The instructions which most assessors receive require that real estate be assessed at a fair cash value - that is, what it would bring at sale with a willing purchaser and willing seller. That some method of uniform assessment should be used becomes apparent when consideration is given to the fact that the state and county taxes on property are apportioned among the various districts on the basis of the assessed valuation.
Results of Apportionment. - The total amount to be obtained by the state is determined and then apportioned to the local tax district; a district which had an assessed valuation of say $100,000 would be asked to contribute twice as much toward the state fund as one where the valuation was $50,000. Counties frequently apportion their demands among the townships or tax districts in the same way, so that the total rate is a composite sum of the state rate, plus the county rate, and in addition the rate representing the needs of the local district itself. In order, then, that the tax burden of the state and county be equally distributed, it is necessary that some uniform system of valuation be used. Whether it be full valuation or a partial valuation would make little difference as long as the same basis was used in all the districts.
It is a matter of common knowledge that anything but uniformity exists in making assessments. Lands of practically the same nature in adjoining townships and counties have been assessed at figures in which there is a wide variation, while a comparison of the assessment figures of a whole state frequently shows startling results. In some states the assessed value has ranged all the way from 20 to 100 per cent of the actual value. In adjoining counties the assessment of railroad property has varied more than $20,000 per mile.
Such discrepancies in assessment must mean an inequality in the tax burden levied by the state and county. If the same basis of assessment were followed within a district, and none of the taxes collected went out of the district, it would make no difference in the burden whether the property were assessed at 100 per cent or 20 per cent of actual value. Suppose two farms in this district, one worth $100,000, the other worth $50,000, and that the assessment has been at full value. The officials of the district decide that it is necessary to assess $1,500 against this property. This will mean a ten mill tax (tax rates are expressed as the number of mills taken from each dollar valuation), and the burden upon the farms will be $1,000 and $500, respectively. Let us suppose, however, that the property had been assessed at 50 per cent of the actual value, or $50,000 and $25,000. The basis upon which taxes are to be levied is thereby reduced, and to get the required revenue the rate must be raised. To secure the $I,500 the officials must levy a twenty mill tax, which imposes exactly the same burden as in the previous assessment at full value.
Suppose, now, that under certain property valuations, the state levies a five mill tax, the county a ten mill tax, and each local district a five mill tax. The actual property values in the districts, let us assume, are practically equal, but the assessor in one district values it at 100 per cent; in another at 50 per cent, and in still another at 20 per cent. The inequality which arises from collecting a twenty mill tax, the total of the three rates, at once becomes apparent. The property assessed at full value is paying twice as much to the state and county as that assessed at 50 per cent and five times as much as that assessed at 20 per cent.
The Local Assessor. - It is too much to expect that assessors for a whole state, or even for a county, will have the same ability in appraising property, or would use the same basis of calculating values, even though their abilities were approximately equal. The qualifications of assessors, moreover, frequently leave much to be desired. The remuneration is so small that men of ability do not care for the task, and it is left to be performed by men of little ambition and second-rate qualifications.
The fact that a goodly portion of the revenue collected in most districts is turned over to the state and county, makes it desirous to the property owners that their assessments be kept low. It is one of the expectations of a satisfactory assessor that he keep values down. In order to receive the votes of his constituency for a continuance in office, therefore, he too frequently, from the standpoint of justice, attempts to do what is expected of him.
The assessor must frequently make returns under oath that he has made the valuation to the best of his ability. In one of the states where the discrepancy between the actual value and the assessed value is most flagrant, the assessors subscribe to an oath in which they declare that the assessment has been made at the full value of the property. In the same state a statute provides that an assessor who falsely subscribes to an oath shall be liable to the penalties of perjury, which are both fine and imprisonment. As yet it seems they are still liable for the punishment, but have not received it.