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3 9 - 3 0 TAX ASSESSME NTS ON COMMON CARRIER

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GOVERNMENT

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H E A R I N G S

BEFORE THE

COMMITTEE ON

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INT ERSTA TE AND FOR EIGN COMMERCE

KSU LIBRARIES

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41

SE OF REPRESENTATIV

EIGHTY -NINTH CONGRESS

SECOND S E S S IO N

ON

H.R. 49 72

A BILL TO AMEND TH E INTE RS TA TE COMMERCE ACT, AS 

AME NDED , IN ORDER TO MAKE UNLAW FUL , AS UNREA SON ABLE AND UN JUS T DISC RIMI NA TIO N AGAIN ST 

AND UNDUE BURDEN UPON IN TE RS TA TE COMMERCE, 

CERTAIN PR OP ER TY TAX ASSESSME NT S OF COMMON 

CA RR IER PROPERTY , AND FO R OT HE R PURPOS ES 

(And Id en tic al Bills)

MARCH 1 AND 2, I960

Serial No. 89-30

* Pr inted fo r the use of the

Co mm itte e on In te rs ta te an d Fo reign Comm erce

6-0-661

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1986
COMMITTEE ON INTERS TAT E AND FOREIGN COMMERCE

HARLEY O. STAGGERS, West Virginia, Cha irma n

WALTER ROGERS, Texas

SAMUEL N. FR IEDEL, Maryland 

TORBERT H. MACDONALD, Massachusetts 

JOHN JARMAN, Oklahoma

LEO W. O’BRIEN, New York

JOHN E. MOSS, California

JOHN D. DINGELL, Michigan

PAUL G. ROGERS, Florida

HORACE R. KORNEGAY, North Carolina 

LIONEL VAN DEERLIN, California 

J. J. PICKLE, Texas

FRED D. ROONEY, Pennsylvania 

JOHN M. MURPHY, New York 

DAVID E. SATTERFIELD III, Virginia 

DANIEL J. RONAN, Illinois 

J. OLIVA HUOT, New Hampshire 

JAMES A. MACKAY, Georgia 

JOHN J. GILLIGAN, Ohio 

CHARLES P. FARNSLEY, Kentucky 

JOHN BELL WILLIAMS, Mississippi 

BROCK ADAMS, Washington

W. E. Williamson, Clerk

Kenneth J. P ainter, As sistan t Clerk

Pr ofessio na l St aff

Andrew Stevenson

Kurt Borchardt

WILLIAM L. SPRINGER, Illinois 

J. ARTHUR YOUNGER, California 

SAMUEL L. DEVINE, Ohio 

ANCHER NELSEN, Minnesota 

HASTINGS KEITH, Mas sachusetts 

WILLARD S. CURTIN, Pennsylvan ia 

GLENN CUNNINGHAM, Nebraska 

JAMES T. BROYHILL, North Carolina 

JAMES HARVEY, Michigan 

ALBERT W. WATSON, So uth Carolina 

TIM LEE CARTER, Kentucky

J ames M. Menoer, Jr. 

William J. Dixon
21

C O N T E N T S

Apr

l96f

Hearings held on— ■ . P aB *

March 1, 1966_______________________________________________ 1

March 2, 1966_____________ _________ ______ ________ - ......... — 47

Text of H.1L 4972________________________________________________ 1

Report of— Advisory Commission on Inte rgovernmental Relation s------------------- 5

Bureau of the Bud get_________________________________________ 4 Commerce, Department of____________________________________ 2 Interstate Commerce Commission---------------------------------------------- 3

Justice, Department of------------------------------------------------------------- 3

Sta tem ent of— Conlon, Charles F., executive secretary, National Association of Tax

Administrators_____________________________________________ 78 McDowell, Robert O., attorney for the Property Valuation Department, State of Kansas______________________________________ 116 Ogden, James N., represe nting th e Association of American Railroads. 10, 72

Peters, William E., Sta te tax attorney, Lincoln, Ne br-------------------- 121

Roncalio, Hon. Teno, a Rep resentativ e in Congress from the Sta te of

Wyoming_________________________________________________ 57 Sanders, Paul IL, professor of law, Vanderbilt University School of

Law ______________________________________________________ 47 Travis, Broley E., consulting valuation engineer, Sacramento, Calif. _ 59

Waggonner Hon. Joe D., Jr., a Representative in Congress from the

Sta te of Louisiana____________________________________________ 7

Additional material sub mitted for the record by—

American Truck ing Associations, Inc., letter from W. A. Bresnahan,

managing dire ctor__________________________________________ 146

Arkansas Public Service Commission, sta tem ent of Earl Berry, director, tax division_________________________________________ 91

Association of American Railroads:

Appendix A—List of 20 States wherein excessive ad valorem

taxes are levied (ta ble)__________________________________ 24

Exh ibit No. 1—L etter from, and background material on, James

W. M artin____________________________________________ 24 Exh ibit No. 2—B ackg round material on Dr. Harold M. Groves__ 26

Exh ibit No. 3—Letter from, and biographical sketch on, Maj.

Gen. John P. Doyle------------------------ ------------------------------- 27 States wherein tax cases were settled with decisions adverse to

railroads, not affording material relief, or litig ation is still pending ------ ----------------------------------------------------------------------- 110 Avery, Gov. William H., of Kansas, letter from---------------------------- 118

California State Controller’s Office, letter from Alan Cransto n______ 142

Dworak, George J., Nebraska S tat e tax commissioner, sta temen t of__ 122

Groves, Dr. Harold M., statem en t of------------------------------------------ 44

Iow a S tate Tax Commission, statem ent of Lynn Potter, c hairm an___ 125

Na tional Association of Tax Administrators, list of States wherein

the re has been recent litigation involving ad valorem tax assessme nts____________________________________________________ 101 No rth Dakota State Board of E qualization, Lloyd Omdahl, secretary, 

sta tem ent of_______________________________________________ 141 Oregon Sta te Tax Commission, letter from C. H. Mack, chairman___ 144

Peters, William E., Sta te tax attorn ey, Lincoln, Nebr., supp lementa l

sta tem ent of----------------------------------------------------------------------- 123 Sou th Dakota State De partm ent of Revenue, statem ent o f_________ 139

Speer, Joh n B., New Mexico State Tax Commission attorn ey, letter

fro m_____________________________________________________ 143

m
IV CONTENTS

Additiona l material sub mitted for the record by—Continued

Springer, Hon. William L., a Representative in Congress from the 

State of Illinois:

Public notice from the Illinois Sta te Journal and Register, listing Page 

1963 fair cash valuation of railroad p roperty (ta ble)------ ------- 34

Public notice from the Southern Illinoisan listing 1964 fair cash

valuation of railroad prop erty (table )------------------ -------- — 36

Section 561, chapter 120, Revenue Code, 1965 Illinois Revised

Sta tutes______________________________________________ 37

Tennessee Public Service Commission, statem ent of, presented by

Eugene W. Ward, general counsel____________________________ 140

Tra nsporta tion Association of America, le tter from Harold F. Hammond, president___________________________________________ 146

Washington State Tax Commission:

Letter from George Kinnear, chairman______________________ 145

Ratio comparison, 1960 through 1965 (cha rt) ----------------------- 145

Wyoming State Board of Equalization:

Exhibit I—C hapte r 11-A—Ad valorem tax assessm ents by the

boa rd___________________________________________ ____ 123

Exhibit II—Excerp ts from minu tes with reference to Chicago,

Burlington & Quincy assessments since 1924------------------ - 123

Exhibit II I— Chicago, Burlington & Quincy Railroad tonnage

handled each year, 1933-63 (table)-----------------_----------- — 131

Exhibit IV—Comparison of railroad assessments in Wyoming,

1955-65 (table)______________________ - _____________ 132

Exh ibit V—Assessed valuations of class I railroad s in Wyoming 

since 1930 (ta ble)----------------------------------------------------- - 133

Exhibit VI— Perc enta ge changes in a d valorem assessed valuation

of various types of p roperty in Wyoming, 1962-65 (tab le)----- 133

Exhibit VII—Chicago, Burlington & Quincy Railroad betterments and /or add itio ns (tab le)----------------------------------------- 133

Exhibit VIII —G eneral Order No. 2, 1962—Buildings and/or 

structures_____________________________________________ 134

Exhibit IX— General Order No. 2, 1966—Inven tories— -------- 134

Exhibit X— General Order No. 3, 1966—Used moto r vehicle and

farm mach inery inventories------------ - ----------------------------- 135

Exhibit XI—G eneral Order No. 4, 1966—Personal pro per ty----- 136

Exhibit XII—Assessed valuations of four major railroads in

Wyoming in percentages of 1930 assessm ents (ch art )----------- 137

Exhibit X II I—Assessed valuations of four major railroads in

Wyoming since 1930 ( chart)_____________________________ 138

Stateme nt of____________________________________________ 126
TAX ASSESS MENTS ON COMMON CARRIER PROPERTY

TUESDAY, MARCH 1, 1966

H ouse of Representatives, 

Committee on I nterstate and F oreign Commerce,

Wash ing ton , D.C.

Th e committee m et at 10 a.in., pu rsu ant to call, in room 2123, R ay ­ bu rn Hou se Office Bu ild ing, Hon . Harley O. St ag ge rs (ch air man) 

presidi ng.

Th e Chairman. Th e comm itte e will come to order .

Th e com mittee this morning is openi ng he arings on 13 identic al bills, s ta rtin g with H.R. 4972, intr oduce d b y o ur colleague, Mr. Rog ers 

of T exas. (T he ide ntical b ills a re : H .R . 5074, H.R . 5310, H.R. 5375, H .R. 5425, 

H.R. 5656, H.R. 7183, H.R. 7313, H.R. 7589, H.R. 7917, H.R. 8238, 

H.R . 8763, and H.R. 9450.)

Th e C hairman. Th e p urpo se of the bill is to declare t ha t it is an un ­

reas ona ble and unjus t dis cri mi natio n again st and an und ue burde n upon interstate commerce fo r a State to assess a va luation on ca rri er pr op erty at a rate hig her tha n it assesses all other p ro pe rty in the State , and collaterally, to pro vid e a remedy in th e Fe de ral court s for c arrie rs ag ains t the collection of a tax based on an unlaw ful assessment. (T he bill ref err ed to . and de partm ental repo rts thereo n, follow :) 

[H .R . 49 72 , 89 th Cong., 1s t boss.]

A B IL L To am end th e In te rs ta te Co mmerce Ac t. as am en de d. In o rd er to make un la w fu l, as unr ea so na bl e an d u n ju st dis cri m in at io n again st an d un du e bu rd en up on in te rs ta te commerce, ce rtai n pr op er ty ta x as se ss m en ts of com mo n carr ie r pro per ty , an d fo r oth er 

pu rp os es

Be it enacted bn the Senate and House of Ileprescntatives of the United States

of America in Congress assembled. That the Interstate Commerce Act, as amended, is amended by inserting afte r section 25 thereof a new section 25a as 

follows:

“Sec. 25a. (1) The following action by any State, or subdivision or agency thereof, whether such action be taken pursuant to a constitutional provision, statute, or administrative order or practice, or otherwise, is hereby declared to constitute an unreasonable and unjust discrimination against and an undue burden upon interstate commerce and is hereby forbidden and declared to be unlaw ful: (a) the assessment, for purposes of a projierty tax levied by any tax­ ing district, of property owned or used by any common carrier subject to this Act engaged in transportation of persons or property in interstate commerce at a value which bears a higher ratio to the true market value of such property than the assessed value of all other property in the taxing d istrict subject to the same property tax levy bears to the true market value of all such property; (b) the collection of any tax on the portion of said assessment so declared to be 

unlawful. “ (2) Notwithstanding the provisions of section 1341, title 28, United States Code, or of the constitution or laws of any State, the district of the United States shall have jurisdiction, upon complaint and after hearing to issue such writs of injunction or other proper process, mandatory or otherwise, as may be neces­ sary to restrain any State, or subdivision or agency thereof, or any person from

1
2 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

doing anything or performing any act declared by p aragraph (1) hereof to be 

unlaw ful: Provided, however, That such jurisdiction shall not he exclusive of 

tha t which any Federal or State court may otherwise have.”

General Counselof the Department of Commerce,

Washington, D.C., March 4,1966.

Hon. Harley O. Staggers,

Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D.C.

Dear Mr. Chairman : This letter is in further reply to your request for the 

views of this Department concerning H.R. 4972, a hill to amend the Interstate 

Commerce Act, as amended, in order to make unlawful, as unreasonable and 

unjust discrimination against and undue burden upon interstate commerce, certain property tax assessments of common carrier property, and for other purposes.

The bill would insert a new section 25(a) in the Inte rsta te Commerce Act to 

prohibit any State or subdivision or agency thereof from assessing, for purposes 

of a property tax levied by any taxing district, property owned or used by any 

common carrier subject to this act engaged in transportation of persons or property in interstate commerce at a value which bears a higher ratio to the true 

market value of such property than the assessed value of all other property in 

the taxing district subject to the same property tax levy bears to the true market 

value of all such property. The collection of any tax on the portion of said 

assessment in excess of such rates would also be declared to be unlawful.

The bill furth er provides that, notwithstanding the provisions of section 1341, 

title 28, United States Code, or of the constitution or laws of any State, the 

district courts of the United States would have jurisdiction, upon complaint and 

afte r hearing, to issue writs of injunction or other proper process to restrain any 

State, or subdivision or agency thereof, or any person from doing anything 

declared by the bill to be unlawful.

State and local governments derive substantial revenues from taxes on property owned by common carriers, particularly the railroads and pipelines. Despite 

State laws requiring uniform tax treatment, in many States railroads and 

pipelines are discriminated against as compared to other property taxpayers in 

the same jurisdiction, due in large measure to long-established procedures for 

assessment of property. Some States apply assessment by a single central 

agency, which permits a relatively accurate method of assignment of value. 

However, other States permit local assessment which permits indiscriminate 

assignment of values and considerable variation in assessments.

The Department of Commerce agrees in principle that common carrier property should not face discrimination in property tax assessments. Such discriminations have been a concern of the transportation industry for many years. 

The scope of this problem was outlined in part VII, chapter 1, pages 4G5-GG, 

of the report of the Senate Committee on Commerce on national transportation 

policy (87th Cong., 1st sess., Rept. 445, June 26, 1961), otherwise known as the 

Doyle report.

The Department, however, recognizes th at there are difficulties of a tax administration and lack of experience with Federal legislation of this kind. For this 

reason it does not seem advisable to enact Federal legislation until other alternatives are tested with respect to this problem. It is also possible that other 

property, such as industrial plants and utility facilities, may face the same situation as railroads and pipelines.

Efforts by the Advisory Commission on Intergovernmental Relations resulted 

in the submittal of draft legislation for State enactment applying to uniform and 

equitable property taxation. While this approach has not resulted in rapid 

progress toward the solution of the problem presented by H.R. 4972, the effort 

should nevertheless be continued. While the Department of Commerce would 

not recommend the enactment of the bill, we would urge the Congress through 

public hearings and formal study to encourage States to accelerate reform in 

those aspects of property tax administration which affect inte rstate commerce.

For the foregoing reasons the Department would not recommend favorable 

action on H.R. 4972.

We have been advised by the Bureau of the Budget tha t there would be no 

objection to the submission of our report from the standpoint of the administration’s program.

Sincerely,

Robert E. Giles, General Counsel.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 3

Interstate Commerce Commission, 

Washington, D.C., February 28,1966.

Hon. Harley O. Staggers,

Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C.

Dear Chairman Staggers : This is in response to your request for the Com­ mission’s comments on H.R. 4972, introduced by Congressman Rogers, to amend the Interstate Commerce Act, as amended, in order to make unlawful, as unrea­ sonable and unjust discrimination against and undue burden upon inte rstate commerce, certain property tax assessments of common ca rrie r property, and for other purposes. I am authorized to submit the following comments: H.R. 4972 would add a new section 25a to the Inte rsta te Commerce Act. This new section 25a would make unlawful the collection of any tax, levied by any taxing district, on property owned or used by any common carrier subject to the act, when the assessment for the tax bears a higher ratio to the true market value than the assessed value of all other property in the taxing district subject to the same propery tax levy bears to the true market value of all such other property. As we understand it, "true market value” is not a term t ha t is used in all States, but is intended to have the same meaning as “fair marke t value” or “market 

value.” It appears that H.R. 4972 is intended to shift the final determination of “true market value” of c arrier property, as well as that of other property in a taxing district, from State courts to U.S. district courts. The U.S. district courts’ d eter­ mination of true market value might very well be questioned in numerous taxing districts, such as city, county, and State, with the result tha t the determination of “true market value” might add substantially to the already heavy dockets in many of our U.S. district courts. If, on the other hand, the question of “true market value” were finally determined in a State or local court, then, of course, 

the question of whether an injunction should issue might more appropriately come before a Federal court. We point this out for the committee’s information without suggesting which court should make such a determination. We suggest that H.R. 4972 be amended to prevent a possible conflict with the present provisions of section 202(b) of the act, which provides, among other things, that “nothing in this par t shall be construed to affect the powers of tax a­ tion of the several States * * This possible conflict could be resolved by in­ serting “notwithstanding the provisions of section 2 02(b)” at the beginning of 

proposed section 25a. In the Commission’s report on “Railroad Fassenger Train Deficit,” 300 I.C.C. 417, we Recommended inter alia, tha t State and local governments should take such steps as may be required to effect a greater degree of equity with respect to the tax burden imposed on railway properties as compared to that borne by taxpayers generally. Since then, there has been an increased awareness of the problems of the railroad industry which has been evidenced by the enactment by a number of States of legislation granting a measure of tax relief to railroads. It is hoped tha t more States will take the necessary remedial action to help to preserve and maintain adequate commuter and other passenger train service as well as freight service for local industries. The Interstate Commerce Commission is strongly in favor of any sound pro­ posal to strengthen the national transportation system by eliminating inequitable tax burdens on common carriers. Accordingly, we endorse the objective sought 

by H.R. 4972. Incidentally, on page 2, line 16, of the bill, it is suggested th at the word “court” be inserted after “district” to appropriately identify the tribunal upon which 

jurisdiction is to be conferred.

Sincerely, John W. Bush, Chairman.

Department of J ustice,

Office of the Attorney General,

Washington, D.C., March 1, 1966.

Hon. Harley O. Staggers,

Chairman. Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C.

Dear Mr. Chairman : This is in response to your request for the views of the Department of Justice on H.R. 4972. a bill to amend the Inte rsta te Commerce Act. as amended, in order to make unlawful, as unreasonable and unjust dis-
4 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

cr im in at io n agai nst an d un du e bu rd en up on in te rs ta te com merce, cert ain pro pert y ta x as se ss m en ts o f comm on carr ie r pr op er ty , an d fo r ot he r pu rposes.

Th e bil l wo uld ad d a ne w section 25a to th e In te rs ta te Comm erce Ac t fo r th e 

pu rp os e of re nd er in g unla w fu l dis cr im in at ory pro pert y ta xes lev ied by S ta te s 

on common ca rr ie r pro per ty . F urt her, th e d is tr ic t court s of th e U ni ted S ta te s 

wo uld ha ve j uri sd ic ti o n to issu e in ju nc tions or oth er ap pro pri ate proc ess as m ay 

be ne ce ss ary to re str a in vi ol atio ns . Such ju ri sd ic tion wo uld not, ho we ver, be 

ex clus ive o f t h a t whi ch an y F ed er al o r Sta te c ourt m ay o th er wise have.

W he th er th is le gis la tion shou ld be en ac te d invo lves polic y co ns id er at io ns a s to 

which th e D ep ar tm en t o f Ju st ic e p re fe rs to m ak e no rec om men da tio n.

Ho we ver, it sh ou ld be no ted th a t para gra ph 1 (a ) of th e prop osed new se ction 

(p. 2. lin es 4 to 12 of th e bill) de clar es th e as se ss m en t of a dis cr im in at or y pro pe rt y ta x un la w fu l. Ye t, para gra ph 1(b ) (p. 2, lin es 12 an d 13 o f th e b il l) , which 

de al s w ith th e co lle ctio n of th e pr op er ty ta xe s in qu es tio n, see ms to in te rp re t 

para gra ph 1 (a ) as decla ri ng only th e dis cr im in at ory po rtio n of th e as se ss m en t 

to b e un lawfu l. Thi s ap p are n t inco ns istenc y shou ld be c lar ified.

If th e Co ng ress decl are s th e enti re as se ss m en t un la w fu l an d pro hib its th e 

co lle cti on of an y p a rt of su ch as se ssm en t, th er e wou ld be no leg al prob lem w it h 

re gar d to th is iss ue. On th e o th er ha nd , if t he Con gress decid es to m ak e on ly th e 

dis cr im in at ory po rtio n of th e ta x unl aw fu l an d un co lle ctible, co ns id er at io n m ust 

be giv en to th e ho ld in g in Ifo scx Lak e Hom es, In c. , et al. v. Gr an t Co un ty, 365 

U.S. 744 (196 1). a t pa ge 752 in wh ich th e C ou rt s ta te d :

“T he effect of th e C o u rt ’s re m an d was to di re ct th e dis tr ic t co urt to de cr ee a 

va lid ta x fo r th e in val id one wh ich th e S ta te ha d at te m pte d to ex ac t. The 

d is tr ic t co ur t has no pow er so to decre e. Fed er al court s may no t as se ss or levy 

ta xe s. Only th e ap p ro p ri ate ta xin g officials of G ra n t Co un ty may as se ss and 

lev y ta xes on th es e leas eh ol ds , an d th e Fed er al court s may de term in e, w ithin 

th e ir ju risd ic tion , on ly w heth er th e ta x levied by th ose officials is or is no t a 

va lid one. When, as h er e, th e ta x is inva lid , it ‘may n ot be ex ac te d. ’ ”

Thi s op ini on leav es unr es ol ve d th e qu es tio n of w heth er th e Co ng res s may co nst it uti onal ly en ac t such a st atu te . The re fo re , such an en ac tm en t could be expecte d to g ive rise to li ti gati on to resolve t his que stion.

It is no ted th a t th e w or d “c ourt s” shou ld be in se rt ed on lin e 16 of p ag e 2 a fte r 

th e w ord “ dis tr ic t” .

Th e Bur ea u of th e B udget has ad vise d th a t th ere is no ob jec tio n to th e su bmiss ion of th is rep or t fr om th e sta ndpo in t of th e a d m in is tr ati on’s prog ram. 

Sincere ly.

Ramsey Clark. 

D ep uty A tt orn ey Ge neral .

E xecutiv e Office of th e P resident.

B ur ea u of th e Budget. 

W ash in gt on . D.C.. F eb ru ar y 28,19 86.

Ho n. Harley O. Staggers.

Ch air ma n. Com mitt ee o n In te rs ta te an d F or ei gn C om me rce. Hou se o f R ep re se nta ­

tiv es. Ray bu rn Hou se Office Build ing, W ash in gt on . D.C.

Dear Mr. Cha ir man : T his is in repl y to th e co m m itte e’s requ es t fo r th e view s

th e B ur ea u of th e B udget on H.R. 4972. a bil l to am en d the In te rs ta te Commerce Act. as am en de d, in ord er to mak e unl aw fu l, as un re as on ab le an d u n ju st 

dis cr im in at io n again st and un du e bu rd en up on in te rs ta te comm erce, cert ain 

pr op er ty ta x as se ss m en ts of com mon ca rr ie r pr oper ty , an d fo r oth er pu rp os es .

Al tho ug h th e ob ject ive of th is bil l is laud ab le , it is doub tful th a t th e pro po sa l 

offers a wor ka ble so lu tion t o t he p roblem of d et er m in in g e qu itab le ta x val uat io ns 

fo r com mon carr ie r pr oper ty . Th e bil l wo uld dec la re unla w fu l an y as se ss m en t 

of carr ie r pr ope rt y w hi ch re su lted in a ra ti o of as se ss ed to ac tu al va lu e (a ss es sm en t ra ti o) hi gh er th an th e co m pa ra ble ra ti o fo r oth er pr op er ty in a ta xin g 

dis tr ic t. A d et er m in at io n of u nl aw fu ln es s wo uld th ere fo re re qu ire kn ow led ge of 

(a ) a carr ie r’s syste m val uat io n. (ft) th e pro ra ta sh are o f th a t val ua tion ass ig nab le to carr ie r pro pert y lo ca ted in a p art ic u la r ta x in g dis tric t, an d (c ) th e 

av er ag e as se ssm en t ra ti o of all oth er pro per ty in th e dis tr ic t. All th re e item s 

re quir e com ple x t ec hn ic al d et er m in at io ns . Su ch dete rm in at io ns ar e b ett er su ited 

to ad m in is tr ati ve th an ju dic ia l rem ed ies . Moreo ve r, to lod ge re sp on sibi lity fo r 

m ak in g suc h ju dg m en ts w ith th e Fed er al ju dic ia ry wou ld plac e a he av y burd en 

on th e co ur t s ys tem .
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY O

Aside from these difficulties, the Department of Commerce points out in its report to your committee tha t the problems inherent in this kind of legislation make it advisable to test other altern atives first. In addition, the Advisory Com­ mission on Intergovernmental Relations, in views to this Office, has expressed doubt t ha t H.R. 4972 represents the best approach to equalization. The Commis­ sion has proposed State legislation to deal with assessment inequities. Finally, the Department of Justice, in it s report to your committee, notes technical incon­ sistencies in the bill and questions its constitutionality. In view of the above considerations, the Bureau of the Budget recommends 

against enactm ent of H.R. 4972.

Sincerely yours, Phillip S. Hughes,

A ss ista nt Director fo r Legislative Reference.

Advis ory C o m m is s io n on I nt er go ve rn m en ta l R e l a t io n s,

Washington, D.C., March 4,1966.

Hon. Harley O. Staggers,

Chairman, House Committee on Interstate and Foreign Commerce, Rayburn Office Building, W ashington, D.C.

Dear Mr. Chairman : We are pleased to respond to your request for the views of this Commission on H.R. 4972, a bill to amend the Interst ate Commerce Act, as amended, in order to make unlawful, as unreasonable and unj ust discrimina­ tion against and undue burden upon interstate commerce, certain property tax assessments of common carr ier property, and for other purposes. The Advisory Commission has devoted sub stantial resources to exploring ways and means to improve property tax administration. The Commission’s interest in th is m atte r arises out of the ma jor role played by the proi>ert.v ta x in financing local government needs and the criti cal importance of the adequate financing of the needs to the strength of our federal system. This one tax alone ac­ counts for over 85 percent of local tax revenue and in many jurisdictions common carrier property represents a significant proi>ortion of the revenue base. H.R. 4972 would forbid and declare unlawful the discriminatory assessment for State and local tax purposes of the proi>erty of common carr iers and would give Federal courts jurisdiction over litigation pertaining to such assessments. The subject matter of the proposed legislation is a longstanding problem involving in par t State-local relations. While virtually all States have now' relinquished the property tax as a majo r revenue source, most have retained responsibility for the assessement of some types of property tha t typically cross local taxing district and State lines, chiefly railroads and utilities. In sur­ rendering their direct revenue stake in this tax. the States appear to have lost also some of their motivation to supervise and coordinate local assessment ad­ ministra tion. The lack of State interest, in turn, may have contribute*! to the spread of inconsistent valuation practices between States, among taxing districts w’ithin States, and among properties within taxing districts. A contributing factor has been the outmoded but deeply rooted tradition tha t every taxing dis­ tric t ought to be free to handle its fiscal problems in its own way. There is as yet little recognition of the fact tha t in today’s economically interdependent America property taxa tion affects competitive business relationships and requires the uniform application of consistent valuation principles in fixing assessment 

values. The Advisory Commission’s recommendations for reforming the assessment of properties for tax purposes are embodied in a two-volume report on The Role of the States in Strengthening the Property Tax.1

 and in suggested State legisla­ tion that has been drafted to faci litat e the implementation of the Commission recommendations. These have been widely disseminated and are receiving active consideration by legislative and other groups, including the railroad industry, in a s ubst antial number of States. The Commission’s program seeks to conform pro{»ert.Y taxa tion to today’s requirements by urging the States to assume re­ sponsibility for inaugurating professional standards and supervising, assisting, and coordinating local assessment practices. The overall objective of this program is uniform assessments within a jurisdictio n and desirably within a State, on the basis of generally accepted professional valuation principles.

1

 The document referred to will be found in the committee files.
() TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

It should be emphasized th at the focus of thi s program as of the bill before 

your committee is the term ina tion of discriminatory assessment practices. The 

Commission does not questio n the rights of States in the exercise of their sovereign taxing powers to diff ere ntiate in the rat es of tax ation on defined classes 

of property or to prescribe differentia l rates of assessment explicitly for the 

purpose of giving effect to differe ntial tax burdens. The Commission’s concern 

is dire cted to the lack of conform ity between assessment law and adm inistrative practice and to the unla wful differentiation in tax burdens th at resu lt from 

it. In short, it is in accord with the objectve of H.R. 4972.

The Commission’s studies have produced ample evidence th at present assessment practices discriminate again st some railroad properties in some taxing 

jurisdictions. The practice, however, is by no means universal. A few States 

have taken steps to equalize cen trally assessed railroad property with locally 

assessed property. Oregon, for example, is repo rted to have brought the level 

of Sta te and locally assessed property to a common level by a gradua l process extending over several years. California and Kentucky are repo rted to be carrying out similar program s curren tly.

It bea rs emphasis that in consequence of Sta te lead ership, significantly accelerated in the last few years, the professional quality and uniformity of assessm ents is improving in many places. Moreover, in the last few years the State 

court s have been contribu ting effectively to this development. Florida and Kentucky courts have handed down decisions which, in effect, require local assessments to be raised to the legal standard thereby wiping out the possibility of 

discrimination between assessments determined locally and centrally. The courts 

in at lea st eight other States have recognized the rig ht of the property owner 

to relief from discriminatory assessment even though his assessment is not in 

fact in excess of the legal sta ndard . Several of these cases involved the assessment of railroa d property.

La st month a furth er aven ue for relie f from discrim inatory assessment practices may have been opened by the decision of a Federal cou rt invalida ting discriminatory railroad assessments in Tennessee on the grounds th at the taxp aye r 

was entitled to equal protection of the laws. A s imilar suit is reported to have 

been filed th is week in a Federal cou rt in Louisiana.

Although the need for elimin atin g discriminatory assessments on railroad 

proper ty persists, as these court decisions would indicate, the immediate need 

for Feder al legislation is less evident. State cou rts have tradition ally handled 

the issue. In the process t hey have developed some of the expertise required for 

the adjudica tion of suits involving alleged assessment discriminatio n. Recognizing the complexities involved in adjudicating assessm ent disputes, the Advisory 

Commission is recommending the establish ment of specialized Sta te tax courts 

on the basis of the successful experience with such courts in Oregon, Massachusetts. and the Distric t of Columbia. If enacted, H.R. 4972 would be a move in 

the opposite direction in th at it would channel technical tax issues to Federal 

court s of general jurisdic tion.

In o ur view, prop erty assessment reform is proceeding a t an accelerating pace. 

If the momentum achieved in recent years can be maintained, relie f will be 

forthcoming in an increasing num ber of States. In view of their past successes, 

railroads , utilities, and other businesses can be expected to continue pressing 

for redress and contribute thereb y to the reform movement.

A significant obstacle to rap id compliance with the un iformity requirement continues to be the potentially disrup tive effect of such actio n on the finances of 

some local governments. The problem is particularly difficult in those local ju ris ­

dictions where railroad asse ssments constitu te a significant portion of the tax 

base and where the dis par ity between railroad and other property assessments 

is large. Where these jur isdiction s are limited to the ir local tax resources, disrup tion of local governmental services can he minimized only by spreading the 

process of reform gradually over a number of years. The States, to be sure, can 

help to effectuate a smooth tra nsition by sharing with th ei r local governments 

some of the revenue burden and they are urged to do so. if only because they 

hav e been a party to the development of th e present assessment situation.

There is evidence tha t increasingly more State s, some on their own initiative, 

some as the result of litig ation, are recognizing their respo nsibility in this field. 

This development has improved the railroads ’ a nd other similarly situated property owners’ prospects for effective relie f from inconsistent valuation practices. 

In our view, the approach to remedy represented by these developments accords 

with the basic principles of th is Federal system and if it holds a reasonable 

prospect for providing t he require d relie f over the next few years, as we believe
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 7

it does, is very much to be p ref err ed to the remedy contem plate d by the proposed legislation. For this reason, we would not support the enactment of H.R. 4972 at 

this time. In the time available for responding to your request, it has not been possible to bring this ma tter to the specific attention of the members of the Commission. In a str ict sense, therefore, th is report reflects only the sta ff’s interp retation of the Commission’s thinking embodied in its report on prope rty tax reform. 

Sincerely yours, r .

W m. G. Col ma n, 

Execu tive Director.

The Chairman. While I understand tha t the principal proponents 

of the legislation are the railroad carriers, the bill covers all common carriers subject to the Interstate Commerce Act, and thus includes oil pipelines, motor carriers, water carriers, freight forwarders, sleeping 

car and express companies, and so on. From our study and hearings over these past years, we can well ap­ preciate that there is a vital problem involved in this legislation before us. It is my understanding that since the Transportation Act Amend­ ments of 1958. much already has transpired in many taxing districts to show a recognition on the p art of those districts of th e need for miti­ gating in some part the burden which has been placed upon some of our 

common carriers, primarily the railroads. AVlaile much has been done, I assume tha t the fact that we have the legislation before us is evidence that there is much yet which the carriers feel should be done. On the other hand, T can well appre­ ciate tha t we have involved here an important problem involving the relative jurisdictions of the local and Federal Governments to tax. Our first witness this morning will be our colleague from Louisiana, 

Congressman Joe Waggonner.

