The news in this publi
cation is released for the
press on receipt.
the university of north CAROLINA
NEWS LETTER
Published Weekly by the
University of North Caro
lina for the University Ex
tension Division.
AUGUST 5, 1925
CHAPEL HILL, N C.
THE UNIVERSITY OF NORTH CAROLINA PRESS
VOL. XL NO. 38
Editorial Hoard: _ E. C. Branson, S. H. Hobbs. Jr.. L. R. Wilson, E. W. Knight, D. D. Carroll, J. B. Bullitt, H. W. Odum.
Entered as second-class matter November 14, 1914, at the Postoffice at Chapel Hill, N. C., under the act of August 24, 1912
VI. LIMITS OF TAXATION AND INDEBTEDNESS
A. Outline
1. Constitutional Limits for the State:
Property tax—five cents. No
levy at present.
Income tax-six percent. Pres
ent maximum—five percent.
Indebtedness—percent of tax-
ables. Present debt $105,874,600
(Aug. 1, 1924).
2. Constitutional Limits for the
County:
a. Property tax—fifteen cents if
• no State levy.
May exceed this limitation
for necessary expenses with leg
islative approval.
May exceed this limitation
for unnecessary expenses with
legislative approval and majority
vote of people.
May exceed this limitation to
defray expenses of six months'
school.
b. Poll tax—two dollars.
May exceed this limitation
until obligations incurred under
the equation principle are liqui
dated.
c. Indebtedness— five percent of
taxables.
3. Constitutional Limits for the City:
Poll tax—one dollar.
Indebtedness—8 percent of tax-
ables.
4. Present Indebtedness:
State debt.
Your county debt. All the coun
ties.
Your city debt. All the cities.
5. Present tax levy:
In your county. Purposes for
which levied.
In your city. Purposes for which
levied.
6. Limitations, general discussion:
The Limit of Sound Credit.
The Limit of Maximum Yield.
The Limit of Maximum Effi
ciency.
The Limit of Endurance,
B. Explanation
The North Carolina State Constitu
tion limits the total state and county
tax on property to fifteen cents on the
one hundred dollars value of property,
but with several provisos: (1) This
limitation shall not apply to taxes
levied for the maintenance of the pub
lic schools of the state for the consti
tutional term, which is now six months.
(2) The county commissioners may
exceed this limitation for a necessary
expense by obtaining legislative con
sent either by general or special act.
(3) The commissioners may exceed the
limitation even for an unnecessary ex
pense if, in addition to legislative ap
proval, the proposition is submitted to
the people and receives a majority of
the qualified vote. The courts have
a right to say what are necessary ex
penses. County bonds not issued for
necessary expense, but authorized
by legislative act and popular vote, are
valid, (4) The state levy on property is
limited to five cents. It is the present
policy of the state government not to
levy any tax on property, leaving it ex
clusively to counties and municipalities.
For many years there was a consti
tutional equation between the property
tax and the poll tax, which had
to be observed in levying general
taxes for state and county pur
poses, in that the poll tax should be
equal to the tax on $300 of property and
should not exceed two dollars; but
this was changed by an amendment in
1917, fixing the poll tax at two dollars
for counties and one dollar for munici
palities. Three-fourths of the pro
ceeds of the poll taxes are to be ap
plied to education and one-fourth to
the support of the poor. In some
counties the poll tax will exceed two
dollars until obligations incurred be
fore 1917 are liquidated.
An amendment passed in 1924 limits
the amount of public debt which the
state may incur to seven and one-balf
percent of the assessed valuation of tax
able property within the state. Cities
are limited to eight percent of their
taxable wealth.
It is possible for a taxing unit to
keep within constitutional limits of in
debtedness and yet not keep within the
limits of a sound credit. It is not a-
lone the amount of indebtedness that
iJiust be considered but what there is
to show for the expenditure. A county
that floats a $600,000 bond issue to
build roads and bridges is better off
than another county that floats $100,000
to fund an accumulated deficit. It is a
maxim of sound business that current
revenues be sufficient to meet current
expenses. A permanent improvement
may properly be paid for through a
bond issue, provided the retirement of
the bonds is completed during the life
time of the improvement.
With the legitimate demands of mod
ern government multiplying so rapidly
it is impossible for the taxing authori
ties to keep the levy as low as it used
to be. Intelligent citizens should con
sider not alone the amount of the levy
but the return thereon in governmental
service. Nevertheless there is a limit
beyond which the levy should not go.
There is a point beyond which every
increase yields a diminishing return.
