96 UNIVERSITY OF COLORADO STUDIES 



county or local unit; hence there would not be the same inducement 

 for the local assessors to undervalue the real and personal property 

 of their districts, as such property would not be taxed for state pur- 

 poses. 



It was at first thought that the merits of this plan were sufficiently 

 great to warrant its general adoption. A number of states so amended 

 their revenue laws as to secure a state revenue without taxing local 

 real estate and personalty under the general property tax system. 

 New York, Connecticut and Pennsylvania were among the first 

 states to employ this system. It has now had several years' trial 

 and is found to be defective. Its chief defects are: (i) The state 

 revenue is inelastic and may in some years greatly exceed the needs 

 of the state; in other years the revenue may fall short of the needs. 

 (2) The voter, relieved from paying a direct state tax, loses interest 

 in state afi'airs. There is accordingly a tendency to extravagance 

 on the part of the legislature. Under this system in New York 

 expenditures increased in fifteen years from $12,984,000 to $34,- 

 589,000, and in Connecticut they increased so rapidly that last year 

 the plan was abandoned, and a state tax was imposed on general 

 property. Connecticut officials state that the extravagance was 

 caused by the abolition of a direct state tax." 



There is another plan for the separation of the sources of state 

 and local revenue which deserves to be mentioned. This scheme 

 was brought forward many years ago by Allen Ripley Foote, presi- 

 dent of the International Tax Association. It has been accepted 

 by eminent students of taxation, and adopted by the state of Oregon. 

 The plan provides that the amount of state tax to be paid by each 

 county shall be determined, not by the assessed valuation, but ac- 

 cording to the expenditures of such county. That is, the ratio which 

 the expenditures of each county bears to the total expenditures of all 

 counties in the state shall be the ratio according to which the share 

 of state tax to be borne by each county shall be determined. 



While this scheme has certain advantages, such as the absence of 

 interest in underassessment, local freedom in taxation, tendency to 



' BoixocK, Quarterly Journal of Economics, May, igio, p. 456. 