Will you take the stand, please?

It is good to have you with us. You may proceed.

STATEM ENT OF HON. JOE D. WAGGONNER, JR ., A RE PR ES EN TA TIVE 

IN CONGRESS FRO M THE STATE OF LOUISIANA

Mr. Waggonnf.r. Thank you, Mr. Chairman and members of the 

committee. Let me express my appreciation for the opportunity to appear before your distinguished committee this morning to state very briefly my case with regard to these 13 proposals, one of which is mine, having to do with taxation of common carrier property. Being from Louisiana, I perhaps realize today, a little bit better than some do, some of the problems involved in tax equalization, be­ cause the question of tax equalization is perhaps closer at hand in 

Louisiana today than in any other State. Mr. Chairman and members of the committee, I introduced H.R. 7183, one of the measures presently before you, and I would like to make a few brief comments urging your favorable consideration of the 

measure. There is located in Louisiana 3,899 miles of railroad track owned in large part by 12 class I roads. These railroads provide a substantial pa rt of Louisiana’s transportation needs and have played a major role in the development of New Orleans as the major port of the South. The railroads serving Louisiana literally crisscross this Nation and, in fact, their tracks extend into 30 States. Through a system of con-
8 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

nections, these major railroad companies reach every part of North 

America and Mexico served by railroad.

The measure presently before you is not radical in nature. In 

effect, it would give a common carrier subject to the Interstate Commerce Act a cause of action to recover that portion of its property 

taxes deemed excessive and discriminatory.

It would give a remedial cause of action to correct a practice that 

sorely needs correction and, for which, as a practical matter, there is 

none today. It is common knowledge tha t quite frequently railroad 

property and other carrier property is assessed at a higher proportion 

of its true value than is the property of an ordin ary taxpayer. Over 

a period of years, this excessive tax has been passed on by the railroads to their shippers and, indeed, affects interstate and foreign 

commerce.

My bill is, I believe, simple and direct in its intent. It is to prohibit 

any taxing district from t axing the property of a common carrier at a 

higher ratio to the true market value of such property than anv other 

industry.

I would like specifically for the record to show th at I do not advocate the destruction of local taxing authority, but I do not believe tha t 

it is fair, reasonable, or just for a common c arrie r to be taxed at a 

discriminatory rate and my bill will correct this discrepancy where 

it exists. We do have a responsibility in matters involving interstate 

commerce.

As a practical matter, 1 believe the redress which mv bill proposes 

can be had only in this manner and I urge your careful consideration 

of it.

Again, realizing that you have a number of others to testify today, 

gentlemen, I want to thank you for your time. I have made my remarks brief because I am aware of the fact that there are many others 

who wish to testify and I do not want, needlessly, to take up the committee’s time.

The Chairman. Thank you. Congressman Waggonner. We appreciate the fact that you have taken the time to come to the hearings 

and give us the benefit of vour views on vour bill and the other bills 

before the committee.

Do you have any questions, Mr. Friedel ?

Mr. F riedel. I just want to compliment my colleague for his 

wonderful statement. You express my own sentiments word for word, 

so I want to thank von for coming.

Mr. Waggonner. Thank you, Mr. Friedel.

Mr. Springer. I have no questions, Mr. Waggonner. It is an excellent job, I want to say, Mr. Chairman, in presenting this matter.

Mr. J arman. I have no questions.

Mr. N ELSEN. Mr. Chairman and Mr. Waggonner, I have introduced 

a similar bill to the one that you have now testified in support of. It 

has come to my attention tha t in manv States great discrimination 

does exist in many areas in methods of tax assessments on railroad 

property.

With the same idea in mind that you have expressed in your very 

precise and exact statement here, I felt it necessary to introduce a 

similar bill to the one tha t you have introduced, with the hope th at 

we could figure out some method of equalization tha t would bring into
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 9

fairplav at least taxing of property that we find hard to hang onto 

in the best of circumstances. I thank the gentleman for his statement. It is a very excellent one.

Mr. Murphy. I would like to compliment my colleague on an outstanding statement and ask him just one question. Does the State of Louisiana have a State equalization board on 

taxes?

Mr. Waggonner. If you had asked me tha t question 10 days ago, I could have said “Yes.” Perh aps you refer to what we call the State tax commission. Fo r over a year, there was, under the present Governor, a special committee studying equalization of taxes. They completed their study and made their recommendation to the 

Governor. With some definite reservations, the Governor endorsed the report and the study and said that he would proceed to try to accomplish it with the hope that he could get the necessary cooperation of other public officials in Louisiana and the community of Louisiana as a 

whole. He found that he did not have the support of the Louisiana Legis­ lature. He polled the legislature, and he told me this himself, ana he found tha t two-thirds of the State legislature was completely opposed io any tax equalization. He has, at least for the time being, called a 

halt to it. I think he has made a statement tha t tax equalization has not been forgotten in Louisiana, and it will probably remain for the courts to do what they had set out to do, but it is a controversial question in 

Louisiana now.

Mr. Murphy. These roads probably run into the same situation in 

other States they serve ?

Mr. Waggonner. Yes. A number of other States, I think, Kentucky and Florida have had prio r experience in this field. They have had some dealings with the courts and they have, I believe, had to enact all too hasty legislation in an effort to comply with the court orders. As a result, they have made a good many mistakes in a good many areas in 

equalizing taxes.

Mr. Murphy. So, in effect, the common carrier almost has a state of chaos in taxes when they serve multiple States with different taxing 

problems.

Mr. Waggonner. Yes, and I think it is common knowledge that probably the railroads have been more discriminated against as com­ mon carriers than have some of the other areas, fo r example, through 

the years.

Mr. Murphy. It could work to their advantage in some cases?

Mr. Waggonner. Yes, it could, there is no question about that, and in some areas of each of the States I feel th at probably it does work to 

their advantage.

Mr. Murphy. Thank you very much.

Mr. Waggonner. But we have a responsibility in interstate commerce and that is my reason for this legislation.

The Chairman. I notice one of our colleagues, Mr. Rogers here, and I thought he might want to make some comment. Mr. Rogers, do you have any question of Mr. Waggonner of Louisiana ?
10 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Rogers of Texas. I want to compliment Mr. Waggonner on 

realizing the problems tha t are facing a lot of these businesses and taking steps to try to correct them.

The Chairman. Tha nk you very much for coming and giving us the 

benefit of your views.

At this time I would like to have inserted in the record at its appropriate place a letter from the Governor of the Sta te of Kansas.

(The letter referred to appears on p. 118.)

The Chairman. Ou r next witness will be a representative of the 

Association of American Railroads, Mr. James Ogden.

Mr. Ogden, you are vice president and general counsel of the Gulf, 

Mobile & Ohio Railroad. You may proceed, and if you will identify 

the gentleman who is with you, and his capacity, we would appreciate 

tha t for the record.

STATEMENT OF JAMES N. OGDEN, VICE PRESIDE NT AND GENERAL

COUNSEL OF THE GULF, MOBILE & OHIO RAILROAD CO., RE PRESENTING THE ASSOCIATION OF AMERICAN RAILROADS; ACCOMPANIED BY WIL LIAM KIMBROUGH

Mr. Ogden. The gentleman who is with me, Mr. Chairman, is Mr. 

William Kimbrough, from our office in Mobile. He is here to help 

me or hand me a paper if it is something in his file that I don’t have, 

in case I am asked a question where it would be needed.

The Chairman. You may proceed. We can put your prepared 

statement in the record or you can give a summary. If you wish to 

read it, you may do so.

Mr. Ogden. I would like my prepared statement put in the record 

and to read parts of my statement if I may, Mr. Chairman.

The Chairman. You may do so.

Mr. Ogden. Mr. Chairman and gentlemen, as the chairman has 

stated, my name is James N. Ogden. I am vice president and general 

counsel of the Gulf, Mobile & Ohio Railroad Co. with headquarters 

in Mobile, Ala.

I appear here on be half of the Association of American Railroads. 

Those railroads operate 95 percent of all the railroad mileage in the 

United States and employ 92 percent of all railroad workers, and haul 

99 percent of this country’s railroad line-haul freight and passenger 

traffic.

It is my purpose to state the views of our industry on II.R. 4972 

and the 12 identical bills before you for consideration.

Of course, the railroa d industry heartily endorses and supports these 

bills. Since they are identical except for number and authorship, I 

will for convenience refer only to II.R. 4972 in the remainder of my 

statement.

But I wish to express the warm appreciation of our entire industry 

to each congressional author for his encouragement in the struggle 

to defend and preserve o ur common carrier system of transportation.

As stated by the chairman, the principal purposes of this bill are to 

declare that a portion of certain tax assessments of common carrier 

property shall be unlaw ful as constituting an unreasonable and unjust 

discrimination against and an undue burden on interstate commerce,
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 11

and to provide a remedy in the Federal courts for such carriers against 

the collection of any tax based on such unlawful assessment. This unlawful proportion exists only when, and to the extent that, common carrier property is assessed at a greater p roportion of its true market value than the proportion at which all other property in the 

taxing district subject to the same levy is assessed. I emphasize that because at the previous hearing before the subcom­ mittee at which Mr. Friedel presided so finely, there had been intro­ duced a letter from the D epartment of Justice calling attention to the possibility that it should be made clear whether the bill was directed a t 

all of the tax or only the claimed excessive portion. I want to make it very clear to the committee that this measure as we see it is aimed only at the claimed unlawful or discriminatory portion of the tax. The remainder of the tax would remain undisturbed. It is not an attack on the entire tax assessment or the entire tax bill, if employed by any railroad. I wanted to make that very clear at the beginning, because th ere seemed to be some, maybe, fuzziness 

about it. The bill deals with all common carriers of persons and property subject to the Interstate Commerce Act, but I will confine my remarks mainly to the railroad industry because I am appearin g in behalf of tha t industry and because I believe it suffers most from the burdens 

which this bill seeks to remove. As you all know, railroads require a great deal of property in order to do business. Right-of-way and rails; locomotives, cars and other equipment tha t operate on those rails; and stations, buildings, shops, and so for th, all are needed t o conduct railroad operations. At th e close of 1964 the railroads in the U nited States had a total investment before depreciation of over $35.8 billion extending over and along 213,800 miles of line. This enormous property investment qualifies railroads as prime targ ets for the tax assessor. Their property is easily identified and located. Cities, schools, counties, and other political subdivisions invariably attem pt to in­ clude within their boundaries as much railroad property as possible and thus insure a steady income from property taxes. Fo r the 5 years 1960-64 the total taxpayments by all class I railroads in the United States fo r all S tate and local purposes ranged from $396 

million in 1960 to $344 million in 1964. The fact that over 80 percent of those payments went to satisfy ad valorem tax liens clearly identifies ad valorem taxes as the most im­ portant and the most burdensome of all railroad State and local taxes. The vulnerability of our industry and the desire of State and local Governments for revenue have combined to create a great many tax problems. Among the more pressing and persistent of these problems are those that relate to railroa d assessments. There the problem is how’ to persuade the tax assessors in the several States to equalize the railroad’s assessment with that of other 

property in the same taxing district. Time "equalization requires that each parcel of prope rty be assessed at a figure which is the same proportion of its full value as the assessment of ever}- other parcel of property in the same taxing distric t is of its full value.
12 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Railro ad assessments are not equalized fa irly and reason ably in 

num erous instances. Many tax assessors sim ply cannot or will not 

equalize railroa d assessments with the assessments of othe r propert y 

even thou gh both kin ds of pr op er ty are subject to the same tax levy. 

Th is is a w ell-known and widely pub licized fact.

As early as 1944, the exi stence of discrim ina tio n as one o f the pro blems of t he railroa ds in the ta x field, was recognized in Governm ent. 

In Ho use Document No. 160, dated September 19?

 1944, in “Letter 

Fr om B oa rd of I nv estig ation a nd Research T ra ns m itting a R ep ort on 

Car rier Tax ation,” on pages 124,125, it was sa id :

The officials of approximately ha lf the States readily concede that railroad s 

are being overtaxed because of inadequate equalization. * * * If we accept the 

standard s of equity set forth in present tax laws, this failure to equalize State 

and local assessm ents is probably the most significant of the railroad tax 

grievances.

In the Doyle rep ort it was shown that railr oa ds pa id ad valorem 

tax es in 1957 in 31 Sta tes by a n am ount th at was excessive, when compa red w ith th e taxes on loca lly assessed prop erty, to the e xte nt o f $141 

millio n, or a pprox im ate ly 54 pe rcen t o f the to tal railr oa d ad valorem 

tax bill in those States. D ur in g th e 87th Congress, a bill sim ilar to 

those no w u nder c onsideration w as i ntroduce d b ut could n ot be reached 

fo r action.

A secon d study was mad e fo r 1961, which showed excessive tax es in 

24 S tates am ounting to $113 mi llio n, or s lig htl y more t han 58 pe rcent 

of th e total rai lro ad pr op erty tax bill in those State s, an d was the 

subject o f a n inf orm ative and r ead able article in the Dec emb er 9,1963, 

issue of th e mag azine Ra ilw ay Age.

A th ird s tud y was m ade f or 1962, and reproduce d as appendix A to 

my stat em ent to the Subco mm ittee on Tr an sp or tatio n and Aer ona utic s 

of this committee, 88th Con gress, du ring a hearing Ju ly 28, 1964, on 

H R . 736 and H.R. 10169, bills identic al to those here under considera tion.

For convenience this he ar in g is he rein after sometim es refer red to 

as th e sub committee hearin g.

Th is th ird stateme nt show ed excessive ad valorem tax es paid in 24 

States am ounti ng to $111 mi llio n or s lig htl y more th an 58 percent of 

the t ota l rai lro ad ad valo rem tax bill in those States.

A fo ur th study—tha t is the s tudy th at we offer with this sta tem ent — 

and at th is point I think th at I ought to point ou t th at these studies 

basically are confined to the 37 St ates th at have so-c alled cen tral 

assessments. Tha t is merely fo r convenience because it can be more 

rea dil y dete rmine d what the bas is of assessments are , because they make 

one assessment in one place, an d it is not an assessment ma de of prop ­

ert y by a n um ber of people.

In th is fo ur th study, which is app end ed to my prep ared stateme nt 

made fo r 1964, and rep roduced as appendix A, shows excessive ad 

valorem tax es paid in 20 St ates amo un tin g to $75 m illion or 51 percent 

of the total ad valorem t ax bill in those States .

So you see we have reache d th is p oint. We had, begin ning in 1944, 

with rec ognition by the House Comm ittee on In te rs ta te and Foreign 

Com merce in its tax ation repo rt, th at t he failu re to equaliz e railro ad 

pr op erty f or taxin g purposes was p erha ps the most pressin g tax gr iev ­

ance of the railr oa d ind us try.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 13

That took shape in th e fo rm of these studies th ro ug h the Doyle re ­

po rt, w hich, of course, em anate d out of the Senate Comm ittee on Commerce, and then thes e lat est studie s b rou ght fo rw ard and presented to 

a sub com mittee o f th is co mmittee . Th ere are four studie s in all , each showin g su bs tantial discrim ina ­

tion an d substantial overp ayme nt of taxes. A t th is point I th in k I ou gh t to emp hasize, and I wish to emphasize 

here th at the pur pose of th ese studies is n either to single o ut nor cr iticize any pa rti cu lar St ate or Sta tes. No r is it our purpo se to com­ mend, by omission, State s not listed or to sugge st the absence of t ax discri minati on in any St ate no t listed. Ra ther, our pu rpose was and is 

to show a pa tte rn or prac tic e of dis cri mi nator y action , sufficient in 

scope and e xte nt to w ar ra nt th e attentio n o f th e C ongress, and directed 

toward a subject—interstate commerce—over which Con gress has f ull 

control and respo nsibility. As fo r th e figures conta ine d in these studies, we hav e trie d to be conservat ive. The actual exten t of dis crimination, reg ardle ss of degree, 

is active discriminat ion direc ted at railr oa ds and as such shou ld be 

decla red unlaw ful. I t is an un pardo nable practic e fo r which the re 

can be no valid excuse. In describing the 1957 stu dy , the Doyle rep ort was caref ul to state 

th at th e inf orma tio n ha d been fur nis hed by the Associatio n of Am eri ­

can Ra ilroads, and it added the follow ing significant sta tem ent bene ath th e detaile d inform ation fo r each of the St ates referre d to :

The resources available to this committee were not such as to he able to con­ duct an independent survey to affirm or disprove the specific data presented to us. However, research has been sufficiently extensive to establish that relative discrimination, of considerable magnitude, does, in fact, exist against the rail ­ roads in the assessment procedures of State and local governments for ad valorem taxation purposes. Therefore, the data is accepted as confirming the judgment of this study group th at State and local assessment procedures do discriminate 

against the railroads.

I t seems almost self-evide nt th at excessive pr op erty tax es res ultin g 

fro m discrim ina tory equalizati on of railr oa d assessments would un ­ duly bu rden interstate comm erce. Ra ilroads are responsible for 

mo vin g the lar gest sha re of ou r inter city ton nage c arrie d by any one 

mode of trans po rta tio n— 13.51 percent in 1964. An y su bstan tia l ad dit ion to the railr oa ds ' cost of do ing business 

obviously burde ns interstate commerce, and where such add ed cost is 

a d ire ct re sult of dis crim ina tory a ction aimed at the r ailroa d ind ustry , 

the n th e burde n is cle arly an undue bur den and in tersta te commerce 

should be protected a ga inst it. Th e added tax burde n on account of discrim inatory assessments is 

subs tantial to the po int o f be ing oppressive. D ur in g th e 6 years th at 

this leg islation has been befor e the Congress, ra ilr oa ds have been 

overt axed more than an estim ated three-fourths of a billion dollars 

as a dire ct result of dis crim inatory assessments. T hat is a sum whic h, on to da y’s ma rke t of about $10,000 a boxcar, 

wou ld ena ble us to purch ase ou trig ht a nd p ay fo r 75,000 cars. I f we wante d to bu y the cars on tim e and pay 20 pe rcen t d own, which is the way we usuall y do it, the in du stry could buy 375,000 boxcar s wi th the 

mon ey that re pre sen ts an ove rta x in those years.

6 0 -6 6 1— 6< 2
14 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Th ere is no telling how lar ge this figure would be if con sideration 

were given to the effect of this ind efensible pra cti ce in pr io r years 

exten din g fo r decades.

Th e curre nt show ing as to discrim ina tor y assessments rep res ents 

43.3 percen t of all ra ilro ad St ate and local tax es of every kind an d 

descr iption in the 20 St at es liste d in ap pendix A h ereto, and it repr esen ts 20.6 perce nt of all such St ate and local tax es fo r the entire 

railr oa d indu str y in 48 Sta tes , Ha wa ii and Alask a excluded.

Th ey are exclude d because they don’t hav e any railroads.

Whil e a ppendix A l ists only 20 of th e 48 State s, the tax discr imina ­

tio n which they are sho wn to pract ice actually has a much broader 

rea ch on the ra ilro ad indu str y. To ill us tra te, in 1964 the ave rage 

road-m ilea ge op erate d in tr an sp or tatio n serv ice of all class I line-ha ul 

railr oa ds in the 48 St at es was 217,181 miles, an d those same carriers 

emp loye d 665,017 perso ns and gen era ted 659,327 millio n reve nue-tonmiles. The total mileage opera ted b y all of the class I line-haul ra ilroa ds havin g pr op er ty in any 1 or more of th e 20 Sta tes listed in 

ap pendix A was 199,656—91.9 perce nt of the to tal. The numb er of 

employees of those sam e carriers was 586,496—88.2 per cent of the 

to ta l—and the revenu e-to n-m iles generated by those same ca rri ers 

everyw here was 602,318,513,000—91.4 perce nt of the total.

I t is clear th at leg islati on fo rbidding discrim ina tory taxa tio n of 

ca rrie r pr op ert y should be made a p ar t of the In te rs ta te Commerce Ac t.

Th e und ue bu rden on interstate com merce flow ing from d isc rim ina ­

to ry tax assessments is com par abl e to the un du e bu rden on in terstate 

comm erce res ultin g from dis crim ina tory action of St ate au thorities 

in t he ir fail ure or r ef us al t o act reaso nab ly in the m atter of rail rat es 

an d services.

II. R. 4972 follows th e lan guage of section 13(4) of the In te rs ta te 

Commerce A ct in de claring th at the pro scribed action by a ny St ate or 

subdivi sion or a gen cy— in tax ing common ca rrie r prop erty on a basis 

high er than th at at wh ich oth er pr op erty in the same tax ing di stric t 

is tax es—

is hereby declared to constitute an unreasonable and unjus t discrimination 

again st and an undue burden upon inters tate commerce and is hereby forbidden 

and declared to be unlawful.

T hat lang uage is prac tic ally the same.

Th e fact th at section 13(4) deals w ith one typ e o f discriminat ion o r 

bu rden and II .R . 4972 w ith anoth er is im ma terial, because the y are bo th 

concerned with “u nre aso nable and un ju st dis cri mi natio n again st and 

an und ue burde n upon interstate com merce.” In the form er, the p ro ­

hibitio n is again st a Sta te ’s req uirin g a ca rrie r to charge intra sta te 

rates so low as to be unfa ir to or dis criminate ag ain st, or to plac e an 

undue b urd en upo n, in tersta te commerce— th at is, so low as no t to contrib ut e their f ai r s hare t o the revenues re quired by the c arrie r properly 

to p erf orm its intersta te operation s.

In H.R. 4972, th e proh ibition —sim ply sta ted— is a gains t the action 

of a S tate or its sub div isions in assessing and co llecting taxes on carrier 

pr op erty at a high er r at e or r ati o th an on othe r pr op erty in the same 

taxi ng district.

In each case the act forbidd en is u nj us t disc rim ina tio n a gains t int er ­

sta te comm erce; th at is, ag ain st common ca rriers which are engaged 

in interst ate op era tio ns and are subject to th e In tersta te Commerce
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 15

Ac t. In e ach case the pr oh ibition is a ga inst a type of dis crimination or burde n which w ould d ep riv e a ca rri er of revenues needed in th e p erfor ma nce of its services in i nt er state commerce. Th e pro vision s and purposes of section 13a of the In te rs ta te Com ­ merce Act rel ating to rail serv ices a re to the same effect—di scr im ina ­ tory Sta te action which un du ly bur den s interstate commerce will n ot 

be permitted. Th e questio n has been ask ed and asked rep eated ly at the las t he ar­ ing , can Congress constitutiona lly enact a measure suc h as this? A t the 1964 hearin gs sev eral m embers o f the subcomm ittee e xpressed co n­ cern ove r this issue as did th e De pa rtm ent of Ju stice in a lette r ad ­

dressed to the th en cha irm an of th is committee. In an effo rt to pu t th is issu e at r est, we have obtained an in-depth opinion fro m two r ecognized a uth orities in the fields of c onstitution al law an d St ate tax ation. Th e au tho rs of this opinion are M r. Pa ul J . H ar tm an and Mr. Pau l II . Sanders , both of Van de rb ilt Un ive rsity 

Scho ol o f Law. Mr. Har tm an is a professor of law at th at in sti tutio n, specializing in St ate and local tax ation law . He is th e au th or of “S ta te T axati on of Int er st at e Commerce” an d ha s w ritten nu merou s la w review article s 

on th e subject. Mr. Sa nd ers is also a professo r of law at Van de rb ilt, teaching courses in con stitution al law and labor law. He is th e autho r of vario us articles and pu blica tio ns in the c on stitut ion al an d pub lic law 

fields. Mr. Sa nd ers is here toda y and will discuss more fu lly the con­ stitu tio na lit y of the measu re at which tim e he will int rod uce th eir writte n opinion and su pp or tin g mem oran dum . Comp rehensive bio ­ grap hi ca l da ta on bo th the se gen tlem an may be foun d at the end of 

th ei r p rint ed mem oran dum . At th e tim e th at we reques ted an opinion of these men, we made avail able to them a copy of th e proposed measure and a copy of the he ar in g before the Subcom mittee on Tr an sp or tatio n an d Aeron autics 

on H .R. 736 and II.R. 10169 held J uly 28,1964.

I t was i n the ligh t o f the ba ckgrou nd i nforma tio n there elic ited th at 

Air. H ar tm an and Mr. Sa nd ers app roa ched t he con stitut ion al issue. These gentleme n h ave concluded t hat th e Con gress does hav e p ower un de r th e commerce clause an d oth er princ iples enuncia ted in th eir 

opinion to enact the measure pres en tly before you. We feel th at b oth of these men are emine ntly qua lified autho rities in the fields of constitution al an d State taxa tio n law an d we assure you t h at this measure, if e nacte d in its pre sen t for m, will successfully 

with sta nd atta ck as to its cons titution ali ty. We have also sought and obtained the views of fo ur noted and qua lified autho rities in the fields of tax ation, economics, and tr an s­ po rta tio n, as to the ap prop ria teness, adeq uacy, desir ab ility, and need 

fo r th is legislation . The se e xperts are Air. J am es W. Alart in of Ke ntucky , D r. Harold AI. Gro ves of Wisco nsin , Gen. J ohn P . Doyle of Te xas , a nd Air. Bro ley E . 

Tr av is of Cal ifo rnia. Ea ch man w as sup plied with copies of II.R . 4972, the repo rt of the sub com mittee h earin g, an d th e ITart ma n-Sanders opinion relatin g to 

the con sti tutio na lity of the meas ure.
16 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Martin, who is generally conceded to be the dean of the tax 

fraternity, is a professor emeritus a t the University of Kentucky. He 

is highly regarded in the field of valuation of railroad and public 

utility properties, having served as valuation consultant both for railroads and the States of Kentucky, Virginia. Arizona, and Georgia, as 

well as the cities in those States. He is a past president of a number 

of organizations, including the Tax Foundation, Tax Institute of 

America, Associated Bureaus of Business and Economic Research, and 

the National Tax Association. I could expand on his biographical 

material but it all appears at the conclusion of his letter, which is 

appended as an exhibit to my prepared statement.

Dr. Groves, no less an authority taxwise, also brings to bear on the 

issue a comprehensive knowledge of economics and public finance. 

He is a, professor of economics at the University of Wisconsin, has 

served government in both appointive and elective capacities, has 

written extensively of finance and taxation, and served a term as 

president of the National Tax Association.

Dr. Groves’ statement has been submitted to the committee, the 

clerk has a copy of it and I request tha t it be considered as p art of 

the record of this hearing. Appended to my remarks is quite an extended biographical sketch on Dr. Groves.

(Dr. Groves’ statement appears on p. 44.)

Major General Doyle, who prior to his retirement served as Director 

of Transportation of the U.S. Air Force, occupies the McDonald 

Chair of Transportation at Texas A. & M., and served as Director of 

a Special Study Group on Transportation Policies in the United 

States for the Interstate and Foreign Commerce Committee of the 

Senate, which reported on the subject in Janu ary of 1961.

Full biographical information appears immediately after his letter 

which is attached to my prepared statement, as exhibit 3. General 

Doyle’s statement is quite short and it is so to the point tha t I would 

like to read it if I may, Mr. Chairman.

General Doyle writes th us :

After going over H.R. 4972, your testimony in 1964, and the Hartman-Sa nders 

paper, I find nothing t ha t I can add to our report of 1961 in national tra nspo rta ­

tion policy.

Since th at was writte n nothing has been developed which would cause me to 

doub t the accuracy of our conclusion that there is ample evidence that railroad 

operating property has been and still is subject to discriminatory assessment 

for tax purposes in a num ber of localities. We all know th at progress h as been 

made in some States. It is not enough.

Mr. Rogers’ bill seems adequate for the purpose and is probably the most 

th at could be achieved at thi s time. I am still of the belief tha t a real case in 

equitable trea tment could be made for exempting priva te way from all ad valorem taxation. I don’t think this very likely execpt as a subsidy to deficit 

comm uter service.

Discriminatory tax ation of corporate enterprise has no place in a competitive 

economy. H.R. 4972 is a step in the righ t direction. I sincerely hope you can 

get this constructive bill enacted into law. It is too bad the several States 

couldn’t do it on their own withou t F ederal intervention.

The Chairman. Is this the complete statement of Major General 

Doyle ?

Air. Ogden. Yes, sir. I wanted to especially emphasize it.

Air. Travis is presently a consulting valuation engineer in Sacramento. Calif. He is a former chief valuation engineer for the Cali-
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 17

fo rn ia S tate Bo ard of Eq ualiz ati on. In ad dit ion , lie has assiste d the 

St ates of Oregon, Colorado , New York, Utah, an d Id ah o in th ei r 

ra ilr oa d assessment work. li e has been emp loyed as an ex pe rt by 

ra ilr oa ds in the pr ep ar atio n of valua tion and equalization cases in 

Mis sou ri, Illino is, S ou th Da kota, and Iow a, since his ret ire me nt fro m 

his position with the St ate of Ca lifornia in 1962. More detailed bio ­

gr ap hica l data ap pe ars as a p ar t of Mr. T ra vi s’ state me nt.

Th ou gh unable to have Mr. Martin, I)r. Groves, or General Doyle 

prese nt to a pp ear before you , we were fo rtu na te in being able to pres ent 

Mr. T rav is who is here and will ap pe ar late r. Th e National Ass ocia tion of Tax Adm inist rators by executive c ommi ttee actio n on Ja nuar y 18, 1961, accorded forma l recognition to the 

dis crim ina tory tax p rac tices dire cted again st railr oa ds in the m atter of 

th ei r prop erty assessments at State and local level. Th is committee 

recommended t ha t the presiden t of the assoc iation ap po int a com mittee 

to “ deal with all aspects o f th e p roble m, includ ing th e several proposals 

to res trict the tax ing juris dicti on of the States a s to prop erty used in 

in terstate commerce by railro ad s.’’

The executive com mittee also expressed the hope th at the State s 

found to be gu ilty of the offensive pra ctice of discrim inating again st 

railr oa ds would see the e rr or o f th eir ways a nd mend them in a gradual 

and, presum ably, painless fash ion.

Th e president of the Na tio nal Association of Ta x Ad ministrat ors 

acted on the reco mm end atio n o f his executive com mittee and appoin ted 

the comm ittee. How ever, the comm ittee had made no rep ort by 1963 

and so fa r as 1 have been adv ised has never m ade a p ublic report.

As a practic al m atter the whole appro ach of this org ani zation 

am ounts to a confession of error coupled with a reque st fo r a postponement o f judgment. In 1964 an d when measures iden tical to those now pending were before th is committee, Government agencies ha vin g a possible inte rest 

were invited to express th ei r views. Th e results are quite rev ealing:

First . No agency den ied that rai lro ads were in fac t the victims of 

discrim inatory actio n o f the type claimed.

Seco nd. No agency oppo sed the equaliz atio n objective.

Th e laws of practic all y all the S tate s, if carefully adhered to, would 

rarely, if ever, produce a dis cri mi nator y assessment. In contrast to 

St ate assessment laws. St ate provisions for testing assessments in courts 

or ob tai ning reli ef from the taxe s that result from these assessments 

are not nea rly as free from criticism. For the most pa rt, these pr ocedural relief statu tes are vague and c onfus ing and have little to commen d them in the way of un ifo rm ity of either des ign or application . 

In th is area, it seems cle ar th at the proposed measure, offe ring as it 

does, a clea r, d irect, and sim ple remedy designe d fo r unifo rm ap plication b y the Federal c ourts is h ighly d esirable. It sho uld be kept in mi nd at all times that the measure here un der 

conside ration addresses its elf only to supp lying a pro ced ure by which 

discrim inatory taxes m ay be corrected. It is only a vailable to the tax ­

pa ye r capable of bringi ng him self within its term s. It is not selfopera tiv e and neither imposes any duty nor con fers any rig ht on the 

Fe de ral Gov ernment to ad minister St ate taxe s. Th e offensive taxes 

mu st be proven to be such by competent evidence and in a co urt of law.

Absen t such a p roc eed ing a nd pro of by a comp lai nin g tax payer, the
18 TAX ASSESSME NTS ON COMMON CARRIER PROPERTY

bill here proposed would have no effect whatever on any act of any 

State regarding any tax at any time.

I think without unduly lengthening the presentation, in my prepared statement I have asked that the proceedings, and parts of the 

previous proceedings before the committee be brought forward and 

by reference considered as a part of this record, only by reference, 

because we did undertake at that time to cover a great deal in this area.

It would unduly lengthen this record for us to have it repeated but 

I would hope that the chairman would bring these other parts of the 

hearing by reference forw ard as I have requested here.

The Chairman. You have made tha t request in your statement, 

ha ve you ?

Mr. Ogden. Yes, sir.

The Chairman. Those parts tha t you have requested will be made 

a part of the record.

Mr. Moss. Reserving the right to object and not having had an opportunity to examine the material which will be thereby included in 

the record, I will reserve an objection until I have the opportunity.

I would have no objection to receiving them for the files of this 

hearing, but to have them incorporated in the record I would want the 

opportunity to look at them.

The Chairman. The gentleman has that right, it is true. It is a 

matter of record before previous Congresses, and th at is the reason that 

I have said that the genl leman has that reservation.

You may proceed.