There is a point beyond which a state
cannot go without undermining the
morale of the state. Just as in private
life there are luxuries which are worth
all they cost to only those who
can afford them, so there are govern
mental services which are worthy but
which not all can afford.
C. Questions
Compare the county tax levy on $100
of property in 1922, 1923 and 1924.
How will the 1926 levy be deter
mined?
To what extent is there a constitu
tional limit?
■ How is the poll tax determined?
What is the present county indebted
ness? State indebtedness?
What is the constitutional limit of
indebtedness for each?
To what extent is your county debt
bonded?
How was the debt incurred?
Is a large floating indebtedness de
sirable?
What portion of the county taxes
goes for interest on indebtedness?
What portion is applied to retire the
indebtedness?
Discuss the advantages of a “pay as
you go” policy.
What do you consider the limit of
sound credit? Has it been exceeded in
the State? In your county?
Is it possible for a tax to exceed the
limit of endurance? Is it likely to oc
cur?
Is a levy that yields the most rev
enue necessarily the levy of maxi
mum efficiency?
Does doubling the levy double the
revenue raised? Why, or why not?
Would reducing the levy by half re
duce the revenue raised by half?
(For a study of city taxes the word
“city” may be substituted for the
word” county” in the above questions.)
D. Sources of Information
j Consolidated Statutes, sections 1297,
(1291 (a), 2677—2679.
! North Carolina Constitution, Art. V,
sections 1-5, Art. VII, section 7.
A. C. McIntosh, County Government
in North Carolina, pamphlet reprinted
from National Municipal Review, Feb
ruary, 1926. Write Department of Ru
ral Social Economics, Chapel Hill.
Issues of the News Letter carrying
studies on Bonded Debt and Tax Hates,
—Paul W. Wager.
MAKE IT SATISFYING
It is just as important to make
farm life more satisfying as it is to
make farm business more profitable.
In fact, as Dr. Thomas N. Carver
has reminded us:—
“Paradoxical as it may seem, it
is a matter of actual observation
that the sections of the country
where the land is richest, where
crops have been most abundant,
where land has reached the highest
price and the farm owners attain
to the highest degree of prosperity,
are the very sections from which
the farm owners are retiring from
the farms most rapidly and leav
ing them to tenants.”
So it is that after the financial
problems affecting the farmers have
been solved, we yet have to attack
er rather we should say that we
must attack along with the financial
problems of the farmer—the prob
lem of rural education and rural
social and community life or culture.
United States Commissioner of Edu
cation John J. Tigert has wisely de
clared, “The greatest need in edu
cation in the United States today is
a square deal for the country child, ”
and points out that the average ex
penditure each year for the city
child is $40.69 against $23.91 for his
rural brother. Urban schools are
open 182 days a year on the aver
age, against 142 days for those in
the country, and the average city
teacher receives a salary of $864
against $479 for the rural teacher.
We shall have no real democracy
until we recognize that the child in
the country districts is just as much
a child of the state as the child in
the city, and that so far as educa
tion is concerned, the wealth of
the - whole state must be put
equally at the service of both coun
try children and city children.
—Clarence Poe.
V. BENEFITS OF STORAGE ABOVE DAMS
This is an extremely important point
to which sufficient attention is often not
given. Let us say that a stream flows
11 cubic feet per second of water and a
20 foot fall is available. By the formu
la given in the second article, H. P.
Qh _ 11 x 20
11
11
20. Then
20
h. p. wheel could be installed and would
produce 20 h. p. day and night. But in
most rural communities there is practi
cally no demand for power at night,
and the water would run to waste for
at least 12. hours. If we can catch this
night flow in a pond and keep it until
the next day, we may then develop 40
h. p. for 12 hours in the day time, and
a 40 h. p. wheel should be installed.
A Big Pond Best
Again let us suppose that a dam is
built so that the pond above it will hold
considerably more than the low water
flow of the stream. We will suppose
the pond to be full. A dry period comes
on and our stream flow instead of being
11 cubic feet per second is only 5 cubic
feet per second. In the first place we
cannot develop 20 h. p. with our 20-foot
fall because we have water enough
only to make
6 X 20
11
— 9.1 h. p, at 80
LOCAL TAXATION FAULTY
Taxes levied locally for purposes of
more than local scope tend to increase
the unfair tax burden on agriculture.
