comfort, we would incline to think that the Act of 1837, which put a
"big stick" in the hands of the assessor, would have been sufficiently
strenuous to have satisfied even that most strenuous of officers, our
worthy President Theodore Roosevelt. But there were mighty men in those
old days, when Sam Houston was at the head of the Lone Star Republic,
and this problem was as meal between their teeth. They enjoyed it to
the uttermost. They enjoyed it so much that they could not keep their
minds occupied with other things, and, in 1838, Congress amended and
strengthened the original "full rendition" bill so as to require every
property owner to swear a still harder swear, to wit, that his list
was a true and perfect inventory and account of his property and its
value. A true and perfect valuation! Think of it, O ye who strain at
gnats in these meek and modern day! A most vigorous oath, indeed, was
that. Strong and bitter, like the medicines they took in those good old
times. And yet I must own to it, gentlemen, that I have nowhere heard
or read that either the oaths or the medicines did them any harm.
I have recalled to your recollection those old days of the golden age
of Texas for one purpose only, which is that you may be reminded how,
in the words of Solomon, "there is nothing new under the sun." There
is nothing new, not even our troubles, and I can imagine that, even
in the time of the Republic, our citizens desisted momentarily from
the lighting of Mexicans and the pursuit of hostile Indians to hold
indignation meetings all the way from Nacogdoches to Matagorda Bay,
where fierce protests were drawn and adopted, condemning Houston and
Lamar and the members of the First Congress for their wickedness in
procuring the enactment of a "full rendition" statute with which to
oppress and impoverish the Lone Star people.
I, myself, am reminded in this connection of the solemn utterances of
some of the daily newspapers, most excellent oracles of Democracy,
warning us in editorial columns long that this is a new country, where
a continuous stream of bottoms is dropping out of our real estate
booms, and that it is a great big mistake to assess our new and fragile
values at anything approaching their face. And in my mind's eye, I
can see right now one of those ancient and beloved heroes, recently
companion to the immortal Davy Crockett, the tails of his coonskin cap
fluttering in the wind, addressing an indignation meeting in the days
of the First Congress, arousing unlimited enthusiasm with the very
same argument which is now so commonly used, founded upon the newness,
three-quarters of a century ago, of this country of ours, which some of
us profess to believe has not yet grown sufficiently old to tell the
truth for purposes of taxation.
The statutes of Texas have always been "full rendition" statutes, and
our Constitutions, except for that one which was adopted in 1836,
have always been "full rendition" Constitutions. And, in my judgment,
there can be no honest attempt at a fair adjustment of the burdens of a
direct tax upon the general property of this or any other country which
does not make a decent effort at an equalization in proportion to the
true value of each article which is taxed. The true value of an article
is necessarily its fair, full value, nothing more and nothing less. If
we levy general property taxes, we are compelled to require by law that
all property subject to the levy shall be taxed in proportion to its
value, and such a rule is inevitably a law for a "full rendition."
If a government were to command that its taxables should be listed at
one-fourth their full value, and that a tax of $1 on the $100 should
be levied on the values so listed, it would in substance have enacted
a law for the taxation of its property, at full value, at 25 cents on
each $100, and no amount of figuring can make out of it anything less
or anything more.
The proposition that property shall be taxed at one-fourth, or at
one-fifth, or at any other fractional part of its true and full value
is wholly inadequate to meet any of the objections which are urged
against the "full rendition" bill. If a tract of land be assessed at
$100 an acre at its full value, January 1, 1908, and by reason of any
change in conditions, the value has diminished before the arrival of
the tax-paying season, say December 31, 1908, to $50 an acre, and, if
it be assumed that it would be an injustice under those circumstances
to require the owner to pay a tax in December which is based upon such
a valuation, still the slightest reflection will convince you that this
injustice has not been obviated by assessing the land at $25 an acre
and, at the same time, multiplying the tax rate by four. In either case
precisely the same amount of money is exacted from the owner, and, in
either case, the tax is in truth based upon the full value January 1st,
which we have assumed to be $100 an acre, and no account is taken of
any subsequent depreciation.
But, if it be urged that the owner will be better satisfied to pay 25
cents an acre if his land be valued at $25 an acre than he will be to
pay the same 25 cents on the same acre upon a valuation of $100, then
I can only answer by saying that the Texans with whom I am acquainted
are so well fixed with brains that you can not fool them with a trick
so transparent as this. If a citizen pays a tax of $50 on a 200-acre
farm, he knows that he is out just $50 in good, common, hard cash, and
all the assessors and collectors in the State can not fool him into
the belief that he has paid only $40 by showing him how low his land
was assessed and how high it was taxed. Having paid his money, he will
feel neither better nor worse because of the valuation put upon his
property, provided only that he has had a square deal as compared with
the other taxpayers.
This is the whole of the tax question, as I see it--to deal justly
with every man in the sight of God--to tax every person as nearly as
possible in proportion to his ability to pay. And under any ad valorem
system the measure of the ability of each individual and the only
approximately fair measure which the ingenuity of man has ever been
able to devise is found in the reasonable, full value of the taxable
property of every owner.