Mr. Ogden. Well, Air. Chairman, this basically concludes my statement.

I sincerely appreciate the opportunity to appear before you. I 

would be happy to try to answer any questions now or later, if the Chair 

should see fit to direct any to us. I wish to leave with you, in closing, 

tha t we very sincerely submit and remind you that it is the duty of 

Congress to protect interstate commerce from undue burdens of discriminatory taxes and by so acting to preserve ou r transporation system in furtherance of the national transportation policy.

We think that that is quite clear and quite compell ing. I thank the 

chairman and the members of the committee for this very fine opportunitv to be heard.

(Mr. Ogden’s prepared statement and exhibits follow:)

Sta teme nt of J am es N. Ogden, Vice P resident and Gene ral Counse l of

th e Gul f, Mobile & Oh io R ailroad Co., on Beh alf of th e Association

of American R ailroads

Mr. Chairman and gentlemen, my name is James N. Ogden. I am vice president and general counsel of the Gulf. Mobile & Ohio Railro ad Co., with head ­

qu arter s in Mobile, Ala. I am representing the Association of American Railroads, whose members operate 95 percent of all the railroad mileage in the United 

States, employ 92 percent o f all railroad work ers and haul more than 99 percent 

of this country’s railroad line-haul freigh t and passenge r traffic.

I wish to state the view’s of the railroad indu stry with respect to H.R. 4972 and 

the 12 identical bills now before you for consideration.

The railroad industry stro ngl y endorses and wholehearted ly supports these 

bills. Since they are identic al except for number and authorship, I will, for 

convenience, refer only to H.R. 4972 in the remainder of my statem ent. But I 

wis h to express the warm appreciation of our entire ind ustry to each congressional autho r for his help and encouragement in the struggle to defend and 

preserv e our common carrie r system of transporta tion .
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 19

The principa l purposes of the bill are to declare t hat a portion of certain tax assessments of common carr ier property shall be unlawful as constituting an unreasonable and unjust discrimination against and an undue burden on inter­ state commerce, and to provide a remedy in the Federal courts for such carriers against the collection of any tax based on such unlawful assessment. This un­ lawful proportion exists only when, and to the extent that, common carrier property is assessed at a greate r proportion of its true mark et value than the proportion at which all other property in the taxing district subject to the same 

levy is assessed.1

The bill deals with all common carriers of persons and property subjec t to the 

Inte rsta te Commerce Act,2

 but I will confine my remarks mainly to the railroad industr y because I am appearing in behalf of th at industry and because I believe 

it suffers most from the burdens which this bill seeks to remove. Railroa ds require a great deal of property in order to do business. Right-of- way and rails; locomotives, cars, and other equipment tha t operate on those rails; and stations, buildings, shops, and so forth, all are needed to conduct rail ­ road operations. At the close of 1964 the railroads in the United State s had a total investment before depreciation of over $35.8 billion extending over and along 213,800 miles of line. This enormous property investment qualifies rail­ roads as prime targe ts for the tax assessor. Their property is easily identified and located. Cities, schools, counties, and other political subdivisions invariably attempt to include within their boundaries as much railro ad property as possible 

and thus insure a steady income from property taxes. For the 5 years 1960-04 the tota l tax payments by all class I railro ads in the United States for all State and local purposes ranged from $396 million in 1960 to $344 million in 1964. The fact tha t over 80 percent of those payments went to satisfy ad valorem tax liens clearly identifies ad valorem taxes as the most important and the most burdensome of all railroa d State and local taxes. The vulnerab ility of our industry a nd t he desire of State and local governments for revenue have combined to create a great many tax problems. Among the more pressing and persistent of these problems are those tha t relate to railroa d 

assessments. In the area of assessments, the most critical problem is to determine how much of the valuation tha t has been found should be assessed, which, in turn, depends upon how much of the valuation of other property is assessed. In other words, the problem is how to persuade the tax assessors in the several States to equalize the railr oads’ assessment with tha t of other property in the same 

taxing district. True equalization requires tha t each p arcel of property be assessed at a figure which is the same proportion of its full value as the assessment of every other parcel of property in the same taxing dist rict is of its full value. Railroad assessments are not equalized fair ly and reasonably in numerous in­ stances. Many t ax assessors simply cannot or will not equalize railroad assess­ ments with the assessments of other property even though both kind of property are subject to the same tax levy. This is a well-known and widely publicized 

fact. As early as 1944, the existence of discrimination as one of the problems of the railroa ds was recognized in government. In House Document No. 160, dated September 19, 1944, in “Letter from Board of Investigation and Resarch Trans­ mitting a Report on Carrie r Taxatio n,” on pages 124, 125, it was sa id : “The officials of approximately half t he States readily concede th at railroads are being overtaxed because of inadequate equalization. * * * If we except the standard s of equity set forth in present tax laws, this failure to equalize State and local assessments is probably the most significant of the railroa d tax grievances.’’

In the Doyle rep ort3

 it was shown th at railroads paid ad valorem taxes in 1957 in 31 States by an amount tha t was excessive, when compared with the taxes on locally assessed property, to the exten t of $141 million, or approximately

1

 It is intended th at only the excessive portion of the assessment and resulting tax shall be unlaw ful and thu s subject to attack. See lette r 7, Deputy Attorney General, dated July 24, 1964, reproduced at pp. 3 and 4 of hea ring on H.R. 736, H.R. 10169, 88th Cong., 

2d sess. 2

 Railroads (sec. 1( a) ) ; oil pipelines (sec. 1( b) ) ; motorbus and truc k ope rato rs (sec. 202 (a )) ; water carriers of persons or property (sec. 30 2( d) ); and fre igh t forw arders 

(sec. 40 2(5)).

3

 National Transportation Policy, a report prepared by the Special Study Group on Tra nsportatio n Policies in the United States for the Senate Committee on In te rsta te and Foreign Commerce, 87th Cong., 1st sess. (pre liminary draft, 1961).
20 TAX as se ss me nt s on common car rier property

54 pe rc en t of the to ta l ra il ro a d ad va lorem ta x bi ll in th ose St at es . D uring th e 

87 th Congr ess, a bill si m il ar to thos e now unde r co nsi der at io n was in trod uc ed 

but could no t be re ac he d fo r ac tion .

A sec ond stud y was m ad e fo r 1961, which show ed ex ce ss ive ta xes in 24 S ta te s 

am ou nt in g to $113 mill ion, o r sl ig ht ly mo re th an 58 perc ent of th e to ta l ra ilro ad 

pro per ty ta x bil l in th os e Sta te s, an d w as th e su bje ct of an in fo rm at iv e an d 

re ad ab le art ic le in th e D ec em be r 9, 1963, issu e of th e mag az ine, Railw ay Age.

A th ir d st ud y w as m ad e fo r 1962, an d repr od uc ed as ap pe nd ix A to my st ate ­

m en t to th e Su bc om mitt ee on T ra nsp ort ati on an d A er onau tics of th is co mm ittee, 

88 th Congres s, duri ng a heari n g Ju ly 28, 1964, on H.R. 736 an d H.R. 10169, bi lls 

id enti cal to thos e her e u n d er co ns id er at io n. (F o r co nv en ienc e th is hea ri ng is 

h ere in aft er someti mes re fe rr ed to as th e su bc om mitt ee hea ring .) T his th ir d 

st ate m en t show ed ex ce ss iv e ad va lorem ta xes pa id in 24 S ta te s am ou nt in g to 

$111 million or sl ig ht ly m or e th an 58 per ce nt of th e to ta l ra il ro ad ad va lorem 

ta x bill in th os e Sta te s.

A fo urt h stud y ‘ m ad e fo r 1964 an d re pr od uc ed as ap pen dix A, show s ex cessive 

ad va lorem ta xes pa id in 20 S ta te s am ou nt in g to $75 m illion or 51 pe rc en t of th e 

to ta l ad va lorem ta x bill in th os e St at es .

I w ish to em pa siz e her e th a t th e pu rpos e of th es e st udie s is nei th er to sing le 

out nor criti cize a ny p a rt ic u la r S ta te o r Sta te s. No r is i t our pu rpos e to comm end 

by om iss ion Sta te s no t li st ed or to su gg est th e ab se nc e of ta x dis cr im in at io n in 

any Sta te s no t listed . R ath er, ou r pu rp os e w as an d is to show a patt ern or 

pra cti ce of di sc rim in at ory ac tio n, suffice nt in sco pe and exte nt to w arr an t th e 

att enti on of th e Co ng res s, and di re cted to w ar d a su bj ec t (i n te rs ta te co mmerce ) 

ov er w hich Co ng res s has f u ll co ntro l an d resp on sibi lit y.

As fo r fig ure s co nta in ed in th es e stud ies, we ha ve us ed only th e mo st co nse rv at iv e a t ou r co mman d. The actu al exte nt of dis cr im in at io n may be mu ch 

gre ate r. Reg ar dles s of de gree , th e re su lt is ac tive dis cr im in at io n di re ct ed a t 

ra il ro ad s an d as such sh ou ld be de clar ed un la w fu l. I t is an un pa rd on ab le 

pra cti ce fo r wh ich th ere c an be no va lid excus e.

In de sc ribing th e 1957 st ud y, th e Do yle re port w as care fu l to st ate th a t th e 

in fo rm at io n ha d been fu rn is hed by th e Assoc iatio n of Amer ican R ai lroa ds , an d 

it ad de d th e follo wi ng si gn ific an t st at em en t be ne at h th e de ta iled in fo rm at io n fo r 

ea ch of th e Sta te s re fe rr ed t o : B

"T he reso ur ce s avai la ble to th is co mmitt ee were not su ch as to be ab le to co nduct an in de pe nd en t su rv ey to affirm or disp ro ve th e specific d ata pr es en ted to 

us. Ho we ver, re se ar ch h as been sufficie ntl y ex te ns iv e to es ta bl is h th a t re la tive 

di sc rim in at io n, of co ns id er ab le mag ni tude , does, in fa ct, exis t ag ai nst th e ra il ­

ro ads in t he a ss es sm en t pr oce dur es o f Sta te a nd local go ve rn m en ts f or ad va lorem 

ta x ati o n pu rposes. Ther ef or e, th e da ta is ac cepted as co nfirming th e ju dg men t

o f th is st udy gro up th at S ta te ahid local as se ss m en t pr oc ed ur es do dis cr im in at e

aga in st the ra ilr oa ds ." [E m phas is ad de d.]

I t see ms alm os t se lf-e vi de nt th a t ex ce ssive pro per ty ta xes re su ltin g from 

dis cr im in at ory eq ua liza tion of ra il ro ad as se ss m en ts wou ld un du ly bu rd en in te rsta te com merce. R ail ro ads are resp on sib le fo r mo ving th e la rg es t sh ar e of our 

in te rc it y to nn ag e carr ie d by any mo de of tr an sp o rt ati o n (43.51 per ce nt in 

19 64 ). Any su bst anti al ad dit io n to th e ra il ro ads’ co st of do ing bu sine ss ob viou sly bu rd en s in te rs ta te co mmerce , an d whe re suc h ad ded co st is a dir ec t re su lt 

of d is cr im in at ory a ct io n ai m ed a t the ra ilro ad in du st ry , th en the bu rden is clea rly 

an un du e bu rd en an d in te rs ta te comm erc e sh ou ld be pr ote ct ed ag ain st it.

Th e ad de d ta x bu rd en on ac co un t of di sc rim in at or y as se ss m en ts is su bst anti al 

to th e po in t of be ing op pr es sive . D ur in g th e 6 yea rs th a t th is le gi slatio n ha s 

be en be fore th e Co ng res s, ra il ro ad s ha ve bee n ove rtax ed mor e th an an es tim at ed 

th re e-q uart ers of a b ill io n doll ars a s a di re ct r es ult o f d is cr im in at ory a ss es sm en ts. 

Ther e is no telli ng how la rg e th is fig ure wo uld be if co ns id er at io n we re giv en to 

th e eff ect of th is in de fe ns ib le pra ct ic e in pri or ye ar s ext en din g f or decades.

Th e cu rr en t sh ow ing as to di sc rim in at ory as se ss m en ts re pr es en ts 43.3 pe rc en t 

of al l ra ilro ad S ta te a nd lo ca l ta xes of e ve ry kin d an d de sc ript io n in t he 20 S ta te s 

list ed in ap jie nd ix A her et o, an d it re pr es en ts 20.6 per ce nt of al l such S ta te an d 

lo ca l ta xes fo r th e en ti re ra il ro a d in dust ry in 48 Sta te s, H aw ai i, an d A lask a 

ex clu de d.

‘ In th is as in the prece din g stu dies only the 37 St ates th a t central ly asse ss railr oa ds 

were considered.

s

 N ational Trans po rta tio n Policy, sup ra, note 2, at 487.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 21

While ap pe nd ix A list s only 20 of th e 48 Sta te s, th e ta x dis cr im in ati on wh ich they are show n to pr ac tice actu ally h as a mu ch br oad er re ac h on th e ra ilro ad in du st ry . To il lu st ra te , in 1904 th e aver ag e ro ad mile ag e oper at ed in tr an s­ port at io n se rv ice of all class I line -h au l ra il ro ads in th e 48 S ta te s w as 217,181 mi les , an d th os e same carr ie rs em ploy ed 005,017 pe rson s and gener at ed 059,327 mill ion re ve nu e ton -m iles. Th e to ta l m ilea ge op er at ed by all of th e cl as s I lin e­ hau l ra il ro ads ha vi ng pro pe rty in a ny 1 o r mor e of th e 20 S ta te s list ed in a pp en di x A w as 199.050 ( 91.9 pe rc en t of th e to ta l) . Th e nu m be r of em ploy ee s of thos e same carr ie rs w as 580.490 ( 88.2 per ce nt of th e to ta l) ; an d th e re ve nue ton- mile s ge ne ra te d by th os e same carr ie rs ev er yw her e was 002.318,513.000 (91.4 pe rc en t 

of th e t o ta l) . I t is cl ea r th a t le gi slatio n fo rb id di ng dis cr im in at ory ta xati on of c a rr ie r pr op ­

ert y s ho ul d h e m ad e a par t of th e In te rs ta te Co mm erc e A ct. The un du e bu rd en on in te rs ta te co mmerce flowin g from dis cri m in ato ry ta x as se ss m en ts is co mpa ra ble to th e und ue bu rd en on in te rs ta te co mm erce re su lt­ ing from dis cr im in at ory ac tio n of S ta te auth ori ti es in th eir fa il u re or re fu sa l to 

ac t re as on ab ly in th e m att er o f r ail ra te s and servic es. H.R. 4972 follo ws the lang ua ge of se ct ion 13 (4 ) of th e In te rs ta te Co mm erc e Ac t in dec la ring th a t th e pr os cr ibed act io n by an y S ta te or su bd iv isio n or agency (i n ta xin g co mm on carr ie r pr ope rt y on a ba sis hi gh er th an th a t a t which ot he r pro pe rt y in th e sa m e ta xi ng d is tr ic t is ta x ed ) “is he reby de cl ar ed to co nst itute an un re as ona bl e and unju st dis cr im in at io n again st an d an un du e bur de n upon in te rs ta te co mmerce an d is he reby fo rb id de n an d de clar ed to be unla w fu l.’’ The fa ct th a t se ction 13 (4) de als w ith one type of dis cr im in at io n or bu rden and H.R. 4972 w ith an oth er is im m at er ia l, be ca us e they are bo th co nc erne d w ith “u nr ea so na bl e an d unju st dis cr im in at io n ag ai nst an d an un du e bur de n upon in te rs ta te co mmerce .” In th e fo rm er , th e pr oh ib iti on is again st a S ta te ’s re ­ qu ir in g a c a rr ie r to ch ar ge in tr a sta te ra te s so low as to he u n fa ir to or dis cr im i­ n ate ag ai ns t, or to place an undu e burd en upon, in te rs ta te co m m er ce ; th a t is, so low as no t to co ntr ib ute t heir f a ir s h are to th e reve nu es re qu ired by th e c arr ie r pr op er ly to pe rf or m its in te rs ta te ope ra tion s. In H.R. 4972. th e pr oh ib itio n (sim pl y st ate d ) is ag ai nst th e ac tion of a S ta te or its su bd iv isio n in as se ss in g an d co lle ctin g ta xes on carr ie r pro per ty a t a hi gh er ra te or ra ti o th an on ot her pr oper ty in th e same ta xin g dis tr ic t. In ea ch case th e ac t fo rb id de n is unju st di sc rim in at io n ag ai nst in te rs ta te co m m er ce ; th a t is, ag ai nst comm on carr ie rs which are en ga ge d in in te rs ta te oper at io ns an d are su bj ec t to th e In te rs ta te Co mm erc e Ac t. In each ca se th e pro hib itio n is ag ai nst a type of dis cr im in at io n or bu rd en which wo uld de pr iv e a c a rr ie r of reve nu es needed in th e pe rf or m an ce 

of its s er vi ce s in in te rs ta te co mm erc e.

Th e pr ov isio ns an d pu rpos es of se ct io n 13a o f th e In te rs ta te Co mm erc e Act 

re la ti ng to ra il se rv ices are to th e s am e ef fe ct—d is cr im in at ory S ta te ac tion wh ich 

un du ly bu rd en s in te rs ta te co mm erc e w ill n ot be pe rm itt ed . The qu es tion has been as ke d, Can Con gr es s co nst itutional ly enac t a m ea su re su ch as th is ? A t th e 1904 hea ri ngs se vera l mem be rs of th e su bc om m itte e ex ­ pr es se d co nc ern ov er th is issu e as di d th e D ep ar tm en t of Ju st ic e in a le tt er ad ­

dr es se d to th e th en ch ai rm an of t h is co mm itt ee . In an ef fo rt to pu t th is issu e a t re st, we ha ve ob tained an in-d ep th op inion fro m tw o rec og nize d auth ori ti es in th e fie lds of co ns titu tion al law an d S ta te ta xat io n. 

The auth ors of th is opinion are Mr. P aul J. H ar tm an an d Mr. Pau l II. Sa nd er s, 

bo th of V an der bi lt Unive rsity Sch ool of Law . Mr. H art m an is a pr of es so r of law a t th a t in st it uti on sp ec ia lizing in S ta te an d loca l ta x ati o n law . He is th e au th o r of “S ta te T ax at io n o f In te rs ta te Com ­ merce " * a nd has w ri tt en nu m er ou s la w re vi ew ar ticl es on th e su bj ec t. Mr. San der s is also a pr of es so r of law a t Van de rb ilt , te ac hi ng co ur se s in con­ st it u ti o n al la w an d labo r law . He is th e au th o r of va riou s art ic le s an d pu bl ic a­ tion s in th e co nst itutional an d pu blic la w fields. Mr. San de rs is he re to da y an d will di sc us s mor e fu lly th e const it uti onality of the m ea su re a t wh ich tim e he w ill in trod uce th e ir w ri tt en opini on an d su pport in g mem oran du m. Com ph eren sive bi og ra ph ical d ata on bo th th es e ge ntle m en may he fo un d a t th e en d of th eir 

pri nte d m em or an du m . At th e tim e th a t we requ es ted an op inio n o f thes e men. we mad e avai la ble to th em a cop y of th e pro posed m ea su re and a copy of th e hea ri ng be fo re the Su bc om m itt ee on Tra nsp ort at io n an d A er on au tics on H.R . 73G an d H.R. 101G9 

he ld J uly 2 8 ,19<M.

8

 Hartma n. “St ate Taxation of Int ers tat e Commerce,” Dennis & Co.. Inc. (1953).
22 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

It was in the ligh t of the background information there elicited that Mr. 

Hartman and Mr. Sand ers approached the constitution al issue.

These gentleman have concluded that the Congress does have power under the 

commerce clause and other principles enunciated in the ir opinion to enac t the 

measure prese ntly befo re you. We feel that both of these men are eminently 

qualified authorities in the fields of constitutional and State taxatio n law and 

we assure you th at this measure, if enacted in its presen t form, will successfully 

withstand at tac k as to its constitutionality.

We have also sought and obtained the views of fou r noted and qualified a utho rities in the fields of taxation, economics, and tra nsp ort ation as to the app rop riateness. adequacy, d esirability, and need for th is legislation.

These experts are Mr. Jam es W. Martin of Kentucky, Ur. Harold M. Groves of 

Wisconsin, General John P. Doyle of Texas, and Mr. Broley E. Travis of 

California.

Each man was supplied with copies of II.R. 4972, the repo rt of the subcommittee hearing, and the Ilar tman- Sanders opinion relating to the constitutionality 

of the measure.

Mr. Martin, who is gene rally conceded to be the dean of the tax fra ternity 

is a professor emeritus at the University of Kentucky. He is highly rega rded 

in the field of valuation of railroad and public utility properties, having served 

as valuation consultant both for railroads and the Sta tes of Kentucky, Virginia, 

Arizona, and Georgia as well as cities in those States. He is a past p resident of 

a number of organiza tions, including the Tax Foundatio n, Tax Insti tute of 

America, Associated Burea us of Business and Economic Research, and the National Tax Association. More expended biographical data appears at the conclusion of the letter opinion appended hereto.

Dr. Groves, no less an authority taxwise, also brings to bear on the issue a 

comprehensive knowledge of economics and public finance. He is a professor 

of economics at the University of Wisconsin, has serve d Government in both 

appointive and elective capacities, has written extensively of finance and ta xa ­

tion. and served a term as president of the National Tax Association. Extended 

biographical data is at tac hed .

Major General Doyle, who prior to his retirem ent served as Director of T rans ­

portation of the U.S. A ir Force, occupies the McDonald Chair of T ranspo rtation 

at Texas A. & M. and served as Director of a Special Study Group on Tr an sportation Policies in the United States for the I nt er state and Foreign Commerce 

Committee of the Senate, which reported on the su bjec t in Jan uar y of 1961. Full 

biographical info rma tion appears immediately af ter his letter which is atta che d 

hereto, as exh ibit 3.

Mr. Travis is pre sen tly a consulting valuation engineer in Sacramento. Calif. 

He is a former chief valuation engineer for the California State Board of 

Equalization. Tn addition, he has assisted the Sta tes of Oregon, Colorado, New 

York, Utah, and Idaho in the ir railroad assessment work. He has been employed 

as an expert by rail roads in the prep aration of valuation and equalization cases 

in Missouri. Illinois, South Dakota, and Iowa, since his retir eme nt from his position with the Sta te of California in 1902. More detailed biographical data 

appears as a p art of Mr. Travis’ statement.

Though unable to have Mr. Martin, Dr. Groves, or General Doyle present to 

appear before you, we were fortun ate in being able to present Mr. Tra vis who is 

here and will appear late r.

The N ational Association of Tax Adm inistrators by executive committee action 

on Jan uary 18, 1961, accorded formal recognition to the discriminatory tax 

practices directed a gains t railr oad s in the m att er of the ir property assessments at 

Sta te and local level. This committee recommended th at the president of the 

association appoint a comm ittee to “deal with all aspe cts of the problem, including the several prop osals to res tric t the taxing jurisdiction of the States as to 

prop erty used in interstate commerce by ra ilro ads .”

The executive comm ittee also expressed the hope th at the States found to be 

guilty of the offenseive practice of discriminating agains t railroad s would see t he 

error of the ir ways and mend them in a gra dual and (presumably) pain less 

fashion.

The president of the National Association of Tax Adm inistrators acted on the 

recommendation of his executive committee and appointed the committee. How-
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 23

ever, the committee had made no report by 1903 and so far as I have been advised 

has never made a public report. As a practical matte r the whole approach of this organization amounts to a confession of error coupled with a request for a postponement of judgment. In 1964 and when measures identical to those now pending were before this committee, Government agencies having a possible interest were invited to express their views. The results are quite revealing: F ir st : No agency denied th at railroads were in fact the victims of discriminatory action of the type claimed. Second: No agency opposed the equalization objective. The laws of practically all the States, if carefully adhered to, would rarely, if ever, produce a discriminatory assessment. In contrast to State assessment laws, the State provisions for testing assessments in courts or obtaining relief from the taxes tha t result from these assessments are not nearly as free from criticism. For the most part, these procedural relief statutes are vague and confusing and have little to commend them in the way of uniformity of either design or applica­ tion. In this area, it seems clear tha t the proposed measure, offering as it does, a clear, direct and simple remedy designed for uniform, application by the Federal 

courts is highly desirable. It should be kept in mind at all times that the measure here under consideration addresses itself only to supplying a procedure by which discriminatory taxes may be corrected. It is only available to the taxpayer capable of bringing himself within its terms. It is not self-operative and neither imposes any duty nor confers any right on the Federal Government to administer State taxes. The offensive taxes must he proven to be such by competent evidence and in a court of law. Absent such a proceeding and proof by a complaining taxpayer, the bill here proposed would have no effect whatever on any act of any State regarding any ta x at any time. To avoid unduly lengthening this statement and at the same time make readily available full information concerning this measure and certain questions that might he asked regarding it, I suggest that the committee by reference include as a part of the record of this hearing, my statement, my answers to questions propounded by the chairman of the subcommittee all in connection with the subcommittee hearing on July 28, 1964, and the documents listed below and 

submitted at that time: (1) The Doyle Report: that is, “National Transportation Policy,” a report prepared by the Special Study Group of Transportation Policies in the United States for the Senate Committee on Inte rstate and Foreign Commerce, 87th Congress, 1st session (preliminary draft, 1961). (2) U.S. Bureau of the Census, U.S. Census of Governments: 1957, volume V, “Taxable Property Values in the United States.” (3) U.S. Bureau of the Census, Census of Governments: 19(52, volume II, 

“Taxable Property Values.” (4) Rej>ort of the Advisory Commission on Intergovernmental Relations on “The Role of the States in Strengthening the Property Tax,” volumes 

1 and 2, June 1963. I thank the chairman and members of the committee for this opportunity to appear before you. If there are any questions which you desire to ask, I shall be happy to try to answer them. If there is any additional information on this subject which you wish us to furnish now or in the future, we will do our very 

best to oblige you. In closing, we submit that the duty of the Congress to protect interstate com­ merce from the undue burden of discriminatory taxes and, by so acting, to preserve our transportation systems in furtherance of the national transportation policy, is clear and compelling. The following exhibits are appended and asked to be made a par t of this 

sta tem ent: Exhibit 1. Letter of Mr. Joseph AV. Martin of January 10, 1966. (Also background material on education and experience.) Exhibit 2. Biographical material of Dr. Harold M. Groves. Exhibit 3. Letter of Maj. Gen. John P. Doyle of February 7, 1966. (Also

background material.)
24 tax as sess me nt s on common car rier property

Appendix A

S ta te

A la bam a............

A rizo na..............

C al ifor ni a_____

Id ah o _________

Io w a_________

K an sas_______

L ouis ia na..........

M is si ss ip p i. __

M is so uri ............

M o n ta n a...........

N ew M ex ic o ... 

N o rt h D ak o ta .

O hio ...................

O kla hom a____

S outh C ar ol in a 

S out h D ak o ta .

Tennes se e____

U ta h ...................

V ir gin ia ......... .

W yom in g_____

T o t a l ....

1964 r ai lr oad All oth er 1964

P er ce nt 

of valu e 

at w hi ch

P er ce nt 

of v al ue 

a t w hi ch

E sti m ate d 

re duct io n in 

ra ilro ad ad 

va lo re m taxe s

if ra ilro ad 

as se ss m en ts P erc en t

ad val ore m S ta te a nd local ra ilro ad p ro p ert y had be en m ad e of t ax

ta xes ra ilro ad ta xes p ro p ert y of ot hers a t th e sa me excesassesse d asses sed per ce nt of va lu e si ve

in 1964 as we re t h e 

as se ss m en ts of

pro p ert y o f

oth er s

(1) (2) (3) (4) (5)

$3, 200, 440 $2,3 17, 560 40 20 $1. 600,220 50

8, 381, 673 319,327 76 20 6, 705. 338 80

24, 732, 616 5.008. 384 42 22 11,624, 330 47

4. 512, 592 281,408 40 16 2, 707,555 60

6, 841, 562 96,4 38 60 25 3. 968,106 ,58

12,59 9, 613 621,3 87 50 20 7,559, 768 60

4,165,341 1.62 0.659 40 20 2.08 2,67 1 50

2, 822. 748 611,252 30 14 1.49 6.05 6 53

9. 352. 081 888,919 50 30 3, 740,832 40

6, 026. 541 149,459 50 25 3,013.2 71 50

2. 453. 818 330,1 82 70 20 1,742,211 71

4. 930, 106 125, 894 45 27 1. 972,042 40

24. 459, 469 2,68 1,531 100 55 11,006.761 45

5, 933, 042 357,958 40 20 2, 966.521 50

2, 468, 585 1.100,415 42 10 1, 876,125 76

1,051,379 30,621 60 45 262,845 25

7, 630, 907 2, 260,093 95 30 5. 189,017 68

4. 564, 202 422, 798 28 16 1.91 6,96 5 42

7, 522, 320 6,943, 680 40 33 1, 278,794 17

3, 550, 477 43,5 23 60 20 2,343, 315 66

147, 199. 512 26,211 ,488 75. 052, 743 61

N o te.—S inc e 1964 c ert ain of t h e S ta te s list ed ab ov e (n o ta b ly N o rth D ak o ta an d M onta na) h av e t a k e n 

ac tion to br in g th e lev el of ra il ro ad as se ss m en t s clos er to th e lev el of ass es sm en ts of ot her p ro p ert y . H o w ev er, 

th e r ev er se is t ru e i n o th er S ta te s.

Exhibit No. 1

Lexington. Ky., January 10, 1966.

Mr. J ames N. Ogden,

Vice President and General Counsel,

Gulf, Mobile rf Ohio Railroad Co.,

Mobile, Ala.

P ear Mr. Ogden : II.R. 4972, 89th Congress, 1st session, and identical measures 

in this and ear lier Congresses, are designed, among other things, to accord the 

Federal district courts jurisdiction to provide jud icial review within carefully 

defined limitations of cases involving carr ier s in interst ate commerce who allege 

discriminatory pro per ty tax assessment. To secu re the review the tax pay er 

would no longer have to show that he lacks a legal remedy under State law.

There are States as to which no such legislation is needed because (a) the 

State does n ot apply the ad valorem prop erty tax to some or all stich carriers , 

(b) the assessing officers avoid the discrim inatory practices, or (c) the Sta te 

courts under appro priate legal procedures protect taxpay ers who would oth erwise become victims of discrimination. However, the re are certain Sta tes in 

which the sta tut es ostensibly provide timely and comprehensive judicial review 

but in which experience dem onstrates that practic ally there is no prompt or adequate legal remedy for grossly inequitable and unconstitutional discrimination . 

(I t has been my lot to be involved as a con sultant or witness in some such 

States—sometimes with the State government, sometimes with taxpayers—and, 

hence to know the fac ts firsthand as well as through usual professional channels.) The States in which the legislation is not needed would, of course, be 

unaffected by the legislation.

In brief, there is a cle ar need for legislation such as th at contemplated in the 

cited bills if i ntersta te ca rriers are to have the due process and equal protection 

of the laws which the 14th amendment to the U.S. C onstitutio n seeks to provide 

and which must be availab le if gravely unreasonable differential burdens on inter sta te commerce a re to be removed.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 25

The proposed legislation carefully avoids any impingement on the character of American federalism. It would not—as would some proposals to atta in re­ lated objectives—impose on State administration of property tax assessment particula r decisions made under congressional authority by the Internal Revenue Service or by some other Federal agency. Indeed, it would neither restrict the scope of State legislation nor interfere in any way whatever with the legal operation of any State administrative agency. Nor would it delay—as do Fed­ eral or State injunction proceedings at present—collection of the parts of State and local taxes which are clearly legal. Its only application would judicially im­ plement a Federal constitutional provision about 100 years old but never yet fully applied in a number of States to interstate transportation proi>erty tax assessment cases. The proposed legislation is, thus, peculiarly appropriate to the task of applying the Constitution of the United States to the comparatively small number of cases to which there is now no practically adequate means of application—and doing so without any possible offense on rational grounds to persons who wish to maintain the legally established operating atonomy of each 

State. In this sense the proposed legislation is wise in what it does do if one merely assumes that it makes sense to apply the equal-protection doctrine to inte r­ state carriers as well as to other taxpayers who otherwise become the victims of grossly inequitable discriminatio n; and it is equally wise in what it avoids doing, tha t is, altering the ground rules for the respective areas of adminstra- tive responsibility of State and of Federal Government. In the latter relation­ ship the builtin restriction in the scope of the proposed bill would assure that the measure will aid, ra ther than impede, the drives now in process in a number of States toward better property tax administration. There is one comment which rests on a different footing. The pleas of the persons who would avoid enactm ent of the proposed legislation until other “al­ ternatives” are tried ignore the history of property taxation in relation to the 14th amendment. For about 90 years (the Supreme Court decided famous State

Railroad cases in 1875) the problem has been attacked repeatedly, variously, and insistently. And, except for technical advances made in the light of research, the nonrevolutionary “alter natives” now proposed have been before the States in some form for more than 50 years. For reasons already made clear in the initial paragraphs of this letter, the legislation now proposed cannot logically be expected to interfere with or even slow the application of any proposed “al­ ternatives.” Moreover, if one may except the drastic remedies which would replace State with Federal tax assessment administration to some degree, this legislation would deal with a weakness which the publicized “alternatives” do 

not even purport to attack. It seems clear that the Congress, in the interest of the reasonable protection of inte rstate commerce from grossly inadequate property tax discrimination and to assure an American fair deal, should enact legislation to guarantee the appli­ cation of the constitutional prohibition against grossly discriminatory tax assess­ ments which victimize carriers tha t transport goods or persons among the States. Only by such positive action can that commerce have the full protection of the laws which the commerce clause of the Constitution charges the national 

lawmakers with protecting.

