MESSAGE
OF
GOVERNOR CLIFFORD WALKER
TO THE
GENERAL ASSEMBLY
OF
GEORGIA
NOVEMBER 8, 1923

MESSAGE
OF
GOVERNOR CLIFFORD WALKER
TO THE
GENERAL ASSEMBLY
OF
GEORGIA
NOVEMBER 8, 1923

TO THE GENERAL ASSEMBLY OF GEORGIA:
Students of taxation in Georgia have openly asserted for months that less than half of the people and less than half of the property of the state are bearing all of the burden of taxation. Though the matter has been actively agitated by the people I have seen no sustained denial of this contention. It was this condition which formed the main issue in the general election. In that election and in the convention of the people which followed, the voters of Georgia clearly registered their will. They directed that the burdens of taxation be more fairly distributed. They directed that the manner of effecting such fair distribution be decided by a Commission composed of farmers, business men, bankers and manufacturers, representing all classes of people and all sections of the state. In sacred compliance with this mandate of the people, such a Commission has been appointed, has functioned in the manner directed by the people and has returned its findings to the Governor to be transmitted to the General Assembly.
This report does not pretend to present a perfect system of taxation. Taxation deals with humans and, therefore, cannot be made perfect. The report is not my report. In some respects I would have altered it. I would have approached the solution of the problem by first repealing the Tax Equalization Law. Faced by a clear majority with opposing views in the Senate I can do nothing but urge the passage of the reform bills approved by the Tax Commission and the repeal of the Tax Equalization Law upon the adoption of these reform measures. The Commission's report is the best report and suggests the best system that could be presented under the terms fixed by the people of the State. It represents the combined views of all classes and sections. It was arrived at through a spirit of "give and take"-a process which marks the passage of all great constructive legislative programs-the only process known by which such programs may be en-
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acted into law and finally perfected by experience and by amendment from year to year.
The members of this Commission have served at a great personal sacrifice, without compensation and entirely at their own expense. No word or thought of personal aggrandisement or selfish political interest has manifested itself in any member of this Commission. Its report should, therefore, be considered with the utmost respect.
Personally, I approve every word, every line and every paragraph of this report and I shall place back of the report every po,ver and every influence which the executive office may properly employ until its recommendations are finally enacted into law. I urge every friend of the administration and every patriotic Georgian to get back of this report and use every influence in its support. If you disagree with any part of the program or any minor detail, I beg of you to urge amendments in a spirit of constructive criticism. If any member can suggest a better system or improve the system here offered, it will have my cordial support. I earnestly urge the enactment of the laws recommended in the knowledge that after a fair trial any part of the legislation can be and will be amended in the succeeding years.
I need say very little as to the suggestions themselves, keeping in mind always that the mandate of the people directs that the expense of Government be more fairly distributed, and the problem is the transfer of some of the burden of taxation from the owners of tangible property to the owners of intangible property. Many of the other states have ,nestled with this problem for years. Their records show that they have succeeded in reaching the intangibles only through an income tax. Hundreds of citi7.ens are e11joying large salaries and all the blessings of Government at the expense of other citizens, paying practically no taxes themselves. These can be reached only through an income tax. While sharp and well merited criticism has been visited upon the unwise and unjust
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method of enforcing the Federal income tax, the Commission in its travels over the state have met with almost no opposition to the principle of the income tax. With only rare exceptions, even large tax payers have admitted that in principle the income tax is the fairest and most economica1 method of taxation. They assume, therefore, that as to this item the only serious difficulty will be as to detail and I can confidently rely on the patriotic members of the General Assembly to adjust any differences of opinion on that score. I earnestly recommend the passage of a Constitutional amendment permitting the Legislature to levy an income tax for state purposes upon net incomes as the same may be defined by the General Assembly, which tax may be graduated, the rate in no case to exceed 5%-the same to contain reasonable exemptions. If such amendment is offered by the General Assembly and ratified by the people, I pledge the influence of this office to the adoption of the scale of income taxation suggested by the Tax Commission. I further pledge the calling of an extra session of the present General Assembly in order that you may fix the rate of taxation and put the law into effect at the earliest possible date.
2. REDUCE AD VALOREM TAX
I recommend that the Constitutional limitation of five mills for such taxes be reduced to such figure as the Legislature may deem safe in preserving the credit and in maintaining the institutions of the state, in no event to be larger than four mills.
