should like to have as much light as possible on that and also upon the other questions that I have just mentioned. That is partly what I am here for.

In addition, this administrative measure will provide for the creation of a state board of assessment and review-in most states it is called a tax commission-to take the place of our present executive council, composed of the governor, the auditor of state, the treasurer of state and the secretary of state. The conclusion to make a recommendation of this character is, of course, no reflection at all upon the council or any member of it, but merely a recognition of the well-known fact that the labor of making the original assessment of the property of public service corporations, and the labor of supervising the work of assessment and taxation, including the intelligent review of property, is a labor altogether too extensive to be vested in an ex-officio body. Therefore, in brief, our administrative bill again will provide for a state board of assessment and review, with the customary powers vested in such state tax commissions as those of Minnesota, Wisconsin and so forth, including of course the power to adjust not merely aggregate values over the state-aggregate values of counties or taxing districts-but the power to adjust individual values on appeal, and to make reassessments.

That in brief is the administrative problem which confronts the State of Iowa, a problem which has confronted many other states and still confronts many states. Whether we shall be able to accomplish at this coming session changes which some of our neighboring states have not been able to accomplish after exhaustive efforts, running over a period of years, will remain to be Of course every one recognizes the great tenacity with which our good people cling to what they are pleased to regard as local self-government.

seen.

Leaving, then, the problem of administration, I want to outline only briefly a few of the substantive changes which will be of interest to the delegates of this conference, and on which we are seeking all the light we can possibly obtain.

First of all, I want to refer to a rather unique suggestion, which I believe originated with the state officials of our federation of farm bureaus. I refer to the suggested change which will be proposed in Section 1305 of our code which defines the valuation of property for the purposes of taxation. In most states that section, or a similar section, uses the words "actual value," "cash value," "true value," or some phrase of that kind, which I believe the courts generally hold to mean what property will bring in the market in the ordinary course of trade. This very fundamental part of our law and of the laws of many other states has been attacked by numerous persons on the ground that market or cash

value of property for purposes of taxation is not necessarily a just and equitable basis for distributing the tax burden as between various classes of property. The suggestion has been made and incorporated in this rather brief bill that the law should be amended to provide that in assessing or valuing property for purposes of taxation, we should take into consideration not merely the market value of property so called, but that we should take into consideration--that means the county assessor-past, present and prospective average earnings of property.

Now, I apprehend that it is a matter of fact-the Judge will be interested in this-that of course there are many cases in our state, in these times of economic depression where the tax on farm lands, for instance, has absorbed more than the entire rental obtained from the farm.

I have in mind one case of a cash rental on a quarter section, of twelve hundred dollars, on which the tax that the man had to pay was twelve hundred and sixty-one dollars and some cents. Now, I am passing no judgment again, no arbitrary judgment upon the merits of this suggestion. I thought it would be of distinct interest to bring it out here, and we are seeking light on that, along with other questions. Another change of a substantive nature, which I think will be proposed, is one where we shall run counter to your situation in Minnesota, by the way, Judge, and to that in four or five other states. For about a quarter of a century, to be specific since the Code of 1897 we have taxed in Iowa on one-quarter of the value; that is, we list property and then we take one-fourth of it. For example, talking about millage rates, the millage rate in the city of Ames, where I live, is 234.5 mills. It is awful, when you commence to think-it is awful anyhow-but especially when you commence to think that the listed value is perhaps but sixty per cent of the actual value, and the taxable value is one-fourth of that, therefore the 234.5 mills levy is on, say, offhand, fifteen per cent of the actual value. We are proposing to abolish this onequarter or fractional assessment, and in that connection I desire to make a suggestion which will again be of interest to every state seeking to fundamentally change its tax laws. In making this change we are up against changing not merely all the tax limitations to which the Judge has been referring in his very able paper. but also the debt limitations of the code. And not merely that, but also the question, if you please, of providing a rather iron-clad section which will prevent the increase of taxation under this proposed system, in comparison with the amount of tax paid under the old system. Now this, in my opinion, is one of the important sections that we are attempting to amend, and in this connection I want to give you a concrete illustration of the importance of that. In our commission's report in 1912 we made this same proposal

and we also wrote into the bill a section of law which would have prevented an increase of taxes in the event that this bill had been made law by the general assembly. It was put into the legislative waste-basket. Now, what happened in Iowa? The thing happened which we are trying to guard against and which every state should guard against in formulating a system of this kind. Why, the executive council, for good reasons, I believe, boosted the aggregate valuation of Iowa by two hundred millions of dollars, as a state board of review, but after that had been done, the local levying bodies did not make the reductions in the levy, as requested by the governor - Governor Clark at that time. with the result that by the mere fiat of arbitrary administration I have estimated that in the following year the people of Iowa paid a tax of five million dollars greater than they should have paid. Now, taxation is a legislative function, properly so, and not one which should be handled in that sort of a way.

