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States should rid their property tax laws of features that are im

possible to administer, whose effective administration would be economically intolerable, which force administrators to condone evasion, and which encourage taxpayer dishonesty. No new changes in property tax should be adopted without weighing the effect on facility of administration. (Report A-17,

1963) States should remove constitutional and statutory limitations on

local authority to raise property tax revenues. (Report A-14, 1962) If it is impractical to remove all limitations, various steps might be taken such as: (a) Providing statutory limitations rather than constitu

tional limits; (b) expressing tax rate limitations in terms of the value of

taxable property equalized to full market value rather

than fractional assessed value; (c) setting broad limitations rather than limits on individual,

specific functions; (d) restricting limitations to financing of operation and

maintenance rather than requirements for servicing

capital improvement debt and pay-as-you-go. (e) providing relief administratively by a State agency and

by reference to the electorate; providing authority to the electorate to initiate a vote on property tax lines

to exceed prescribed limitations. (f) extending limits to embrace all overlapping local taxing

jurisdictions; (g) exempting home rule charters from limitations. (Report

A-14, 1962) States should retain responsibility for shaping policies dealing

with general property tax relief and instrastate school finance equalization. A massive Federal effort to cut residential property substantially and to encourage States to assume most of the cost for financing local schools is neither necessary nor

desirable.22 (Report A-40, 1973) States should use grants to equalize local property tax loads

within metropolitan areas (Report A-25, 1965); and States should help localities finance the cost of relieving any undue local property tax burden on low income families. (Report A-31,

1967); reaffirmed by (Report A-40, 1973) States should carefully review and recodify assessment laws to

remove ambiguities, inconsistencies and other weaknesses. They should make a thorough re-evaluation of all regulatory and partial tax exemption provisions with an eye toward consistency with sound policy. Unless a local assessor has adequate means to audit self-assessed personal property, the States should assess it or the tax should be abolished. States should eliminate all constitutional and statutory requirements for fixed assessment levels except for specifying a minimum assessment ratio (in relation to market value) below which "assessment” may not drop.

22 Muskie, Percy, Kneip, Schultz dissent.

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For equalization and measurement, State supervisory agencies
should conduct an annual assessment ratio study to determine
an average level of assessment in each assessment district to
provide the basis for tax equalization, and to use market value
figures as the basis for all regulatory and partial tax exemption
provisions. States should establish, minimum assessment per-
formance standards and provide--at district expense State
assessment in districts that do not meet the minimum. (Report
A-17, 1963 %; reaffirmed by Report A-40, 1973)
States should conduct and publish the results of comprehensive
annual assessment ratio studies as to the average level and degree
of uniformity of property taxes for all major classes in all
districts. They should require regular assessment of all tax
exempt property and compile and publish the results. And a
central States supervisory agency should require assessors and
other local officials to report data on assessed valuation and
other features of the property tax. The State agency should

publish digests of the information. (Report A-17, 1963)
States should improve and standardize their own collection,

compilation and analysis of essential data on the property tax to facilitate this function of the Census Bureau. (Report A-17,

1963) States should centralize assessment administration and should

vest the State's share in joint State-local assessment administration in a single agency lodged in a central department, professionally organized and equipped for the job. States should evaluate the structure, powers, facilities and competence of their agencies for supervising assessment, equip them to perform functions deemed necessary, and provide for

continuing systematic review. (Report A-17, 1963) The division of assessment jurisdiction between State and local

agencies should be clear to taxpayers and assessors. Local assessment districts should be reorganized to encompass a large enough geographic area to promote efficient assessment. Overlapping should be eliminated. States should assess all property that lies in more than one district, that requires appraisal specialists beyond local scope, and which can be done

more readily by a central agency. (Report A-17, 1963) All assessors should be appointed to indefinite terms of officesubject to removal for good cause including incompetence-by the governing agency of the district. The State supervisory agency should establish professional qualifications and certify candidates as to fitness. No one should be permitted to hold office who is not certified. But States should not set or place limits on salaries for assessors and appraisers. The States should set minimum professional staffing requirements in all local assessment districts. (Report A-17, 1963)

Muskie dissent on minimum standards recommendation.

State agencies supervising assessors and appraisers should

cooperate with educational institutions to plan and conduct pre-entry courses of study and regular internship training

programs. (Report A-17, 1963) States should review administrative-judicial procedures for

assessment review and appeal to assure taxpayers of all the
remedies to which they are entitled. The machinery should be
two-level-local and State--and should serve in an appellate
capacity only. Appeals on questions of law should go to the

State Supreme Court.
States should publish findings of annual assessment ratio studies

and permit taxpayers to introduce them as evidence to prove

discrimination in assessment. (Report A-17, 1963) Income

States should consider adopting personal income taxes. 2 (Report

A-27, 1965)
Congress should amend the Internal Revenue Code to permit a

substantial portion of State income tax payments as credit

against Federal income tax.25 (Report A-27, 1965) (Various bills introduced in Congress to provide tax credits.) States should bring their income tax laws into harmony with the

Federal definition of adjusted gross income, with modifica

tions.26 (Report A-27, 1965) Congress should authorize the Internal Revenue Service to enter

into agreements with States for Federal collection of State

income tax.27 (Report A-27, 1965) [Implemented by State and Local Fiscal Assistance Act of 1972

(PL 92-512.)] Congress should enact legislation requiring the Federal govern

ment at the request of the local government to withhold local income tax payments from Federal employees who either reside in or commute to a local jurisdiction within the State.

