Section 19 (new) prohibits retrospective appropriations for services or claims under any agreement not authorized by law, except for expenditures incurred in suppressing insurrection or repelling invasion. Section 20 extended the prohibition on loaning the credit of the state (Section 38, Article III in Constitution of 1848) to assuming the debts of any corporation, association or individual. Section 21 (corresponding to Section 24 of Article III in Constitution of 1848) provides that the compensation of members of the General Assembly shall be prescribed by law, but no change may be made during their term; and limits other allowances to $50 per session. Section 33 of Article IV (new), limited appropriations for the new state house to a total of $3,500,000 without a vote of the people. Article IX on Revenue was increased from six to twelve sections. The changes made are noted in the following analysis: Section 1 of the former article authorizing a poll tax was omitted. Section 1 in the Constitution of 1870 corresponds to Section 2 of the former constitution, reaffirming the rule of uniformity and adding to the list of objects and subjects of special taxation-"liquor dealers, insurance, telegraph and express interests or business, vendors of patents and corporations owning or using franchises or privileges", with a further qualification that all such special taxes shall be "by general law, uniform as to the class upon which it operates". Section 2 in the new constitution is the same as Section 6 in the constitution of 1848. Section 3 added to authorized exemptions, property used exclusively for agricultural and horticultural societies and for cemetery purposes, required exemptions to be made by general law, and provided that: "In the assessment of real estate encumbered by public easement, any depreciation occasioned by such easement may be de-ducted in the valuation of such property". Sections 4 and 5 relating to tax sales and redemptions took the place of the more detailed provisions in section 4 of the former constitution. Section 6 (new) prohibits the General Assembly from releasing local districts from state taxes, or any commutation for such taxes. Section 7 (new) provides that "all taxes levied for state purposes shall be paid into the state treasury". Section 8 (new) establishes a limitation on county taxes of 75 cents per $100., except for debt existing at the adoption of this constitution, unless authorized by a vote of the people of the county. Sections 9 and 10 take the place of section 5 in the former constitution. The General Assembly is specifically authorized to vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessment, or by special taxation of contiguous property, or otherwise". The provision for corporate taxation under the uniform rule is extended to "all municipal corporations". The General Assembly is prohibited from imposing taxes on municipal corporations for corporate purposes; and private property is declared not liable for the debts of municipal corporations. Section 11 (new) repeats with reference to municipal officers provisions of other parts of the constitution as to the ineligibility of defaulting officers, and prohibits the increase and decrease of compensation during the term of officers elected or appointed for a definite term. Section 12 (new) establishes a limit to the debt of municipal corporations of five per cent of the assessed valuation of taxable property, and requires a tax to pay interest and the principal within twenty years, with exception for bonds voted by the people in pursuance of law prior to the adoption of this constitution. In addition to the provisions in the main constitution, three other sections, separately submitted and all adopted, related to financial questions. Section 1 provided that the contract liability of the Illinois Central Railroad Co. shall never be altered or remitted; and that the money derived from the company, after payment of the state debt, shall be applied to the ordinary expenses of the state. Section 2 prohibited any municipal corporation from subscribing to stock or loaning its credit to railroad or private corporations, unless voted under authoirty of law before the adoption of the constitution. Section 3 required a popular vote to authorize the sale or lease of the Illinois and Michigan Canal; and prohibited the loan of state credit or appropriations in aid of railroads or canals, except that surplus earnings of any canal or water power might be appropriated for its enlargement, maintenance or extension. Amendments. By an amendment to Section 31 of Article IV, adopted in 1878, the corporate authorities of drainage districts may be vested with power to make special assessments on propertly benefited. An amendment to Section 16 of Article V, adopted in 1884, extended the Governor's veto to items or sections of appropriation bills. An amendment to Article IX, adopted in 1890, added section 13, authorizing the city of Chicago to issue $5,000,000. in bonds on account of the World's Columbian Exposition. An amendment to separate section 3, adopted in 1908 authorized the construction of a deep waterway from Lockport to Utica, and the issue of bonds not to exceed $20,000,000 for such construction. Revenue Legislation since 1870. A new revenue law was enacted in 1872, which still forms the basis of the present system of assessment and collection of taxes. This act further elaborated the rules for listing and valuing property, increasing the number of items of personal property required to be scheduled. It provided for the review and equalization of original local assessments by the county board; and it reorganized the State Board of Equalization (established in 1867), and added to its authority that of assessing railroad property and the stock of Illinois corporations. Numerous amendments to the act of 1872 and other laws relating to taxation, have been passed from time to time. The more. important of these have been the following: An Act of 1895 to tax gifts, legacies and inheritances, amended in 1909 and at other times. An Act of 1898 making some important changes in the methods of assessing property, especially in Cook County. This act did away with town assessors and collectors in the city of Chicago, and provided a Cook County board of assessors and board of review; it increased the powers of all county treasurers as supervisors of assessments, and reorganized and increased the powers of