In the minute remaining I will state that we are preparing a bill-in fact our chairman, whom I see present, Senator Van Alstine, is preparing a bill-providing for a personal income tax to take the place partly of the flat rate which we now have on moneys and credits, and in that connection we are again seeking light with reference to how this can be done, and its relationship to the well known Richmond decision, as relates to the taxation of bank stock. We are also considering the question of a corporation or business income tax, and finally some modifications in our inheritance tax. in accordance with the suggestions made by the income tax and inheritance tax committees of the national tax association, and finally we are considering a special gasoline tax. (Applause)

CHAIRMAN LESER: We shall have time now for two or three five-minute talks, bearing on Mr. Brindley's subject. One of the sensible things that the states have recently been doing is that of naming expert advisers to their special tax commissions. The State of Washington has named Professor Harley Lutz of Oberlin, and he knows enough to tell us something in five minutes that is worth hearing.-Professor Lutz.

PROFOSSOR HARLEY L. LUTZ: Mr. Chairman, ladies and gentlemen: I merely want to offer certain general suggestions on a subject that is not susceptible of generalized treatment, if that is possible. It is not susceptible of generalized treatment to discuss the work of special tax commissions, because the problem varies in each state from that in every other state. You have constitutional limitations, you have certain statutory limitations imposed upon the commission; it is instructed often to attempt to solve a certain particular problem. You have very often a limitation of funds. and there will be many other reasons which I need not detail.

which go to show that in each case it is a special problem; and yet, if I may present just one or two generalized comments upon the procedure of a special tax commission, when such a body has been created, I should like to do it.

In the first place, with regard to the technique of such a body, there are various procedures which have been followed in different states. In some states the special commission will travel over the state and invite interested parties and organizations to attend public hearings and present their views, and they accumulate stenographic reports by the bushel basketful, and of course nobody can wade through them. Nobody is interested in wading through them. So, when the work of a special investigation of taxation begins by means of a public hearing, I think we may put this aside at the outset as being practically worthless, except possibly for the purpose of indicating the way in which public sentiment drifts, and that is, as I want to suggest later, really a very important matter. I think it can be gotten at in other ways than by means of a general public hearing. The advice and assistance of the regular tax officials of the state is always of the highest importance. I am of the opinion, however, that in a great many states, because of their other duties and possibly for other reasons, the state tax officials have not always at their immediate command the kind of information, the kind of material that will serve best the purposes of a special investigating commission. So, we are driven back to the conclusion that if an investigation of this sort in any state is worth while, it must be done carefully and frequently by trained investigators, who are able to go into the problem involved and compile material upon which a sound step forward may be taken. It is not worth while to spend one thousand dollars in a tax investigation, as some states have recently attempted to do—they are simply wasting that money. Unless you are willing to provide a special tax investigating commission or committee, with funds and with ability to draw upon those who may contribute in a degree sufficiently ample to get results, there is no use undertaking it. And so, my first generalization is, that if work of this sort needs doing, it must be done well, and it cannot be done well, except by those who can be drawn upon for that character of work. A second general suggestion is the manner of handling the results, assuming, of course, that those results are sound, and assuming that the commission, as a result of its inquiries, has developed a line of suggestions that are deserving of incorporation into the state tax system. I have seen more than one case and you are doubtless familiar with instances in which a very worthy report or very worthy suggestion has fallen by the wayside, has fallen on barren ground. I am becoming more and more convinced that quite as much importance attaches to ground work, the preliminary ground.

work, as well as the salesmanship displayed in putting this suggestion or these suggestions across, as in the actual study of the problem itself. The study of the problem itself, of course, is fundamental, but unless you can convince the public, unless you can convince the legislature and the governor that you have a suggestion worth while, you will have wasted your time and the state's money. And so I should like to emphasize particularly this matter of salesmanship of the reforms that you are working out. That needs very careful publicity. It needs very careful engineering. I realize that sometimes the political situation in a state is a very delicate matter-has to be handled with gloves; asbestos glovesand sometimes with tongs, and so you have to take all those factors into account, but the salesmanship of the results is very important. CHAIRMAN LESER: You have one minute more.

MR. LUTZ: In that one minute let me make this further suggestion in regard to the personnel of such a committee: I should prefer, and I should always advise a small rather than a large committee. I may say that personally I should prefer to have a minimum of membership of the professional politician type. If I could have a committee of business men, of public-spirited citizens, to work with, I should prefer it, of course, every time, to the committee of the professional politician type, and yet, because of that factor in the situation, the ultimate success of it sometimes makes it necessary to include such members in the organization. And so with these generalizations, let me make my contribution: In the first place, greater attention to scientific technique, a greater amount of time allowed for such investigations, and a more careful selection of the personnel of a special tax investigating committee. I thank you.

CHAIRMAN LESER: The State of Michigan has under way an investigation of its tax system, with a view to reform, and has very fortunately also invited an expert adviser as a member of that committee, a man who has been a member of the national tax association and a delegate to a good many of our conferences. He is here today, and we should like to have a five-minute talk from Mr. George Lord at this time. Is he here?

GEORGE LORD of Michigan: Mr. Chairman and gentlemen of the conference: I dare say that the problems in Michigan are quite similar to the problems that you have in your respective states. I do not agree with the last speaker in regard to the public hearings conducted by special tax commissions. In Michigan we have received most helpful suggestions from the tax-paying public at these special hearings that we have conducted in various parts of the state. I think we, as public officials, and particularly academic