3. CLASSIFICATION OF PROPERTY
I earnestly recommend a Constitutional amendment permitting the Legislature to classify property for taxation. Such a law would reduce the burdens now carried by owners of tangible property from one to two million dollars annually. The owners of intangible property producing
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an income of from 5 per cent to 8 per cent will dodge taxation, sell their intangibles or move out of the state before they will pay a tax of from 3 per cent to 4 per cent. Such a tax is an income tax of over 50 per cent which, of course, is unfair, unreasonable and confiscatory. Even the income tax has failed to reach all intangibles. The classified property tax system has succeeded in all the states in which it has been tried. A system combining the income tax with the classification tax meets the approval of students of taxatibn. It has been given the approval of the people of the states which have tried the combined system ::,tnd the Tax Commission urges your body to add the classification law to the income tax. I earnestly join in this recommendation.
4. BUDGET SYSTEM
Modern business heartily approves a budget system. Its adoption by the Federal Government has met the approval of business men throughout the nation. Up-to-date states have also incorporated this system. I do not hesitate to say that- this suggestion has met practically the unanimous approval of the people of the state and I cordially urge the General Assembly to enact such a law.
5. STATE AUDITOR
Separate from the Budget System, but supplementing its work, and a necessary adjunct thereto, is a State Auditor. The work of an Auditor is not intended alone to discourage dishonesty, although this feature is incorporated in every modern business plan. It is intended to suggest modern systems of bookkeeping, checking and auditing; to suggest overlapping in endeavor in transacting the business of the state; the reduction of overhead and all other expenses and the adoption of every modern economy and other business methods. I do not hesitate to say that if provided I shall endeavor to make this office at least the
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foundation for a purchasing system for the state which, while giving preference to merchants in the local vicinity of the different state institutions, will save annually several hundred thousand dollars. I cordially commend the passage of this legislation.
6. ENFORCE COLLECTION OF TAXES
The State Tax Commissioner in an open meeting asserted his official opinion that a reasonable force of field inspectors charged with enforcing all tax laws would net in the treasury a minimum of one million dollars additional income annually. I sincerely share this opinion and I earnestly ask that such a force be provided. Even the establishment of a new department would be economical and wise. However, I have suggested that this force be provided as a division of the Comptroller General's officethus obviating the establishment of a new department. This suggestion has the approval of the Tax Commission and I confidently trust it will be endorsed by the General Assembly. Not only the dire need of the institutions of the state, but common honesty demands that tax laws be repealed or be uniformly enforced. It tends towards disrespect of the laws to permit a tax law to be enforced against one citizen while it is disregarded and defied by another citizen. Respect for the law, as well as the needs of the state, demand the passage of some such law and I hope that it will be enacted without delay.
I approve the reference of the Tax Commission to limitation upon the rate of county and local taxation and trust that some relief may be granted by the Legislature.
J recommend that the Tax Equalization Law be repealed and that the old law as to equalization be reenacted.
7. FREE SCHOOL BOOKS
For seventy years states, counties and municipalities have furnished school books for the free use of the pupils
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of the elementary grades. Experience has shown this practice to be safe, sanitary, economical and wise. Many sub-divisions of this state have tried the system and found it most advantageous. The people unmistakably declared for the adoption of this system in Georgia. It has the approval of the State Superintendent of Schools. Its expense will amount to only 2 per cent of the amount appropriated to the schools. If no means can be provided for the year 1924, I earnestly ask that enabling legislation be adopted providing for the foundation of the system, appropriations to '6e made in later years when the means are in sight. This could be provided by directing that that portion of the tobacco tax appropriated to the tuberculosis sanitarium at Alto for the years 1924 and 1925 be appropriated to this fund for the years following 1925. This, or some other plan can be arranged following the reformation of the tax laws. I earnestly ask that enabling legislation at least be passed at this extra session. I consider this legislation of secondary importance to tax reformation and suggest that the tax measures be given the right of way. I remind the General Assembly that the people of the state in convention have declared for the system of furnishing school books to the elementary grades and I ask that this legislation be enacted before the special session is adjourned.
I have exercised the constitutional right in the executive to call you into an extraordinary session in the firm conviction that no great constructive reformation of the intricate and complicated tax system could be enacted in a regular session, flooded with measures of special personal interest to the members, at a time when the state will be charged with political unrest, in the midst of national, state, county and municipal political campaigns. This view accords with the legislative history of other states and even of our own state. Certainly constructive legislation can be considered with greater calmness and deliberation. Such atmosphere should surround the consideration of this most vital question affecting the future of our state. I confi-
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dently believe that patriotic members of the General Assembly will approach the solution of this problem in the spirit of love for the state and patriotic devotion to the welfare of the people.
CLIFFORD WALKER,
Governor. Atlanta, Georgia, November 8, 1923.
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