county boards of review. It also recognized the practice of undervaluation in the assessment of property by providing that the taxable value should be one-fifth of the "full value”. An Act of 1901, (the Juul law) which has been frequently amended, established a general limitation on the aggregate tax rates, and for the reduction of rates over the limit. An Act of 1909 provided for an increase in the taxable value of property from one-fifth to one-third of the full value. In 1919, a further increase to one-half was made. These changes were made to enlarge the borrowing power of municipalities under the constitutional debt limit; and in each case corresponding reductions were made in the authorized tax rates of local authorities. An Act of 1917 abolished town collectors; and placed the coilection of taxes entirely in the hands of the county treasurers. Acts of 1919 abolished the large elective State Board of Equalization, and provided for a State Tax Commission of three members, appointed by the Governor; and established an increased scale of license taxes on corporations and insurance companies. III. JUDICIAL DECISIONS ON TAXATION Early cases. Two decisions of the Supreme Court of Illinois, under the rule of uniform taxation as laid down in the first state constitution, indicated a liberal construction of the rule. In Sawyer v. the City of Alton (1841) it was held that the con stitutional provision for uniformity did not prevent a poll or capitation tax or a law requiring labor service on roads. "We are of opinion the framers of the constitution intended to direct a uniform mode of taxation on property, and not to prohibit any other species of taxation, but to leave the legislature the power to impose such other taxes as would be consonant to public justice, and as the circumstances of the county might require. They probably intended to prevent the imposition of an arbitrary tax on property. according to kind or quantity, and without reference to value. The inequality of that mode of taxation was the object to be avoided. We cannot believe they intended that all the public burdens should be borne by those having property in possession, wholly exempting the rest of the community who, by the same constitution were made secure in the exercise of the rights of suffrage, and all the immunities of the citizen." In Rinehart v. Schuyler, et. al. (1845) it was held that the revenue laws from 1823 to 1829 were not unconstitutional because they provided for the classification of lands at specific valuations named in the law. It was maintained that the system of valuation and classification was the most equitable and convenient, and that a valuation of the lands by personal examination and inspection would not only have been inconvenient and expensive, but absolutely impracticable.2 But in later decisions the rule of uniformity has been more strictly enforced, and applied, not only as to all forms of tangible property, but also to intangible wealth in the form of stocks and bonds, mortgages and other securities, and credits. Intangible property. The taxation of credits and intangible rights as property has been upheld. In the case of Trustees etc. v. McConnell it was held that money loaned was a subject of taxation. In the case of People v. Rhodes, it was held that notes for money duc for land sold by contract, was a proper subject of taxation, as well 1 Sawyer v. The City of Alton, 4 Ill. 127. 129 (1841). 2 Rinehart v. Schuyler et al., 7 11. 73, 505. 511 (1845). 12 Ill. 158 (1850Y as the land the title to which was still held as security for the purchase money.* In People v. Worthington, it was held that the legislature had the right to tax notes and credits secured by mortgage on lands sold. "The word property is not alone used in our language to denote tangible things, but is properly applied to denote intangible rights of value. One may have a property in a patent right or a copyright. which is as much ideal as is a right of action. We may safely assume that it was the policy of the convention which framed this clause of the constitution, that each person pay a direct tax in proportion to the pecuniary interests which he has in the state, and to be protected and defended by the laws."5 But the fact that certain credits and deductions are allowed in the assessment of personal property does not establish a want of uniformity." It has further been held that the franchise of a corporation is property which has value that can be estimated; and that there is nothing illegal or unjust in a rule of the state board of equalization. that to value the stock and franchise of incorporated companies, the fair cash value of the capital stock be added to the fair cash value of the debts of the company, except the debt for current expenses. In the so-called Teachers' Federation case, the state board of equalization was required by mandamus to assess the capital stock of public utility corporations, but the Supreme Court of the United States held that the assessment should be made on the same basis as that of other corporations of the same class. 8 To secure the uniformity required by the constitution, it has been held that two things are essential: "First, the assessments shall be just and equal, in proportion to the value of the property liable to assessment; and secondly, when thus assessed, the rate shall be uniform as to every person, and on every species of property returned by the assessor for taxation"." But, in the case of the First National Bank of Urbana v. Holmes, it was held that where bank shares were assessed on the same basis as other personal property, but at a higher percentage of true value than real estate, there was no equitable right to have the valuation of bank shares reduced.10 Commutation-License Fees. Under the first state constitution, it was held that an exemption of the State Bank of Illinois from all taxation in consideration of the payment of one-half per cent on their capital stock was valid and constitutional.11 *15 111, 304 (1853). People v. Worthington, 21 Ill. 170 (1859). 7 Ottawa Glass Co. v. McCaleb, 81 Ill. 556 (1876). & St. L. R. Co. 76 Ill. 561 (1875). Porter v. Rockford, R. I. * State Board of Equalization v. People, 191 Ill. 528 (1901); Raymond v. Chicago Union Tr. Co., 207 U. S. 20 (1907). Sherlock v. Village of Winnetka, 68 Ill. 530 (1873). 10 First National Bank of Urbana v. Holmes, 246 Ill. 362 (1910). 11 State Bank v. People, 4 Scam. 303 (1843). |