No revenue law is wholly bad which tends in this direction and, on the
other hand, every such law is good and valuable in direct proportion as
it is so drawn that it will aid in bringing about this all-desirable
equality in the imposition of public burdens.
Granting that taxes are apportioned with reasonable fairness, there
is but one way whereby an impartial reduction can be had and the
benefits of such reduction distributed proportionately and honestly
among the taxpayers, and this way is by cutting down the expenses of
the government. Every other effort is either the pursuit of a ghost,
leaving the pursuer empty handed if he were to succeed in catching it,
or it is an effort at tax dodging. The average taxpayer is no shirk,
and the very best for which he can hope and the things for which he
should always be demanding are, first, an economical administration of
public affairs, and, second, the utmost fairness in the distribution of
public burdens.
The Constitution of Texas, as I have already shown, has always
commanded an equality in taxation, to be attained by levying upon
all property in proportion to its value. The laws of Texas have been
enacted in obedience to the constitutional mandate, as full rendition
laws, but have until the late session of the Thirtieth Legislature
failed in one respect, at least, for they provided no adequate means by
which they might be enforced. And under these laws, which on the face
required a fair assessment, but did not undertake to compel obedience
to their provisions, a practice of evasion was begun and spread all
over the State, until a condition prevailed which was anarchy, pure and
simple. County strove against county and neighbor against neighbor,
each one trying unjustly to shift some portion of his rightful burden
to the shoulders of another. It was a reign of lawlessness, gentlemen,
when, as some of you members have demonstrated, the average assessment
in one county was only 24 per cent. of the value of the property
assessed, while the average in another county was as much as 75 per
cent. And the remaining counties of the State ranged themselves
anywhere you please between these two extremes.
Equality in taxation was a thing dead and forgotten, and honorable
people were being taught to look with contempt upon the affidavits
which were required to be made before the assessors. A strong and manly
people who throughout their history had held the vice of lying in
peculiar detestation, were made accustomed to falsehoods, uttered for
profit, under the supposed sanction of an oath. A condition prevailed
which would in time have compelled the moral deterioration of all
citizens.
Now, it is certain that it is one of the most important of the
functions of government that it shall secure justice and fair dealing
as between all those who are subject to its jurisdiction. But more
than this, and more than all else, it is the duty of those who are
in control of public affairs that they shall permit no condition to
continue which threatens to undermine the moral character of its
people. For I venture the opinion that civilization is not builded of
capital and labor alone, but that its chief component parts are the
love of virtue and the sense of honor and the devotion to truth and
integrity which are in the hearts of all persons, and if these good
attributes are no longer actuated by these high ideals, then I predict
that mankind will have become from that moment forward incapable of
maintaining social order.
The practice of undervaluing property for purposes of taxation, which
had become common and almost universal in Texas, was destructive of
all possibility of justice as between the respective owners, and
had in addition thereto a distinct tendency to debase the morals of
an uncontaminated and virtuous people. The movement for what I will
venture to call purer and better laws did not begin in the Thirtieth
Legislature, but years and years ago, and the so-called Full Rendition
act of 1907 is merely a mile-stone in the forward march of a progress
which has continued throughout the ages, and which will never end.
The statute for the taxation of banks and banking capital is a "full
rendition" statute, designed to enable and to require assessors to
list at full value the stocks or properly of such institutions and all
funds employed in that particular business. The act for the taxation
of the intangible assets of railroads, an act which I had the pleasure
of assisting to pass in the Twenty-ninth Legislature, is another "full
rendition" law, under the operations of which nearly $174,000,000 of
additional railroad values is exposed to view and listed and taxed.
These and other statutes of the same kind, which I have not the time
to mention, are just and fair, if all other property is also assessed
approximately at its value, but they become discriminatory and
oppressive as soon as undervaluations of other taxables are purposely
allowed.
I am fully aware that there are certain vices which appear to be
necessarily inherent in any system that can be devised for the direct
taxation of both real and personal property. And while I am not
inclined to believe that these vices render this character of tax more
difficult of fair apportionment than is any other, yet I would not
for a moment attempt to render blind either myself or you to those
imperfections and weaknesses of human nature which make it apparently
impossible entirely to effect the purpose of any law, no matter how
just or wise it may be. But I would remind you that we can not give
ground in the face of this argument without abandoning all effort at an
orderly rule of society and plunging headlong into the deadly chaos of
anarchy. If our inability, entirely and in all cases, to enforce a full
rendition law is just cause for the abandonment of the full rendition
principle, then, in the same way and for the same reason, we shall be
driven from any other plan that we may adopt. Indeed, if we once admit
the force of this objection, we must abandon all law, for in no case
are we able satisfactorily to enforce any statute which is upon our
books.
Remember, gentlemen, I make no pretense that perfection has been
attained in the act of the Thirtieth Legislature, or that the act
is incapable of improvement. What I am contending is that it is a
step forward, and that this body, standing as it does for the ideal
aspirations of the business men of Texas, must take no step backward.
To repeal this statute, setting up nothing better in its place,
retreating to a condition of which you, as thoughtful and patriotic
citizens, must have been sick at heart, may bring us to have "fewer
laws," but I am not able to persuade myself that those laws which are
left will thereby have become any the better.
