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22 Taxes 114 (1944)
Tax Changes in the Missouri Constitution

handle is hein.journals/taxtm22 and id is 114 raw text is: By LYLE OWEN Tax Changes in the Missouri Constitution This article points out certain limitations which follow the incorporation of tax provisions in a state's constitution, and while the problems related here are lyMissouri's, the same problems may be present in other states, especially so in regard to the decline of the general property tax. Mr. Owen is Assistant Professor of Economics, Carnegie Institute of Technology; and was Visiting Professor of Economics and Government, Southwest Missouri State Teachers College. TTHE November election of 1942 the voters of Missouri au- thorized the calling of a Con- vention to revise and amend the Constitution of that state. This Con- vention assembled on September 21, 1943, and is now in session. There is general agreement among informed Missourians as to the need for revi- sion. The Missouri Constitution of 1875, the one now in effect, is gen- erally conceded to contain some obsolete and much legislative matter. Moreover, it has been amended rather frequently by the initiative method, so that today the original document has numerous excrescences and lacks the neat integration which is desirable in the fundamental law of the land. In addition new problems, including financial ones, unknown to state government in 1875 now demand attention. The last Constitutional Convention in Missouri was held in 1922 and 1923. Not counting several recesses, it was actually in session 266 days. Its recommenda- tions were submitted to the voters at a special election in 1924, in the form of 21 proposed amendments. The people rejected all but six. There was much criticism of this Convention of 1922-1923 on such grounds as that it was in session too long, that it was too expensive, and so on.' Partly because the 1922-1923 Convention was never viewed as a success, the one now sitting opened under some handicap of suspicion. In addition there was a belief on the part of many Missourians this time that a Constitutional Convention should not be held during, the war. So far the business of the Convention has been that of receiving proposals for change and hold- ing committee hearings thereon. December 3, 1943 was set as the deadline for introduction of proposals. The response of the voters to the Convention's work may depend largely not only upon the nature of the final recommendations made by that body, but also upon popular impressions as to the level of debate, as well as to the length and cost of the session. It is not anticipated that the Convention will be ready for final adjournment until late spring or early summer. Then, to become effective, its proposals, whether they be amendments or a whole new Constitution, must secure a majority vote at a special election to be held not less than 60 days nor more than six months after the adjournment of the Convention.2 Thus it will be some months before the Conven- tion's final recommendations will be available, and even more before their fate will be known. The pur- ' The cost of the 1922-1923 Constitutional Convention was about $800,000. See editorial, Job Before the Convention, St. Louis Post-Dispatch, Sept. 21, 1943. 2 Constitution of Missouri, Article XV, Sections 2, 3. pose of the present paper is to assay some of the tax problems with which the Convention is by public demand being forced to grapple. One of the most insistent of these problems is whether the Constitution shall remain so worded that property taxation must take the form of the old-fashioned gen- eral property tax. At present that document appears to require that all forms of property, tangible or in- tangible, must be listed and taxed at the same rate, save for a few specific exemptions.2 It is well known that the general property tax, which in its standard and once nearly universal form in the American states attempted to assess and tax all prop- erty at the same rate, has for some time been on the wane. A recent study by the Governmental Research Institute (of St. Louis) concludes that there remain only seven states which can definitely be classified as general property tax states on the basis of actual practice. 4 Missouri is one of them. There are various reasons for the decline of the gen- eral property tax. One important reason, and the one which is attracting great attention at Missouri's Con- stitutional Convention, is the difficulty, or more accu- rately the impossibility, of getting a full listing of intangibles like money, bank deposits, accounts re- ceivable, mortgages, promissory notes, state and munici- pal bonds, and corporate stocks' and bonds, when the Missouri Constitution requires that All property subject to taxation shall be taxed in proportion to its value. 5 Not only are such intangibles notoriously mobile and easily concealed, but with the present tax rates the motive for such concealment is perfect. In the writer's home community in a rural part of Missouri the rate this year, for all purposes, is $2.45 per $100 of as- sessed valuation. In the last half-dozen years it has been as high as $3.10. On real estate such a rate proves not Exemptions are the usual ones for lands belonging to the United States (by Constitution of Missouri, Art. XIV, Sec. 1); real and personal property of the state, counties, and municipalities (Const. of Mo.. Art. X, Sec. 6); cemeteries (Ibid.); and the legislature may exempt limited amounts of real estate used exclusively for religious. educational, and charitable purposes, as well as real or personal property used exclusively for agricultural or horticultural so- cieties. (Ibid.). There Is no homestead exemption, or any other exemption of either a minimum amount, or a class, of property. Art. X, Sec. 7, Const. of Mo., specifically states that All laws exempting property from taxation, other than the property above enumerated, shall be void. Hence Missouri remains one of the seven states attempting to retain the general property tax. 4 Constitutional Provisions Relating to* the Taxation of Intan- gibles Should Be Revised, research report issued by the Govern- mental Research Institute (of St. Louis), Nov. 1, 1943; Dr. Charlton F. Chute, Director. The seven states are Arkansas, Maine, Missouri, New Jersey, New Mexico, Texas, Wyoming. Lists of which states fall In which class as to tax matters will be found to vary. in dif- ferent publications. In making Its lists the Governmental Research Institute not only checked various published sources, but sought first-hand Information through visits to about one-third of the states In the Union. In tax matters actual practice Is sometimes more reliable than what the statutes say. 5Const. of Mo., Art. X, Sec. 4. There Is of course no attempt made to tax bonds or other obligations of the United States Government, and by Missouri Supreme Court decisions it Is held at present that corporate stock Is not normally subject to taxation under the general property tax laws of Missouri as now written. For the decision stating the exemption of shares In a foreign corporation that owns no property In Missouri, the stock being held within Missouri by a resident of that state, see State ex rel. Koeln v. Lesser et aL. (1911) 237 Mo. 310, 141 S. W. 888. State ex rel. Camp- belt and American Insurance Co. v. Brinkop and Koeln (1911) 238 Mo. 298, 143 S. W. 444, states the similar exemption of stock In domestic corporations, where the property of such corporations has already been taxed. But bonds issued by both foreign and domestic corporations are taxable In Missouri. And so are state and mu- niclpal bonds. M TAXES-The Tax Magazine March, 1944

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