Sincerely yours, J ames W. Martin.

Notes on Education and Experience of J ames W. Martin to J anuary 1. 1966

Education: College, East Texas State Teachers’, June 1920. Graduate, Pea- body-Vanderbilt, June 1920-June 1921; Chicago, June 1922-June 1924; summer 

1928. Experience: Alabama Technical Institute and College for Women, 1921-22; University of Chicago and Northwestern University (part time), 1922-24; Pea­ body College, summer 1924; Emory University, 1924-28; University of Ken­ tucky, professor, 1928-48. distinguished professor, 194S-64. emeritus. 1964 to da te; director, bureau of business research, 1928-64. Meantime, simultaneously or while on partial or complete leave, assistant to chairman. National Tax As­ sociation Committee on Highway Finance, 1921-22; chairman, Committee on Motor Vehicle and Related Taxes, National Tax Association, 1929-34; director of tax study for Georgia Chamber of Commerce, 1923-24; research director. Inte rsta te Commission on Conflicting Taxation (Council of State Governments),
26 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

1934-35; member of Pre sid ent’s Committee on Relation of District of Columbia 

to United States, 1935; chief of staff of Governor’s Reorganization Commission 

(Ke ntucky), 1935-36; commissioner of revenue and chairman, Tax Commission, 

Kentucky, 1936-39; con sultant during World War II period to Treasury Departme nt, Civil Aeronautics Board, and Division of Governments, U.S. Bureau 

of the Census; later consu ltant or lecturer (also staff dir ector ), Virginia Pub ­

lic Service Tax Study Committee on Railroad and Other Public Utility Tax ation ; Turkish Ministry of Fin anc e on Adm inistration of the Mi nistry; city of 

Louisville, and numerous other cities of Georgia, Kentucky, Tennessee, and Virginia; various agencies of Commonwealth of Kentucky, and of 12 or 15 other 

Sta tes ; Southern Regional Education Board, 18 or 20 American universities and 

1 foreign unive rsity; and served as Kentucky commissioner of finance (1955-57) 

and of highways (1937-38). Aside from 3 times valuing railroads and other 

Kentucky public service property as an official, M artin devoted special atte ntion 

to thi s subject in (a) pre paration of valuation testim ony as to 5 valuation 

cases—mostly railroads—involving assessment or condemnation in which testi ­

mony was not submitted because of settlement or other reaso n and 15 cases in 

which in 9 States testimony was submitted before a State valu ation agency or 

a State or Federal court; (6) consultant to railroad associations of 3 States 

involving counsel as to valuation of all railroads in 2 cases and testimony before a legislative interim comm ittee in the third, pre paration for Kentucky 

Dep artm ent of Revenue of a general study of methods of valuation of operating 

public utility (including statist ical derivation of cap italization rates) in early 

1950’s and as to railroads again in the late 1950’s (a third study involving all 

public service ente rprises is now in process) ; (c) revalution of all Kentucky 

public service corporations for departm ent of revenue, 1964-65; (d) current 

consultation with Arizona, Georgia, and Kentucky as to public service v aluation ; 

and (e) contribution of a dozen or 15 monographs and technica l journ al artic les 

to scholarly litera tur e (alo ng with 3 unpublished rep orts aggregating monogra phic proportions to tax officials in Arizona and Kentu cky ). In all, Martin 

has prepared for publication about 400 monographs and articles (the latte r includin papers in American and foreign government, legal, and economics journa ls) . He was awarded an honorary LL.D. by the University of Kentucky in 

1965. Martin is past pre sident of the Kentucky Academy of Social Sciences, 

Southern Economic Association, Tax Foundation, Tax In sti tute of America, Associated Bureaus of Business & Economic Research, and National Tax Association. He is now an hon ora ry member of the las t and of the National Association of State Budget Officers.

Exhibit No. 2

Dr. Harold M. Groves is a native of Wisconsin. He is a gradua te of the University of Wisconsin where he received his bachelor of philosophy degree in 1919, 

his ma ster’s in 1921. and his doctor of philosophy degree in 1927, and had a yea r 

of law at Harvard Law School. A professor of public finance, he was appointed 

to the University of Wisconsin staff in 1937 where he has remained except for 

an occasional mission in public affairs. During the ear ly thi rties he was successively State assemblyman, Sta te tax commissioner, and State senator. In 

1940 he served as chief of s taff for the U.S. Treasur y’s stud y of intergovernmental 

fiscal relations. In 1944-46. he was on the staff of the Committee for Economic 

Development which published his study entitled “Postwar Taxation and Economic Progress.” In 1948-50, he w as chairman of the Nation al Tax Association 

Committee on Corporate Income Taxation .

He has been on the board of dire ctors of the National Bur'eau of Economic 

Researc h since the m idthirties and was chairman of th e b oard from 1961 to 1963. 

He was vice president of the American Economic Association for a term in the 

late forties and has been president of the Mid-West Economic Association. One 

of his many books, “Fin anc ing Government,” is now in its sixth edition. He 

served as president of th e National Tax Association in 1963-64.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 27

Exhibit No. 3

Texas A. & M. University, 

College Statio n, Tex., February 7 ,1966.

Mr. J ames N. Ogden,

Vice President and General Counsel,

Gulf, Mobile <£ Ohio Railroad Co.,

Mobile, Ala.

Dear Mr. Ogden : After going over H.R. 4972, your testim ony in 1964 and the Hartm an-San ders paper, I find nothing that I can add to our rep ort of 1961 on nation al transp ortation policy. Since th at was written, nothing has been de­ veloped which would cause me to doubt th e accuracy of our conclusion that there is ample evidence that railroad opera ting property has been and still is subject to disc riminatory assessment for tax purposes in a number of localities. We all know t hat progress has been made in some States. It is not enough. Mr. Rogers’ bill seems adequate for the purpose and is probably the most that could be achieved at this time. I am still of the belief th at a real case in equitable treatme nt could be made for exempting private way from all ad valorem taxation. I don’t think this very likely except as a subsidy to deficit commuter 

service. Discrim inatory taxation of c orporate ente rprise has no place in a competitive economy. II.R. 4972 is a step in the right direction. I sincerely hope you can get th is constructive bill enacted in to law. It is too bad the several States couldn’t 

do it on th eir own without Fed eral intervention.

Sincerely, J ohn P. Doyle.

Biographical Sketch of Maj. Gen. John P. Doyle

Maj. Gen. John P. Doyle, U.S. Air Force (re tir ed ), currently occupying the MacDonald Cha ir of Trans portation at Texas A. & M. University, is a gradua te of the U.S. Military Academy and the advanced management course from the Ha rvard School of Business. Prior to his retirem ent in 1956, he was Director of Tra nsp ortation for the Air Force. Subsequent the reto he was a consulting engineer in tran spo rtation and a mem ber of the board of directors of Transpor­ tation Consulta nts, Inc., of Washington, D.C. He was recalled to active duty in 1959 to serve as director of a stu dy of national tra nsporta tio n policy for the In terstate and Foreign Commerce Committee of the U.S. Senate (as it was then known). The repo rt (S. Rept. 445, 87th Cong., 1st sess.) was completed in December 1960, after which he reverted to retired sta tus and resumed his work with Tra nsp ortation Consultants, Inc., until accepting his pre sen t position in Septem ber 1962. He is the au thor of a number of technical pap ers dealing 

primarily with transportation.

The Chairman. Thank you.

Mr. Rogers, do you have any questions ?

Mr. Rogers of Texas. Mr? Ogden, let me compliment you on your 

statement. It is very thorough, and I think to the point. I think really that on page 13, where you state tha t the laws of practically all of the States, if adhered to, would rarely, if ever, pro­ duce a discriminatory assessment, and the language following that, points up the basic problem here. It was the problem that caused me to become interested in this ma tter and to introduce this legislation. Do we have access to the opinions tha t you referred to in here, by 

Mr. Hartman ?

Mr. Ogden. Yes, sir. It is quite a substantial document and con­ sists of over 90 pages. It has been given to the clerk and we have a number of copies here. Mr. Sanders is here to state his opinion and to answer any questions or discuss any facet of i t with you. (The document referred to will be found in the committee files.)
28 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Rogers of Texas. I)o you recall, Mr. Ogden, what their conclusion was with regard to the objection of Deputy Attorney General 

Katzenbach, as expressed in their letter in 1964, in which he referred 

to the decision—I forget the name of it-----

Mr. Ogden. Tha t is the Moses Lake decision.

Mr. Rogers of Texas (continuing). In which it was stated that the 

court reversed the case and, of course, remanded it and the lower court 

had no right or jurisdiction to assess any taxes.

Mr. Ogden. Mr. Rogers, Mr. Hartm an and Mr. Sanders’ opinion 

and memorandum have fully covered the Moses Lake proposition. 

That is in pages 92, 93, 94, and 95 of the memorandum. I would 

hesitate to undertake to explain Mr. Sanders’ opinion when he is here, 

but it does cover it and it was gone into, and I thin k very ably and 

very clearly.

Mr. Rogers of Texas. But they did conclude in their opinion, I 

would gather from your statement, that there would be no necessity 

to amend the bill as it is presently drawn because this matter would 

be taken care of.

Mr. Ogden. That is correct.

Mr. Rogers of Texas. Thank you very much. Tha t is all, Mr. 

Chairman.

Mr. Y ounger. Thank you, Mr. Ogden, for a very thorough discussion of this problem. Do you recall the hearings tha t we had in 

connection with the guarantee of railroad loans by the ICC?

Mr. Ogden. Mr. Younger, I recall only that there were hearings. 

I was not present and had no participation in them whatever.

Mr. Younger. As I recall, there were discussions in regard to the 

New Ilaven Railroad and one of the reasons given for the financial 

position that the New Haven found itself in was the discriminatory 

tax by the various towns through which the New Haven road ran, 

especially in the local communities, and the tremendous tax that was 

placed even on their small depots and buildings, which was in addition 

to th eir right-of-way.

I think that was rath er clearly brought out in those hearings: that 

one of the greatest difficulties, and as I recall there was some talk 

at the time of the ICC stepping in and tryin g to get some relief from 

this excess taxation in order to make the New Haven partially sound. 

Of course, since that time we have had something like $50 million in 

guaranteed loans to the New Haven.

Mr. Ogden. Yes, sir.

Mr. Younger. But I think it was rather thoroughly covered in the 

hearings at that time.

Mr. Ogden. I do recall, Mr. Younger, just from the presentation, 

that the matter of heavy tax burden was alluded to as one of their 

problems. Tha t is true.

Mr. Younger. Thank you very much.

Mr. J arman. Mr. Ogden, I think you have made an excellent statement. and I compliment you on it. On page 13, where you refer to 

Government agencies having a possible interest being invited to 

express their views—were those agencies State or local in nature ?

Mr. Ogden. I meant the Federal Government, sir. I assume that 

it was confined to Federal Government agencies because no State
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 29

agency expressed any view. I really, perhaps, should have made the 

statement in that fashion, that I understand when a bill is up for 

consideration, that is the practice of the committee, or the chairman, 

to ask various Government agencies, Federal agencies, if they think 

they have any interest, to express a view. That is w hat I meant to 

imply, tha t if, following the customary procedure in those matters, 

it was followed and the views were expressed.

Mr. J arman. I understand.

Now, at the local and State levels, there are legal provisions for 

contesting an assessment, are there not ?

Mr. Ogden. Yes, sir.

Mr. J arman. And, of course, I am assuming a testing effort has 

been made many times at the State and local levels to contest assessments that were felt to be discriminatory. Wha t kind of reaction and 

results have been forthcoming, in actions of tha t sort ?

Mr. Ogden. On the whole, Mr. Jarman, very, very negligible, relatively, and very, very discouraging. To give you just a few instances, 

and this is related to the commuter problem and the taxes. New J er ­

sey has helped railroads to some extent in connection with actually 

forgiving some taxes to help in the related commuter problem, but 

at the same time, New Jersey perhaps has procedures for testing, as 

you ask, an assessment or raising the question regarding taxes that 

are considered to be discriminatory or wrong for any reason, but those 

procedures are just terrible.

I am advised tha t tax cases that were begun in New Jersey in 1952, 

afte r 13 or 14 years, are still muddling along and no closer to conclusion. One railroad estimates that it feels that a t the rate they are 

going, they will not conclude its 1953 objections until about 1970.

So while there are procedures, to say th at they are adequate, they 

just are not. It is very cumbersome in a number of other States. 

Many States require the type of procedure where they go into each 

county. For example, in the State of Illinois we have had litigation 

for years. It finally resulted in legislation tha t requires equality of 

assessment, but to bring tha t about more than 2,000 cases were filed 

in tha t State in the various counties. Eight cases went to the Supreme Court and we are still tryin g some of the cases.

We have won all that we have tried, but there were over 2,000 

cases in about 8 years in one State. That is a great deal of litigation, 

even though we win it. It is expensive and time consuming, and it puts 

the emphasis, Mr. Jahman, where it shouldn't be.

The emphasis, for instance, in Tennessee, to use an illustration that 

is very much in the news at the moment, is on whether or not an 

extra ordinary remedy may be employed. It is pretty well taken 

for granted that if they can jus t get into court, possibly the relief 

would be granted. Well, the emphasis should not be, in a case of this 

kind, can I get into court. The emphasis ought to be, can I prove 

my case, or do I have any jus t reason to want to be in court ?

The purpose of this measure would be to provide a simple, direct, 

usable, understandable, equally applied method of raising these important issues and place the emphasis where it ought to be, to put the

60-66 1—6 6----- 3
30 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

burden where it should be ; th at is, on the taxpayer to prove what he 

claims, and not spend all of his time and fritt er away all of his energies 

and carry on all of this extraordinary litigation in order to find a way 

to get into court.

Mr. J arman. And your conclusion is tha t the only really practicable solution to this problem will be through Federal legislation 

such as we have before us.

Mr. Ogden. Yes, sir; because it would apply, then, equally and 

evenly. As I emphasize again, it is only a remedy. It places no 

affirmative duty on any Federal agency to come out and police anybody. There is nothing for the Federal courts to do unless a taxpayer 

calls on the court and proves his case.

But it does remove from the realm of litigation the proposition of 

whether or not a remedy is available. Tha t today is the big issue. 

Do we have a remedy? That is the issue. The remedy in Tennessee 

so far stands on the very th in ground th at a district court has reversed 

an old rule of the Supreme Court of the United States. That doesn’t 

happen too frequently. I wouldn’t put too much dependence on it.

Mr. Rogers of Texas. Mr. Ogden, isn’t it a fact that if this bill is 

passed, the availability of the Federal forum will tend to reduce the 

number of lawsuits because your State agencies and your municipal 

corporations of lesser size within that State will tend to follow these 

equalization practices and get away from the discriminatory practices?

Mr. Ogden. I would answer that strongly in the affirmative. It 

has been the history over the years of this problem that, when brought 

up to stark reality and faced with known methods of reaching the 

thing, then some relief is brought about.

Fo r instance, in Kentucky, they are in pretty good shape right now, 

but they were faced with a decision last year, a mandamus to every 

public official in the State, where they were told that on January 1, 

1966, they would have to equalize all ot the assessments. Their failure 

to do it would be considered a deliberate violation o f the court’s order.

I will say this for the benefit of Kentucky: Th at they have been 

working toward tha t for some time. They just had n’t quite gotten 

there, and it came as neithe r a surprise nor a disappointment, as fa r 

as the Kentucky officials were concerned. But nonetheless, that 

typifies the point tha t is reached in this type of situation.

I think what Mr. W aggonner said, as far as Louisiana is concerned, 

in expressing the local view there, they made it quite clear that there 

jus t would be no equalization until they were faced with a court 

requirement.

Mr. J arman. I have no further questions, but thank you, Mr. Ogden.

Mr. Moss. Mr. Ogden, what property is to be covered? Is it all 

prop erty owned by the railroa d company ?

Mr. Ogden. Yes, sir.

Mr. Moss. In my State that could entail the many thousands of 

agricu ltural acres that are owned by the railroads.

Mr. Ogden. Well, I see what you mean. No, sir; I don’t mean that. 

We are speaking now of railroad operating properties, and they di-
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 31

versify to some extent now. Some railroads have oil-producing lands.

Mr. Moss. Isn ’t the language in the bills as presented here intended 

to cover all railroad prop erty ? That is as I read it.

Mr. Ogden. Well, yes, sir.

Mr. Moss. That is prop erty owned or used, that is the language on 

line 6 of page 2 of the proposed legislation. It would cover all prop ­

erty, wouldn’t it ?

Mr. Ogden. Well, the language certainly would; yes, sir. I should 

thin k that if there were any problems, it was intended, or a t least my 

recommendation would be that if need be, it would seem to me it could 

be confined to that property of the carrier on which the carrier does 

business and on which is carried the success or failure of its carrier 

operations.

Mr. Moss. It would be very difficult to define it, would it not?

Mr. Ogden. Well, this other property would hardly get into the 

ratemaking base, for instance.

Mr. Moss. Now, it would also place the railroad carrier in a preferred position as a taxpa yer; -would it not ?

Mr. Ogden. Sir, what is that ?

Mr. Moss. It would place the railroad taxpayer in a preferred 

position, would it not, and give an additional remedy ?

Mr. Ogden. No, sir.

Mr. Moss. In my State of California, we assess all utility property 

under the same procedures. I went through this back in my State 

legislature almost 20 years ago. I have no doubt as I recall the testimony of the Pacific Gas & Electric Co., and the Pacific Telephone & 

Teleg raph Co., that they felt that they were suffering the same discrimination which was alleged by the railroads. Thro ugh the enactment of this, we would be giving an additional remedy to the one, but 

not to the others; isn’t tha t true ?

Air. Ogden. Well, yes and no. In a sense it really isn’t. Actually, 

today, Mr. Moss, there is a much more drastic remedy open to anybody 

with diversity of citizenship in the Federal court. The only reason 

tha t it is difficult to get into the Federal court is the requirement that 

you prove, first, that there are no adequate State remedies. Sometimes 

tha t is quite hard to prove.

Air. Moss. Wouldn’t the Pacific Gas & Electric Co. be faced with 

the same problems in doing tha t as the Southern Pacific Co. ?

Air. Ogden. I am not fam iliar with the Pacific Gas & Electric, hut 

my point is simply this: that under the law as it is today, and assuming 

tha t there is no adequate State remedy, any taxpayer, be he the Pacific 

Gas & Electric or Southern Pacific, or Tom Jones, if he has a diversity 

of citizenship or other ground for Federal jurisdiction, he can obtain 

an injunction against the entire assessment.

Air. Moss. Are you saying, then, that the remedy for the other utilities is adequate, but not for railroads?

Air. Ogden. Frankly, I am worried with the railroads right now.

Air. AIoss. That isn’t the question I asked you. I think I have asked 

you a fair question. I think I am entitled to a fair answer.

Air. Ogden. I am not trying to sidestep it at all, Air. AIoss. Would 

you mind repeating it ?
32 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Moss. I asked, first, if this was not providing an additional 

remedy for the railroads.

Mr. Ogden. My answer to that is “Yes.”

Mr. Moss. And one not available to other utilities?

Mr. Ogden. My answer to that would be precisely “Yes.”

Mr. Moss. Of course, it would. Do you think that we are justified 

in only tackling p art of this problem ? If we are going to marshal the 

power of the Federal Government to achieve tax equality, why not 

marshal it for all firms affected by these actions, firms engaged in 

interstate commerce?

Before coming here, I was a practicing real estate broker and I know 

in some of these ind ustrial parks I have heard my clients allege that 

they suffered highly discriminatory treatment. I don’t know whether 

they did, but if they did, shouldn’t they also, if engaged in interstate 

commerce, have this additional remedy available to them ?

Mr. Ogden. Yes, sir. It covers all common carriers subject to the 

Interstate Commerce Act.

Mr. Moss. It covers the common carriers subject to it, doesn’t it?

Mr. Ogden. Well, pipelines are common carriers.

Mr. Moss. Let us talk about Safeway Stores. They are in interstate commerce, and they are not a carrier. They have large warehouses in many indu strial parks across this Nation. If they alleged 

discriminatory treatment, would this be available to them ?

Air. Ogden. If they were common carriers; yes.

Mr. Moss. Well, they are not.

Mr. Ogden. I can't help it if they are not common carriers, Mr. 

Moss.

Mr. Moss. I just wanted to get on the record here the fact that this 

would be an additional remedy available only to one class of citizen and 

not to others who might have a very similar or an identical problem.

That is all.

Air. Rogers of Texas. AVould the gentleman yield?

The point is, I don’t th ink that it ought to be confined to a railroad, 

but this is a common c arrier bill. It has to do with all common c arriers. One of the reasons for it is tha t it was in this general area 

where discrimination was quite obvious. As a m atter of fact, i f you 

go back not too many years ago, you will find the general saying was 

that the railroads stood for it because it was a good tax source and they 

were also a good defendant in lawsuits.

Air. AIoss. Aly other point is that there are other utilities who allege the same sort of discriminatory treatment. I recall full well, 

during the hearings in the California Legislature in 1949 on legislation proposed by then Assemblyman Kirkwood, that we had the same 

allegations made, as I recall, by Pacific Gas & Electric Co., by Pacific 

Telephone & Telegraph Co., and other important business members 

of our State community.

Mr. Ogden. Mr. AIoss, I would have no objection to them being included at all.

Air. AIoss. I just wanted to point out tha t we are going to open this 

Pandora’s box and if we are going to do tha t we should know full well 

the dimensions. If we are going to provide this additional relief,
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 33

where do we stop? If the test is the effect upon interstate commerce, 

and the burden upon interstate commerce, then we have a long way fur the r to go than is included in the bill before us. I don’t personally 

want us to start, down that road at this time.

Mr. R ogers of Texas. Would the gentleman yield furth er? I don’t get the point of th e gentleman’s argument. Now, my atten­ tion has not been called to discrimination with regard to Safeway, but it is my feeling t hat in whatever field there is discrimination it ought to be corrected, and if it is not corrected at the State level, it ought to 

be corrected at. the Federal level. One of the basic premises of our Constitution is equality of taxation. I don’t care whether i t is a railroad or a truck of Safeway or who it is, 

if there is discrimination i t ought to be corrected. Mr. Moss. Why limit this additional remedy to common cam el’s? 

Why not open it up to everybody ?

Mr. Rogers of Texas. If the gentleman will yield furth er, if the 

gentleman will furnish me with the evidence as to other people en­ gaged in interstate commerce, which would give us jurisdiction to act in th is field, I will be most happ y to study the evidence and introduce 

legislation to correct tax discrimination. Mr. Moss. I have no doubt th at I could get many firms engaged in interstate commerce to come before this committee and make the statement tha t they suffered discriminatory treatment.

Mr. Rogers of Texas. If they can establish this, and prove it, they 

ought to be entitled to relief unless we are just doing lip service to 

equality in tax matters. Mr. Moss. I think if we are going to provide relief, we should pro­ vide it for all taxpayers who can make a case of discriminatory treatment, whether they are common carrier or individuals.

The Chairman. Mr. Springer, do you have any questions?

Mr. Springer. Mr. Ogden, when you were before the committee, do 

you recall some questions I asked you at that, time with reference to the 

constitutionality ?

Mr. Ogden. Yes, sir.

Mr. Springer. Now, you are satisfied that this legislation, the Waggonner bill which has been introduced, or the Rogers bill, tha t this is constitutional even in the face of State laws which apply for equalization of assessments ?

Mr. Ogden. I do.

Mr. Springer. Even though there may be such in the States?

Mr. Ogden. Yes, sir.

Mr. Springer. Now, I think since you were before the committee, you 

have had some decisions, and I noticed, for instance, in Illinois that there was a suit brought by the Burlington, and your line, the C.N. & W., which came up in 1961, and the C.N. & W. case in May of 1963. Now, you have a case pending of the Chicago, Burlington and Quin­ cy, as of last November, which was continued to April 27th of this year tha t is pending in the circuit court of Cook County. Are you familiar 

with th at case ?
34 tax assess me nt s on common carrier pro per ty

Mr. Ogden. In a ge ne ral w ay ; yes, sir.

Mr. Springer. Now, w ha t they a re seekin g t he re is a return of taxes 

based on over ass essme nt; is n’t th at correct ?

Mr. Ogden. T hat is a lit tle ov ersimp lification of it, bu t it is basically 

correct.

Mr. Springer. T hat is abo ut rig ht , in laym an ’s language, so all of 

the com mittee can u nd erstan d it.

Mr. Ogden. Yes, sir .

Mr. Springer. Now, in Illino is, in 1963, we rem edied th is s itu ation 

so the re could be no d oubt. Th e I llino is St ate L egislatu re passed, an d 

the Gove rnor signed, wha t was ca lled th is section 561 of chap ter 120 of 

Illino is State Code, section 561, a method of determinin g fa ir cash 

value and equ alizin g assessed value.

I won’t go into th e whole of th at , whi ch conta ins some fo ur lon g 

pa ragr ap hs , bu t I wo uld like to rea d the last pa ra gr ap h to give th is 

com mittee some idea of how the St ate of Ill inoi s corr ected this thing.

The department shall determine the equalized assessed value of the property 

■of every railroad company, other than noncarrier real estate

this ge ts into Mr. M oss’ poin t, and we took c are o f t ha t, and we di dn ’t 

include th at—

by applying to its determination of the f air cash value of such property of every 

railroad company an equalization factor, which factor shall be the statewide 

average ratio of the equalized assessed value of locally assessed property to the 

full, fair cash value of such locally assessed property.

Now, in essence, th is is wh at you are talk in g about in thi s bill, the 

Waggonner bill, is it no t ?

A I r. Ogden. Yes. si r.

Mr. Springer. Now, pu rsua nt to th at , and to give the com mittee 

an exam ple of wh at is req uired un de r the law , here are two legals 

which, Mr. Ch air man, I would like to , if I m ight, insert in the rec ord 

at th is point, if it is in order.

Th e Chair man. W itho ut objection, th at will be inserted.

Mr. Springer. An d also section 561 of ch ap ter 120 of the Revenue 

Code which gives the m akeup of this ev aluatio n.

(The documen ts re fe rred to follow:)

[F ro m th e Il li nois S ta te Jo urn al an d Reg iste r, Dec . 24, 196 3]

P ublic Notice

Notice is hereby given th at the Department of Revenue of the State of Illinois 

has determined the 11X53 fair cash valuation of railroad property subject to its 

assessment jurisdiction, under authority of the Revenue Act of 1939, as amended. 

Original assessments have been made on the basis of fa ir cash valuation to which 

has been applied a statewide equalization factor of 50 percent. Fair cash 

valuation and original assessments by companies are set forth below:
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 35

Rai lroad c om pany

1963

fa ir ca sh 

v alu ati o n

1963

or iginal

as se ss m en t

A lt o n & S o u th ern R R . C o_________________________________________________ A tc his on T o p ek a & S an ta Fe R y. C o------------------------------------------------------------ A uro ra E lg in & Fox R iv er E le ct ric C o. --------------------------------------------------------- B al ti m ore & O hi o R R . C o-------------------- ------------------------------------------------------ B al tim ore & O hi o Chi ca go T erm in al R R - .............— ................................................ B el t Railw ay Co. of C hi ca go ...................... ................... - ................................................. C alu m et W es te rn R y ______________________________________________________ C he sa pe ak e & O hi o R y . C o ----- ------------------------------------------------------------------- Chi ca go & E a ste rn Illino is R R . C o------ -------------------------------------------------------- Chi ca go & Il linois M id la nd R y. C o--------------------------------------------------------------- Chi ca go & Il linois W es tern R R ------ ------- ------------------------------------------------------ Chi ca go & N o rt h W es te rn R y. C o__________________________________________ Chi ca go & W es te rn I n d ia n a R R . C o------------------------------------------------------------- Chi ca go B u rl in g to n & Q uin cy R R . C o--------------------------------------------------------- Chi ca go G re at W es te rn R y. C o--------------------------------------------------------------------- Chi ca go H eig hts T erm in al Tra nsf er R R ------------------------------------------------------- Chi ca go M ilw au ke e St. P au l & Pa ci fic R R --------------------------------------------------- Chi ca go N o rt h Sho re & M ilw au ke e R y _________________________ _____ _____ Chi ca go P eo ria & W es te rn R y , C o---------------------------------------------------------------- Chi ca go Pro duce T erm in al C o .. ------ ---------- -------------------------------------------------- Chi ca go R iv er & In d ia n a R R . C o__________________________________________ Chi ca go Roc k Is la n d & Pa cific R R . C o__________________________ _________ Chi ca go S hort Lin e R ai lw ay C o........ . . . ..................—................................................... C hi ca go S outh Sho re & Sou th B en d R R ___________________________________ Chi ca go U nio n S ta ti o n C o------- --------------------------------------------------- ---------------- Chi ca go West P u ll m an & S ou th er n R R . C o ------------------------------- ------- ---------- D av en p o rt R ock Is la n d & N o rt h W es te rn R y . C o ---------------------------------------- D ep ue & N o rth ern R R . C o _________________________________________ _____ E a st St . Loui s Ju n cti o n R R . C o_______________________________ ____ ______ E lg in J oliet & E a st ern R y. Co--------- --------------------------------- -------------------------- E ri e-L ack aw an n a R R . C o_________________________________________________ G ra n d T ru n k W es te rn R R . C o...................................... - .....................................- ......... G ulf M obile & O hi o R R . C o............... ............. ......... ............................. ......... ............... Illinoi s C en tr al R R. C o___________________________________________________ Illino is N o rt h ern R y ----------------------------- --------------------------------- ----------- --------- Illinoi s T e rm in al R R . C o-------------- --------------------------------- -------------- ........... — In d ia n a H arb o r B elt R R . C o— ----------------------------------------------------------------- Je ffer so n S o u th w este rn R R . C o ._______ ___________________________________ Je rs ey vil le & E a ste rn R R . C o--------------- ------------------------------------------------------ Jo li et U nio n D ep o t C o -------------------- ------------------------------------------------------------ LaS al le & B u re au C o u n ty R R . C o --------------------------------------------------------------- Le e C o u n ty C en tr al Ele ct ric R y. C o ............................... ............. - ...................- ......... Loui sv ille & N ash v il le R R . C o............ ................. . ............. . . .................- ......... ......... M an ufa ct ure rs ’ J u n cti o n R y . C o___________________________________________ M an ufa ct ure rs ’ R y C o--------- ------------------------------------------------------------------------ Soo L in e R R . C o____________ - ........... ............. ......... ................... ......... ................. —- M isso ur i & Il li nois B ridge & B el t R R . C o ---------------------------------------------------- M is so ur i-Illn oi s R R . C o . . . ____ ____________________________________________ M isso ur i Pac ific R R . C o............. ....... ............. - ------------------------------------------------- M on on R ail ro ad —------------------- -------------------------------------------------------------------- N ew Y ork C en tr al R R . C o ____________________________________ ____ ______ N ew Y ork C hi ca go & St. Lo uis R R . C o------ --------------------------- -------------------- P ad u cah & Illi nois R R . C o .------- - ----------------- ------- ---------------- ----------- - ......... P en n sy lv an ia R R . C o---------- ---------------------------------------------------------------------- P eo ria & P ek in U n io n R y. Co---------------------------------------------------------------------- P eo ri a T e rm in al C o ----- ------------------------------------------------------------------ ------------ St. Lou is & O ’F all on R y --------------- ------------------------------------------------------------- S t. L ou is S o u th w este rn R y. C o--------------------------------------------- ----------- ---------- S o u th ern Illino is & M issouri Bridg e C o-------- ------------------ ----------- .......................

