Property tax

“ Income tax, then known as property tax, was brought in as a temporary measure for the next three years, but was renewed time after time and finally made permanent. My grandfather writes in the third year, 23 February 1845, “The property tax is an inquisitorial and annoying thing: a real-property tax would not be so much amiss, even if it were to be made a permanency: in my opinion they could not levy a better tax.” His opinion was disinterested, as he had real-property enough for such a tax to hit him rather hard. ”

“ Property taxes may be paid initially by property owners, but a significant part of the ultimate burden of each year's tax on rental property will very likely be borne by the tenant rather than the landlord since, as the parties also stipulated in this case, the landlord will treat the property tax as a business expense and normally will be able to pass all or a large part of this cost on to the tenants in the form of higher rent. ”

“ The short answer to the argument that it therefore only applies where multiple taxation is a real possibility is that the plain words of the statute do not say so. In fact, they are much broader: 'personal property shall not be deemed to be located or present in or to have a situs for taxation' in the state of temporary presence in any case. There is no suggestion that the state of original residence must have imposed a property tax. ”

“ All improvements are exempt. All buildings, fencings, draining, crops, etc.—all value that has been added by labor, all live stock also and personal property; only the unimproved value of the land is taxed. Mortgages are deducted also in estimating the land taxes [297] as they are taxed to the lender. There is a small-estate exemption of $2,500, where the net value of the estate doesn’t exceed $7,500. So that if a farmer has no more than $2,500 of land value left after deducting improvements and mortgage liabilities from the value of his real property, he pays no land tax. ”

“ Nevertheless the Government argues that since the tax is measured by the value of the property used it should be treated as nothing but a contrivance to lay a tax on that property. We do not find this argument persuasive. A tax for the beneficial use of property, as distinguished from a tax on the property itself, has long been a commonplace in this country. ”

“ The objection to a graduated property-tax applies in an aggravated degree to the proposition of an exclusive tax on what is called “realized property,” that is, property not forming a part of any capital engaged in business, or rather in business under the superintendence of the owner; as land, the public funds, money lent on mortgage, and shares in stock companies. ”

“ Every owner of such property is liable to income tax in respect to its annual value, whether it is let to a tenant or occupied by the owner himself. This is commonly known as "Landlords' Property Tax." The annual value is the rack rent at which it is let, if fixed within seven years; or, if not let, the rent at which it might be so let, subject in either case to a deduction of one-sixth on houses not being farm buildings attached to land, and one-eighth in respect to land including farm buildings. ”

“ But inasmuch as different kinds of property are by no means equally profitable, and therefore the ability of owners to pay is by no means equal, the simplicity of the Property Tax was not by many thought equity. The shopkeeper, taxed on unsaleable stock, the manufacturer paying on plant and buildings as much in good years as in bad, bethought them that under an Income Tax they would at any rate escape in bad seasons when their income might be less or nothing. ”

“ Doubtless no state could add to the taxation of property according to the rule of ordinary property taxation the burden of a license or other tax on the privilege of using, constructing, or operating an instrumentality of interstate or international commerce, or for the carrying on of such commerce ”

“ During most of the 19th century, the chief source of funds for financing city and town streets was some form of real estate tax, which fell into three major classes:
Property taxes levied against all real property for general purposes, the proceeds going into the general funds, from which appropriations were made for highway and other purposes. Property taxes levied against all real property specifically for street purposes. ”

“ Tax buildings conjointly with land as real estate at a uniform valuation; and then as the equivalent for all taxation on personal property, tax the occupier, be he owner or tenant of any building or portion of any building used as a dwelling, or for any other purpose, on a valuation of three times the rental or rental value of the premises occupied. Tenement houses occupied by more than one family, or tenement houses having a rental value not in excess of a fixed sum, to be taxed to the owner as occupier.—Report, p. ”

“ The principle of graded taxation in the matter of incomes and succession taxes has been very generally adopted, not as yet in any direct property tax, except that a small amount of property, one hundred dollars or five hundred dollars, is usually exempt. ”

“ To say when and how the ultimate burden of a tax shall be distributed among all the members of society would necessitate taking into view every possible contract which can be made, and would compel the weighing of the final influence of every conceivable dealing between man and man. A tax rests upon real estate. Can it be said that by the law imposing such a tax it was intended to prevent the owner of real property from taking into consideration the amount of a tax thereon, in determining the rent which is to be exacted by him? A tax is imposed upon stock in trade. ”

“ Whereas property taxation involves only the property owner and the tax officials, sales and use taxation usually requires participation and accounting by the seller as well. And the accounting difficulties which retailers and the States would encounter in determining for thousands of transactions which customers were properly exempt under § 514 are considerably greater than any that Congress can be thought to have envisioned for the exemption from property taxes alone.↑ S.Rep.No. ”

“ The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It419 is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by nature be attained. ”

“ In support of their claim that the city as lessor could not tax its own property, so as to make it a valid public tax, payable by the lessee, they rely on the general rule that taxes are assessed to the owner, and as the landlord receives the rent, he ought to bear the burdens imposed upon the property. ”

