Page images
PDF
EPUB

Common school districts may levy up to thirty mills for the support of schools, and ten mills for new sites or buildings, while in independent school districts there are no limitations on levies for the support of schools, but the levy for new buildings is limited to eight mills. If the school district is located in a city or village, the maximum school levies cannot exceed a per capita of sixty dollars.

The foregoing limitations do not include levies for indebtedness, or interest on indebtedness.

Bonded indebtedness is limited to an amount not exceeding fifteen per cent of the assessed value of the taxable real property of the municipality.

The general statutory limitations on tax levies and public indebtedness, however, have been greatly expanded by numerous laws applicable to a class of municipalities.

From the time of the adoption of the state constitution in 1857, and up to 1892, the legislature of Minnesota was not prohibited from enacting special laws, that is, laws applying to a single county or municipality. Under the exercise of this power, when a municipality wanted to increase its tax levies beyond the maximum fixed by existing general or special laws, resort was had to the legislature for authority to make the increase, and, as the bill applied only to the municipality asking for the increase, but little opposition to its passage was encountered. This practice not only covered taxation, but many other matters of municipal government as well.

The policy of special legislation became so general that the greater part of each legislative session was occupied in the consideration of purely local bills, to the exclusion of measures of state-wide interest. So rampant did the policy of special legislation become that it grew to be a vice, and in 1892 the constitution was amended prohibiting the enactment of a special law in all cases where a general law could be made applicable.

The adoption of the amendment was hailed as marking the end of special legislation, often of doubtful wisdom, and not in frequently, vicious in effect, because enacted at the behest of special interests or factions. But our joy was shortlived. A way was soon found to circumvent the restrictive provision of the state constitution. It was discovered that the legislature could enact laws, general in their character but applicable only to counties or municipalities of a specified class, so the policy of class legislation has taken the place of special legislation, and the evil of the former is almost as vicious as the evil of the latter.

Our earlier laws applicable to municipalities of a specified class had the virtue of being based on some well-recognized difference in population or economic conditions, but in more recent years

almost any fantastic classification, if it does not embrace too much territory, can muster votes enough in the legislature to be enacted into law.

Laws are now passed that are applicable only to counties or cities having a certain population, with full knowledge on the part of the legislature that such laws will affect only one county or one city in the state. Likewise laws are passed applicable to counties having an assessed value in excess of a specified amount when there is but one county in the state with the specified valuation. Sometimes the representatives of two or three counties will get their heads together and devise a classification based on not less and not more than a specified taxable value. Sometimes a combination of assessed value and population is used, and if this takes in too much territory, area or the number of congregational townships in a county is added to the combination to overcome possible opposition. So ingenious have we grown in the art of classification that, in the refinement of its application, it has become almost a fixed science with us.

Many of these laws, perhaps most of them, are commendable. They are frequently designed to meet conditions which are peculiar to a few districts and which cannot well be met by a law state-wide in its application. The evil is not so much in the principle of classifying municipalities, as in the too flexible application of the principle. A reasonably flexible constitution, wisely construed, is preferable to a rigid and unyielding one, especially in this age of rapidly changing social and economic conditions. And yet the general policy of classifying municipalities, when too broadly applied, is open to the same abuses that grew up under the legislative power to enact special laws.

Many of these laws, that is, laws applicable to a class of municipalities, relate to tax and debt limits. Almost invariably they permit. of an increase in the maximum tax levy, or in the amount of public indebtedness that may be incurred by municipalities, thus either directly or indirectly adding to the tax burden of the districts falling within the classification. Perhaps this would not be objectionable if such laws were in response to a general public demand on the part of a majority of the taxpayers of a district; but too frequently such laws are the result of the persistent activity of a few people, more or less directly interested in their passage, and the general taxpayer knows but little of them until he calls for his tax statement, then, too late, he awakes to find that he has been sleeping at the switch. Eternal vigilance on the part of the people is the price of moderate taxation, as it is of liberty.

As already pointed out, we have numerous statutory limitations on the power of Minnesota municipalities to levy taxes or to incur indebtedness. That such limitations have tended to check exces

sive expenditures in some districts of the state is probably true, but in a great many instances, because of the numerous exceptions and loopholes, they have utterly failed to check excessive expenditures or to halt mounting tax rates.

While this failure is due in part to the ease with which tax and debt limits may be extended through the legislative power to classify municipalities, it is far from being the sole cause of growing public expenditures.

Many other causes have contributed to the rapid increase in the burden of taxation in recent years. The great war struggle in which our country was recently engaged, with its immense expenditures, had both a direct and indirect bearing on the burden of state and local taxation. Taxes are largely spent in the purchase of service and commodities; consequently any substantial increase in the cost of service or in the cost of commodities means a corresponding increase in taxes. The immense increase in the cost of labor and commodities, due to conditions resulting from the war, was almost immediately reflected in an increase in tax rates to meet the changed economic conditions of the country, thus directly adding to the burden of state and local taxation. Indirectly the burden was further augmented by the immense increase in federal taxes. The necessity for increased revenues to meet the stress of the war not only compelled the federal government to increase the tax rates on most of the taxable objects theretofore constituting the main source of federal revenues, but also compelled it to reach out for new sources of revenue to meet, in some part, the extraordinary demands on the public treasury, so federal taxes were extended to include inheritances, profits, sales, and numerous other imposts, thus greatly adding to the burden of the federal tax. Using ordinary receipts as the measure of the burden, we find that in the entire country the per capita of the federal tax burden in 1916 was $7.62, and in 1921 $52.05, an increase of 583 per cent in the five-year period.