S o u th ern R y . C o . . . ------------------------------------------------------- ----------------------------- T erm in al R ail ro ad A ss oc ia tion of S t. L ouis ------ ---------------------------------- --------- Tole do P eo ria & W es te rn R R . C o . . ------------------------------------------------------------- W ab as h R R . C o_____________________________________________ ________ ____

$12,0 38,00 0

75,39 9,0 00 

16,0 00

32,0 90, 000 

27,22 0,0 00 

27,20 0,0 00 

400 ,000 

2, 550 ,000 

38,4 40, 000 

18,835 ,00 0 

2,0 00 ,00 0 

114 ,494,000 

28,34 1, 000 

182 ,964,000 

12,717 ,000 

5,1 90,00 0 

63,80 0,0 00 

4,1 84,00 0 

40,000 

5,2 90,00 0 

18,317, 000 

68,89 0,0 00 

1,8 40, 000 

530,000 

28,36 3,0 00 

1,0 60,00 0 

1,300, 000 

30,000 

1,160,00 0 

30,72 0,0 00 

1,0 50, 000 

8,2 80 ,00 0 

59, 470,000 

101 ,932,0 00 

1,5 78,00 0 

13,950, 000 

15,400, 000 

60,00 0 

10,0 00 

450, 000 

1,0 00,00 0 

14,0 00 

15, 650,000 

590,000 

.50,000 

5,9 70,00 0 

700 ,000 

7,1 00,00 0 

30,00 0,0 00 

500,000 

70,2 00, 000 

46,02 0,0 00 

700,000 

64, 730, 000 

7,1 40,00 0 

1,2 70,00 0 

260,000 

4, 700,000 

2,1 00,00 0 

14,730, 000 

19,900 ,00 0 

12,260 ,00 0 

64,14 0,0 00

$6,020 ,00 0 

37,700 ,000 

8,000 

16,045,000 

13,610, 000 

13,600,000 

200,000 

1,27 5,00 0 

19,220,000 

9,4 20, 000 

1,000,000 

57,250,000 

14,170,000 

91,490 ,00 0 

6,3 60, 000 

2,595,00 0 

31,900 ,000 

2,092,00 0 

20,000 

2,645, 000 

9,1 60, 000 

34,445 ,000 

920,000 

265,000 

14,185,000 

530,000 

650,000 

15,000 

580,000 

15,360,000 

525,000 

4,140,00 0 

29,735 ,000 

50,970 ,000 

790,000 

6,975,00 0 

7,700,00 0 

30,000 

5,000 

225,000 

500,000 

7,000 

7,825,000 

295,000 

25,000 

2,985,000 

350,000 

3,550,000 

15,000,000 

250,000 

35,1 00.0 00 

23,010.000 

350,000 

32,3 65,0 00 

3,570,00 0 

635,000 

130,000 

2,350,000 

1,05 0,00 0 

7,365,000 

9,950,000 

6,130, 000 

32,0 70,0 00

Applicatio n for review of tlie foregoing will be received by the Departm ent within 10 days of this date. Such application must he in writin g and shall he tiled with the Department of Revenue (Railroad Pro perty Tax Division) at its Chicago Office, 160 North La Salle Stre et, Chicago, Ill. Provisions of the sta tut e and the rules of practice and procedure adopted by the Department of Revenue shall govern th e preparation and filing of such applications.

State of I llin ois, Department of Revenue, 

Harry L. Hulman, Direc tor of Re ven ue.

Chicago, II I. , December 24, 1963.
36 tax ass ess m ents on com mo n ca rr ier pr op er ty

[From the Southern Illinoisan, Dec. 28, 1964]

P ublic Notice

No tice is he reby gi ve n th a t th e D ep ar tm en t of Re ve nu e of the S ta te of Il linois 

has de term in ed th e 1904 fa ir ca sh val uat io n of ra il ro a d pro pe rty su bje ct to its 

as se ssm en t ju ri sd ic ti on, und er auth ori ty o f th e Rev en ue A ct of 1939, as am en de d. 

Orig inal a ss es sm en ts h av e bee n mad e on th e b as is of fa ir cas h va lu at io n to w hich 

ha s been ap pl ie d a st ate w id e eq ua liza tion fa cto r of 50 pe rcen t. F a ir ca sh val uatio n an d or ig in al as se ss m en ts by co mpa nies are se t fo rt h bel ow :

R ai lr oad co m pan y 1964

fa ir ca sh 

val uat io n

1964

ori gin al

as se ss m en t

A lton & Sou th er n R R . C o ________________ ____________ ____ ______________

A tc his on Topek a & S an ta F e R y . C o______________ _________ _____________

A uro ra Elg in & Fo x R iv er E le ctr ic C o_____________________________________

B al tim ore & Ohio R R . C o ________________________ ____ ___________________

B al tim ore & Ohio C hi ca go T e rm in al R R ___________________ ______________

B el t R ai lw ay Co. of C hic ag o_______ ____ __________

C al um et W es te rn R ail w ay __________ ____ ____ ___________________ ZZZZZZZZZ

C he sa pe ak e & Ohio R y . C o ________________________________________________

Chica go & E ast ern Il li nois R R . C o_________________ _________________ ZZZ.Z

Chica go & I llin ois M id la n d R y . C o ________________________ ____ __________

Chica go & I llin ois W es te rn R R ______________________ _________ ___________

Chica go & N o rt h W est er n R y . C o..................................................................................

Chica go & W es te rn In d ia n a R R . C o ________________________________ ______

Chica go B url in gto n & Q u in cy R R . C o.................................................... .....................

Chica go G re at W es te rn R y . C o ___________ _____________________ _______ _

Chica go H ei ghts T e rm in al T ra n sf er R R ___________________________________

Chica go M ilw au kee St . P a u l & Pa ci fic R R . . . .................. ............. ............. ........... .

Chica go Peo ria & W est er n R y . C o . . _____ ____________________________ ____

Chica go Pr od uc e T e rm in al C o _______________________ ________ ____________

Chica go R iv er & I n d ia n a R R . C o............................................................... ...................

Chica go Roc k Is la nd & Pac if ic R R . C o______________________________ _____

Chica go Sh or t Lin e R ail w ay C o_____ ____ ________________________ _____ _

Chica go S out h Sh or e & S o u th B en d R R . C o..............................................................

Chica go Union S ta ti on C o ___________________________ ______ _____________ _

Chica go W es t P u ll m an & So . R R . C o............................................... ...........................

D aven port Roc k Is la n d <fe N . W. R y . C o........ ............................................................

E a st St. Lou is J u n cti o n R R . C o___________ _______________________________

E lg in J oliet <fe E ast ern R y . C o ____________________________________ ____ ___

Eri e- L ac kaw an na R R . C o ................ .................................................. ................. .............

G ra nd T ru n k W es te rn R R . C o___________________________________________

G ul f M ob ile & Ohio R R . C o _____ _____ ________ ____ ____ ________________

Illino is C en tr al R R . C o_____________________________________________ _____ _

Illino is N ort her n R ail w ay ______________________ ____ _____ ________________

Illinoi s T erm in al R R . C o . . ...................................... ....... ................. . ........................... .

In d ia n a H arb or B el t R R . C o _________ _____ _____ ____ ____________________

Jefferso n Sou th w es te rn R R . C o ____________________________________________

Je rs ey vi lle & E ast ern R R . C o .................................. ........................... ............... .............

Jo liet Uni on D ep ot C o _____________________ ____ __________________________

La Sa lle & B ure au C o u n ty R R . C o ________________________________________

Le e C o u n ty C en tr al E le ctr ic R y . C o .____ ______ __________________________

Lo ui sv ille & N as hvil le R R . C o _____ ____ __________________________________

M an ufa ct ure rs ' Ju n cti o n R y . C o ___________________________________________

M an uaf ct ure rs ’ R ai lw ay C o _______________________________________________

Soo Lin e R R . C o______________ ____ ______ ________________________________

M is so ur i & I llin ois B ri dge & B el t R R . C o________________ ________________

M isso ur i-Illino is R R . C o ____________ _____ ________________________________

M is so ur i Pa cific R R . C o ___________________________________________________

M on on R ai lr oad _______________________________________ ____ ______________

Newr

 Y or k C en tr al R R . C o ..................... ................................................................ .........

N ew Y or k Chi ca go & S t. L o u is R R . C o .. ....................................... .........................

P ad u cah & Il li nois R R . C o ............................................................. .................................

P en nsy lv an ia R R . C o............................................................................................... . .........

Peo ria & Pek in g U ni on R y . C o ____________________________________________

Peo ria T erm in al C o________________________________________________________

St. Loui s & O ’F al lo n R y __________________________________________________

S t. Lou is S out hw es te rn R y . C o ____________________________________________

South er n I llin oi s & M is so uri B ridge C o____________________________________

South er n R y. C o______________________ _____ _______ ______________________

T erm in al R ai lroa d A ss oci at io n o f S t. L ouis _________________________________

Tol ed o Peo ria & W est er n R R . C o_________________________________________

W ab as h R R . C o ......................................................................................................................

$13,400,000

73,700,000 

14,000

28,930 ,000 

27,220,000 

25,080 ,000 

360,000 

2,320, 000 

35,4 00,0 00 

17,900,000 

1,600,000 

85,6 10,0 00 

23,280,000 

163,000, 000 

11,690,000 

4, 620,000 

59,950, 000 

40,0 00 

4,7 60, 000 

15,500,000 

58,0 40,0 00 

1,480,0 00 

500,000 

28,3 70,0 00 

1,020,000 

1,100,000 

1,160,000 

29,540,000 

1,000,000 

8,280, 000 

46,450 ,000 

96,6 70,0 00 

1,460,000 

13,460,000 

13,530,000 

60,000 

8,0 00 

370,000 

900,000 

14,000 

14,000,000 

540,000 

40,0 00 

5,540,000 

600,000 

8,6 00, 000 

27,5 00,0 00 

500,000 

65,9 90,0 00 

43,990 ,000 

600,000 

61,490 ,000 

6,640, 000 

1,00 0,00 0 

160,000 

3,970, 000 

1,800,000 

14,500,000 

18,920,000 

11,610,000 

44,950 ,000

$5,20 0,0 00 

36 ,85 0,0 00 

7,000 

14,46 5,0 00 

13,6 10, 000 

12,54 0,0 00 

180,000 

1,160, 000 

17,700 , 000 

8,9 50 , 000 

800,000 

42,80 5,0 00 

12,64 0,0 00 

81,50 0, 000 

5,8 45, 000 

2,3 10 ,00 0 

29,975 , 000 

20,0 00 

2,3 80 ,00 0 

7,7 50 ,00 0 

29, 020, 000 

740,000 

250,000 

14,1 83, 000 

510,000 

530,000 

580,000 

14,770 ,000 

500,000 

4,1 40,00 0 

23,22 5,0 00 

48 ,33 3,0 00 

730, 000 

6,7 30, 000 

6,7 65, 000 

30,000 

4,0 00 

185,000 

450,000 

7,00 0 

7, 045, 000 

270,000 

20,0 00 

2,7 70, 000 

300,000 

3,3 00, 000 

13,75 0,0 00 

250,000

32.99 3, 000

21.993 , 000 

300,000

30 ,74 5,0 00

3,3 20 ,000 

500,000 

80,00 0

1,385, 000 

900,000

7, 25 0,000 

9,4 60 ,000 

5,8 05 .00 0 

22,47 5,0 00
TAX ASSESSMENTS ON COMMON CARRIER PROPERT Y 37

Applicatio n for review of the forego ing will he received by the dep artm ent within 10 days of this date. Such appliaction must be in wr iting and shal l be filed wi th the departm ent of reve nue (ra ilroad pro per ty ta x divisio n) at its Chicago Office, 160 Nor th La Sall e Street, Chicago, Ill. Prov isions of the sta tu te and the rules of prac tice an d procedu re adopted by the dep artm ent of revenue sha ll govern the pre parat ion and filing of such applicati ons.

State of Illin ois Department of R evenue. 

Harry L. Hulm an, Direc tor of Reven ue.

Chicago, II I. , Dec ember 28, 196.’i.

[From 1965 Illinois Revised Statutes]

Chapter 120—Revenue

* * * * * * *

561. Method of determ ining fa ir cash value and eqalized asses sed value .] § 80. The Dep artm ent shall asse ss all prop erty owned or used by railroad companies operatin g within thi s Sta te, as of April first annu ally, except property found by the Dep artm ent to be non -ca rrie r real estat e as hereinb efore defined. In assessing the property of any railr oa d company, the De par tme nt shall first dete rmin e the f ai r cash value of such prop erty. The Dep artm ent shall, in det erm inin g the fa ir cash valu e of the prope rty assesse d by it, value all the pro per ty of any rai lro ad company as a unit, but shal l make due allowance for a ny non-c arri er real estate. For the purpo se o f determining the fa ir cash value of the pro per ty of any rail­ road company the Dep artm ent sha ll tak e into co nside ration the ac tua l or market value of the shar es of stock out stan din g, the act ual or ma rke t val ue of all bonds outstan din g and all other inde bted ness as shal l be applica ble, fo r operating the road, provided, in determ ining the marke t value of any such stock or indebted­ ness the Dep artm ent shall consid er quotations for the nex t prece ding five y ea rs ; the net earnin gs of the company durin g the five calend ar years preceding the assessmen t dat e; and such oth er info rma tion as the Dep artm ent may consider as bearing on the fa ir cash valu e of the property: Prov ided th at the fact s here inbe fore named shall not be conclusive upon the De par tme nt in determining the fa ir cash value of the pro per ty of a rail roa d company. Th e assessm ent by the Departme nt shall include capit al stock and all oth er pro per ty of rail roa d companies except such prop erty as is foun d by the Departme nt to be non- carri er rea l est ate a f hereinbefore defined : Prov ided t ha t only so much of the intang ible pers ona lity of foreign corp orati ons as has a business situs in Illi noi s shall be included and so much of the inta ngi ble perso nalty of domestic corp oration s as has a b usiness situs in othe r st ate s sha ll n ot be included. The De par tme nt shall determin e th e equalized assessed value of the prope rty of every rai lro ad company, oth er th an non -carr ier rea l estate, by applying to its determ ination of the fa ir cash value of such property of every railroad company an equalizatio n fact or, whic h fac tor shal l be the sta tew ide average rat io of the equalized assessed valu e of locally assess ed pro per ty to the ful l, fa ir cash valu e of such locally asse ssed property. As amend ed by ac t approved 

Aug. 26,196 3. L. 1963, p. 3422.

Mr. Springer. Now, these legals which cover every single railroad in the State of Illinois, and I guess there are some 30 or 40, sets up the fair cash valuation and the original assessment. That has to be published, so that any objector, any taxing body that objects to it, has notice that 

this has been equalized.

Mr. Ogden. Yes, sir.

Mr. Springer. Now, I take it that you don’t want this without notice in due form, do you; that is, to any possible objector?

Mr. Ogden. No, sir. We would like to know. We have no objection to any degree of publication about any facet of our assessment in 

anything.
38 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Springer. So tha t if there is a tax objection, they do have a 

notification of that.

Mr. Ogden. Tha t is all rig ht with us.

Mr. Springer. Now, I thin k the point tha t you were trying to get 

over, as I understood it, to Mr. Moss a moment ago, is that at the 

present time under these recent decisions since the Browning case, 

you do have a remedy. The remedy is to go into the Federal court: 

that is true, isn’t it ? That is what you said a moment ago ?

Mr. Ogden. That is right.

Mr. Springer. But that remedy is based on the fact that you first 

have to prove that there is no remedy in the State court in which you 

brin g this action?

Mr. Ogden. That is right.

Air. Springer. So what you are seeking here is a shortcut method of 

coming immediately to the Federal court to register your objection?

Mr. Ogden. That is right.

Mr. Springer. And to seek relief ?

Mr. Ogden. Yes, sir.

Mr. Springer. In effect, you are not getting additional relief. What 

you are in effect getting is getting your relief directly in the Federal 

court in the first instance, based on this set of facts?

Mr. Ogden. If we felt we have a case; yes.

Mr. Springer. Actually, you wouldn’t get any different result finally, would you, by going to the Federal court and going through all 

of this meandering tha t you have in the background to get into Federal 

court—you couldn't possibly get any different result than you do under 

this law, could you, in the end ?

Mr. Ogden. Yes, s ir; there would be a little different result. This 

law is directed only at the claimed excess. Und er current Federal 

procedure, if we could get into Federal court, we would at least have 

to have some agreement or else attack the entire assessment. That is 

the J /osex Lake case.

Mr. Springer. I was not going into that. I used to sit as a judge on 

these cases 6 weeks in the spring, and every railroad came in and made 

the ir objections and we ha d to hear this thing every year. What you 

are trying to do is to be able to wind up in one proceeding in the Federal 

court, isn't that right ?

Mr. Ogden. Yes; if we needed it.

Mr. Springer. I don’t want this committee to get an idea that somewhere along the line you are going to get a better deal under this law 

than von do at the present time.

An equalized assessment could be any different if decided in the 

Federal court and decide under this method.

Air. Ogden. That is quite true.

Mr. Springer. Thank you.

The Chairman. Mr. Komegay, do you have any questions ?

Mr. Kornegay. Thank you, Air. Chairman.

Air. Ogden, I am sorry I was not here to hear your initial statement. 

I want to say th at I am very proud to see that my State of North 

Carolina does not particip ate in this alleged discrimination practice. 

Thank you, Air. Chairman.

The Chairman. Air. Broyhill, do you have a question?

Air. Broyhill. I want to second what my colleague from North 

Carolina has said.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 39

The Chairman. Mr. Van Deerlin.

Mr. Van Deerlin. I wonder whether this is an exclusive list of 

States, or whether you just chose the worst examples?

Mr. Ogden. Mr. Van Deerlin, we really didn’t intend to be exclusive at all. Actually, we tried to explain that rath er carefully, both from the standpoint of pointing out the nonexclusiveness, and also in trying to explain tha t we really don't intend this as a blacklist at all, if you 

want to call it that. It is not intended and tha t is not the purpose of this list. The purpose of it is to come to the Congress and to you gentlemen with something of substance. We are not here to talk idly about what might happen, but we bring forward this only as a showing of general—as 1 used the expression—pattern or practice, to go back over the years and bring it forward and show that this is not peculiar today. It was brought to public attentio n by this very committee in 1944 in the report on carrier taxation. It was only brought forward in terms of lists such as we have now when we had the benefit of the Bureau of the Census reports on the level of assessments. Tha t was in 1957, based on 1956. It was the first time in the United States that there was a reliable or uniform yardstick against 

which to compare assessments. It was a very fine work tha t was done by the Bureau. I understand their purpose is to repeat this every 5 years. They made one study I think for the year 1956, and the next one was fo r 1961, and I pre­ sume th at there will be another for 1966 and so on. It is a wonderful service for all taxpayers, and tax collectors, because I have found when States and tax administrators calm their emotions in this area and look at it objectively, they realize tha t tax equaliza­ tion is a fine thing for their own economy and it is a good thing to try and encourage business to come into your State if you have a sound fiscal program and everybody is treated equally. It is jus t a good healthy atmosphere in which to work. When emo­ tions are left to one side and looked at realistically, it is a good thing. In tha t connection, the Bureau of the Census ought to receive the 

commendation that it deserves.

Mr. Nelsen. Mr. Chairman, I just wish to thank Mr. Ogden for 

the fine statement. 1 would, however, like to say tha t perhaps with the appearance of some disagreement with my colleague from Cali­ fornia, I would expect Mr. Ogden to appear here presenting the prob­ lems of the industry he represents, and if Safeway has a problem, they 

in turn could present their case. However, in concurrence with what Mr. Rogers of Texas has stated, if there is discrimination in any other pa rt of our economy, we would 

be glad to listen to it.

Thank you for your statement.

The Chairman. Mr. Pickle, do you have a question ?

Mr. Pickle. Mr. Ogden, I want to make reference to appendix A which is included in your report. Can you tell me if the railroad properties are assessed in the same ratio as the other public utilities 

of the various States ?

Mr. Ogden. Generally speaking, yes, sir; so far as I know. I do not have precise information on tha t, of course, but I would think generally, yes.
40 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Pickle. Specifically, what I am tryin g to drive at is the percentage of other taxation as against the railroads. Is it roughly the 

same as it would be against other common carriers such as trucklines 

and that type of problem ?

Air. Ogden. As to trucklines, they have very little fixed property. 

As far as I know, I have not heard or been advised of any problem 

of theirs in this regard. Their rolling stock is assessed on a sort of 

a bluebook basis, and I don’t believe they have any real problem.

Air. Pickle. Wha t would be a better example, a comparative example of tax levied against a railroad, as against other common carriers ? If trucking would not be a proper comparison, what would be ?

Air. Ogden. I think pipelines would be as good as any, and they are, 

of course, covered by the bill.

Air. Pickle. On appendix A, you show in column 3 a percentage 

of the value of the railroad property, assessed in 1964, and then you 

follow that in column 5 with the percentage of which all others are 

assessed.

Now, when you list “all others,” do you include in that all other 

common carriers as well as general property such as farms and ranches 

and homesteads ?

Air. Ogden. Mr. Pickle, it is intended by the “all other” column, 

column 4, to include only locally assessed property as distinguished 

from State centrally assessed property.

Air. Pickle. In column 4, then, you have lifted out taxes of other 

common carriers ?

Air. Ogden. Tha t is right.

Air. Pickle. And it is just property taxes tha t individuals primarily pay ; that is, stores and so on ?

Air. Ogden. Tha t is right.

Air. Pickle. Now, as to the percentage of difference, your chart in 

column 4 does not show it, but I figure it would be about 24 percent, 

and your last column is 51 percent. In other words, you are saying 

then that taxes levied against railroads is at least twice what it is 

against all others?

Mr. Ogden. Tha t is correct, in this list.

Mr. Pickle. Are you saying then tha t you think railroads or pipelines or any other common carriers should be assessed on the same 

basis as a man’s homestead, or a farmer’s farm ?

Air. Ogden. When they are subject to the same taxes; yes, sir.

Air. Pickle. You mean the same ad valorem taxes ?

Air. Ogden. Yes; the same ad valorem tax rates, if they would be 

applied against railroad property and against the farm tha t is on the 

side of the railroad track, then I think tha t the proportion of value 

at which each is assessed should be the same.

Air. Pickle. Then you make no distinction between th at which is 

commercial property and tha t which would be farmland?

Mr. Ogden. No, sir; because I relate it all to value, Air. Pickle. 

Whether it is a commercial property or whether it is farmland, it has 

a value. Whatever its value is, a certain portion of i t is assessed, say 

half of it, or say 50 percent.

If it is worth $10,000, it is assessed at $5,000. That is half of the 

value. If half of the value of a farm is going to be assessed, then half
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 41

of the value of the railroad ought to be assessed, if they are both subject 

to the same taxes.

Mr. P ickle. I think you have a good point in the argument th at you have presented. Traditionally, we have local communities or States which have just simply taxed those entities which are of interstate character or commercial character or public utility character. We have a big overall problem of leveling this off and finding equal­ ization. I hope we can find such a level, and I appreciate your testi­ mony. Let me ask you one other question tha t is for information 

purposes. When you read Major General Doyle’s statement, did I understand you to say th at he felt that in time all right-of-way properties would be leveled at the same ratios as all other property ? Was your phrase 

“right-of-w ay” ?

Mr. Ogden. The only time that he said “time” I believe was when he said Mr. Rogers’ biil seems adequate for the purpose and is prob­ ably the most that could be achieved at this time. He did allude to one of two recommendations tha t were made in his repo rt to the Senate Committee on Commerce, the so-called Doyle 

report. In tha t report, he made a double-barreled recommendation. One was tha t certain carrier property be entirely exempt, and in the alter­ native he suggested this very bill. He said this would be a way to 

get at it. In his letter now he says he thinks tha t this bill is perhaps the most 

we could do at this time.

Mr. P ickle. I can read that in the report, and I thank you for that 

additional statement.

That is all, Mr. Chairman.

Mr. Rogers of Texas (presiding). Dr. Carter, do you have a statement?

Mr. Carter. I just want to welcome the members of the railroad industry from Kentucky here, and it seems to me that it should be an entirely reasonable bill and I see nothing wrong with it.

Mr. Farnsley. Thank you, Air. Chairman. Air. Ogden, as you know. I introduced one of these bills and I am for you. I want the record to show th at from the time I le ft th e Ken­ tucky Legislature until I was mayor, I was counsel for the Kentucky Railro ad Association and I received $25 a month. I was very proud 

and grateful. I couldn’t ride on the commuter lines on the Central or the Panama Limited or the Broadway Limited or things like th at, bu t I was well 

paid. However, I wasn’t well enough paid to tell them how to run the 

railroad. Now today I am well paid by the Government to tell you how to run your railroad. The railroad and the Government are in the same fix. Everybody tells us how to run the Government and everybody tells you 

how to run the railroad. Your objectives are too limited and you’re thinking in 19th-century middle-class terms. As you realize, tlie middle class pays the taxes. Of course, very properly we try to help the poor people but you
42 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

all are ins isting on pa ying ta xes. I am well pa id to tell you thi s bu t 

you are no t going to do it. And you are go ing to say it is creeping 

socialism , and th at the Go vernme nt gets into every thi ng.

In du st ry constantly cree ps up on the Government. It is a two-w ay 

street.

We ju st got throu gh ta kin g over the toll roa ds and now people are 

bu ild ing toll roads again to co mpete with o ur nice free highways. Of 

course, you p ay th e gas oline ta x on the toll ro ads, too.

Privat e enterprise will compete w ith the Go vernm ent , and I am not 

jok ing .

You ou gh t to look at the s itu atio n th at you r comp etitors have—the 

tru ck ers, and the people who ru n th eir own cars—a nd maybe you 

would wan t to be un de r th e Bu reau of Pu blic Roads. I t could be 

changed int o the Bu rea u of Pu bl ic Roads a nd Ra ilroads.

Th en you could sell yo ur rig ht-of-w ay to those people. You will 

find it is a grea t help, a nd you wo n’t have these problem s ab out equ ality 

of tax ation.

Ev eryb od y would pay th e same amount pe r ga llon o f g as or so muc h 

a wheel.

But I am g lad you are lo oking in to the si tuati on on the ri ver s. Get 

un de r th e Cor ps of En gine ers if you possibly can. Th en we can all 

help you. I t is ha rd eno ugh to ge t reele cted bu t you hav e to have 

proje cts to take care of you r district.

You m ight think I am joking , bu t I am not. Th e railr oa ds are 

im po rtan t to the Un ite d St ates an d im po rta nt t o us. Thi s is tru e in 

wa r an d in peace.

You have quit ha ving steam trai ns and have diesel bu t you are 

still, in yo ur economics and sociology, in the 19tli ce ntury and in the 

middle class.

Now, you shou ld get un de r th is riv ers and ha rb or th ing, “Rivers, 

Harbo rs, and Ra ilroads,” an d stu dy the possib ilities there . Some of 

the finest peop le in the wo rld are in our Corps of En gin eer s.

You could join the A rm y an d you wouldn ’t be hu rt an d you wou ldn’t 

have t hes e problems.

I am dead serious. I thi nk i t is you r p atriotic duty to explore these 

matt ers. You don’t need jus tic e, you need pa rit y. I have talked too 

long bu t I neve r did tell you how to do it when you pa id me $25 a 

month.

Now th at the Government is pa ying me well, I feel fre e to tell you 

how to run y our railroad.

Tha nk you.

Air. R ogers of Texa s. Mr. Og den , you will be allo wed a response, 

if you c are to.

Mr. Ogden. I don ’t believe I could make one, excep t to say I like 

mv job , an d I don ’t believe I wan t to get in the Army.

Air. R orers o f Texas. Air. Fr iede l, do you have any questions?

Air. F riedel. Air. Ogd en, you m ade a very fine state me nt. You spoke 

of unrea sonable and un ju st dis cri mi natio n and undue burde ns upon 

intersta te commerce in certai n pr op erty tax assessments.

Could you g ive one or two e xam ples showin g why they are burdensome or w hy there is this d isc rim ina tio n ?
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Ogden. Well, of course, as to the burdensome feature, 1 1W igh t appendix A pretty well lists 20 current examples, which amounffi, of course, just on that list to some $75 million. £PR 27

That list, as we explained before, is not considered to be an extmisl©er

list. It has never been our purpose to criticize anybody about i<\ or to try to put anything on the list th at would cause controversy. \

Mr. F riedel. Well, I don’t want to ask you to name a specific SMe^i but could you illustrate as an example, a big building you have, and a building alongside of you, and how they are assessed ? Could you state whether they are comparable or not, and give some 

examples of where the discrimination comes about ?

Mr. Ogden. Mr. Friedel, the examples that we have in hand actually apply to the whole operating property. Railroads are assessed as units 

and then the value is spread primarily along the miles of railroad 

because that is where the business is done. That is its business, the track, basically. Maybe a grocery store has a big store on the corner. We don’t have a store on the corner, we have a track running down the road. Those tracks are assessed on the basis of miles and the yardstick of comparison, as I explained before, is 

value. We have undertaken to show that a larger p art of our value is con­ sistently taxed right alongside of a much smaller portion of value of owners of farms, stores, or what have you. Because of the nature of it, I am afra id that the only common ground between the two is value.

Mr. F riedel. I was hoping you could give us a specific example to 

show why there is undue tax discrimination. You made the statements regarding the ad valorem tax, and could you tell me in comparison where it is different? Could you give us an example of how different they are, what they charge the railroads, 

and what they charge the others ?

Mr. Ogden. Well, the tax rate is always the same, and this bill would only apply in situations where the taxes th at were being exacted 

were the same. The vice of the situation that we hope to cure is the requirement tha t railroads pay 50 mills, on a $1,000 unit of their property , and the man r igh t next door to us pays 50 mills on what is the equivalent of a $1,000 unit of his property, but only on $500 and not on $1,000. There is the difference. The railroad at once has paid twice as much 

relatively as the man right next to it.

Mr. Rogers of Texas. Mr. Ogden, looking at your table in your appendix, let us take Alabama, for instance. This reflects that the railroad property in 1964 was assessed on the basis of 40 percent of its 

value. Now other property in the State was assessed at 20 percent of its value. I think what Mr. Friedel is driving a t is what evidence do you 

have to establish these conclusions ?

Mr. Ogden. I would be happy to tell you that. The 20 percent is the basis which is an admitted basis. The tax authorities of Alabama will admit that. It is borne out by the latest Bureau of the Census figures, and it is borne out, also, by studies tha t the departm ent of revenue in Alabama itself has made, and it is borne out, also, by studies tha t the industry has made. Everybody agrees on that. The 40 per-
44 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

cent is also agreed upon. The head of the department of revenue will 

tell you that he assesses railroads a t 40 percent. He admits that.

Mr. Friedel. And Arizo na; what is the percentage there ?

Mr. Ogden. In Arizona, again the 20 percent there comes from 

these various types of studies. The basic comparison for the percents 

in paragraph 4 all are largely related to the census studies or any later 

studies th at are made e ither by State authorities or by a university.

Frequently the railroads employ university departments of research 

to make these studies. That is where these column 4 percents come 

from. The column 3 percents in many instances are admitted percents 

on the part of State authorities.

Where they are not admitted, they are percents derived from the 

experience of railroad people themselves. Tha t is their own considered opinion as to what the level is. It is based on their year-to-year 

experience.

Mr. Friedel. I notice one State has 100 percent. Let us assume a 

railroad went through five or six different States. Would they tax 

you in one State for all o f your equipment th at goes through the other 

four or five States ?

Mr. Ogden. No ; tha t means that in th at one State that much of the 

railroad that is found to be in that State would be taxed at 100 percent 

of the value of th at pa rt of the property in that State.

They divide it up just like a pie, and then just cut slices and divide 

it all up.

Mr. Rogers of Texas. We only have about 10 minutes left, and I 

suspect th at it would be better if we adjourn un til 10 in the morning, 

and our first witness a t that time will be Mr. Sanders.

Mr. Ogden. Thank you so much.

(The statement of Dr. Ha rold Groves follows:)

Sta teme nt of Dr. H arold M. Groves, P rofessor of E conomic s, Univ ers ity of

Wisco ns in

Mr. Chairman and gentlemen, my name is Harold M. Groves and I am professor 

of economics at the University of Wisconsin. I am offering this stateme nt on 

my own account and at the invitat ion of the Association of American Railroads 

which association has made a vailable to me a copy of H.R. 4972 together with a 

copy of the proceedings involving identical bills in the 88th Congress entitled 

“Ta x Assessments on Common Carrie r Pro perty”—hea ring before the Subcommittee on Transporta tion and Aeronautics of the Committee on Inter sta te and 

Foreign Commerce, House of Representatives, 88th Congress, 2d session, on 

H.R. 736. H.R. 10169 (J uly 28, 1964).

I am interested in this proposed legislation among oth er reasons because it 

would be of benefit to the citiz ens of Wisconsin of which I am one. Our State 

ha s applied an ad valorem ta x to railroads since 1903. It was argued at that 

time th at the railroads were not paying their fa ir sha re of taxes under a gross 

receipts tax. The rai lro ads answered that they would inev itably be victimized 

und er the ad valorem system with the application of an average State rat e 

to the ir assessment. They would be assessed in full by a Sta te tax commission 

and other property would continue to be assessed by a multitu de of amateu r 

local assessors under var yin g competitive pressures at va rious fractional values. 

The railroads were assured th at the State could and would develop methods of 

evaluating all taxable pro per ty in the State and develop an average State rate 

independent of local assessments. They were assured th at th e program was only 

asking the railroad s to pay their fa ir share, not more tha n their fair share.