“ Dwellings represent pretty accurately the annual expenditures, and a progressive tax is the most convenient way of taxing these. There should be a high progressive tax on tangible personal property that is not the tools of production—on expensive furnishings, pleasure automobiles and the like. Owners might be allowed to place their own valuation on real estate and personal property, the state or any individual being permitted to purchase it at twenty per cent, advance, the property being redeemable by the original owner on payment of this margin. ”

“ Both in England and on the Continent a graduated property tax (l'impôt progressif) has been advocated, on the avowed ground that the state should use the instrument of taxation as a means of mitigating the inequalities of wealth. I am as desirous as any one, that means should be taken to diminish those inequalities, but not so as to relieve the prodigal at the expense of the prudent. To tax the larger incomes at a higher percentage than the smaller, is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours. ”

“ But the rapid development of corporations, bringing with it a rapid increase in the proportion of intangible forms of property, has rendered the general property tax grossly unjust. The assessors of the general property tax cannot easily discover intangible property, unless taxpayers co÷perate with them. The all too frequent lack of such co÷peration causes a disproportionate share of the tax burden to fall upon tangible property. The general property tax is haphazard, ineffective, and demoralizing to both tax officials and taxpayers. ”

“ He further directed that the tax on realty both in the country and the city should be upon the following basis:--Improvements on city property were to be taxed at one-fifth of their value, and the naked property either in town or country at two-thirds of its value. The fact that country property used for agricultural purposes was improved, should not be reckoned. ”

“ Land sold or by a contract of bargain and sale demised forever, subject to a perpetual rent, is taxable as corporeal property; and in private hands the rent also is taxable as an incorporeal hereditament. The tax on the former is chargeable to the purchaser or perpetual tenant, and on the latter to the owner of the rent.' It can hardly be said that it makes a constitutional difference that a so-called lessee, who may enjoy forever, if it chooses, has also the privilege of giving up the property at the renewal dates. ”

“ It suffices to say that the tax immunity extended to property qua property does not embrace a special privilege, the corporate franchise, otherwise taxable, merely because the value of the corporate property or net income is included in an equable measure of the enjoyment of the privilege. The owner may enjoy his exempt property free of tax, but if he asks and receives from the state the benefit of a taxable privilege as the implement of that enjoyment, he must bear the burden of the tax which the state exacts as its price. ”

“ Our conclusion is, that under actual conditions in America to-day the landowner may virtually be declared to pay in the last instance the taxes that are imposed on his land, and that at all events it is absolutely erroneous to assume any general shifting to the consumer. In so far as our land tax is a part of a general property tax, it can not possibly be shifted ”

“ It is not clear that the increment of value on land belongs to the public more than the increment of value on personal property, but a transfer tax on real estate, based partly on the increment of value, can be conveniently collected and would discourage speculative holding. ”

“ Such a contract is a limitation upon the taxing power of the legislature making it, and upon succeeding legislatures, to impose any further tax upon the franchise. But why, when bought, as it becomes property, may it not be taxed, as land is taxed which has been bought from the state, was repeatedly asked in the course of the argument? The reason is, that every one buys land, subject in his own apprehension to the great law of necessity, that we must contribute from it and all of our property something to maintain the state. ”

“ The first question to be considered is whether a tax on the rents or income of real estate is a direct tax within the meaning of the constitution. Ordinarily, all taxes paid primarily by persons who can shift the burden upon some one else, or who are under no legal compulsion to pay them, are considered indirect taxes; but a tax upon property holders in respect of their estates, whether real or personal, or of the income yielded by such estates, and the payment of which cannot be avoided, are direct taxes. ”

“ In many instances, indeed, the income is the property itself." The United States Supreme Court, in its recent decision of the income tax (1895) , also practically indorsed this conclusion. To levy taxes on the rent of land and also upon the land itself is, therefore, double taxation on one and the same property, which in common with all other unequal and unjust taxes can not be diffused; and for this reason should be regarded as in the nature of exactions or confiscation, concerning the incidence of which nothing can be safely predicated. ”

“ This being clear, it is held reasonable and constitutional to get at the worth of such a line, in the absence of anything more special, by a mileage proportion. The tax is a tax on property, not on the privilege of doing the business, but it is intended to reach the intangible value due to what we have called the organic relation of the property in the state to the whole system. ”

“ People owning such property, were anxious to get it improved so as to get their taxes back in the rents of buildings. Those owing suburban lands and lots soon found that it would be useless to improve them as people would not occupy them till all the more central lots were occupied. Much dispute arose as to the way in which such property should be taxed. At first the assessments of valuation on the lands were as high, as they had been before the adoption of the single tax plan. ”

“ But by the Civil Law and the Common Law the provision in the treaties that no tax should be paid on the property greater than that fixed in ground rent would have prevented the levying of any tax on the buildings because, by such laws, improvements are considered to be a part of the land. ”

“ Ordinarily it would be a useless thing for a city to tax its own property. But this can be done under Virginia practice, and is not a vain thing if thereby property of the city, subject to taxation, is listed in its name as holder of the legal title, so as to fix the amount of the tax on the property which the tenant may have agreed to pay. ”