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Free List, The

Free List, The: Property Without Taxes

Alfred Balk
Copyright Date: 1971
Published by: Russell Sage Foundation
Pages: 284
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  • Book Info
    Free List, The
    Book Description:

    A recent Supreme Court decision confirmed the churches' right to tax exemption for religious property. In this highly relevant book, Alfred Balk places this question in social perspective and demonstrates how tax exemption and immunity affect the fiscal load of local communities and the well-being of our whole society. Among the "free list" or tax-free properties which the author examines are churches, hospitals, schools, and government buildings. Seven specific proposals for reform are set forth.

    eISBN: 978-1-61044-581-8
    Subjects: Business, Law, Sociology

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Acknowledgments
    (pp. v-vi)
  3. Table of Contents
    (pp. vii-2)
  4. 1 The Unexamined Sieve
    (pp. 3-9)

    The universality of the above contribution to philosophy may not have immediately occurred to its author. Its intended context was the world of stocks and bonds—the speculators, lenders, brokers, and others who comprise the variegated universe of Wall Street. Yet its message might hold true of almost any other subject, including one unavoidably close to millions of American homeowners—their property tax.

    It is the conventional wisdom that ad valorem (i.e., “according to the value”) taxation of real property—land and the structures attached to it—means that taxes are levied proportionately on the valuation of each owner’s holdings,...

  5. 2 The One-Third Untaxed
    (pp. 10-19)

    Standing beside the enormous concrete chamber of a canal lock, I once heard an attendant proclaim its water level with the cry: “Thirteen feet deep and rising!” Applied to the nation’s exempt property, the call might be: “One-third exempt and rising”—or at least rising in various jurisdictions where data are at hand. Somewhat extraordinarily, in this presumably advanced era of computerization, instant communication, and ubiquitous records, no precise nationwide exempt-property data are available; only informed estimates.

    Fortune in its May 1969 report declared: “In 1968, according to one solidly based estimate, almost one-third of all potentially taxable real estate...

  6. 3 Whence Came Exemptions?
    (pp. 20-27)

    Exemptions probably are as old as taxes. For it is venerable logic that a king does not tax himself or submit to taxation without his consent. Thus governmental immunity began. Church-property exemptions, too, date to the earliest tax systems, for the ancient priesthood in effect was part of incipient governmental forms. Royal astrologers, soothsayers, and more traditional priestly functionaries, in fact, received benefits far beyond exemption from taxes: James Henry Breasted records in his History of Egypt that the Osirian priesthood owned 750,000 acres of select Nile Valley lands, plus the right to levy taxes and own slaves for ecclesiastical...

  7. 4 “For Religious Purposes”
    (pp. 28-44)

    In a skit on NBC-TV’s Laugh In, the owner of a small grocery store listened to a tax official explaining that property levies had increased spectacularly that year because surrounding land parcels had been exempted for religious purposes. As the official paused, leaning casually against the cash register, the grocer thought a moment, then in a flash of inspiration exclaimed, “Take your hands off my altar!”

    Subsidies to, and exemption of, church property have been subjects of bitter contention for centuries. Today some national governments levy taxes on behalf of churches (West Germany, Austria, and Sweden, for instance), and The...

  8. 5 Who Defines “Government”?
    (pp. 45-61)

    If any exemption would seem uncontroversial, predictable, and beyond abuse, it would be that on governmental property. Since taxes are, after all, for support of government, what could the tax collector gain by taxing himself? Should not any government propertyipso factobe entitled to exemption? What could be less complicated? Yet, nearly a quarter-century ago, economist Walter W. Heller, then a member of the Division of Tax Research of the United States Treasury, told the National Tax Association that “the problem of taxes on federal real estate holdings [is lone of the major issues in federal-state-local relations.”¹ It remains...

  9. 6 The Expanding Campus
    (pp. 62-72)

    In earlier times the audio signature of a college campus was the blare of a band, the roar of a football crowd, the shout of intramural softball or soccer contenders. Today it is the snarl of a bulldozer, the clank of a piledriver, the staccato of a riveter. In the decade ending in 1969 more than five hundred colleges and universities were added to the United States Office of Education’s compilation of American institutions of higher education, and the number of institutions enrolling thirty thousand or more students increased sixfold.¹ With every campus born, or bucolic teachers college enlarged to...

  10. 7 Welfare Exemptions: “The Indigent Rich”
    (pp. 73-86)

    In 1944 California voters vehemently debated adding a new exemption category to the constitution encompassing properties of “welfare” organizations—religious, hospital, or charitable institutions and societies presumed to exist to advance community welfare.* “In support of this amendment,” the authors ofTaxation of Property in Californiarecalled, “proponents advanced the argument that while the loss in the tax base would cost the taxpayer possibly 1 cent per $100 of assessed value, ‘additional health and welfare services resulting from the exemption would save the entire exemption cost.’ They also assured the voters that ‘the meaning of every phrase has been clearly...

  11. 8 Dwellings Without Taxes: Homeowners/Veterans/Aged
    (pp. 87-97)

    Only in fantasy would most homeowners postulate a situation in which nonresidential property owners pay real estate taxes while they do not. Yet, thanks to a provision known as “homestead exemption,” this now is at least theoretically possible in eleven states.¹* Merely by owning and occupying a home, one can be exempt from real estate levies on a designated maximum valuation—which in some instances amounts to total property tax forgiveness. But this is only the beginning of the tax concessions bestowed on certain homeowners. Veterans, widows, the handicapped, the aged—these and other subgroups of the homeowning populace are...

  12. 9 “Incentive Exemptions”
    (pp. 98-109)

    In Greenville, Alabama, about forty miles southwest of Montgomery, travelers can stay at the sixty-unit Holiday Inn motel as guests, in effect, of the city. Rates quoted in a recent brochure were $8 to $10 a night for one person; $12 for two. The motel pays no real estate tax. The same is true for the Holiday Inn in Boaz, Alabama, and for several other motels in the state.¹ Under the Lawless and Cater Acts, Alabama counties and cities may “acquire property, build factories, and buy machinery and equipment” to be leased to corporations. These leases usually extend thirty to...

  13. 10 The Differential Burden
    (pp. 110-126)

    In defense of exempt properties, Harvard University President Charles W. Eliot once said that it is tax-exempt institutions that make a community worth living in. One even hears quantitative arguments that exempt properties “pay.” To a degree, obviously, both the qualitative and quantitative arguments are sound. Parks, museums, libraries, hospitals, public schools, and similar exempt properties do enrich a community environment in ways that cannot always be quantified, and an exempt property that fosters jobs, retail sales revenue, and increased property values can cause measurable net revenue gains. Nevertheless, in evaluating exempt properties’ economic effects, several points must be considered....

  14. 11 Formula for Change
    (pp. 127-146)

    The property tax long has been favorite whipping boy for critics of our revenue system. Whole volumes have been devoted to chronicling its many faults, and conferences, symposia, and commissions have solemnly marshaled facts to prove that the tax is obsolete, unjust, and resistant to reform and should therefore be abolished. Still, the property tax not only persists but in this country raises nearly nine-tenths of all local governmental revenue and almost half of all local general revenue from all sources, including state governmental grants.¹

    Similarly, some authorities have suggested that outright abolition is the only real cure for the...

  15. Notes
    (pp. 147-164)
  16. Appendix
    (pp. 165-258)
  17. Index
    (pp. 259-276)