The State has made good on this assurance. It a t once started to develop the 

method of State assessment by sampling and used recently sold property as a 

test of the level of local assessments. This tes ting came in time to be tr ust ed ex-
TAX ASSESSM ENTS ON COMMON CARRIER PROPERTY 45

clusively to a civil service staf f decen traliz ed in regi onal offices throug hou t the Stat e. The sam pling process went throu gh a long per iod of r efin eme nt; equalize rs lear ned to “field the sal es” in disc arding nonty pical tran sa ct io ns ; to suppl emen t sale s by spot app raisal s; and to classify samples by type s of prope rty. Today mar ket-value figures are developed for every town, village, and city in the Stat e. They a re widely accepted as adeq uate by c ounty boards, the courts, the ra ilro ads , 

and the public. I cite this experien ce no t only as evidence th at objec tive and reaso nable Sta te eval uati on of general pro per ty is feasib le: Sta tes th at are reconciled to fa ir tax ati on of rai lro ads hav e a stake in the fa ir tax ati on of railroads generally. Since the incidence of rai lw ay tax atio n is ou the user s and rate charges offer no te rrito ria l discriminatio n, it is app aren t th at Wisconsin businessmen and con­ sum ers shar e the bu rden of d iscri mination anyw here. The principle of ne ut ra lit y in tax atio n calls for an evenha nded appl icat ion of prop erty taxes to bus ines s properties so as to inte rvene as little as nece ssary in the process of com petit ion and the alloc ation of resource s according to con­ sum ers’ preferences. Ra ilro ads are by the ir na tur e especially vulne rable to the pro perty tax even wi tho ut discrimination. The effect of this on the bala nce of competition is describe d by Dick Netzer in his recent book “The Economics of the P roperty Ta x” (B ro ok in gs : p. 73) as fo llows : “Railroa ds are inh erently real prope rty intensiv e and thu s subject to hea vier pro per ty taxatio n than air, wat er, and road competitors. In 1957, for example, pro perty taxes absorb ed ne arl y 3.5 percent of all rail ope rati ng revenues, but. only 0.4 perce nt for motor ca rrie rs and 0.2 perc ent for ai r car rie rs. Rising pro perty tax es in postw ar yea rs imposed costs on rai lro ads fa r in excess of any par alle l gen eral tax confro nting th ei r competit ors, and con trib uted to increa ses in ra il­ roa d rates , hard ly a good c ompetitive stra tegy for a hard -pressed ind ustry.” Thus discr imination ag ain st int ers tate ca rri ers may have the effect of dis­ crim inat ion among in te rs ta te carrier s. Pro per ty tax discriminat ion can matt er very litt le to competitors who are not partic ula rly vul nerable to the prop erty tax 

bu t i t is quite cruci al f or railro ads . I believe is our Fed era l system and subscr ibe to the view that gene rally the State s should rema in free to enact, design, and adm iniste r the ir own laws and dete rmine the ir own tax policies. But an accep table case can be made for a Federal limitation on the app licat ion of Sta te prop erty tax es to railr oads . Not only do railroads at t he pr ese nt time pres ent a natio nal problem of special signif­ icanc e ; railroads are especially vulne rable to Sta te discr imin ation . In terstate ma nuf acturing and me rcantil e firms are prote cted by their relative freedom to loca te and do business elsewh ere. Railroad prop erty is uniquely captive and it con stitutes an open inv itatio n to be m ilked by a pa rti cu lar Sta te at the expense of o ther S tate s and of t ran spo rta tio n in general. It is tru e th at cou rt prot ecti on aga inst arbi tra ry and incomp etent assessmen t is generally weak. The development of adeq uate sale s-ra tio stud ies by dis tricts would help taxp aye rs general ly to make effective appeals. The proposed legislation would promote such development. It may be said th at th e proposed legis latio n affords no protection aga ins t excessive gross income taxe s and would afford an inv itation to the Sta tes to sh ift from ad valorem to alt ern ati ve forms of rai lro ad taxatio n. Some of the disc rimi nation again st railr oa ds is delib erate but I believe much of i t is de facto grow ing out of imperfection s in the equalizati on fea tur es of property tax laws. The proposed legislation may not be broad enough to elim inate all disc rim ina­ tion but it would make a good st ar t in elim inat ing th at pa rt of it which is pro ­ cedu ral. This much control a t leas t commands dis inte rested suppo rt in terms of improv ement in Sta te pro per ty tax ad min istra tion . The point is made th at th e proposed legislation would shackle the power and rig ht of the States to classif y property. Not many Sta tes classify prop erty for asses sm ent; most of them str ive somewhat half-he arte dly tow ard the uniform ity th at is required by their con stitutio ns and/or statutes. The re is noth ing in this proposed legislation th at proh ibits cla ssif ication ; it only prohibits adverse classification of in ter sta te ca rri ers and only as to the asse ssment (valua tio n) of propert y. There are oth er mean s of classifi cation such as delib erate ra te dis ­ crim inat ion and the applica tion of special tax es th at would still be available i f a Sta te genuinely wishes to discrim inat e in its busine ss ta x system. But at lea st the back-door disc riminatio n by adm inistra tive sub terf uge s would be ba rred .

60 -661 —66-
46 tax assessme nt s on common car rier pro per ty

The existence of widespread and substan tial discrimination is common knowledge and in addition has been well documented. I shall not elab orate here ou 

adequate testimony from oth er sources. The only reaso nable suppo rt for the 

no-need argum ent is th at adequ ate remedy is available in Sta te courts. The 

opposing view is supported by the testimony of Jam es N. Ogden and others as 

to fru str ating experiences in dealing with the cou rts of some States. I do not 

question the integrity of Sta te cou rts but it is human na ture to accommodate in 

some degree the revenue needs of one’s own State. Coming from Wisconsin, I 

recall th at our courts have recently enjoined the Milwaukee Braves to stay in 

Wisconsin. Georgia courts a ppare ntly would apply the law quite differently.

I appreciate the opportunity to submit thi s statem ent to the committee.

Mr. R ogers of Tex as. W itho ut objection, the com mittee will stand 

in recess until 10 o’clock in the mornin g.

(W hereu pon, at 11 :50 a.m., the com mittee was recessed to reconvene 

at 10 a.m., Wedn esday, March 2.)
TAX ASSESS MENTS ON COMMON CAR RIE R PROPERTY

W ED N ESD A Y , M A RCH 2, 19 66

H ouse of R epresentatives, 

Committee on I nterstate and F oreign Commerce,

Washin gto n, D.C'.

Th e committee m et a t 10 a.m., p ur su an t to recess, in room 2123, Ra ybu rn House Office Bu ild ing, Ho n. Har ley O. St ag ge rs (ch airma n) 

pre sid ing .

Th e C hair man. Th e co mm ittee avill come to orde r.

On y est erd ay when the com mittee a djo urne d, we were he aring witnesses on H.R . 4972, and related bills to amend th e In te rs ta te Com ­

merce Act, as ame nded, in or de r to make un lawful, as unreasona ble 

and un ju st dis crimination ag ains t and undue bu rden upon inter sta te 

comm erce, certain pr op erty ta x assessments of common ca rrier pr op ­

ert y, an d f or oth er pu rposes. Our first witness this m orning will be M r. Pa ul II . Sanders , professor of law at Va nd erbilt U nive rsity School of Law.

Air. S anders, would you take the stan d ? Professor, Ave are g lad to have you wi th us an d to h ave the benefit 

of yo ur views on this im po rtan t legi slation. Do you h ave a prepared 

sta temen t ?

STATEMENT OF PAUL H. SANDERS, PROFESSOR OF LAW, VANDERBILT UNIVERSITY SCHOOL OF LAW

Mr. Sanders. Yes, I do.

Th e Chairma n. I f you care to, you may put it in th e record and 

pro ceed to summ arize it or you m ay giv e it in frill.

Mr. Sanders. We are offering a ra th er fu ll sta tem ent which I assume will be made a pa rt of th e record. I wa nt to re ad merely a portion 

of th at f or purposes of th is hearin g.

Th e C hairma n. You may do tha t.

Mr. Sanders. As th e ch airm an has sta ted , my name is Pa ul H. 

Sanders . I am pro fes sor of constitu tio nal law a t Van de rbilt U niv ersit v at Nashville, Te nn.

Th e opinion and me mo ran dum 1

 which has been filed is the jo in t 

prod uc t of Pr of . P au l J . H ar tm an of V an de rbilt and myself. We were 

ap proached by Air. Og den’s com mittee and asked if Ave h ad an op inio n 

with r eg ar d to the c on sti tutio na lity of t he propo sed legi slation and we 

indicated in our opinion th at it Avas wi thin t he poAver of Congress to 

pas s such a bill a nd th en Ave pr ocee ded to do a mo re thorou gh research 

of th e sub ject and it c ontin ued to be our opinion, an d we prep ared a 

me mo ran dum accordingly.

1

 The document referred to will be found in the committee flies. 47
48 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

I might add th at Pr ofes so r Hartm an , the c oa uth or o f thi s opinion, 

teaches State and local tax ation, and he is t he a ut ho r o f a t ex t on the 

sub ject of “S tate Tax atio n of In tersta te Com merce.”

Whil e there is general s up po rt fo r the p rin ciple th at in ter sta te common carriers sho uld no t be discr imina ted ag ains t in State and local 

pr op erty tax asse ssments, it has been sug gested th at the constitutio na l au thority o f Congres s to afford rel ief ag ains t such pra ctic es is 

subje ct to question.

Consider ing th e co ns titutiona lity of leg islation such as is propo sed, 

th e fo llow ing question s ar e p rese nt ed :

1. Does Congress h ave the p ower to pr oh ibit discriminat ion in 

th e assessment of pr op er ty of in terstate ca rriers in com parison 

wi th oth er pr op erty in the same taxi ng di st rict subject to the 

same tax ?

2. Does Congre ss ha ve the power to pro hibit th e collection of any 

tax on th e assessm ents so decla red to be unlaw ful ?

3. Does Congress have the pow er to confe r jur isd iction on the 

Federal distr ict co urts to restr ain the officials of a State or sub ­

division or agency t he re of fro m the pe rfo rm ance of the proh ibited 

acts of assessment and ta x collection f

I t is our opinion th at pro vision s of the bill are withi n the powe rs 

gr an te d to Congress by th e Co nstitu tion o f th e U nited States. Sp ecifically, it is our opinion th at the above questions sho uld be answered 

“ye s,” th at the substan tiv e reg ula tions set fo rth in the bill are within 

th e power of Con gress un de r the commerce clause, and that provision 

fo r filing suit in Fe de ral co urt to enforce th e sub stantive rig hts 

gr an te d in the bill is v ali d and not in conflict wi th the 11th amendment.

We note th at th e pro posal is c oncerned only with State assessment 

fo r tax purposes of the pr op erty of those common ca rri ers who are 

subje ct to the regu latory pow ers of the In te rs ta te Commerce Commission. In oth er words, the sub stantive regu latio n set forth in the 

bill is lim ited in its ap plication to the pr op erty of interstate common 

ca rriers whose pra ctices an d economic affairs are alr eady regula ted 

exte nsively and intensiv ely un de r Fe de ral sta tutes. The apparen t 

pu rpose of the p rop osa l is to req uir e th at the pr op er ty of such intersta te c ommon ca rri ers be assessed fo r St ate ad valore m tax purposes 

on th e same basis (i.e., on t he same pr op ortio n of true ma rke t value) 

as ot he r prop erty owners wi thin a pa rtic ul ar ta xin g distric t subject 

to the same tax.

Th e proposal thus provide s th at these interstate common carriers 

no t be discriminat ed ag ains t withi n a pa rtic ul ar St at e in terms of 

pr op er ty tax assessment pra cti ces or in ter ms of prop ortio n of value 

utilize d for ad valorem ta x purposes, bu t th at su ch inter sta te carriers 

shou ld be placed in a position of equ ality or pa rity wi th oth er pr op ­

er ty owners within a pa rtic ul ar taxi ng di stric t subje ct to the same 

tax .

F o r purposes of this opini on, it is assumed to be a well-known fac t 

(a fa ct which can be established by obje ctive evid ence) th at in many 

St ates rai lro ads do have th ei r prop erty assessed at a diffe rent and 

hi gh er percen tage of value fo r ad valorem tax purpo ses than is tru e 

of the grea t bulk of pr op er ty owners subject to the same tax. The 

scope of the problem was outlined in wha t is kno wn as the Doyle repo rt (re po rt to the Se nate Com mittee on Com merce on “Na tional
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 49

Transportation Policy”—87th Cong., 1st sess., Kept. 445, June 26, 

1961, pp. 465-466). Material submitted at the 1964 hearing on H.R. 736 (app. A, p. 22) indicates that in Arizona, for example, railroad property was assessed at 89 percent of value in 1961, while the comparable percentage for property owners generally was approximately 14 percent. In Kentucky in 1961 railroa d property was assessed for ad valorem taxes at 60 percent of value, while the general basis was approximately 27 percent. This same appendix A carries an estimate of the annual amount of discriminatory tax burden borne by railroads in selected States which exceeds $100 million. For purposes of this opinion it is assumed that, if Congress passes the bill, it would be acting on the basis of evidence brought to its attention which would indicate tha t interstate common carriers are frequently subjected to a disparate and disadvantageous assessment practice in connection with percentage of value used for State and local property taxes and tha t from the national standpoint the total burden so resulting is substantial. I might ju st say in passing that in a casebook in constitutional law, which I happened to be using at the time this was prepared, there was a statement by the authors of the book which said tha t such disparate tax practices were usually the case, and that is a quote from the book, “usually the case,” tha t there is such discriminatory tax assessment 

practices followed. This opinion is not concerned with Federal constitutional limita­ tions upon the power of a State to engage in such disparate assess­ ment practices in the absence of a Federal statute such as is proposed. It might be noted in passing that the case of Nashville, Chattanooga

<& S t. Louis Railway v. Browning, decided in 1940, stated that a sep­ arate mode of assessment of railroad property at a higher percentage of value did not violate the equal-protection clause of the 14th amendment. Our opinion is not concerned furthermore with whether disparate assessment practices would be in violation of the constitutions or statutes of particular States; nor with whether such practices by a State or some lower level of government within a State would be sub­ ject to some already existing statute or regulation, or could be reached and corrected under existing Federal statutory auth ority other than 

the proposed enactment. This opinion thus deals solely with the powers of Congress under the Constitution of the United States to enact the substantive and 

procedural aspects of the bill. In enacting such a bill Congress would be prescribing a rule with regard to property of interstate common carriers which are already subject to an extensive body of regulatory legislation enacted under the commerce clause of the Constitution of the United States. Con­ gress would be acting to relieve such carriers of State tax assessment practices deemed by Congress to be burdensome, unreasonable, and 

discriminatory. If Congress concludes from evidence presented to it tha t the prac­ tices in question are detrimental to the maintenance of a strong in ter­ state transportation system, there is no likelihood tha t the courts would trea t this judgment as arbitrary. An act of Congress is pre ­ sumed to be constitutional and the courts do not consider it appropri-
5 0 TAX as sess me nt s on common carrier pro per ty

ate to reexamine the congressio nal jud gm ent emb odied in such legislation . Congress wou ld, undoubted ly, be reg arded as havin g a re asonable basis fo r exerc ising its pow er to req uir e the elim ination of 

such dis criminator y practic es and to pro vid e a Fe de ral cou rt remedy 

fo r the r igh ts thus c reate d in the interstate common carriers.

Th e power of Co ngres s over interstate commerce is ple nary (i.e., 

full and com plete). Thi s pow er extend s to ta ki ng action to lim it, 

disp lace, or overr ide Sta te-imposed reg ula tio n or tax ati on which 

m ight be constitutiona lly perm issible in the absence of affirm ative 

act ion by Congress.

Th e lim itations placed bv the commerce clause of the Constitution 

of the Un ite d Sta tes , an d I might say the lim ita tio ns placed by any 

othe r clause of th e Co ns titution of the Un ite d States, on State r eg ulatio n or tax ing power wh en Congress has not spoken are not indic ativ e of the scope of the regu latory pow er of Congress when it acts 

affirmatively under the commerce clause.

Th us , ther e a re pe rmissible area s of St ate action affecting int ers tat e 

comm erce to some deg ree which are en tirely va lid un til Congress enacts a reg ula tion which eith er expressly or by necessa ry implication 

ov err rid es the Sta te law w hich th en becomes inv alid. It should also he 

borne in m ind when c onsid ering the scope o f congres sion al pow er t hat 

the necessary and pr op er clause of the Co nstituti on is always a su pplem entar y source of po we r to any other enum era ted power in the 

Co nst itution.

Th e p ower of Congress ove r i ntersta te commerce inclu des the pow er 

to promote, pro tect, and foste r the agencies and instr um ental ities of 

in terstate commerce, as well as the power to restrain and control such 

ins tru me nta lities . The powe r of Congress to prote ct and fos ter the 

agencie s of inter sta te commerce inclu des the nowe r of rem oving or 

rel iev ing again st pa rtic ula r practices within a £>tate which are thought 

to burde n or impede t he ma intena nce of a str on g interstate tr an sp or ta ­

tio n system.

Th us th e power o f Congres s under the commerce clause exten ds not 

only to th at which is itse lf int ersta te commerce, bu t to those local 

matters and pra ctic es where reg ulati on is ap pr op riat e because of the 

effect upon inter sta te comm erce or upo n the in str um en tal ities of intersta te commerce.

Ou tst an ding exa mples of this power by Congress have been pr esen ted under variou s section s of the Tr an sp or tatio n Act of 1920. It 

ha s been held th at C ong ress may validly require the raising of in tr asta te rat es and th at Con gress may va lid ly impose the elim ination of 

in tras ta te service in pu rsu ance of a natio nal prog ram of foste rin g or 

pr otec tin g a str ong i nter state rai lro ad o peration , despite contraven ing 

req uir em ents or orde rs u nd er Sta te law.

Congress could rea sonably conclude th at equality in prop erty assessmen t f or ad valorem tax purpo ses was req uir ed to pr otec t and p romote 

intersta te tran sp or tatio n in the nat ion al int ere st an d in the Federal 

Go vernm ent’s own interest as a use r of services.

Idie reg ulato ry pow er of Congres s un de r the commerce clause can 

op erate upon State ta xi ng pow er in the same man ne r th at it ope rates 

upon any oth er type of St ate gov ernmental power. The re can be no 

question bu t th at the Sta te practic es referre d to in th is bill affect the 

in te rsta te ca rrier and affec t interstate tra ns po rtatio n.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 51

If Congress acts specifically in the manner set forth in this bill, State constitutions, laws, regulations, or practices in contlict there­ with are rendered invalid under the supremacy clause of the 

Constitution. I might interject at this po int a brief comment about the question of including all possible ramifications of the problem of discrimination 

at one time.

Chief Justice Hughes, in the Jones <& Laughlin case, which upheld 

the power of Congress to regulate an employer’s labor relations treated this aspect as follows: We are dealing with the power of Congress and not with a particular policy of or the extent to which the policy should 

go-We have frequently said that the legislative authority exerted within its proper field need not embrace all of the evils within its reach. The Constitution does not forbid cautious advance step by step in dealing with evils which are exhibited in activities within the range 

of legislative power. Mr. Moss. I might just say t hat I raised the question yesterday not because I doubted the power of the Congress, but I was concerned over a policy. You have not resolved my concern at all on that policy.

Mr. Sanders. I am merely bringing it in terms of its possible relation to the question of constitutional power. The power of Congress referred to above is in no wav controlled by the provisions of the 10th amendment. Whenever State action is rendered invalid under the supremacy clause because of conflict with congresisonal action pu rsuant to the powers granted by the commerce clause, supplemented by the necessary and proper clause, it cannot otherwise be supported by power that has been reserved to the States by reason of the 10th amendment. If the Federal regulation is within the scope of powers granted to Congress, the reservation of powers provided in the 10th amendment cannot have any effect. Decisions suggesting the contrary have been overruled or explained away. Action by Congress requiring nondiscriminatory assessment prac­ tices affecting the property of interstate common carriers could not be regarded as imposing an unreasonable or arbitrary requirement upon State and local taxing officials so as to run afoul of the due process clause of the fifth amendment. The statute is sufficiently precise in stating what it is tha t is forbidden. Problems of statutory interpre­ tation would not appear to lx* any more difficult than usual. 1 ’nder es­ tablished principles the statute should be construed so as to avoid ques­ tions of constitutionality. The percentage of value utilized for assess­ ment and tax collection purposes is either known or ascertainable in 

particu lar taxing districts. The requirement is informative with regard to those who would need to comply with it and is as precise as the subject matter permits in light of its nationwide scope. In any event, the remedy afforded is civil rather than criminal and carriers would have to prove their 

entitlement to the protection the statute provides. The 11th amendment is not a bar rier to the provision in the bill for suit in Federal court to enforce th e substantive rights created by the bill. If a State official acts contrary to the regulation prescribed in the bill with regard to assessment and tax collection, his action would 

be unconstitutional, as well as contrary to the statute.
52 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Under these circumstances, for purposes of the 11th amendment, his 

action is not that of the State , and the individual occupying a particular office may be sued in Federa l court without regard to the 11th 

amendment.

Moreover, the statute should not be construed as imposing any nonjudicial function upon the Federal court in fashioning a remedy for the 

substantive rights created by the statute.

I might say that on that latter point, about which some question was 

raised, we have a detailed treatment of the problem tha t comes in in 

connection with the Moses Lake Homes case, tha t appears on page 93 

of this memorandum which is being presented here, Mr. Chairman.

If there was particular interest in my going into that, I think that 

I might read that portion which relates to the question of the Moses

Lake case, which was raised, I believe, by A ttorney General Katzenbach at a previous hearing.

The Chairman. You may proceed.

Mr. Sanders. If you would like me to go into that, I will read that 

portion th at is concerned with th at problem.

The Chairman. What is your question again, please ?

Mr. Sanders. Since the problem was raised, and I believe Mr. 

Springe r raised it yesterday about the subject of this Moses Lake

case, which presented some problem in terms of the power of a Federal 

court to carry out the procedures set out in this bill, we deal with that 

extensively at pages 92 to 95 of this memorandum which is being 

presented.

I think that I might just read a little bit of tha t because it was 

apparently a serious question by Mr. S pringer and some others.

The Chairman. You may proceed.

Mr. Sanders. The statement re ads:

E. The Federal court remedy provided in the proposed legislation does not 

impose any invalid or non jud icial function upon the court in the enforcement 

of the rig hts created by the statut e.

In enacting the proposed legislation Congress would be prohibiting 

discrimination in the assessment of the property of interstate common 

carriers in relation to other property subject to the same tax and would 

be providing a remedy tailored to relieve against such discrimination 

and no more.

The power of State and local officials to assess and tax the property 

of such carriers in a nondiscriminatorv fashion is in no way affected 

by the proposal. The language of the proposal makes this limited 

purpose clear by providing a remedy only against that portion of 

an assessment which is in violation of the standard established by the 

statu te and only against the portions of a tax levy t ha t are based on 

assessment practices forbidden by the statute.

It seems clear that Congress is under no obligation under these 

circumstances to declare invalid, expressly in the statute, the entire 

assessment and the entire amount of a tax based on a prohibited assessment.

As Chief Justice Hughes said in the Jones & Laughlin case, the 

Constitution does not forbid “cautious advance, step by step” in dealing with practices deemed detrimental. National Labor Relations

Board v. Jones rf* Laughlin Steel Corp. (301 U.S. 11, 46 (1937)).
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 53

In Moses Lake Homes v. Grant County (365 U.S. 744 (1961)), the 

Supreme Court held tha t a county's discriminatory assessment and taxation of Federal leaseholds (Wherry Act leaseholds) resulted in the purported assessment and tax being completely void in their entirety. The Supreme Court held that the court of appeals had erred in remanding the case to the district court for purpose of reducing the tax to what it would have been if the assessment and tax had not been discriminatory. The Supreme Court stated tha t the effect of the remand was to direct the district court to decree a valid tax for the invalid one which the local taxing authorities had attempted to exact and th at: “Federal courts may not assess or levy taxes” (365 U.S. at 752). The Supreme Court then proceeded to hold void the taxes 

“presently assessed and levied.”

The Moses Lake case, on prop er analysis, should not be taken as 

invalidating the remedy provided in the proposed legislation for the following reasons: (1) In the first place section 511 of the Housing Act of 1956 (42 U.S.C. 1594), upon the basis of which the lessees in tha t case resisted the local claims, does not include as precise a state­ ment of what is forbidden, nor does the statute make, the specific provision for a remedy that is contained in the proposed legislation to 

which these comments are addressed.

(2) In the next place, there is nothing at all in the Moses Lake case 

to suggest tha t Federal courts would be unable to fashion adequate measures in the nature of equitable relief to protect a substantive right which Congress has established against discriminatory assessment. The Moses Lake decision did not need to and, in fact, did not 

address itself to this problem. (3) The proposed statute does not require or direct tha t the Federal judge perform the tax assessment or tax levying function. Moses

Lake is eminently correct, of course, in saying tha t Federal courts 

do not assess or levy State taxes as such. This does not indicate, however, th at Federal courts cannot exercise their normal judicial function in protecting valid Federal rights, no 

matter how narrowly those righ ts may be defined. The proposed statute provides injunctive relief against discrimina­ tion and unquestionably such a remedy should be “fashioned in the 

ligh t of well-known principles of equity.”

Bake r n. Carr (369 U.S. 186, 250 (1962) (concurring opinion of 

Justice Douglas)). Federal courts cannot perform the legislative function of apportioning State legislatures either; but, in judicially enforcing the Federal rights involved, it is clear t hat Federal courts can fashion appropriate orders needed to give relief and otherwise apply in a flexible manner the powers they have traditionally possessed. This has included, where deemed required, the entering of a judicial 

order apportioning on an interim basis. See Rei/nolds v. Sims (377 

U.S. 533 (1964)).

(4) In the last place, the Moses Lake decision does not indicate any 

constitutional infirmity in the provisions for remedy in the proposed statu te because it is obvious that, this statute can and should be con­ strued so as to avoid any charge that a non judicial function is required 

to be performed.
54 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Under principles of construction, now uniformly followed, a statute 

passed by Congress is presumed to be valid in all of its provisions. 

Furthermore, if one reading of the statute would raise doubts as to its 

constitutionality and another inte rpretation of the statute would eliminate those doubts, it is agreed that the latter interpretation should be 

utilized so as to give effect to even’ part of the statute rather than destroy it or make any p art of it ineffective. United States v. Brandenburg (144 F. 2d 656,661 (3d Cir. 1944)).

It would be unreasonable to assume that the authoritative construction of the provision for equitable remedy in the proposed legislation 

would result in an interpretation to the effect tha t a Federal court was 

required to perform an improper, nonjudicial function.

It is an essential function of the Federal judiciary to protect rights 

given under Federal law. There is nothing in the proposed statute 

tha t requires going beyond that essential function.

I might just add in conclusion there, as stated at the bottom of page 

95, that on the basis of Professor Hartma n’s and my examination of 

the materials, we concluded that there was little room for question that 

the proposed bill was constitutional, and it could be stated flatly there 

was no authority that lends any substantial support to the proposition 

that Congress would lack power to enact the proposed bill.

Mr. Moss. I found your opinion very interesting, when I read it 

yesterday.

Do you make any distinction at all between property utilized for 

carrier purposes and property not util ized for carrier purposes; that is, 

coal mines, and hotels, and farmlands.

Would the procedure on assessment apply or the proposal here apply 

to those properties or would they be treated as other taxpayers within 

a State?

Mr. Sanders. I would make no distinction in terms of the constitutional power. I recognize there is some question as to the precise interpretation and scope of the statute, but assuming t ha t it were given 

the broadest scope, Mr. Moss, I don’t believe it would be beyond the 

constitutional power of Congress to enact the legislation in question.

The reason is that assuming in the one case it is discrimination in 

the assessment with regard to solely th at property used in the transportation function. In the o ther case, the broader meaning, it is discrimination with regard to the property of the carrier used but not that 

which is used immediately in tra nsportation functions.

I thin k as f ar as the power of Congress is concerned, and its concern over the interstate carrier and all charges being made against the 

interstate carrier, it would be entirely from a constitutional standpoint 

which interpretation might be given.

Mr. Moss. I agree it would be immaterial from a constitutional 

standpoint. The statute as proposed, the language now before this 

committee, would be difficult to construe in any manner other than 

including all property owned by a railroad regardless of the use of 

the p roperty ; is that not correct ?

Mr. Sanders. I did not draw the statute nor am I attempting fully 

to give it a construction.

It says, I believe, “property owned or used by any common carrier 

subject to the act.”
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 55

I would simply say from the standpoint of my limited competence 

which is with regard to the constitutionality, even i f it is given the 

broadest meaning I would still assert tha t it is within the constitu­ tional power of Congress in light of the long history which is upheld, 

we will say, congressional controls over charges against the interstate 

carrier, even when those charges relate to very local matters. Of course, in this case, there is an additional aspect, that unless there 

is discrimination in assessment, the act has no application anyway.

The Chairman. Mr. Younger, do you have any questionst

Mr. Younger. Mr. Sanders, not being a lawyer, I am interested in 

your decision about what you think the present Supreme Court would do. You talk about the constitutionality of this bill, but do you think tha t the Supreme Court as it is now constituted and following the past 

decisions of this Supreme Court, they would ever approve the right of 

Congress to so legislate?

Mr. Sanders. Well, Mr. Younger, we tried, if you read our full 

memorandum, to range all of the way from Chief Justice John Marshall up to the decision of the Supreme Court of the United States 

last year in the Heart of Atlan ta Motel case, each one of which was 

talking about the scope of the commerce power. I must say th at I have seen nothing to indicate in any recent sur­ vey that there is any indication of a lessening of the scope of the commerce power in the interpreta tion being given to it by the present 

Court.

Mr. Younger. Tha t is all, Mr. Chairman.

The Chairman. Mr. Dingell, do you have any questions ?

Mr. Dingell. I have no questions.

Mr. K ornegay. Mr. Sanders, 1 would like to comment simply that 

I see you have an LL.B. degree received at Duke University, which is 

in my district, and I want to welcome you to this committee.

I want to say also from the portions of the brief you have read, and 

those I have had time to read, are very well done. I look forward to 

studying the entire brief. The bill says, the first section of it, the second line of page 2 of your 

brief—

wh ich be ar s a hig her ra tio to th e true marke t value of such prop erty than th e ass ess ed value of all othe r pr op erty in the ta xi ng di st rict su bject to the same 

proj>erty ta x levy * * *

Does this bill envision the situation where you have all property 

other than railroad property or common carrier property assessed at 

a certain value and railroad property and other common carrier 

property assessed at a higher rate of value ?

Mr. Sanders. As I understand it, Mr. Kornegay, tha t is the basic 

problem tha t this bill is seeking to deal with. It is a claim th at the railroad property is assessed at a higher percentage of value than is 

true, or this occurs in many situations, than other kinds of property 

in the same taxing district subject to the same tax.

Mr. Kornegay. The point I am trying to get at is th is : Where would 

we be in a State or a county or taxing subdivision of a State, where 

you may have various ratios depending on various categories of property? Suppose you had more than two. Suppose you had a certain 

percentage for industrial property, and residences, and various other
56 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

categories of property and still a higher rate than railroad property 

or property owned by common carriers, tha t is interstate common 

carriers ?

Mr. Sanders. Well, of course under this act, the carrier in order to 

be entitled to relief, would have to show that it was being assessed at 

a higher percentage of value than is true for other property in the 

taxing district subject to the same tax.

Now we keep repeating in the same taxing district subject to the 

same tax. I might add there tha t the normal situation is a situation 

where this other property is at a certain percentage. This is, I know, 

true, for instance, in Tennessee.

A percentage there might range from 7 percent to 10 percent or 30 

percent, or something like that. Then th e carrier property comes in 

at perhaps supposedly 100 percent or something less, but substantially 

above this other generality.

Now, however, if you have several different admitted arrangements 

in the law, this would have to show discrimination. It is all other 

property in the taxing district, in contrast with all other property.

I am not prepared to say just how that might be interpreted in connection with your problem.

Mr. Kornegay. In the bill, it says the assessed value of all other 

property. Then do you take this case of a railroad, where you have 

railroad property or the common carriers and all of the interstate common carrier property, and weigh tha t against the average assessed 

value of all of the other property in the county ?

Mr. Sanders. I would assume again that it is weighing it against 

the normal or average percentage in the rest of the taxing district, 

subject to the same tax.

I keep repeating those words. That would be my assumption. But 

again, I am limiting myself to an opinion of constitutional power. I 

don’t think that that gets into that immediate sort of a situation. He 

has to prove discrimination, of course.

Mr. Kornegay. I will admit I am talking about the mechanics, but 

I can see the problem. It would indicate that the bill envisions a 

situation where you have all property other than common carrier 

property assessed at a certain percentage. Then the common carrier 

property is assessed at a higher percentage.

It is certainly possible to have a multitude of variations, perhaps 

some may be higher than common carrier property.

Tha t is all, Mr. Chairman.

The Chairman. Mr. Sanders, we appreciate your coming and giving 

us the benefit of your testimony.

Mr. Sanders. I am glad I had a chance to be here and to submit 

this to you.

Thank you.

The Chairman. I see in the audience one of our colleagues, a Member of Congress who has one of the bills in on this subject, and at this 

time we would hear from Mr. Roncalio.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 57

STATEMENT OF HON. TENO RONCALIO, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF WYOMING

Th e Chairma n. Wou ld you give us the benefit of yo ur views an d 

we ar e gl ad to ha ve you w ith us. . .