This is true of school taxes. Education
is necessary to the proper development
of society as a whole, and many states
lay down requirements fixing minimum
school terms and minimum salaries for
teachers. Courses of study and train
ing standards are prescribed. Yet the
cost of maintaining these state-made
standards is left mainly to local school
districts. In a similar manner taxes
are raised locally for roads used per
haps more for general traffic than for
local traffic.
This is a difficulty which will increase
rather than decrease unless something
is done about it,’according to the United
States Department of Agriculture. Tax
studies just completed by the depart
ment show that in many states a heavy
burden of taxation on farmers has been
added by what amounts to local taxa
tion for state purposes. Theoretically,
the area taxed for any particular pur
pose should be the same as the area
benefited by the expenditure for which
the tax is raised. In practice the line
between local and general benefits can
hardly ever be drawn with precision.
When the division is much out of line
the burden of taxes for general or state
purposes is unfairly distributed.
Numerous violations of the principle
that state-wide functions should be
supported by state-wide taxes are
pointed out. Trouble arises from the
fact that when a tax for a state-wide
purpose is levied in different districts
at different rates, the tax may be fair
enough within each district, but dis
tinctly unfair as between districts
Education is admittedly a social func
tion, the benefits of which are not re
stricted to the area or even to the state
or the country in which it is given. It
is therefore obviously unfair to burden
farm property or rural occupations with
higher school taxes than other sources
of tax revenue have to bear. This
would be the case if there were an
equal interchange of population be
tween the city and the country. It is
the more unfair since the move
ment of population is from the country
to the town. City men have more than
a passing interest in the education of
the country boy or girl, even if only
from an economic standpoint, since they
recruit their help in part from the city
ward flow of ppulation. They are not
likely, says the department, to object
to the principle that education should
be as good in the country as in the city
and that its cost should be fairly dis
tributed
Local taxation for the support of both
roads and schools is faulty because it
rests on a division of states into more
or less arbitrary districts which are un
fitted for purposes of finance. In many
sections the separate taxing units are
not separate districts at all. They are
merely parts of larger communities
scattered around towns and cities.
Logical separation is possible only in
minor matters. In economic and social
problems, responsibilities are interde
pendent. Attempts to maintain sepa
rate financial relationships in such cir
cumstances fly in the face of the nat
ural organization of society.—U. S.
Department of Agriculture Press Ser
vice. ;
percent efficiency. Moreover, our wheel
operates at best efficiency only when
using in the neighborhood of 11 cubic
feet per second, and therefore we can
probably only develop from 7 to 8 h. p.
with the 6 cubic feet per second that is
flowing. This will not drive our ma
chinery. But if the pond has filled up
previous to the dry period, we may be
gin to use this stored water to make
up the deficient stream flow to some
where near our 11 cubic feet per second
that we need.
The bigger the pond the longer the
dry period we may tide over by draw
ing water from it. There is therefore
a great advantage in having a big pond ’
above the dam. Where suchapond-is
possible, the turbine water wheel is '
Dest adapted for use, because as we ’
draw on the pond the water level is
lowered and the fall which our turbine
uses is less. The turbine can operate
fairly well until the water level falls to
76 percent of the total fall originally
designed for.
Placing Flood Gates
In planning to create a pond behind
a dam due regard should be had to the
filling up of the pond with silt, in
which case all the value of storage is
lost. This l\as happened at many small
power developments in the state.
When the dam is built, large rectan
gular gates at least 6 square feet in
area should be constructed and ar
ranged so that they may be opened in
times of moderate flood and thus allow
the silt and mud to be scoured out.
The placing of these gates where they
will be most effective requires good
judgment. They should be so located
that they are in the path of the swift
est current during floods. Do not put
the gates in the middle of the dam
with no way to open them in flood.
The importance of storage increases
with the number of persons served
with power from the development.
For a single farm, an overshot wheel
may produce all the power that is
needed. When dry periods occur it is
not a matter of much consequence for
a single farm to go back to kerosene
lamps for a few days or weeks, or to
give up using the electric iron or
toaster, etc. But if a small commun
ity is being supplied with power, a
more reliable and constant flow of
electricity is demanded. Then in dry
periods we must either (1) have enough
water at minimum stream flow to meet
the power demands, (2) have sufficient
stored water to tide us over until rains
increase the stream flow to normal, or
(3) have an auxiliary source of power
such as a gasolifie, oil, or steam en
gine. It is evident that method (2) is
greatly preferable and usually cheaper
than method (3). The relative costs
of these methods will be considered in
the next article.—Thorndike Saville.