(Report A-47, 1974) [Implemented by PL 93–340] States should allow credit to residents who pay personal income

taxes to other States, and repeal non-resident income tax

credits.28 (Report A-27, 1965) States should adopt as the definition of "residence”: “A resident

individual means an individual: (a) who is domiciled in this State, unless he maintains no permanent place of abode in this State, maintains a permanent place of abode elsewhere, and spends in the aggregate not more than 30 days of the taxable vear in this State; or (b) who is not domiciled in this State but maintains a permanent place of abode in this State

24 Ervin, Mundt, Dempsey, Dwyer, Fountain dissent.
25 Fowler expresses reservation; Dempsey abstains.
26 Dempsey abstains.
37 Dempsey abstains.
28 Dempsey abstains.

and spends in the aggregate more than 183 days of the taxable year in this State.” The State tax agency should be authorized to enter into reciprocal agreements to avoid potential double taxation.” (Report A–27, 1965)

Sales

Congress should enact legislation explicitly authorizing State overnments to impose a sales tax on firms making sales in š. where they maintain no place of business. The tax should be equal to the State rate plus a single local rate. States should adopt a formula to distribute the local sales tax portion, among local governments. (Reports A-47, 1974)

States should shield low income families from undue tax burdens on food and drugs under general sales taxes. (Report A-31, 1967)

Business

States should eliminate the tax on business inventory and either tax business personalty (machines and equipment) at the State level or closely supervise local tax administration to assure uniformity.” States should reimburse local governments for attendant loss in revenue. (Report A-30, 1967)

States should avoid providing special tax advantages or concessions to select groups of business firms but provide general benefits in order to preclude a self-defeating cycle of competitive undercutting. (Report A-30, 167)

States should provide adequate technical assistance and supervision in local assessment of new industrial property to insure uniformity of treatment. (Report A-30, 1967)

Estate and Gift

The President and Congress should coordinate State and national inheritance and estate taxes.” (Report A-1, 1961)

Congress should replace the Federal estate tax credit for taxes aid to States (Section 2011 of 1954 IRS Code) with a twoi. credit to earmark for the States a large share of Federal tax liabilities in the lower tax brackets and a small share in higher brackets. The new formulation should be expressed in terms of an independent schedule. But legislation should make the new credit available to taxpayers only if the governor certifies to the Secretary of the Treasury that the State has raised death taxes by the amount of the credits and that State taxes remain at the higher rate for five years. The Federal estate tax credit should be limited to estate-type taxes rather than inheritance taxes. (Report A-1, 1961)

States should be given the option to forego independent death taxes in favor of a share of Federal estate tax collections.” (Report A-1, 1961) *Dempsey abstains. * Daniel o: stating recommendation not broad enough.

* Burton and Hollings additional comment. *Anderson expresses reservation.

The tax credit should not be extended to gift taxes, but credit for inheritance and estate taxes should be fixed at a higher level to enable most States to forego gift taxes. (Report A-1, 1961)

Tobacco

State tax policy officials, the Treasury Department and the Internal Revenue Service should explore with representatives of the tobacco industry placing cigarette taxes on a return basis at the manufacturing level in such a way as to minimize the burden on the industry.” (Report A-24, 1964)

Real Estate Transfer

Congress should amend Chapter 34 of Internal Revenue Code to repeal the stamp tax on conveyances.” When the stamp tax is repealed, States without real estate transfer taxes should enact them at either State or local level. Local officials that record transfers should be required to verify that tax has been paid. (Report A–23, 1964)

|Partially implemented by the Excise Tax Reduction Act of 1965, PL 89–44.]

User Charges

States should have an affirmative policy regarding user charges when specific beneficiaries of particular government services can be readily or approximately identified. States should authorize and encourage local governments to adjust fees and user charges annually to reflect at least changes in financial costs; and should provide technical assistance and consultation as to appropriate areas, methods and rates of charges. (Report A–47, 1974)

Value-Added Tar

The Federal Government should not enact a Federal valueadded tax to provide revenue for property tax relief and to ameliorate intra-state fiscal disparities among school districts because it is not needed. (Report A-40, 1973)

GRANTs-IN-AID (see also Under Specific Subject Headings)

Federal-General Administration

To assure the greatest flexibility, the Federal Government should authorize a combination of grants-in-aid: categorical grants, to meet specific needs of national concern; block grants to provide greater flexibility in broad functional areas; and per capita general support (revenue sharing) to enable States and localities to meet their own unique needs. Provision should be made to assure that general support grants are not for programs in • conflict with existing comprehensive State plans.” (Report A–31, 1967)

* Fountain makes clarifying statement. * Dillon abstains. * Bryant dissent, Fowler reservation, Naftalin not concur in last sentence.

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