Mr. R oncalio. Tha nk yo u fo r your thou gh tfu lness in rec ogn izin g me, an d heari ng me uns che duled , I appreciat e it very much. Bu t 1 left the In terior full com mittee mee ting in orde r to do this. Mr. Ch air ma n an d colleagu es, and mem bers of th e committee, I wa nt to th an k you fo r this op po rtu nity to a pp ea r b efo re yo ur com mit­ tee in the con sideration of II.R . 4972 and its com pan ion bills, one of 

which I am pleased to introduce. Th e princ ipal pur pose of these bills is to declare th at a portion of certa in tax assessments on common ca rrier pr op erty , and I presum e thi s will mean all common ca rrier prop ert y, wh eth er it is a section of lan d take n under the common lan d g ra nt s of rai lro ad s, which received every oth er section of land throug h pub lic dom ains, and wh eth er it means ties, and rai ls and wh eth er it mea ns minerals, oil, gas, and resources, shall be un lawful because they co nstitute unreason able and un ju st dis crimination ag ains t and an undue bu rden on int ersta te 

commerce. Th e bill prov ides a rem edy in the Fe de ral courts fo r such carriers ag ains t the collection of an y tax based on such unequ al assessments. Thi s unlaw ful assessment exists only when, an d to the exten t that common carrie r p rope rty is assessed at a g re at er p ropo rtion of its tru e mark et value than the pr op ortio n at which all othe r prop erty in the 

tax di strict subject to the sam e levy is assessed. Tru e equ aliz atio n req uir es th at each parcel of pr op erty be assessed at a figu re which is the sam e pro portio n of the full value as the assessment of e very othe r parce l of prop erty in the same tax distr ict 

is of its full value. It has been alleged before this committee th at ra ilr oa d assessm ents are no t equalized fa irly or rea son ably in num ero us instances. It has been fu rther alleg ed th at ma ny tax assessors sim ply cannot or will not equalize rai lro ad assessments with the asse ssments of oth er prop ­ ert ies even tho ugh both kind s of prop erty are subje ct to the same 

tax levy . I f th is committee finds th is to be tru e, Mr. Ch airm an , then clea rly there is a need for such leg islati on because the present system is cre ating an u ndue burden on in tersta te commerce, if th ese a lle gatio ns a re tru e. Th e ma in pur pose of this bill is to pro vid e recourse to the Federal court s where the ca rrier will have the bu rden of prov ing, under the no rm al rules of procedure, th e un just or u nre aso nable discriminat ion in or de r to sus tain th ei r allegati ons of th ei r pe titions fo r relief in 

Fe de ral co urt. I t seems to me, Mr. Ch airm an , that this is not an un ju st or un rea­ son able request. I wa nt to express my gr at itud e to you and to the com mittee fo r mee ting to resolve this hig hly com plicat ed and difficult 

matter.

Tha nk you, Mr. C hairm an.
58 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

The Chairman. You say if we find tha t they are unjust and discriminatory. Do you think we ought to ask the different proponents 

of the bill to show us where there is discrimination and in what States 

they exist?

Mr. Roncalio. This, I think, is squarely within the very proper inquiry of this committee. I believe that if there are carriers who maintain tha t an injustice is taking place, they should be prepared to 

prove it to this committee or to one of its subcommittees upon request. 

I think my answer to your question is “Yes.”

The Chairman. You say “if we find,” and I took it from that that 

we ought to go into it and find out what States are doing this. Thank 

you.

Mr. Moss, do you have any questions of our colleague?

Mr. Moss. I have no questions at the moment, Mr. Chairman.

Mr. Y ounger. I have jus t one question.

I don’t follow you to the point of saying th at this committee ought 

to go into the assessments made to find tha t they are discriminatory. 

All we are saying in the bill is tha t if there are discriminatory levies, 

then there is relief. I don’t see why we should investigate to see 

whether or not there are discriminatory levies being made, because 

our bill doesn’t specifically say that. It is a broad piece of legislation.

If they do exist anywhere, then the carrier does have a system of 

relief in the Federal courts.

Air. Roncalio. I concur with your reasoning. It is not inconsistent 

with that of the chairman or my own in that regard.

The Chairman. Are there any other questions ?

Air. Watson. I might say one thing. In following the line of reasoning of Air. Younger, I am sure that you were certainly thinking of this 

when you introduced your bill, tha t by the mere passage of this bill 

it is not. my interpreta tion that we are immediately concluding th at 

there is discrimination.

I think as a practical matter we can agree that there is, but this 

bill will not be saying that. It will be providing1

 a vehicle th at gives the carrier the opportunity to come in and prove discrimination. Then 

he can get relief under it. But I think this is a rathe r innocuous piece 

of legislation and I commend you for introducing it, and I am sure 

that we are not saying that there is discrimination by the mere passage 

of this bill. Do you agree with tha t ?

Air. Roncalio. Yes, si r; I can agree with that assertion.

I f I may say, Air. Chairman, in my State we have two or three predominant rail carriers. One of them has long maintained, one of the 

smallest ones, that they are assessed at a 100 percent value of their 

property. This raises quite a problem.

How do you put a fa ir market value on a strip of iron running in the 

State? How do you put a fair market value on a depot out in the 

prairie in Wyoming ? That is quite a problem. Certainly I agree with 

you.

The Chairman. Thank you very much.

Air. Travis, are you here ? AV ill you take the stand, please, and give 

us the benefit of your views ?

I understand that you have a prepared statement. If you care to 

insert, the statement in the record and summarize it that is all right, or 

if you care to read it.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 59

STATEMENT OF BROLEY E. TRAVIS, CONSULTING VALUATION 

ENG INEER, SACRAMENTO, CALIF.

Mr. Travis. Thank you, Mr. Chairman. I would like to read my 

statement. Mr. Chairman and members of the committee, my name is Broley E. Travis, and I reside in Sacramento, Calif. Shortly after graduation from college with a degree of engineering in 1924, I commenced my professional career with the State of California, as a valuation engi­ neer, or assistant valuation engineer with a regulatory commission, the public utilities commission, which I held for a period of about 9 years. At that time, I tran sferred to the board of equalization which has the duty of assessing all of the utilities and railroads in the State of California, as senior valuation engineer. I stayed with them, progressing through the positions of assistant chief of the division and chief of the division until 1962, at which 

time I retired. I was chief of the valuation division having responsibility of assess­ ing all of the railroads and other utilities in California for the last 12 years, 1950 to 1962, at which time I retired from the State service. I have spent approximately 42 years in the profession of valuation 

of utilities and railroads. The California State Board of Equalization, which was given the duty of administration of the new law, formed a valuation division to assist it in this duty. I was offered and accepted a position with this new department as a senior valuation engineer. I continued with this department for the next 29 years, advancing successively to the positions of assistant chief of the division and chief of the division, which la tter position I retained for 12 years, until my 

retirement in 1962. As chief of the valuation division I was in responsible charge of a staff of about 60 people, gathering and processing information lead­ ing to the valuation and equalization of the assessments of all the u tilities and railroads in California. During my service with the board of equalization the assessment roll of State-assessed prope rty grew from about $800 million to over $4 billion. In 1962, this assessment roll included 36 railroads with a 

total assessment of $345 million. While in State service I was loaned to the States of Oregon, Colo­ rado, and New York to aid and advise them in the ir railroad assess­ ment work. Many other States asked for our advice in their railroad 

and utility assessment work. Since my retirement from State service I have assisted the States of Utah and Idaho in the ir work in connection with the valuation and equalization of railroads and utilities. In addition, I have partici­ pated in valuation and equalization cases for railroads in Missouri, 

Illinois, South Dakota, and Iowa. At the present time, I am engaged or participating in a valuation 

and equalization case in the State of Iowa. I have also advised State-assessed taxpayers in regard to their as­ sessments in Nevada, Arizona, Washington, and Oregon. I am very well aware of the tax discrimination against railroads due to the practice of assessing railroad property at percentages of full
60 TAX ASSES SMENTS ON COMMON CARRIER PROPE RTY

value much higher than most other property that is subject to the same 

tax rates.

I have observed this type discrimination at one time or other in the 

States with which I have had personal dealings, and based on conversations with both railroad representatives and State tax administrators 

I am convinced that the discrimination is widespread.

This belief is supported by a mass of data in many reports and 

studies on the subject. Ratio studies made by taxpayer groups and 

also by administrative and research organizations have all confirmed 

the claim of the railroads that they are being subjected to gross discrimination in the field of ad valorem taxation.

One of the first authoritative reports tha t confirmed what the railroad industry has been contending for many years was the report on 

carrier taxation, made by the Board of Investigation and Research 

and published in 1945 as House Document No. 160 of the 79th 

Congress.

This very complete report on carrier taxation stated, in commenting 

on the lack of equalization in assessments of railroad property—

♦ * * th e officials of ap pro xim at el y half th e S ta te s re ad il y concede th at ra il ­

ro ad s are be ing ov er ta xe d be ca us e of in ad eq uat e eq ua liza tion .

I lie discrimination in the assessment of railroad property has been 

more readily identifiable since the adoption of central assessment of 

such property. This discrimination has become more pronounced in 

recent years, due in a large degree to the rap id increase in the value of 

property locally assessed, where the local assessor has not kept up with 

such increases in his assessments; wherea the property of railroads 

lias, on the whole, decreased in value due to economic reasons and the 

central assessing agency has kept railroad values high while failing 

to recognize the decrease in the assessment ratio of locally assessed 

property.

The Bureau of Census reports of 1957 and 1962 gave the first factual 

data as to the level of assessments in a great many States. These data 

confirmed the fact tha t the assessment ratios in nearly all States had 

been gradually getting lower each year. This fact had been found to 

be true in previous years in studies made in a relatively few States by 

legislative committees and taxpayer organizations.

The Doyle report, so called afte r Maj. Gen. John P. Doyle, director 

of the Special Study Group on Transportation Policies in the United 

States, created by Senate Resolutions 29, 151, and 244 of the 86th 

Congress, in 1960 found that State and local assessment procedures 

discriminated against railroads.

In fact, the report said so in very strong language—

♦ * * th a t th er e is a st udie d an d de libe ra te pr ac tice of as se ss in g ra ilro ad 

pro pert y a t a pr op or tio n of fu ll va lu e su bst an tial ly hig her th a n ot he r pr op er ty 

su bj ec t to th e sa me ta x r at es .

In Jun e 1963, there was published a report of the Advisory Commission on Intergovernmental Relations on “The Role of the States 

in Strengthening the Pro perty Tax.” This report confirmed the 

findings of previous groups which had studied the problem, to the 

effect that the railroads were being discriminated against in the matter 

of ad valorem assessments.
TAX ASSESSMENTS ON COMMON CARRIER PROPERT Y 61

If a person were to be guided by a reading of State constitutional and statutory provisions, he would not expect to find such a degree of dis­ crimination in railroad assessments. Railroad property is usually assessed by a State assessing agency, as is the property of nontrans­ portation utilities, while all other property is generally assessed by county assessors. Property of both kinds is subject to local property 

taxes at the same tax rate. In most States the constitutional and statutory provisions require tha t property taxation shall be uniform and equal, tha t State-assessed property assessments shall be equalized with local property assess­ ments by the State assessing agency, and tha t both types of assessments 

shall be at full market value. The record shows that there has been a disregard of these obviously fai r requirements by many State assessing agencies. Although in most States today property is not assessed at full market value, the property of railroads is assessed a t a much higher percent of market value than other property which is assessed by local assessors. Why, then, is there this unfai r discrimination against the railroads ? The discrimination stems from several factors, but the most important one is the political pressure on the State-assessing agency to maintain the status quo in the face of ever-increasing governmental costs and tax 

needs. The railroads have for many years attempted to obtain relief at the administrative level, but the results have been very disappointing, for the reason stated above—that the State officials are reluctant to change their procedures because to do so would be politically inexpedient.During the past decade, the administrators have been made aware, through their own organizations, such as the National Association of Tax Administrators, of the fac t tha t they should get the ir houses in order and attempt to make the ir assessments with more regard to equity for the railroads both as to valuation and to equalized assessments. The National Association of Tax Administrators had a competent committee work for several years developing standards for the finding of full value of properties of railroads and utilities. Their report en­ title d “Appraisal of Railroad and Other Public U tility Property for Ad Valorem Tax Purposes” is recognized as an authoritative guide for 

tax administrators. Committees of the National Tax Association and National Associa­ tion of Tax Administrators have recommended methods to be used to determine the assessment level of locally assessed property. By the use of the valuation report and the methods recommended for deter­ mination of assessment ratios the State administrators have tools by which they could make large strides toward ending the discrimination in railro ad assessements. Unfortunately, too few States have seen fit to attem pt any changes in th eir procedures tha t would result in a reduction of railroad assessments. Although some measure of relief has been obtained by the taxpaying railroads in the State courts, the results of such action have been very discouraging. Dockets in the State courts are congested, and the courts are slow to move. In addition, the State courts are very reluc­ tan t to overturn the action of the assessing body, and they exert every 

effort to sustain the tax administrators.

60 -66 1— 66------ 5
62 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

In most cases there is not a full trial before the State court, but 

only a review of the record made before the administrative body. As 

it is the hope of the complaining railroad that the relief desired may 

be obtained from the State-assessing body the record made before tha t 

agency is usually quite sketchy; this is so because if the taxpayer 

should indicate tha t an appeal was likely by making a complete record, 

the assessing agency would not be in a mood to gran t any relief.

Also, in many States the railroads do not have recourse to the courts 

to the extent that the assessing body is made a party to the proceeding, but instead must bring suit against the tax collecting body, such 

as the county, protesting the excessive taxes as a result of the discrimination in the assessment of the railroad property.

This means th at suit must be brought in every county of the State 

in which the railroad has property, which is a very time-consuming 

and expensive procedure.

I believe the evidence is irrefutable that there exists in a great many 

States clear evidence of discrimination against the railroads in the way 

the ir property is assessed. The movement toward gran ting the railroads relief against such tax discrimination has been very slow, and 

in many States the movement has been so slight that i t is practically 

imperceptible.

As the State administrative bodies refuse to fulfill their duties as 

public servants, and they are supported in this action by the State 

courts, it becomes evident tha t the only way the railroads can be 

freed of this tax discrimination is by having recourse to the Federal 

courts, as set out in H.R. 4972.

The Advisory Commission on Governmental Affairs in its report 

of J une 1963, recognizing need for improvement in the assessing procedures in the various States, made a number of recommendations fo r 

State action to strengthen property tax administration. Subsequently, 

the committee drafted suggested property tax legislation for enactment 

in the various States. If the recommendations of the committee were 

carried out by the various States, it could well be that the tax discrimination problem would be substantially solved. It would be a 

very naive person, however, who would believe that final consideration 

of the Commission’s recommendations could be obtained in less than 

a couple of decades.

The fear has been expressed by some State adm inistrators t hat this 

proposed law (H.R. 4972) would take away from the individual States 

the right to administer thei r own tax laws. Such a danger would exist 

only if the administrator should be negligent in performing his duty. 

Certainly, if the State-assessing agency assesses railroad property at 

the same level as all other property, the railroad would not have a 

cause of action in the Federal court under this proposed law.

The State administrators may also say—“we are improving our 

valuation and equalization procedures, just give us time to finish the 

job.” Although it is true t ha t some of the States have shown a measure of improvement over the last 30 years, there are many States that 

have made no real effort to do an efficient job in the assessment of ra ilroad property. It would be very difficult to predict accurately how 

many years it might be before those States would achieve any measure 

of equality.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 63

Th at finishes my statement, Mr. Chairman, I would be very happy 

to try to answer any questions you may have. Mr. Moss. Mr. Travis, I know from your statement th at you are one of my constitutents and I welcome you to Washington. We are talking about something that we are both familiar with. Is assessment in Sacramento County uniform and equal on the basis 

of highest and best use ?

Air. Travis. The local assessment, sir, you are talking about ?

A Fi* j\JEoss es.

Mr. Travis. I think it is very close to it, sir, and within recent years there has been a tremendous improvement in the assessment and I will 

cover all of the counties of California in that. Mr. Moss. And tha t effort at greater equalization has been as a result of prodding by the State , to achieve equalization between taxassessing districts; is that rig ht?

Air. Travis. Tha t is, sir, through prodding by the State and legislation with regard to school aid has helped very much. Air. AIoss. We have a very large amount of the total budgets of local school districts, particula rly, which are met through subventions from sales tax sources, so that the State of California, going back to the time when I served in the legislature, initiated efforts to improve equalization. It took quite a while to improve our own county to the 

point where it is today, did it not ?

ATr. Travis. It did, sir. Air. AIoss. And just, about 3 years ago, we had trouble in the county because there were some new assessments which took quite a number of years, on a block-bv-block basis to reevaluate property, did it not?

Air. Travis. That is right, sir. Air. Moss. Is there equalization between the various tax assessment 

districts ?

Air. Travis. I will say “Yes.” That is a general statement, lo u cannot get perfect, and you can’t say it is all 22.1 percent or something but it is a range of reasonableness or ability of the person to do the job, because of the fact that as you point out, it takes time for an assessor to get around. He can’t change every year. It is impossible, 

physically impossible to do tha t. So there are some small discrepancies within the county. Intr a- county assessments are not perfect, but I feel it is very good and 

very close. Air. Moss. You say within a county ?

Air. Travis. Yes, sir.

Air. AIoss. Is it between counties ?

Air. T raits. The variation from the statewide average as found by the State board of equalizations within about 3 percentage points, I 

bel ieve, at the present time, so th at is very close. Air. AIoss. Within tha t percentage you can get extremes from both 

ends?

Mr. Traits. You can get from 9 to 20 percent.

Air. AIoss. Or much higher?

Air. Travis. There might be a point, but they don’t last, very long, sir, because if they publish the ratio of Sacramento County as being 23 percent and a man is higher than 23 percent, he will immediately see the assessor and see that he is reduced to 23 percent.
64 TAX ASSESSM ENTS ON COMMON CARRIER PROPERTY

Of course the man that is at 19 percent doesn’t come in. That is why 

it is a continual decrease in the assessment ratio.

Mr. Moss. In our State, the board of equalization is responsible for 

all utility property assessments; is it not ?

Mr. Travis. That is right.

Mr. Moss. It tells the county the amount of property on the rolls 

in tha t county for purposes of tax : is that correct ?

Mr. Travis. You are talking about u tility property; is that right?

Mr. Moss. Yes.

Mr. Travis. That is right.

Mr. Moss. In your statement on page 2, you said:

I am very well aware of the tax discrimination against railroads due to the 

practice of assessing railroad property at percentages of full value much higher 

than most other property that is subject to the same tax rates.

Would that statement be true as between a railroad and an electric 

utility ?

Mr. Travis. The same thin g would apply to both of them, sir.

Mr. Moss. Or a gas u tility ?

Mr. Travis. Tha t is rig ht, in California. You are limiting this to 

California.

Mr. Moss. In other words, the practice of assessing property in 

California is uniform between utilities, that is all utility property?

Mr. Travis. I don’t want to quibble, sir. The answer to your question is “ Yes” if I may amplify to this extent, that there are certain 

properties assessed by the State board of equalization, and I am talking about pipelines that are at a lower assessment.

Mr. Moss. I recognize tha t there are some utility properties that 

are not assessed by the State board of equalization, bu t the significant 

majority of the properties are assessed by the State board of equalization.

Mr. Travis. That is right.

Mr. Moss. And between utilities there is uniformity then to the 

extent that the State has jurisdiction ?

Mr. Travis. Generally, t hat is right, sir.

Mr. Moss. As a matter of equity, if we are going to provide this 

relief, shouldn’t we provide it for all utilities?

Air. Travis. I can’t disagree with the fact th at there should be relief 

for the other types of utilities. Of course, they are not interstate 

commerce so they are not covered by this bill.

Mr. Moss. Well, aren’t they ?

Mr. Travis. No.

Mr. Moss. Now, I understood tha t Pacific Gas & Electric Co. was 

interstate commerce.

Mr. Travis. I am not a lawyer, you see.

Mr. Moss. They are clearly interstate commerce.

Mr. T ravis. Well, everything is interstate commerce, I suppose.

Mr. Moss. Would you apply it to all utilities engaged in interstate 

commerce ?

Mr. Travis. I believe that there should be equality in assessment 

between all types of property.

Mr. Moss. I do, too. If we actually had that, fully equal, then as 

a taxpayer my taxes would probably’go down, and not up, as they 

have been.
TAX ASSESSMENTS ON COMMON CARRIER PROPERT Y 65

Mr. Travis. Tha t is r ig ht . Mr. Moss. Becau se I have seen this block method of assessment 

whereby they tak e 10 years to go over a politica l sub div ision, and 

achieve equality . By th at tim e you have a 10-year lag between the 

last one an d the first. So it becom es s ort of a difficult circle to achieve 

this e qu ali ty we all seek.

Mr. Travis. I t takes time, althou gh they are tryin g to do it in 4 

yea rs. Mr. Moss. Now, if we are go ing to be conc erned over th e impact 

upon interstate commerce as th e test, why stop only with uti lities ? Ha ve you seen in your e xpe rien ce in the State some of t he new ly developed indu strial pa rks alle ge th at the y have been sock ed by the 

assessor?

Mr. T ravis. Yes, sir.

Mr. Moss. You have?

Mr. Travis. Yes, sir. Mr. Moss. So have I. Many times those tena nts are c lea rly en gaged 

in interstate comm erce; ar en 't they ? Th at im pact might be upon the bu dg et of a c itizen, th at disc rim inatory assessment o r ta x tre atm en t. Where do you envision we s ho uld stop or sho uld we pr esc rib e a u ni­ form Fe de ral sta nd ard fo r achie vin g ful l equ ality in th e lev yin g of 

tax es ?

Mr. Travis. Of course, the in du strial pa rk h as a v ery q uic k way o f 

ge tti ng relief, because he is in one ta xi ng dist ric t, or one t ax in g ju ris­ diction, let u s call it. He c an go to the county assessor an d get rel ief 

fro m t he c ounty assessor or the cou nty boa rd o f equ aliz atio n.

Mr. Moss. You can go to th e cou nty su perviso rs. You know , I hav e 

done t ha t on a num ber of occasions, and I have been trea ted wi th g reat 

cou rtes y, a nd persev eran ce a nd fu tility .

Mr. T ravis. Well, th at is the sam e experien ce of the rai lro ad s, of 

course. Mr. Moss. I would like t o go into Fe deral cou rt pe rhap s and get a 

quick a nsw er and tie them up .

Mr. T ravis. You can go to th e su pe rio r cou rt w ith it.

Mr. Moss. Going to the su pe rio r court migh t ma tch my resources 

a littl e be tte r th an going to the Fe de ral court. I do th an k you for 

yo ur test imony, and as I said, I am pleased to welcome you here.

Mr. Travis. Th an k you, an d I hope to see you in Sacra me nto a gain 

soon.

Th e Chairm an. Ar e there an y questions ?

Mr. Dingell. I have been very imp ress ed wi th yo ur testimony, sir, 

an d I th in k it has been very good. There are, how eve r sev eral questio ns I would l ike to a sk you about some of th e comments yo u m ade this 

mo rning. I t would be fa ir to say, wou ld it not, th at each St at e has a 

pro vision fo r contest of its tax es an d levies, the ra te at wh ich those 

tax es are assessed, and indeed all ot he r questions i nvolv ing th e fairne ss 

and th e a mou nt of the tax es, w ould i t not ?

Mr. Travis. I believe that is tru e, s ir, th at th ere is a recourse in t he 

St ate c ourts at the pre sen t time.

Mr. Dingell. The Co nstituti on would req uire it, and th e fa ilur e to 

include th at wou ld make the law subje ct to a co nstitution al review.

Mr. T ravis. Right.
66 TAX as sessme nt s on common car rier pro per ty

Mr. Dingell. These provisions are fairly similar, am I correct, in 

that in each instance there is a provision for, first of all, the equalization of taxes across the State from one area in the State to the other. 

Am I correct about that?

Mr. T ravis. Well, the taxpayer has to go-----

Mr. Dingell. That is a fairly simple question.

Mr. Travis. There is a forum except it is not as simple in that you 

can go into one State court.

Mr. Dingell. I am ta lkin g in terms of general theories, and I intend 

to specialize as much as I can, but I am afflicted by a shortage of time.

Now each State has such provision for equalizing the taxes across 

the confines of its boundaries, am I correct ?

Mr. Travis. Tha t is right.

Mr. Dingell. Now, each State also has provisions within its tax 

laws for assuring that taxes are levied fairly across the different kinds 

of industries and land uses against which ad valorem taxes are levied.

Mr. Travis. There is a uniformity clause in all States, I think.

Mr. Dingell. Now, you indicate th at under the present practice, it 

will be necessary for railroads or other industries afflicted by unfa ir 

taxes within the borders of a State, in many instances, to initiate a 

suit in one way or another against each of the taxing authorities, 

which would require probably a county-by-county attack upon the 

taxes but also which would require a taxation or, rather, an attack 

upon the taxes probably more broadly, since you have county taxes 

and you have city taxes, and you have school board taxes, and you 

have all manner of taxing authorities.

In Michigan we have community hospitals, and you have community schools that are entitled to levy certain percentages of taxes. 

So you would be afflicted under present law with the necessity of 

attacking these taxes. In the case of Michigan, I think there are 83 

counties and I suspect there are about 1,000 school boards, and you 

would be afflicted with a situation of having to attack these taxes in 

the courts of every county in the State and probably in a number 

of instances, am I correct?

Mr. Travis. The bill doesn’t call for attack on the taxes, it is an 

attack on the assessment. It is the county as the assessing agency, 

which makes the assessment for all of the multitude of taxing jurisdictions, in practically all States, and there are some exceptions.

Mr. Dingell. It would essentially require separate action.

Mr. Travis. It would require a very large number of separate actions, I would say that.

Mr. Dingell. That is the fairly major complaint in your statement, 

is i t not ?

Mr. Travis. It is one of the complaints, tha t is right.

Mr. Dingell. Well it was one of the main points tha t you raised, 

was it not ? I know the bill, II.R. 4972 says that:

The following action by any State, or subdivision or agency thereof, whether 

such action be taken pursuant to a constitutional provision, statute, or administrativ e order or practice, or otherwise, is hereby declared to constitute an 

unreasonable and unjust discrimination against an undue burden upon interstate commerce and is hereby forbidden and declared to be unlawful.

Now, following on from tha t is language which would require railroads afflicted by this situation about which they complain, to enter
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 67

and contest the assessment in each State, in each county, and in each taxing authority within the confines of the State whose taxes they 

complain about. My question is simply this: How is H.R. 4972 or any other similar legislation pending before this committee going to help you about 

the problem of which you complain ?

Mr. Travis. Well, perhaps I am not competent to answer you. I 

am an engineer and not a lawyer.

Mr. Dingell. You have expressed great experience in equalization, and you appear here on taxes and tax assessments. You express a long background and experience in this area. I am sure you must have some idea of how this bill is going to affect the major problem of 

this industry.

Mr. T ravis. I just want to qualify myself to tha t extent.

Mr. Dingell. How is this bill going to help you with the very wide 

jurisdictional problem that you stress to the committee?

Mr. T ravis. Because the attack can be brought in the Federal court against the assessment of the central assessing agency. The assessment is made by the State.

Mr. Dingell. Assuming there is no central assessing agency in the 

State, what then?

Mr. T ravis. I presume then the same thing would apply, although 

those are very fa r and few between.

Mr. Dingell. Let us assume in Michigan we have a S tate board of equalization, similar to your experience in California. Their function is to see to it tha t the taxes are fair and in equal proportions of ad valorem taxes throughout the State. How are you going to attack those? Their function is to go into the question of taxes to see to it that the properties are valued properly. How are you going to attack them if they assess fairly, if the principals of the State equalization law are applied, where you allege some other ground of unfairness, such as the fact tha t they are fixing the value of the property too 

high ?

Mr. Travis. In Michigan the railroads are assessed by a central agency. They would be the ones which the action would be brought 

against, if there was inequality of assessment.

Mr. Dingell. In Michigan the State board of equalization simply sees to it tha t properties are valued equally and fairly across the 

State.

Air. Travis. But they have the primary duty—I have not worked in Michigan—of finding the assessment of railroads in Michigan.

Mr. Dingell. Within this framework, as long as the community doesn’t exceed the assessed valuation, or does not fall below it, and actually the main function is to see that you don’t fall below ite-and so long as the communities act within the maximum limit fixed by the State board of equalization, they can tax at any level they want, as long as they behave properly according to the vote of the county or the other agencies. How is th is going to be helped? In Michigan you are still going to have to go into every single county and every single 

taxing d istrict in the State of Michigan.

Mr. Travis. It is my understanding tha t this bill covers the discriminatory assessment procedure of equalization.
68 TAX ASSESSME NTS ON COMMON CARRIER PROPERTY

Now, if there is discrimination in the special laws for tax rates, I 

don’t think it is covered by this. If they levy a special tax against 

railroads that would be true.

Mr. Dingell. It says tha t this is the stated equalized tax for property within your area.

Mr. Travis. It is an equalized assessement. It is the assessment 

we are talking about and the assessment in Michigan is made by the 

central agency and tha t assessment.

Mr. Dingell. I think your understanding of this and mine are a 

little different.

To go on to another point, this legislation would force the railroads 

to bring into Federal court every school district and every county and 

every city and every community hospital association in the State of 

Michigan.

Am I correct tha t that is to litigate the problem of taxes by the 

railroads within the confines of their taxing area ?

Mr. Travis. I can answer your question. It is* my understanding 

it brings the assessing agency in.

Mr. Dingell. Is there any requirement tha t the railroads under 

this legislation should first exhaust the remedies within State law 

before they proceed into Federal courts.

Mr. Travis. I don’t believe so.

Mr. Dingell. Don’t you think as a matter of principle th at would 

be something for this committee to consider in the interest of fairness, 

that State law should be interpreted by State courts before it is interpreted by Federal courts?

Mr. Travis. Of course the delay in getting action in the State courts 

is one of the reasons for having this bill.

Mr. Dingell. Wh at you are seeking then is quick justice, as opposed 

to equal justice?

Mr. Travis. I wouldn’t sav that. It is quicker justice than delayed 

justice.

Mr. Moss. Just for the purpose of clarification here, because it seems 

to me th at there is a confusion and I think the confusion should be 

cleared up, on page 2 of the bill beginning on line 4, following (a), 

it sa ys:

the assessment, for purposes of a property tax levied by any taxing district, of 

property owned or used by any common carrier subject to this Act engaged in 

transportation of persons or property in interstate commerce at a value which 

bears a higher ra tio to the true market value of such property than the assessed 

value of all other property in the taxing district * * *

Now, in your response to Congressman Dingell, you have indicated 

that you felt the action would be against the State board of equalization, which is not a taxing district under our laws, is it ?

Mr. Travis. That is right.

Mr. Moss. The taxing district would be the fire district or the school 

district or the reclamation district, or any of the many thousands of 

taxing entities we have in the State of California, would it not?

Mr. Travis. Tha t is right, sir, but it says that the—

unjust discrimination against an undue burden upon interstate commerce is 

forbidden and declared to be unlawful: (a) the assessment, for purposes of a 

property tax levied by any taxin g district * * ♦
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 69

It is the undue burden due to the assessment. Mr. Moss. Is the board of equalization a ta xing district ? It is an 

assessing agency which gives its valuation to a taxing district.

Mr. Travis. That is right. Mr. Moss. But the taxing d istrict then levies upon the assessment in 

order to achieve equalization.

Mr. T ravis. That is right, but this bill is against the assessment for 

purposes of the property tax. This bill goes to the assessment. Air. Moss. It is the taxing district, and my point is th is : I f you had 

to try to arrive at a uniform rate of tax in relation to market value for all of the properties taxed in California by the multiplicity of districts, there were dozens of them when I left the legislature. Now I understand we have multiple-purpose districts, so th at we 

have almost no end to the type of special assessment districts that can 

be established in our State, isn’t that correct ?

Mr. Travis. That is right.

Mr. Moss. Well, those districts are the ones which levy the taxes.

Mr. Travis. That is right, upon the assessment made by the State 

board of equalization. Mr. Moss. Would you then tax the utility property on an average for 

all of those districts? Th at debt has to be paid within each taxing 

entity.

Air. Travis. It is each assessment area on which a tax rate is made. 

The tax rate is within that assessment area. Mr. Moss. I wanted to get your views out here on th e record, be­ cause what we do here in the way of a history is of some significance 

if this legislation is enacted, but I think that it must be made very 

clear before anything happens here, that the State board of equalization is not a taxing district.

Air. Travis. That is right. Air. Aloss. We would have to test in each taxing district the relationship of utility property to other property assessed within that 

district.

Air. Travis. It could be, sir; I don’t know.

Air. Aloss. We are providing a tremendous job in this. If you are going to have a statewide average, many of the counties of the State 

might have no railroad property, and in fact there are a number of 

them having no railroad property, but you throw them all in the same 

basket and come up with an average, which could create some real 

windfalls. I would certainly want to see us, whatever we do, avoid that. I 

think that we might compound our problem rath er than solve it.

Air. Travis. Of course in all of your equalization laws in all States 

now, you would have the same problem under the present laws, because th e assessment of property should lie at average taxes. Air. Aloss. They are supposed to be levied equallv, but here we are seeking a special relief in a different form. So to that extent at least 

we are placing the railroad utility as a citizen in a different category 

from some of his other friends.

Air. AVatson. AYould the gentleman yield on that ?

Air. Aloss. But the gentleman from Michigan yielded to me.

Air. AVatson. It appears in section 25(b), the first paragraph of 

that section, the action would lie against your board of equalization,
70 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

and it isn't necessary tha t it be a tax district, because it says, “The 

following action by any State or subdivision or agency thereof.”

Perhaps Mr. Sanders who is a renowned lawyer, could shed a little 

more lig ht than the gentleman here. I know nothing about engineering and probably little more about law, but perhaps Mr. Sanders could 

extricate us from this discussion of where it would lie.

Mr. Moss. If the gentleman from Michigan would yield further. I 

would direct my friend’s attention to the language on page 2 of the 

bill, beginning on line 4, after the small “a” in parentheses: “The 

assessment for purposes of a property tax levied by any taxing 

district.”

My State board of equalization is not a taxing dis trict; it is an assessment agency.

Mr. Watson. Well, then, of course, I am reading from the brief th at 

was presented here earlier, and I assumed that it was the same as we 

have under consideration.

Mr. Moss. I always want to work from the proposed language pending, because that is what we must deal with.

Mr. Watson. The bill itself does contain this section 25(a).

