Mr. Richard Crisler
North Bend Bottoms
Boone County, Kentucky
Dear Sir,
It was nice to talk to you today about Boone County History. I think there is quite a lot, especially about the northern part of Boone County that I could learn from you. I look forward to seeing your completed book, or books. Do you have any papers or other material you have compiled that might be instructive for someone such as myself to review? If so I would look them over right away and return the material to you as soon as possible.
In regard to your question about tax equalization, I will be as informative as possible, but I do not (yet) know how the equalizations function, or why it seems to fall on some taxpayers, and not others. There must be some formula for how the equalizations function, or some policy as to whom it applies, and when. That will have to wait for an answer at a later time.
Equalization refers to the process of achieving a uniform rate of valuation, and hence an equitable burden of taxes. This may be between individual taxpayers within a district; or it may refer to a means of equalizing them between districts, which would be counties in Kentucky. The aim is that similar property would be taxed at like values uniformly across the state, not according to local considerations. (Black’s Law Dictionary, s.v. “Equalization”) This applied to counties, and not to individual taxpayers within the county, in Kentucky. This can be shown from the fact that the Commonwealth received the property taxes; the county laid a levy on individuals. The counties today receive part of the property taxes, but even now equalization is between counties. The current law states: “The Department of Revenue shall equalize each year the Assessments of the property among the counties. . . . When the property of any county, or any class of property in any county, is not assessed at its fair cash value, such assessment shall be increased or decreased to its fair cash value by fixing the percentage of increase or decrease necessary to effect the equalization.” (K.R.S. 133.150)
In the early days the land was divided into first, second, and third rate lands. This seems to have been changed by the equalization law. At least in the 1840 tax book, at which I am looking right now, the lands are not so rated, nor in any later book which I have examined. This is probably because the classification of the various rates was so subjective that many first and second class lands hid under the third class rate. The equalization was to establish the true value of the land instead of classifying all the classes at the same rate.
There are some interesting remarks made on this taxation in the American Almanac and Repository of Useful Knowledge for the Year 1842.
"Kentucky. — This State had a revenue from taxation, in 1839, of $250,000 on an assessment of ten cents on $100; by a law of the last session this tax has been increased five cents on the $100. The State has also a revenue of over $40,000 derived from taxes on law process, deeds, seals, &c." (p. 105)
The Commercial Review of the South and West, for 1850, edited by J. D. B. de Bow in New Orleans, lists all the revenue in the state for 1845 and 1846. He summarizes this by saying:
"The whole value of the above articles, including the effects of the equalization, about 27 millions, was, in 1846, estimated in taxation at $242,388,967. The whole revenue from taxes, $1383,283. The average value of land in the State was estimated at $6.31 per acre." (p. 198)
Prof. Arthur Yager in a paper entitled “State and Local Taxation in Kentucky”, (1884) writes:
"In Kentucky about one-third of all the taxes in the state are levied and collected by the state government. In many rural districts the only kinds of property taxation known are those imposed by the state authorities. The unit of administration for financial, as well as other purposes, is the county." (The Johns Hopkins University Circulars. Baltimore, 1884, p. 130) He goes on to say (in 1884):
“There is no state board of equalization, and the most glaring inequalities between different counties and classes of property naturally result.” (ibid.) And he adds that the same difficulty is found all over the South. There was later instituted a Board of Equalization, but it was not very efficient. In the Report of the Special Tax Commission of the State of Kentucky, 1912-14 (Frankfort, 1914) it is stated in regard to the functioning of this body under the heading “Equalization between counties”:
The State Board of Equalization then proceeds to “equalize” between counties by adding to or deducting from the value of the property as accessed such percentages as will make the value conform to the true value in money. Whenever they intend to raise a county, they send notice of that intention to the county, and the County Court may send representatives to object. The same procedure is followed in case of a proposed reduction. But this is obviously unimportant. (p. 18)
This is all very interesting, and may serve to show what equalization is, but it does not show how it works. We may imagine just what political machinations come into play when a County Court is notified that its valuation is being raised. We can also consider that valuations may be raised for political motives, or to put pressure on certain politicians. In short, we can imagine that the process of equalization may have been worse than the original evil of inequalities between the counties. Kentucky, and most of the rest of the South, with a long tradition of “pauper counties” (the term is actually very old), have never had a very fair system, if that means everyone paying the same rates on the same types of property.
There is a good deal more that can be said on this subject, and I would be interested in any comments you have about the matter. I would be particularly interested in any observations that would serve as evidence for how the equalizations work in practice. I am hoping to find a good description of this somewhere, but actual instances from the tax records are the best way of telling how it worked in practice.
All the best,
James Duvall, M. A.
Local History Research Specialist
History Department
Boone County Public Library
1 comment:
The first equalization law is described on the Kentucky Secretary of State's website as follows:
1837 (Feb. 23)– This Act equalized taxation. All persons, when giving in their lists of taxable property were required to fix, on oath, a sum sufficient to cover what they shall be worth, from all sources, on the day to which said lists relate, exclusive of the property required by law to be listed for taxation (not computing therein the first $300 in value, nor lands not within Kentucky, nor other property out of Kentucky, subject to taxation by the laws of the country where situated), upon which the same tax shall be paid, and the same proceedings in all respects had, as upon other property subject to the ad valorem tax: Provided, that nothing herein contained shall be so construed as to include the growing crop on land listed for taxation, or one year’s crop then on hand, or articles manufactured in the family for family consumption. (ref: Acts of the General Assembly, Chapter 437, pgs 313-314, pub. 1837)
I see it entered as "worth from other sources" in 1838 and 1839, and as "value under equalization law" in later years. It doesn't seem to be related to the value of land, even though the 1st, 2nd, and 3rd rate land system was dropped, as each parcel was valued individually. Rather, as described above it applies to assets other than those listed on the form. I find it applied to people or partnerships who were in business other than stores, which are listed on the form.
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