CHAPTER IV. EFFICIENCY OF THE TAX SYSTEM Fiscal Results In the vault in the office of the state treasurer in the capitol at Springfield is carefully preserved a plain, wooden box, scarcely more than a foot long; this box is the receptacle in which the state funds were kept during the early years of the state's history. As it rests today, tucked away on one of the shelves in the massive vault which has succeeded it, an interesting contrast is presented of the importance of the financial affairs of the state at that time and at present. For the amounts involved in the early financial transactions were indeed trifling. Exact statistics, are, in some cases, hard to obtain. Thus the sums raised by taxation for local purposes are almost entirely wanting for the years before 1838;1 and it is only after 1820 that complete statistics are available for the receipts from taxation for state purposes. However, some fragmentary information exists concerning the total revenues of the state from all sources for earlier years. For example, it is known that the total amount expended from the state treasury 1According to the reports of the state auditor and treasurer, the following amounts were transmitted to the counties as their share in the nonresident land tax. They were entitled to share in this tax by a law which was in force for two years, 1821 to 1823. Jan. 1, 1823 to Nov. 30, 1824......... Two years ending Nov. 30, 1828..... ..$ 808.12 1,617.96 358.13 From special reports made by the auditor at the request of the legislature in 1835, it appears that the revenue to the counties from the land tax in 1835 to $26,451.49. (S. J., 9 G. A., 2 Sess., p. 64.) An estimate of $31,374.89 is made of the probable income of the counties from this source in 1836. These statistics do not include the taxes which may have been levied on personal property for county purposes. during the six years that Illinois was organized as a territory of the second grade, December 31, 1812, to December 31, 1818, was approximately twenty thousand dollars, an amusingly small sum compared with present day budgets.2 This figure represents fairly accurately the amount received by the territorial government from taxation. For the territory, it will be recalled, had no sources of revenue of any consequence aside from the tax and there was no money in the treasury at the end of the year 1818 when the report was made. If the above estimate is correct for the territorial period, the amounts received from taxes in the late years of that period were very much larger than those received in the earlier years. For it is known, from a report made to the first territorial legislature, that during the one year, from December 1, 1817 to December 1, 1818, the territorial revenue from taxation amounted to $9,528.05,3 leaving only about $10,500 to be raised during the other five years.* The size of the budgets, however, began to increase sharply as soon as the territory was admitted to the Union in 1818. During the first two years as a state, money was 2A report to the House of Representatives in 1819 puts the figure at $20,415.79. But the old revenue and warrant ledger in the vault of the state auditor at Springfield states that this amount was only $19,982.36 Whatever may be the explanation of this discrepancy, the total amount was approximately twenty thousand dollars. H. J., 1 G. A., 2 Sess., p. 30; Revenue and Warrant Ledger, Class 3, I, 32. 3H. J., 1 G. A., 2 Sess., p. 30. 4Reynolds (My Own Times, p. 105) says that the taxes imposed from November 1, 1811 to November 8, 1814 amounted to $4,875.47. “Of this sum," he says, "$2,516.89 had been paid into the treasury and $2,378.47 remained in the hands of the delinquent sheriffs to be paid over." The two items, added together, do not make the sum mentioned first. Moses, (Illinois, I, 266) says that the total amount of revenue from November 1, 1812 to November 1, 1814 was $4,875, of which $2,516 was collected and $2,359 remained uncollected in the hands of the sheriffs. Neither Reynolds nor Moses gives exact references to his sources. Moses's statement that the state treasurer received $1,508 in 1817 and $2,471 in 1818 is at variance both with the reports to the assembly and with the books of the state auditor. paid out of the treasury to the amount of $52,809.70.5 There was also a cash balance left in the treasury, on January 1, 1821 of $17,720.13. This would seem to indicate that for two years the entire receipts at the treasury, almost all of which probably came from taxation, were $70,529.83. After 1820 the regular reports of the state auditor give precise information concerning the receipts of the state treasury from all sources, including the various types of taxation. The receipts from the tax on property for the period are shown in Table 1: TABLE 1. RECeipts into the State TreasurY FROM THE TAX ON PROPERTY, 1820-1838. These figures represent the state's share in the receipts from the tax on property. This revenue came almost entirely from the land tax, the only exception being in the first figure where a small part of the $45,803.75 came from the tax on bank stock. All the tax on other personal property went to the counties. Moreover, during the early years, most of the money received by the state came from a tax on the land of non-resident proprietors; for not only was the larger share of the tax paying land owned by persons living outside the state, but after 1823 the counties retained two-thirds of the revenue from the land of residents, only the remaining one-third going to the state. The taxable land of non-residents consisted largely of claims 5 Revenue and Warrant Ledger, Class 3, I, 32. This indicates that the statement of Moses, (I, 306) is inaccurate. He says that the receipts from October 18, 1818 to December 31, 1820 were $53,362.22 and the expenditures $35,655.00. "Compiled from the reports of the auditor of public accounts. 8 in the military tract which had been bought up by speculators from the original grantees.' Congress had appropriated about three million acres of this land as bounties for military service. As Governor Coles pointed out in a letter to the governor of Maryland, this policy had the effect of greatly increasing the non-resident list, for much government land was made taxable which otherwise would have remained exempt as property of the United States. The temporary advantage coming in the way of increased revenues from this source was largely counterbalanced, however, by the fact that the settlement of that part of the state where the land was situated was somewhat retarded by this form of ownership. 9 The sums received at the state treasury from the nonresident tax and the percentage which they formed of the total receipts from the state tax on property are shown in Table 2: TABLE 2. RECEIPTS INTO THE STATE TREASURY FROM THE TAX ON THE PROPERTY OF NON-RESIDENTS AND THE PERCENTAGE FORMED BY THEM OF THE TOTAL RECEIPTS FROM THE PROPERTY TAX, 1820-1838. The most striking condition revealed in this statement is the rapid fall in the non-resident receipts after 1832. Aside from the steady transfer of the ownership of land from non-residents to residents, another cause may be responsible for this, namely, the hard times of the thirties, which undoubtedly bore heavily on many persons holding "Ford, Hist. of Ill. p. 48. 8Ill. Hist. Coll., IV, 45 et seq. 9For conditions under which bounty lands became taxable, see supra, p. 30. land as a speculation, causing them to lapse in their taxes. The item in the auditor's report called receipts from "revenue clerks" shows a large increase as the receipts from non-residents diminish. These "revenue clerks" were the clerks of the county commissioners, to whom in 1833 was assigned the task of selling the land of delinquent nonresidents. It is probable that most of the receipts from "revenue clerks" were sums realized from sales for nonpayment of taxes. It may be, however, that by some administrative order, unsanctioned by formal legislative action, the county clerks were made receivers of state taxes on non-residents' lands. The sums received by the state treasurer from the revenue clerks during this period were: 70,015.70 From Dec. 3, 1836, to Nov. 30, 1838... Table 3 shows the ordinary income of the state by two year periods and the percentage of these sums which came from the property tax.10 TABLE 3. TOTAL ORDINARY RECEIPTS INTO THE STATE TREASURY AND THE PERCENTAGE FORmed by the Receipts from the Property Tax, 1820-1838. In order to show with what degree of adequacy the revenue from taxation met the needs of the state, it may 10 The figures in this table do not include the items of "State paper funded and interest on the same," which were receipts into the treasury of securities taken up by sums secured chiefly from the "Wiggins Loan," (Cf. supra, p. 33.) These amounts were, 1830-32, $105,987; 1832-34, $3,790; 1834-36, $217. Moreover, the figures do not include receipts from loans. The decreasing percentage finds at least a partial explanation in the increased receipts from the school funds. |