, as the state board of tax commissioners, power to remove from office an unsatisfactory assessor.

CHAIRMAN LORD: We have not, but we have in a few instances complained to the governor, and the governor has power to remove, and the result of those complaints has been that the assessor usually resigned before the governor had a chance to remove him.

THOMAS A. POLLEYS of Illinois: I should like to inquire as to Minnesota, and also I should like to know as to several of the other states that have been represented in the discussion this morning, as to this point: What proportion of the aggregate tax burdens in the year 1921 for state and county and local purposes, is represented by the amount collected from your intangible low rate tax and from your state income tax-as to Minnesota.

CHAIRMAN LORD: Total burden?

MR. POLLEYS: Yes, total percentage.

CHAIRMAN LORD: I think it was about one per cent last year.

MR. POLLEYS: That is what I am interested in knowing as to some of these other states; how important it is in the matter of revenue production as compared with the balance of the revenue.

CHAIRMAN BULLOCK: In Massachusetts when we started. it was probably ten per cent, but in view of the increase in local taxes and the slight shrinkage in income tax in these last two bad years. it is less today; how much less I don't know, because I have not looked up the figures.

CAPTAIN W. P. WHITE: Mr. Lord, you say there is no credit given for outstanding debts against this tax. Then if a mortgage is placed on a property and the investment of that mortgage money is made outside of the state for greater income than the mortgage itself pays, you don't remit the interest on the mortgage as a, debit against the tax?

CHAIRMAN LORD: We do not. There is no deduction of any kind. I will say this; in the assessment of book accounts we explain to the assessors that the book accounts of a merchant vary in value all the way from possibly 50% up to 75% of their face value; that the total of a merchant's book accounts never are worth what they seem on the books to be worth. We tell him that some promissory notes are worth their face value while other notes may not be worth the paper they are written on. All those things he should take into consideration in making his assessment of this kind of property.

THOMAS S. ADAMS: Mr. Lord, do I understand that you suggest

that the average business book accounts are not likely to be worth more than 75% ?

CHAIRMAN LORD: Yes. I think if you take book accounts that run over a period of six years-back to the limitation period-they would probably not be worth more than seventy-five cents on the dollar.

MR. ADAMS: It would be a pretty good merchant that would hold them up to that basis.

CHAIRMAN LORD: The poor merchant's book accounts probably would not be worth-covering this six-year period-more than 50% or 60% of their face value.

don't

MR. ADAMS: How does that six-year period enter into that? CHAIRMAN LORD: Because they usually outlaw in six years; we go back of that; we call them worthless back of six years. CHAIRMAN BULLOCK: We are greatly indebted to these speakers, and it was my intention to provide the speakers from these states and then speakers from the floor, but the questions asked have prolonged the discussion by the speakers. This meeting is now open for discussion from the floor or for questions.

ALBERT HANDY of New York: I want to disagree with Mr. Ivins in his statement that a bad income tax law is better than no income tax law. I know the conference would be very much interested, particularly the representatives of the large corporations, in Mr. Ivins' statement that the legislature in New York state is the best that money can buy; but getting back to the subject, I want to say this, that every state law - and there are eleven of them in the United States which have income tax laws-has many good features, which might well be adopted in the model law. On the other hand, there are a great many features indeed which I think should be eliminated from the various laws. It seems to me that the provision contained in the laws of two states, Massachusetts and North Dakota, for a segregation of income between earned and unearned income, is peculiarly vicious for this reason: I recently had a case brought to my attention in Massachusetts. A woman had been living there for many years the widow of a respected citizen. She had during these years had a little income from local stocks but was barely able to enjoy a decent living from the receipt of that income. During the wartime her income was naturally reduced; then came the income tax law of Massachusetts, taking six per cent. This may not be very much, but it may mean a difference to a woman of this character between comfort and discomfort; it may mean the difference of keeping up respectability and not; it may mean many differences, and it seems to me that any

such provision is peculiarly vicious, particularly in view of the fact that no exemption is allowed on unearned income. That is a provision in the laws of Massachusetts and North Dakota which I think is rather to be condemned, and I think that the committee might well examine those provisions and ascertain whether or not there is any basis for them, or rather if there is any good reason for their being continued.

There is one other point which I want to bring up, and that is this: It has been suggested by a great many opponents of the income tax law that it is bad, because it does not impose any burden whatever upon the citizen who has an income of less than $1000 a year. Of course, Wisconsin only grants an exemption of $800, but most of the other states grant an exemption of $1000. It has been said that no citizen can realize his obligations to the government unless he is directly responsible to the government for a tax of some nature or description. Of course the poll tax, an ancient institution, which is to a great extent obsolete today, covers that to a great extent, but there is one thing which I think might well be considered, and possibly followed. Delaware provides that every citizen over the age of 21 years shall make a return, and any minor having an income of over $1,000. It further provides that no tax shall be levied upon any income under $1,000, but it does provide for a filing fee on every return filed. It seems to me again that this is a very excellent provision, as it makes every citizen realize that he is directly responsible to the state for a certain amount of the cost of state government, and I believe any provision which brings home to each citizen the fact that he is obliged to pay a part of the expense of the state government, will have a tendency to induce economy on the part of the state government, because the citizens who find the state governments are unwisely using their money, the money which they personally have contributed, are going to turn out the legislators who are spending their money without due consideration for economy. I thank you, gentlemen.

CHAIRMAN BULLOCK: If the gentleman will permit me just a moment, I want to say that we in Massachusetts do not recommend our law to any other state. It fitted into the peculiar situation we had, and it was all we could get. There are excellent provisions in the law and it is excellently administered.

W. R. BRADLEY of South Carolina: There is one feature of the income tax law I have not heard discussed here, on which I should like to get an expression from New York and Massachusetts and Wisconsin; and that is the matter of finality in making a return. I don't think there has been any instrumentality that has brought the federal government and the national law into disrepute, if I may say it, more than the exasperating proposition of having the