CHAPTER XII THE MANAGEMENT OF THE PUBLIC FINANCES 78. REFERENCES Johnson, Cyclopaedia, "Finance," "Taxation;" Lalor, Cyclopaedia of Political Science, "Taxation;" Plehn, Introduction to Public Finance; Barnstable, Public Finance; Daniels, Public Finance; Adams, Science of Finance; Cooley, On Taxation; Seligman, Essays on Taxation; Cossa, Taxation, its Principles and Methods, Eng. trans.; Ford, American Citizen's Manual, Part II. p. 149, "State Taxation," p. 161, "Debts;" Bryce, American Commonwealth, I. ch. 43, "State Finances;" Hart, Actual Government, Part VII., "Financial Functions," pp. 381427; Ely, Taxation in American States and Cities; Wells, Report on Taxation (50th Congress, Ist session, Ex. Doc., No. 400); Wells, Theory and Practice of Taxation; Hollander, editor, "Studies in State Taxation" (Johns Hopkins University Studies, XVIII, 1-4); Commons, "Some Taxation Problems and Reforms," in American Monthly Review of Reviews, Feb., 1903; Orth, "The Centralization of Administration in Ohio" (Columbia University Studies in History, Economics and Public Law, XVI, 3), ch. 2, "Taxation and Local Finance." Constitution of Ohio (1851), Art. XII., “Finance and Taxation," Art. VIII., "Public Debt and Public Work," Art. XV. § 3, "Publication of Receipts and Expenditures;" Bates, Annotated Ohio Statutes, I. pp. 1465-1615a, "Finance and Taxation;" Ellis, New Annotated Ohio Municipal Code, "Taxation," "Borrowing," "Sinking Fund;" Annual Reports of the State auditor and the State treasurer. 79. THE EXPENSES OF THE GOVERNMENT of the The various functions of the government that have Necessity been examined in the preceding chapters involve large and danger expenditures for maintaining the great body of officials, money State and local, who are engaged in the performance power. of these and other functions. The local governments not only help to pay for these various kinds of public work and the officers they make necessary, but also have many separate expenses of their own. In other words, a great deal of money is needed for both State and local purposes, and the government must therefore possess the added power of exacting contributions from the public. This is known as the taxing power. Justly and economically exercised, it contributes to the public good; dishonestly exercised, it corrupts the political and moral life of the community. It is therefore both desirable and essential that every citizen should know how our revenues are obtained and how they are expended. The amount of money needed every year for State Expenses of purposes is much smaller than that needed for local government. purposes. For example, the amount collected for State purposes in the fiscal year 1902 was about $5,686,000; that for local purposes, about $42,104,000, or more than seven times the former amount.1 The annual expenses of the State are distributed as follows: for the maintenance of the legislative and executive departments, $975,000; for the administration of justice, $480,000; for the protection of the community, $363,000; for the support of public education, $2,335,000; for the maintenance of charitable and correctional institutions, $3,155,000. Besides these expenses the State pays interest 1State Auditor's Report, 1902, p. 363. Sources of State revenue. on certain irreducible debts to the extent of about $277,000 annually, the interest and principal of other debts in the sum of about $271,500 annually, and some miscellaneous items amounting to $263,000, more or less, each year. The distribution of the expenses of the local governments can not be given because it varies greatly with the different governments and from one year to another. It may be said, however, that the chief items of expense in the case of the counties are salaries, roads and bridges, the care of the poor, and occasionally new buildings. In the case of the townships the chief items are salaries, roads, schools, poor relief, and special objects. In the case of municipalities the items are much more numerous and include all the customary conveniences of city life besides the items regularly found in the expense account of the rural areas. 80. SOURCES OF PUBLIC REVENUE The revenue for State purposes is derived from various sources. By far the most important source is the general or State tax levied on the real and personal property of the State. In 1902 about $2,760,000 were realized from this source. The State also levies a number of special taxes, such as the excise taxes on corporations enjoying public franchises, the tax on collateral inheritances, and the taxes on the sale of liquor and cigarettes. From these sources about $2,818,000 were obtained in 1902. The State gets a part of its income from other sources than taxation. Thus, it has the use of certain funds that have arisen through the sale of lands granted by the United States for the support of education. But the laws require that the State shall pay a fixed rate of interest (six per cent.) on these funds, to be devoted to educational purposes. It also receives small amounts from the rental or sale of public lands. Still another source is the earnings of State departments and institutions, which amounted in 1902 to $617,000. There are other miscellaneous sources of revenue, such as show and peddlers' licenses, auction duties, teachers' examinations, etc., which bring in small amounts.1 of the The revenues of the local governments-the counties, Sources of townships, and municipalities-are obtained for the most revenues part by the taxation of the real and personal property local govwithin their limits, while some money is also derived ernments. from fines, fees, and licenses. It should be further remembered that local communities share in certain taxes levied by the State, and thus get back for local uses a part of the revenue they have contributed to the Commonwealth. Thus the State common school fund, which is created by State levy, is distributed among the counties at the rate of $1.45 for each person enumerated in the school census; and the taxes on the sale of liquor and cigarettes go in part to the township and municipalities for police and other purposes. 81. THE Assessment OF PROPERTY The tax on personal property. We have already seen that the State raises most of its revenue by a general tax on real and personal property, real and and that the local governments obtain most of their revenue in the same manner. The amount of property tax a person has to pay depends on the amount levied and the ratio of the value of his property to all the property taxed. We may therefore define the property tax as a 'The receipts and disbursements of the State are shown in Appendix E, § 103. Valuation of personal property. Failure to make returns. proportional contribution paid by property-owners for public purposes. The first step to be taken in the process of levying this tax is the valuation of the taxable property of the State. It then becomes possible to apportion the tax equitably, and determine the share that each property-owner must pay. Personal property is "returned," or assessed, every year by the annual assessors. These officers are elected annually by the townships and wards in which they serve. They furnish every citizen over twenty-one years of age in their several districts with a blank, on which he must list all of his personal property and its value. These reports, which are made under oath, are collected by the assessors, and turned in to the county auditor, who supervises the listing of all property.1 "All corporations, except express, telegraph, telephone, and railroad companies, are required to make return of all their personal property to the auditor of the county in which their business is located." The assessors also list such realty and new structures as have not been assessed before, besides noting any instances of decline in value through the loss or destruction of buildings or other property. "If any person refuses or neglects to make the required returns, the assessor makes the returns from such information as he may be able to obtain, or from his own personal knowledge." When the reports are in the county auditor's hands they are subject to his revision. Anyone whom he suspects of fraud or delinquency, he is empowered to summon; and in case he becomes convinced of an effort to omit property for returns he may add fifty per cent. of the total sum of the 'The assessors distribute and collect these blanks between the second Monday of April and the third Monday of May. |