In our own state the increase in the federal tax burden during the war period can be measured in part by a comparison of internal revenue collections in 1916 with 1921. For the fiscal year 1916 the total internal revenue collections in Minnesota amounted to $9,548,382, representing a per capita federal tax burden of $4.22 ; in 1921 the collections amounted to $77,722,157, a per capita of $31.55, being an increase of 714 per cent in the five year period. This immense increase in federal taxes has had an indirect, but none the less important, bearing on the increase in state and local taxation.

Another cause of growing tax burdens is found in the expansion of governmental functions in recent years. There is an ever increasing tendency to transfer the cost of many activities of a semi

private character from the single individual to the collective individual called government. Not only is this tendency noticeable in state activities, but equally so in many of the activities of the smaller units of government. The state and its subdivisions are now doing many things for the benefit and welfare of the people that were formerly left to the individual to do for himself. This expansion of governmental functions means increased public expenditures, and increased public expenditures mean increased taxes. Still another cause of increasing taxes is that not only do people demand more things from the governmental organization, but they demand better things than formerly-better public service, better educational facilities, better public buildings, better health and sanitation regulations, better roads, and better everything that governments are expected to do, just as the individual demands and enjoys better things than he did twenty years ago. A state is but an aggregation of individuals, and in the final analysis, the desires and wishes of a majority of its people are reflected in its government and in its institutions. A state, so far as its government is concerned, is what its citizens make it. They circumscribe its activities and define its policies, and in the exercise of these inherent rights, determine whether its taxes will be high or low.

But regardless of the cause of growing tax rates or the responsibility for the increase in tax burdens, the fact remains that during the past twenty years taxes in Minnesota, as in practically every other state, have increased much more rapidly than population, and more rapidly than wealth, if wealth be measured by the value of property listed for taxation.

As indicating the growth in the burden of state and local taxes in the last ten years, let me cite just a few comparative figures.

In 1911 the estimated full value of taxable real and personal property in the state, exclusive of the property of railroads and other public service corporations subject to gross earnings taxes, amounted to $3,847,223,000, representing a per capita in taxable wealth of $1,872. Ten years later, in 1921, the taxable wealth of the state, based on values determined by assessing officials, had grown to $6,037,558,000, representing a per capita value of $2,530, being an increase of fifty-seven per cent in the total and thirty-five per cent in the per capita of taxable wealth during the ten-year period.

In 1911 the total of all tax levies-state and local-amounted to $33,747,590, representing a per capita tax of $14.97; in 1921 the levies amounted to $108,019,673, a per capita of $45.26. The increase in the ten-year period was two hundred and twenty per cent in amount of taxes and two hundred per cent in the per capita of the tax burden.

The increase in the property burden of the tax, however, was

not so great as in the per capita of the burden. In 1911 the levy per $1,000 of full value amounted to $8.80, and in 1921 to $17.70, an increase of approximately one hundred per cent in the ten-year

period.

Expressed in percentages, the increases in the last ten years were as follows:

[merged small][merged small][merged small][ocr errors][merged small][ocr errors][merged small][ocr errors][merged small][ocr errors][merged small]

These figures show quite conclusively, as already stated, that during the past ten years taxes have grown much more rapidly than either population or wealth.

The foregoing comparisons are based on the full value of the taxable property of the state and measure the actual tax burden more accurately than if the comparisons were applied to taxable values, because, under our classified assessment law, the latter represent varying percentages of full value. However, if the tax burden be measured by taxable values rather than full values, we get but slightly different results.

Excluding money and credits from the computation, because taxable at a flat rate of three mills, we find that in 1911 the total taxable value of property subject to the general ad valorem tax amounted to $1,212,567,000, with an average tax rate in that year of $27.86 on each $1,000 of taxable value; in 1921 taxable values had increased to $2,026,793,000, and average tax rates to $52.67, the increase in the tax burden on each $1,000 of taxable value being eighty-nine per cent in the ten-year period.

This somewhat startling increase in the tax burden in the last ten years is due in large part to causes already referred to-the expanding functions of government in recent years, the insistent demand for better educational facilities, better roads and better public service generally, and in no small part to the war, with the resulting increase in the cost of the two items that represent such a large part of the public expenses, labor and commodities. That the influences of the war largely contributed to the increase in the tax burden is shown by dividing the last ten-year period into two five-year periods. In 1911 as already stated, the tax burden amounted to $27.86 on each $1,000 of taxable value; in 1916 it was $33.19, and in 1921 $52.67. Thus the increase in the first half of the ten-year period was nineteen and thirteen one-hundredths per cent, while in the second half, the war period, the increase in the tax burden was fifty-eight and sixty-nine one-hundredths per cent.

« PreviousContinue »