$4,500,000,000 Found

In 1935 when Congress amended the 1934 Revenue Act, a provision was included permitting local governments to inspect Federal income tax returns. To Cook County, Illinois' Assessor John S. Clark the provision seemed to offer interesting possibilities. Like many other local tax units, Cook County levies a tax on tangible and intangible personal property. The $495,000,000 at which Chicagoans' total personal property was assessed seemed to Mr. Clark considerably too low. He saw a chance to reckon the true value of their intangible personal property--mostly stocks and bonds--by checking on the income therefrom which they had reported to the Federal Government.

Last summer, his assistants photographed all 350,000 Cook County income tax returns. Last week Assessor Clark announced his complete findings:

Of the 350,000 returns, 90,000 revealed income received from intangibles. Of the 90,000, 42,000 showed property which Cook County taxpayers had not reported before. Assuming that income from securities represented a 5% yield, total market value of the nonreported new taxable property was $4,500,000,000. For assessment purposes--taking 20% of the market value as true value and 37%* of the remainder as taxable--this was reduced to about $283,884,836. Taxes on the new property will be $23,500,000, enough to reduce the city's tax rate of $9.52 per $100 by 12%.

In his lists of the 24,000 Chicago citizens and corporations who had been filing personal property returns but omitting intangibles, 18,000 others who had been improperly omitting personal property entirely, Assessor Clark had plenty of big Chicago names. Gordon C. Thorne, whose father was a Montgomery Ward & Co. founder, had his valuation upped from $1,388 to $530,351. Shoeman Louis F. Florsheim's was upped from $5,171 to $244,160. On their Federal income tax returns many Chicago corporations had naturally priced machinery at a maximum to increase exemptions for depreciation. This practice also produced assessment changes. Valuation for Wm. Wrigley Jr. Co. jumped from $249,036 to $3,987,736; for Walgreen Co. from $61,751 to $675,-219.

More significant than the groans of thousands of Chicagoans was the probability that they would soon be echoed elsewhere. Last week, Assessor Clark had already received eager queries about his method from taxing units in Montana, Texas,. Connecticut, Michigan.

-Figure fixed by the Illinois State Legislature before Illinois substituted a sales tax for a State property tax in 1933.

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