In my judgment, _ex parte_ affidavits, which have the effect of making
the truth cost money and of rewarding falsehood as if it were a virtue
and not a vice, ought not to be exacted in any but the rarest of cases,
and only where no other source of information can reasonably be found.
And, for this reason, I have long preferred that the visible property
of the State should be valued and assessed by the assessor rather than
by the owner. But I am greatly in the minority in my opinion of this
subject, and because that opinion is of absolutely no consequence, I
refrain from enlarging upon it.
Proceeding, then, along the only road which is open for travel, and
assuming that each owner shall continue to fix the _prima facie_ value
of his own assets, it can not be successfully denied that the interests
of society demand that such valuation shall be made under oath, and
that the value stated in every affidavit shall be the true, full value
and not an arbitrary, assumed and fictitious proportion of the same.
The "full rendition" law, considered in connection with other statutes
in force upon the same subject, provides an admirable system of
local equalization, and tends in a very considerable degree toward
equalization throughout the limits of Texas.
But this is a State of vast areas and of prodigious distances, and in
any such widely extended territory it seems to me that the physical
conditions alone are sufficient to demand the enactment into law of
some method of apportionment which will not depend entirely upon
local views and local sentiments. It must be kept in mind that, while
the Attorney-General may sue to remove from office any assessor or
member of a board of equalization whom he believes to be guilty of
intentionally accepting undervaluations, yet, convictions for such
offenses are always difficult to secure and the prosecution of the
vast majority of such cases would be no better than a farce. The
State government is practically without power to compel reasonable
assessments in any county or section where the citizens are largely
opposed to full rendition. The administration has no legal authority
which it can effectually use, but must confine itself to moral suasion
alone, and in controversies where interested parties are arrayed upon
opposite sides, we, as a people, have never regarded moral suasion and
merely moral responsibilities as a sufficiently effective force to be
worthy of serious mention. We will not permit a judge to hear a case in
court, or a juror to sit on a jury where either the plaintiff or the
defendant is related to him within the third degree, either by blood
or marriage. Arbitrators must be without interest and not related to
the parties, and, in general, wherever an act is authorized which may
affect the rights of others, the law is vigilant in requiring that
the officer or person acting shall be disinterested and impartial.
Everyone will agree that these precautions against injustice are right
and necessary, and yet I can conceive of no good reason why interested
parties or their relatives may not be permitted to adjudge any other
disputed claims quite as well, and with just as large a probability
that justice will be done as when they were asked to determine what
amount of State taxes they will pay.
A compulsory equalization of some character seems to me the next step
to be taken in the forward march toward fairer taxation in Texas. We
have come a long way from that original plan of 1837, by which an
assessor and two neighbors arbitrarily determined what a property
owner should pay, but we are still very far from home. Nor should this
occasion surprise, for if the law is to be worthy of respect, if it
is to be in any way effective as a force for the right, it must not
be fixed and unchangeable, but, on the contrary, must be capable of
infinite variety and infinite development, growing with the growth
of the people who are its creators and enforcers, eternal in seeking
justice, but flexible in adapting itself to the present.
In conclusion, gentlemen, permit me to call to your attention very
briefly a few of the effects of the new tax laws. For if we are to
return, as at least one candidate for high office is insisting, to the
old order of things, we are abandoning not merely the so-called Full
Rendition law, but all other of the recent enactments upon the same
subject. We are to abandon the intangible tax law, the franchise tax
law, the law taxing the gross receipts of certain corporations, and all
other of the statutes of the Twenty-ninth and Thirtieth Legislatures by
which a fairer adjustment of the burdens of government was sought to be
secured. And if we abandon these laws we must abandon their undeniable
benefits as well as their doubtful disadvantages, and pay taxes as we
paid them in the good old times.
Now, in 1906, when these laws were either tied up in court or not yet
in force, the property owners of Texas were called upon to pay a total
ad valorem tax for the expense of the State government of $2,443,637,
but in 1907 the ad valorem tax for State expenses was reduced to
$2,044,566. The operation of the new tax laws reduced the burdens put
upon property owners by $400,000, and of the amount which property was
still required to pay, something near $214,000 was levied upon railroad
intangibles. The saving upon the general property, aside from railroad
and corporation taxes, was $614,000 for that single year, for State
expenses alone. In the same way, the saving for the year 1908 will not
be less than $900,000 on State expenses, not including the school fund.
It can not be successfully denied that the new tax laws have tended
largely toward an equitable distribution of tax burdens and that
in doing this they have diminished the amount paid by the average
citizen. The intangible assets tax alone brought in a revenue for
1907 of $1,470,000 to the State and its counties, and cost for its
administration the insignificant sum of $2,650, a result which can not
be surpassed in the history of governmental finance.
These are the triumphs which we are asked to abandon by returning to
that system where "the assessors under the commissioners courts made
the assessments as under former laws."
Now, gentlemen, I for one am not disposed to retreat. I am intending to
go forward, not backward. And in the course which I am determined to
pursue I am expecting to go arm in arm in the company of the most of
those who are here to-day as the representatives of commercial Texas.