FEDERAL INCOME TAX RETURNS, 1923
Nnmber of Personal Returns and Inhabitants per Return
The following table, based on Statistics of Income, Treasury Department,
and the Census estimates of population for 1923, ranks the counties according
to the number of inhabitants per Federal income tax return filed for the income
year of 1923. The accompanying column shows the number of returns filed by
each county.
New Hanover leads in inhabitants per return made, with one return for
every 11.4 inhabitants. Mecklenburg leads in total returns filed, with 6 782
Clay ranks last, both in inhabitants per return, 980, and in total returns, 6.
The urban counties lead, while the excessively rural counties pay very little in
come tax. For instance Mecklenburg filed more returns than the 60 counties
combined appearing in the second column, more by 332! The eight counties
which lead in the table filed more returns than the other 92 counties combined.
State average, one income tax return for every 39.4 inhabitants. Only 20
counties rank above the State average. These 20 counties filed 63 percent of
the income tax returns reported for 1923. Total returns filed, 68,191,
S. H. Hobbs, Jr.,
Department of Rural Social-Economics, University of North Carolina
Rank County
Number
Inhabs.
i Rank County
Number
Inhabs.
Income
per
1
Income
per
Tax
Return
Tax
Returns
1
Returns
1
New Hanover
3820
11.4 161
Caldwell
260
82.0
2
Mecklenburg..
6782
12.6
1 62
Martin
255
86.9
3
Buncombe
4726
14.7 1 63
Rutherford ....
360
90.3
4
Guilford
6780
14-8 ! 64
Swain
5
Edgecombe ...
2490
16.1
166
Randolph
336
93.6
6
Durham
2640
16.9
l66
Johnston . .
7
Wake
4205
18.9
67
Anson
290
101.6
8
Forsyth
4235
20.8
68
Duplin
310
102.7
9
Pasquotank ...
735
24.6
69
Harnett
290
106.0
10
Richmond ....
1096
25.3
60
Pamlico
86
107.0
11
Rowan
1770
26.2
61
Hoke
110
111.7
12
Wilson
1370
29.2
62
Hertford
146
114.6
13
Craven
995
30.5
63
9nn
14
Chowan .
336
31.7
64
Northampton .
180
130.6
16
Cumberland ...
1146
32.1
66
Jackson
95
136.0
16
Alamance
1046
32.7
66
Mitchell
86
136.5
17
Vance
720
33.3
67
Tyrrell
36
137.0
18
Lenoir.
916
36.0
68
Franklin
195
14(1.6
19
Lee
396
35.7
69
Davie
96
143.0
20
Gaston
1530
86.8
70
Bertie
166
147.0
21
Henderson
446
42.7
71
Dare
36
148.4
22
Wayne
1065
44.1
72
Cherokee
106
148.6
23
Beaufort
686
45.4
73
Lincoln
115
167.4
24
Halifax
1010
46.6
74
Brunswick
96
168.0
26
Carteret
360
45.7
76
Sampson
240
169.2
26
Rockingham...
1010
46.4
76
Wilkes
205
163.6
27
Pitt
1010
48.4
77
Alexander
70
177.0
28
Moore
470
49.0
78
Avery
60
177.1
29
Cabarrus
716
61.0
79
Chatham
130
186.0
30
Iredell
770
51.1
80
Onslow
80
186.3
31
Catawba
705
61.2
81
Nash
280
189.7
82
Davidson
720
61.8
82
Stokes
106
197.0
38
McDowell
325
56.1
83
Pender
75
197.4
34
Scotland
275
57.1
84
Jones
60
206.0
36
Orange
320
59.1
85
Currituck
35
208.0
36
Haywood
396
61.8
86
Bladen
96
216.0
37
Warren
336
66.0
87
Camden
26
216.0
38
Surry
606
66.4
88
Madison
90
222.0
39
Union ........
490
68 6
89
Watanpa
fin
40
Granville
376
73.3
90
Macon
60
262.0
41
Stanly
410
73.4
91
Yancey
60
270.0
42
Robeson
770
74.6
92
Gates
35
303.0
43
Washington .,..
155
74.9
93
Ashe
70
310.0
44
Polk
120
76.6
94
Hyde
25
336.0
46
Montgomery...
190
76 8
95
Greene
50
346.0
46
Columbus
396
77.3
96
Caswell
36
460.0
47
Transylvania...
130
77.8
97
Yadkin
35
477.6
48
Perquimans ....
140
80.0
98
Graham
■ 10
490.0
49
Cleveland
446
81.0
99
Alleghany
10
740.0
60
Person
240
81.7
100
Clay
5
980.0