Mr. Dingell. I would like to query the witness on this :

Th e following action by an y Sta te or sub divisio n or age ncy the reo f, whe ther 

suc h a ction be tak en.

Now those are the actions which become subject to judicial review 

in the Federal court, a m i correct, sir?

Air. T ravis. That is the way I would read it; yes, sir. It is the 

assessment.

Mr. Dingell. We can review any action taken by any of these 

agencies. First of all you can take into court any action bv a State 

agency which would be the public utilities commission or it could be 

any of the State executive agencies regardless of how they might be 

denominated and it would mean that you could take in any county, 

because counties happen to be subdivisions of the State, within the 

State of Michigan. You could take in municipal governments since 

they set their power from the State under the State constitution in 

Michigan, and I am sure every other State, and it could be a county 

agency which might have authority to levy taxes. You would have 

the water district or any school agency within the State which would 

have taxing authority under the State. It would derive its power 

from the State and so would be subject to having its actions reviewed 

in Federal court.

In addition to this, I think th at you would have, as my good friend 

from California points out, a multiplicity of other agencies within 

the State which happen to have taxing authority which derive their 

power from the State government and in the State constitution.

Wouldn’t all of these be subject to review under this?

Mr. Travis. Not under my interpretation of it, sir, which is limited 

to tha t qualification, but to me it is the interpretation of the State 

agency regarding the assessment upon which the tax is levied.

Mr. Dingell. The language here is very celar, and it savs, “The following action by any State or subdivision or agency thereof.”

Were any of the agencies T mentioned not agencies of the State or 

subdivisions of the State and excluded from the language of this bill ? 

I don’t want to nitpick but I want some answers on this legislation.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 71

Mr. Travis. They are agencies of the State, but they have nothing 

to do with the assessment. Th at is what they are talking about.

Mr. Dingell. Every one o f those agencies takes action in assessing 

taxes. It is sub] ect to review in the Federal court ?

Mr. Travis. If they are assessing agencies.

Mr. Dingell. That is not what it says. It says:

The following action by any State or subdivision or agency thereof, whether such action be taken pursuant to a constitutional provision, statute, or admin­ istrative order or practice, or otherwise, is hereby declared to constitute an unreasonable and unjust discrimination against and an undue burden upon inte rstate commerce and is hereby forbidden and declared to be unlawful * * *.

Then there is the provision that authorizes action to prevent collection of taxes, and it authorizes actions to enter courts, and certainly 

necessarily a State agency of the type I have mentioned would have to 

have standing in court to appear and defend its action. I am not talking about the State board of equalization or whatever 

you might have, but I am talking about every county and hospital 

association, every school district, every irrigation district, and every 

power district that would have authority to levy taxes under the State 

constitution and State laws.

1 yield to my friend from California.

Mr. Watson. The gentleman from Michigan has raised a very important point. I am not going to defend the gentleman who is on the 

stand right now testifying, but I don’t think tha t he can properly 

respond to it. I think it is a legal question and the committee has a right to know the answers to the query propounded by the gentleman 

from Michigan. I believe if he would defer we could probably have a clearer answer 

from Mr. Sanders, who is the constitutional and legal witness.

The Chairman. Just one moment. I believe, Mr. Watson, that that 

is the prerogative of the man asking the questions, to ask any man who 

appeared before this committee and wants to make a statement. If 

he can’t answer it, I believe it is righ t to say he can’t answer it.

Mr. Dingell. I would be happy to have Mr. Sanders’ views, if 

he can answer this particu lar question, but I did not place the gentleman on the stand here. li e comes before us with impressive credentials and background which I would construe as being adequate for him to answer a simple question, even though it is legal, but it is in 

an area in which he has worked for 29 or 30 years.

Mr. Travis. Forty-two years, sir.

Mr. Dingell. In 42 years you ought to be able to construe that 

statute.

Mr. Travis. I have read it, sir, and I have in my own mind made 

an interpretation of it. I have interpreted the actions to be against 

the body, the subdivision or agency which makes the assessment which 

is subject to these taxes.

Mr. Dingell. Thank you very much.

The Chairman. All right, Mr. Watson, do you have any questions?

Mr. Watson. Mr. Chairm an, I would like to hear from Mr. Sanders, 

if the witness would defer to him, so that we might shed a little light 

on the question tha t has been propounded by my colleague.

The Chairman. Mr. Sanders, are you present? Would you care to 

take the stand at the request of Mr. Watson to answer this question ?
72 TAX ASSESSME NTS ON COMMON CARRIER PROPERTY

Mr. Sanders. I have an opinion about it, but it doesn’t go to my 

particular point. I thin k Mr. Ogden could answer the question.

Mr. Ogden. With the Chair’s indulgence, Mr. Sanders, of course, 

was asked to look at this from a constitutional standpoint. I think 

that I can answer the gentleman’s question.

The Chairman. Would you prefer that ?

Mr. Watson. I want to hear from anyone who can shed some light 

on the question.

The Chairman. It is only for this question, Mr. Ogden.

STATEMENT OF J AM ES N. OGDEN, VICE PR ES IDEN T AND GEN ERA L

COUNSEL OF TH E GULF. MOBILE & OHIO RAILROAD CO., REP RESEN TING TH E ASSOCIATION OF AMERICAN RAILROADS

Mr. Watson. Wh at is your name, please ?

Mr. Ogden. James Ogden.

Mr. Watson. And you are a lawyer ?

Mr. Ogden. Yes, sir ; I am vice president and general counsel of 

the Gulf, Mobile & Ohio Railroad and I made a statement yesterday.

Mr. Watson. I am sorry, I was not here. You heard the questions 

propounded by Congressman Dingell with reference to the possibility 

tha t this legislation would require a multiplicity of suits against every 

taxing district within a State.

Could you give us your interpretation as to whether or not this 

legislation would require that, and against what political subdivision 

or agency would an action lie ?

Mr. Ogden. Air. W atson, the bill as I read it is designed to reduce 

the amount of litigation in certain areas. The primary purpose of 

the bill is to reach the assessing agency and to prohibit assessments at 

a higher level than other assessments of other properties subject to the 

same tax.

Specifically, many of the problems, it seems to me, that Air. Dingell 

so ably raised would be problems that would go to how to frame a 

complaint, if they could ever frame one. But if Michigan has a centra l assessment of railroads, obviously the action would be against the 

central assessing authority on a showing that the assessment was at a 

level higher than the railroad was able to show to lie the level of the 

assessments of other property in various taxing districts where the 

railroad had property.

If that was a difficult problem, it would be the problem of the complainant and not the problem of the State.

Air. Watson. And in a sense of fairness, then. I yield only for this 

line of questioning to the gentleman from Michigan, who brought it 

up first.

Air. Dingell. I want to be clear. I am not unsympathetic to the 

problem of seeing th at the railroads are taxed fairly, but I want to be 

sure the action taken by this committee is wise.

Now, as I read the language at the bottom of page 1 and the top of 

page 2, you come to a situation here where it says—

The following action by any State, subdivision, or agency thereof * * *.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 73

Now subdivision s or age ncies the reo f of a St at e would be counties, 

wo uld be school d ist ric ts, and irr igation distr icts, or m ight be distr icts 

de dic ate d to the c rea tio n of hospitals or any othe r va lid purpo ses fo r 

wh ich a S tate or m un icipality h as gr an ted taxi ng a utho rit y.

Now, un der this, eve ry one of those actions of every one of those 

age ncies is subject to rev iew in a Fe de ral cou rt. Am I correct?

Mr. Ogden. No, sir.

Mr. Dingell. In itia lly t he railr oa d has its opti on u nd er this bill of 

go ing into the St ate age ncy if it chooses and fa ilin g th at , or if it so 

chooses, it h as the optio n of going f orward ag ains t every one o f those 

counties or any one of those co unties in th e S ta te wh ich it may so choose 

to do.

Mr. Ogden. Mr. Di ng ell , if it is the assessment agency , the sub ject 

of the whole pa ra gr ap h is “th e assessment."’

Mr. Dingell. Now in M ich igan we have a St at e bo ard of equalizatio n. I t does not assess. I t sim ply sees to it th at taxa tio n in a ll o f th e 

counties of the S tate on rea l p ro pe rty is levie d on a f air and equal basis.

Mr. Ogden. Well, som ebody assesses th e railr oa ds . I don’t know 

who it is. Bu t who ever it is, th at w ould be the one.

Mr. Dingell. In M ich igan it is th e co unty, an d in Mich iga n it is th e 

school distric t and in Michiga n it is the p eople ’s c ommu nity hospitals 

associations. We do no t have, as I un de rst an d Michiga n law, an 

age ncy o n the St ate level wh ich assesses. I t eq ualizes, bu t i t does not 

assess. I would much ra th er see it on a S ta te level, b ut th is is n ot my 

un de rstand ing of how i t w orks.

Mr. Ogden. Le t me p ut it to you th is way, M r. D in gel l: Pe rhap s th is 

bill would make no difference in Mic higan, bu t let me po int this out, 

th at th is bill rea lly only changes existing law in two way s: One is it 

enables the comp lai nant to go into Fe de ral court with ou t proving th e 

ade quacy of a St ate rem edy, which is the inhibitio n imposed upon us 

by section 1314. Tha t p ro hibitio n is removed.

Th e second th in g is th at i t declares th e difference to be an undu e b ur ­

den on int ersta te comm erce an d lim its the cause of ac tio n to the difference. Un de r p resent la w, Mr. Din gell, i t is en tir ely possible to go into 

any St at e and contest the en tire assessment and all of th e t ax in a Fe dera l court.

Mr. Dingell. You see, my good fri en d has yie lde d to me fo r trea tme nt of a very l imited q ues tion . You are go ing well beyond that, and 

I did n’t wan t to do th at on his time. I ju st wa nte d to stay with the 

que stio n I have.

Are you willin g to ma ke a flat sta tem ent to th is com mittee th at 

eve ry St ate in this Un ion ha s an assessing agency w hic h would be th e 

pr incipa l and pr im ary de fend an t under th is leg islation?

Mr. Ogden. If the y have an assessing agency, or whoever does the 

assessing .

Mr. Dingell. You said eac h State has one.

Mr. Ogden. Well, it could be ma de th e de fen dant.

Mr. Dingell. I am as king you, are you wi lling to make th at flat 

sta temen t at this time, t hat each State has a S ta te agency ?

Mr. Ogden. No, sir, I kno w the y don’t.

Mr. Dingell. Now, if eac h State does no t hav e a St ate assessing 

age ncy , the n you will be able to proceed ag ains t each of t he adm inis -
74 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

tra tive sub divisions o f St at e gove rnm ent which do have assessing p owers ; am I correct ?

Mr. Ogden. Ju st like you ca n do to day .

Mr. Dingell. Now, if the y do not have a St ate assessing agency, 

you would the n be abl e to proceed again st each sub divisio n; is th at 

correct ?

Mr. Ogden. Whoever m akes the assessment.

Mr. Dingell. Now, you also have the op tion of proceeding if you so 

choose again st ad ministra tiv e units of governm ent, subdivisions of 

gover nm ent , by cou nties and so fo rth , or ag ains t th e State assessing 

age ncy if you so choose u nd er H.R . 4972 ?

Mr. Ogden. No, sir.

Mr. Dingell. You would not?

Mr. Ogden. Th ere wo uldn ’t be bu t one asse ssing agency.

Mr. Dingell. W ha t in this bill w ould deny you th at power?

Mr. Ogden. Beca use th e bill is directed only to t he assessment. I t 

is wh ate ver th e asse ssment is. I d on’t know who the assessment agencies are.

Mr. Dingell. Ju st one m inute. Th e bill s ay s:

The following action by any State or subdivision or agency thereof—

And th en it goes on to say rega rdless o f how such acti on be ta ke n—

pursu ant to a constitutiona l provision, statute, or administrative order or practice, or otherwise, is hereby declared to constitute an unrea sonable and unjus t 

discriminatio n against and an undue burden upon interstate commerce anil is 

hereby forbidden and declared to be unlawful.

Now, t his perm its you to proceed ag ain st the action of any county, 

of any peop le’s com mu nity hospital association, of any school distr ict, 

or of any oth er sim ila r subdivisio ns of St ate gov ernme nt, if you so 

choose, and allow s you ab initio witho ut res ort first to action again st 

the St ate agency.

Now you tell me w here you are pr oh ibi ted from doing th at ?

Mr. Ogden. Mr. Di ngell , you stopped at the colon and you ha ve n't 

gon e on a nd read the two word s, “the assessment.”

Mr. D ingell. W ha t tw o words do I fai l to rea d ?

Mr. Ogden. Th e two lit tle words you di dn ’t rea d, the two words 

“the assessment.” I f y ou r hos pital association assesses rai lroads, the 

answ er is “yes,” and I d on ’t guess yo ur ho spita l asso ciation does assess 

railr oa ds , though.

Mr. Dingell. In ou r St at e these a ssessments are mad e by the counties a nd by simila r in stitu tio ns of the State govern me nt.

Mr. Ogden. Th en they would be the ones.

Mr. Moss. Would the gen tlema n yield to me no w ?

Mr. W atson. Yes.

Mr. Moss. Looking ag ain at the lan guage of th e proposed sta tute, 

it says tha t discrim ina tio n wou ld constitute und ue b urd en upo n in te rsta te commerce and it is dec lare d to be un law ful an d it is forbid den . 

Th e tes t here is whe ther the assessment is fo r purpo ses of a tax levy, 

isn’t it?

Mr. Ogden. Yes, sir.

Mr. Moss. W here do you tes t it? You tes t th at assessment, if it 

bears a h igh er ra tio to true m arke t value th an othe r prop erty sub ject
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 75

to the same levy, where? It is in the tax district. Isn't that the clear 

language of the statute ?

Mr. Ogden. Yes, sir. Mr. Moss. You have to then compare the valuation, whoever makes it, against the valuation applicable in the tax district. Now, in my State, the assessment agency is not the tax district, is it? I am reading you the language of the proposal you submitted to us. It means something or it means nothing. It says on page 2, beginning on 

line 8:

at a value which bears a higher ratio to the tru e market value of such prop erty than the assessed value of all othe r property in the taxing dis trict subject to the same prop erty tax levy bea rs to the tru e ma rke t value of all such prop erty 

in the tax ing distric t.

Where else would you test ?

Mr. Ogden. You read it exactly correctly, and I still say that the contest is still over the assessment and not of all of the other property, but of th e assessment of the taxpayer th at is complaining. The com­ plaining railroad would not be complaining of anybody else’s taxes. They would be complaining of their own assessment. Mr. Moss. Mr. Ogden, the assessment is for the purpose of a tax 

levy.

Mr. Ogden. Well, all assessments are for the purpose of a tax levy. Mr. Moss. By a taxing district, and it has to be a levy made by a taxing district.

Mr. Ogden. But it has to be an assessment made by the State. Mr. Moes. The assessment is not going to be in contest unless it is held at a higher ratio than other property, and in other words, it is discriminatory to the disadvantage of the taxpayer, in this case the railroad. But where do you test tha t point? You test according to the language on line 10, “of all property in the taxing district.”

Air. Ogden. Air. AIoss, t ha t is merely an element of proof in the contest over the railroads’ assessment. That would be a burden that the complaining taxpayer would have to bear. If it couldn't make the proof, why, then there would be no judgment in its favor. Air. AIoss. You address yourself to everything but the language of 

the proposed document before us.

Air. Ogden. Let us turn around the other way, then. The contest is going to have to be one place or the other. It doesn’t seem to me to make any sense to contest the railroads’ assessments, which is the subject of the contest, in the several taxing districts where nobody else’s assessment is in contest at 11. The assessment of other property to which the railroad assessment is sought to be compared is important only for the purpose of comparison, and not for purpose of change. Mr. AIoss. I am interested in what the language of the proposal 

before us savs.

Air. Odgen. Well, I think it says the other, and you obviously don't. Air. AIoss. I want to thank my friend for yielding to me.

Air. Watson. Thank you very much, and I am sure that we have gotten this thing rather complicated. I only hope we didn’t cont ribute 

too much to the complexity of it. Air. Ogden, notwithstanding the procedural difficulties which may arise as a result of this legislation, as to venue and as to burden of proof and so forth, you still believe that this is an equitable piece of
76 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

leg islation and you th in k it w ould serve to the ad va ntag e of eliminating discriminat ion, if th ere be any, again st the common carriers?

Mr. Ogden. I certa inly do .

Mr. Watson. Furt her , it is your in terp retatio n of this legislation 

th at the contest would arise at the po int of assessment ra th er th an 

at the point of levy, th at you can go int o Fe de ral court at the time 

of assessment ra th er t ha n 'waiting fo r the d istrict to a ctu ally levy the 

tax es ag ain st the ca rri ers ?

Mr. Ogden. Yes, sir.

Mr. Watson. An d in the court, the d ete rm ina tio n would be in compa ring the assessment of th e ca rrier wi th the asse ssment o f the oth er 

prop ertie s in th at ta x di stric t, ra th er th an waitin g un til the actual 

levy as ap pa rently th e gentlem en from Michi gan an d Ca lif ornia are 

re fe rr in g to?

Mr. Ogden. Yes, sir.

Mr. W atson. Th an k you very much. I d on ’t ha ve any questions o f 

Mr. Travis.

Mr. Rogers of Fl or id a. Ju st in listen ing to some of the colloquy 

here, I did n’t un derst and y ou r ans wers.

Th e Chair man. Are yo u addre ssi ng yo urs elf to M r. Ogd en ?

Mr. Rogers of Fl or id a. Yes, to Mr. Ogden . I did n’t un derst and 

yo ur rep ly to two of my colleagues here an d I wa nte d to get it clea r. 

It is my un de rst an din g from a rea din g of the bill, th at you are concer ned with the assessment. I f you wa nt to que stio n the assessment 

in attack in g dis tricts , you would proceed ag ains t the body that, levied 

the assessment, wh eth er it be a local taxi ng di strict —listen to this— 

a local tax ing distr ict , a co un ty taxi ng d ist ric t, or a St ate assessment 

body. You would pro cee d un de r this proposed leg islation again st 

which eve r body assessed th e pr op erty th at you wa nte d to question.

Mr. O gden. Yes, sir, that is correct.

Mr. R ogers of Fl orida. I f it is a local are a th at you are questioning or if it is the St ate assessing agency you wou ld go again st State 

asse ssing agency, isn’t th at tr ue ?

Mr. Ogden. Tha t is my un de rst an din g.

Mr. Moss. Wo uld you y ield at t hat point ? My St at e does not assess 

the tax es for local taxes. I t arr ive s at an evalu ati on an d the assessme nt is levied acc ord ing to o ur constitution by ou r c ounty assessor.

Mr. Ogden. Mr. Moss, th ere is a grea t difference betw een valuat ion 

an d assessment. Th ey are no t the same thing. Levy is something 

else, bu t I think perhap s you are c onfusing levy an d assessment.

Mr. Moss. I am no t co nfusing levy and assessment.

Mr. D ingell. Would you yie ld to me ?

Mr. R ogers of Flo rid a. I will yield.

Mr. D ingell. The l an gu ag e of th is b ill ref ers in line 4, pag e 2, under 

(a ) to th e assessment. Thi s is th e point you h ave been making. Now 

th is is prec isely the po int th e gen tlem an fro m Cal ifor ni a and I have 

been ma kin g, th at assessment in Mic higan, and an assessment in 

Cal ifor ni a is done by the local subdivisio n of governm ent, and th at 

ev alu ati on is done on a Sta te basis. Un de r this you are not going 

to be benefited because you are going to h ave to go into the subdivisions 

of the S tat e.

Mr. Ogden. Mr. Dingell, of course Ca lifornia is ou r larges t State 

now an d Michigan is a treme ndously im po rta nt S tate. We love them
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 77

all because we try to handle lots of business back and forth from 

them. But they are not the only States and we have property in a 

lot of States that do have central assessment agencies, and to which 

we could reach in this fashion which States do assess our railroads at 

a substantially higher propo rtion than other properties are assessed.

Mr. Dingell. I am sympathetic with your problem but I want to be 

sure you have the right device.

Mr. Rogers of Florida. Und er the State of Michigan, would you 

proceed against the local assessing body ?

Mr. Ogden. If it were warranted, yes. It is whatever body assessed 

the railroad property.

Mr. R ogers of Florida. Whoever is assessing is the man you would 

proceed against, if it is in question. Certainly tha t was my understand ing of it and I thought it was very clear.

Thank you, Mr. Chairman.

Mr. R ogers of Texas (presiding). Are there any other questions of 

Mr. Ogden ?

I have just one thing before we close, with regard to this assessment 

situation. What this bill actually does is to bring into one forum, 

the Federal court, the power to proceed against a situation where the 

railroads are assessed on a 75-percent basis, and anoth er group, corporate group or individual group, is assessed on a 40- or 50-percent 

basis.

Now, Mr. Ogden, if you tur n this thing around and you simply said 

tha t everybody is assessed on a 50-percent basis but they are going to 

charge you a higher rate tha n they do somebody else, it would be 

actually unconstitutional, would it not?

Mr. Ogden. I would think t ha t it would, but you could certainly get 

the same results.

Mr. Rogers of Texas. Your action will be against in some instances, 

I would presume, levying authority ?

Mr. Ogden. No, sir; it would only be against the assessing authority. 

The common denominator is the assessment of property, comparing 

assessments of property where the tax rates are the same.

Mr. Rogers of Texas. But where the levying auth ority was undertaking to collect taxes on a false assessment, it might be necessary for 

you to seek relief to prevent this until your determination of your other 

suit could be reached ?

Mr. Ogden. That is correct.

Mr. Rogers of Texas. In other words, as you say, the common denominator is the assessment, and if it is any of these agencies, it makes 

no difference who the assessing agency is. The question is whether 

or not they have the basic authority to make an assessment.

Mr. Ogden. That is correct.

Mr. R ogers of Texas. Once they make the assessment, you can proceed if your assessment unde r this bill is based upon a percentage 

higher than the assessment that is made against property other than 

common carrier property.

Mr. Ogden. That is right.

Mr. Rogers of Texas. I thin k the committee will come back at 2 

o’clock and I think the first witness scheduler! at tha t time is Mr. 

Charles Conlon, of the National Association of Tax Administrators.

The subcommittee will stand in recess until 2 p.m.

60 -6 6 1— 66------ 6
78 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

(Whereupon, at 12 o'clock noon, the committee was recessed, to be 

reconvened at 2 p.m. the same day.)

AFTERNOON SESSION

The Chairman. The committee will come to order. We have been 

having hearings on H.R. 4972 and related bills. The witness this 

afternoon will be Mr. Charles Conlon, National Association of Tax 

Administrators, of Chicago, Ill.

Mr. Conlon, will you come to the witness stand. You have a prepared statement. If you wish to have it inserted in the record, in will 

be inserted in total and you may summarize it, or you may read it.

STATEMENT OF CHARLES CONLON, EX EC UT IVE SECRETARY,

NATIO NAL ASSOCIATION OF TAX ADMIN ISTRAT ORS , CHICAGO,

ILL.

Mr. Conlon. Thank you, Mr. Chairman. I would like to refer to 

a number of parts of it, if I may.

(The prepared statement of Air. Conlon follows:)

Sta te men t of Charles F. Con lo n, E xecutive Secretary, Nation al Associat ion

of T ax Administra tor s

I am Charles F. Conlon, Chicago, executive secretary of the National Association 

of Tax Administrators, and I presen t this statement in opposition to H.R. 4972 

and 12 identical bills on behalf of the tax departm ents of the States of:

Arkan sas Illinois Michigan

California Iow a Mississippi

Georgia Ka nsa s Neb rask a

Idaho Kentucky

The tax departments of these States oppose the hills first, because they would 

pu t any property owned by a common carri er sub ject to the I ntersta te Commerce 

Act in a special category for purposes of Sta te and local prop erty taxe s; and 

second, because these bills would establish a special inju nctive procedure in the 

Federal courts to review a ssessments of property owned by ICC c arriers and thus 

bypass existing adm inistrativ e an d ju dicial remedies by wh ich oth er pro perty ta xpay ers ar e hound.

PREFERRED STATUS FOR CARRIER PROPERTY

Paragraph 1 of the bills would have the effect of prohibiting the inclusion of 

any property owned by an ICC common c arrie r in a ny regularly authorized classification system except presumably at the lowest assessment ratio provided for 

any class.

This is a most imp orta nt point because the classification of prop erty fo r property tax purposes is alre ady auth orized by the constitution or st atu tes of several 

States an d is under consideratio n in others. The rapid increase in the burden of 

pro perty taxes since World W ar I I has renewed inte res t in the possibility of wider 

acceptan ce of a classified ra th er tha n a uniform prop erty tax system. One possible basis of classification t hat m ight be considered is tha t of t he owner-occupied 

residence versus business, commercial, or ren tal prop erty. This is supported on 

the g round that the owner-occupier of a residence must b ear the brun t of property 

tax increase s whereas the owne r of business or commercial p roperty can pass them 

along the same as any o ther cost.

Where classification is legally permissible and adopted, the property of ICC 

reg ulated carriers should be trea ted in the same m anner as the property of others 

in the same classification. Under these bills, however, ca rrier property would be 

frozen into a preferred status. Whethe r property should be classified, and how, 

is a matter of State policy and so long as the classifications a re reasonable, there 

is no w arrant for Federal intervention in this field.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 79

In passing, it should be noted tha t these bills include any property owned or used by a common carrier of persons or property subject to ICC regulation. They would apply to office buildings, hotels, resort property, oil and mineral interests, and other kinds of property coming under the general category of nonoperating property. Accordingly, if property is presently, or were by constitutional amend­ ment or statute to be classified by type or use, such a classification would not apply to similar property owned by or used by a carrier. To the extent tha t nonoperating property owned or used by a carrier would be given a special tax status under these bills, contrary to a general applicable State law, they are prob­ ably objectionable on constitutional grounds.

THE SP EC IAL IN JU NCTIV E PROCEDURE

The proposal to substitute a special injunctive procedure in the Federal courts for the administrative and review procedures now provided by State law raises two questions. The first one is whether there is really any necessity for estab­ lishing a new Federal procedure. The second concerns the exte nt to which the alleged discrimination against carrier property exists compared to assessments of 

all other property.

REMEDIAL PROCEDURES IN STATE COURTS

Boiled down to its essentials, the request for a special remedy in the Federal courts is based on the assumption that there is no speedy, effective remedy in the State courts to deal with cases of alleged discrimination in property tax assessments. Twenty years ago, this might have been said with some justifica­ tion but it is not true today. Where the issue has been presented, the courts of the several States have now practically without exception recognized the necessity of giving predominant consideration to the element of uniformity of assessment rathe r than to compliance with the legal standard. Consequently, specific relief is now granted by the courts in cases involving discriminatory assessments—where the taxpayer proves tha t his property is assessed at a higher ratio of its true value than the property of other taxpayers—even though the contested assessment is concededly less than the constitution or the statute calls for. In the following States, among others, there have been court deci­ sions where this principle of relief has been applied either directly or indirectly by the sanction given to assessment equalization prog rams: Alabama, Arizona, Connecticut, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Mary­ land, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Oregon, South Dakota, and pending in Tennessee 

(favorable lower court decision).

DISC RIMINA TIO N IN RAILROAD AS SE SS MEN TS

No one who is familiar with property tax assessment practices would deny tha t in many States assessments are not uniform over the whole range of proper­ ties taxed. This is a general problem and one by no means limited to common carrier property. Insofar as there is criticism based on the allegation tha t business property is unfairly assessed compared to residential property, it should be noted tha t railroad property constitutes a relatively small proportion of all business property. Locally assessed commercial and industrial real property amounted to $75 billion in 1961; State-assessed public utility property other than railroad property amounted to $18.7 billion in the same year while State- assessed railroad property was $5.9 billion. Of the total of $100 billion repre­ sented in these three property classes, about 6 percent was railroad property and this proportion would be even less if locally assessed personal property used in business were included in the total of the commercial and industrial property assessment figures. The special remedy proposed in the bills would thus apply only to a small proportion of the property involved in this general problem of unequal property tax assessments. The major premise of the argument for H.R. 4972 and similar bills is tha t railroad property is assessed in a discriminatory basis compared to other property. The existence of this discrimination is sought to be demonstrated by a comparison of the assessed values of railroad property, generally a t assumed legal standards, with the U.S. Bureau of the Census sales-asessment ratios of 

transferred properties by States in 1961.1

1

 Hearings, H.R. 736, before the Subcommittee on Tra nsp ort ation and Aeronautics, Committee on Int ers tat e and Foreign Commerce. Ju ly 28, 1964.
80 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

It is difficult, though, to accept this demonstration as proof of either the existence of or the extent of the discrimination alleged. Fir st of all there is no 

evidence which shows how railro ad property assessments compare with those 

of other businesses. Second, in the case of locally assessed property, the average level of assessment may be determined within acceptable limits by sales 

comparison methods because some types of property involved usually change 

hands frequently and sales prices and tax assessments can be compared. (Most 

of these sales, incidentally, involve residential property.) The property of 

carrier s and other public utilities is not subject to such a sales comparison test 

because public utility companies are very infrequently sold as going concerns. 

Thus while the assessment ratios applicable to property generally are based on 

objective standards derived from Bureau of the Census data, the assessment 

ratios attributed to the carrier properties are subjective. At the very least, they 

are not subject to the acid t est of the market as are the ratios with which they 

are compared. Moreover, it should be pointed out that th e Bureau of the Census 

sales-assessment ratios, and any other State or local assessment ratio studies 

which are based exclusively on sales of properties, are bound to have only a re latively small number of commercial and industrial properties in the sales sample. 

Actually, the sales-assessment ratio studies in the 1962 Census of Governments 

report show only 6 States where basic sales information was obtained for 25 

or more sample industrial properties. Also, it should be understood tha t the 

census survey was limited to locally assessed property and tha t no attempt was 

made to measure the relationship between locally assessed and State assessed 

property. This is explicitly stated in the census rep ort:

“The survey was limited to sales of real estate listed on local property tax 

rolls. No study of the relation between assessed value and market worth has 

been attempted for State-assessed property or for locally assessed personal 

property.2

What this all suggests is t ha t if the estimates of the ratios of railroad assessments to assessments on other property are to have any probative value, they 

must be tested preferably in some sort of adversary procedure, as to two fundamental points: (1) the basic full value appraisal of the property, and (2) the 

percentage of that full value which actually is put on the assessment roll.

A final point in this connection is the trend in property tax assessments on 

railroad property compared with public utility property other than railroad and 

with all locally assessed property.

The Census of Governments property tax studies indicate that between 1956 

and 1961 State assessed railroad property valuations declined moderately while 

all other assessments rose substantially : 3 45

[In millions of dollars]

1956 1961 Percent

change

Sta te assessed railroad p rop erty____________________ _____ $6,546 

13,354 

249,986

$5, 939 

18,754 

327, 783

—9.3 Sta te assessed property of other public u ti li ti e s___ _______ +40.4 All locally assessed property____________________________ +31.1

Much of the increase in asessed valuations of nonrailroad utility property and 

locally assessed property is the result of new investment. However, the railroads 

also made substantial investments in new plant and equipment—in the 5 years 

from 1956 to 1960 inclusive, these amounted to $5.3 billion? It is significant, 

therefore, that in a period of improving economic activity featured by generally 

rising prices, the assessments of railroad property by State agencies showed not 

only a relative but an absolute decline.

Incidentally, between 1961-62 and 1963-64 the annual percentage increase in 

expenditure for plant and equipment by the railroad industry was higher than 

for any other industry and about three times the average annual increase for all 

industries combined.6

2

 C en su s of G ov ernm en ts, 196 2. “T ax ab le P ro pert y V alue s,” p. 9.

3

 C en su s of Go ve rnmen ts, 195 7, “Tax ab le Pro pert y Value s,” ta ble 2 ; sam e. 1962, ta bl e 2.

4

 Su rv ey of C urr en t Bus iness, Ju ly 1959. p. 30, ta ble V -7 ; Sep te m be r 1961, p. 6, ta bl e 1.

5

 S ur ve y of C urr en t Bus iness, M ar ch 1965, ta bl e 1, p. 1.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 81

ADMINISTRATIVE ACTIONS TO PROMOTE UNIF ORM ITY

The tax departments of the several States are awar e of the need to make all property tax assessments conform to the stand ards of uniformity required by the c onstitutions and statu tes of the States and have done much to forward such a program. For example, working through the National Association of Tax Administrators, the tax departments of the several State s have formulated stan dard procedures for the conduct of sales-assessment rati o studies and these are now widely used." This is a most-important activit y and one t hat has done much to improve the degree of uniformity achieved in the assessment process generally. Actually, the effectiveness of the judicial remedy in discrimination cases stems directly from the use of assessment ratio studies because the courts 

accept these findings. In the more specialized public utili ty assessment field, a committee of this asso­ ciation has formulated extensive procedures for the valuatio n of public utility property including railroad pro pe rty ;* 7 it has also recommended standa rds to be followed in allocating an appr opriate portion of the tax payer's property to each 

State in which the enterprise o perates.8

The figures shown earlier comparing the trends in railr oad and other public utility assessments for property tax purposes between 1956 a nd 1961 demonstrate tha t these programs have had wide acceptance and tha t they have been effective.

IMPACT OF THE BILLS ON PROPERTY TAX ADMINISTRATION

In appra ising H.R. 4972 in the light of these developments, some consideration must be given to its potential impact on the wrhole process of property tax administration. As a practical matter, progress toward an acceptable standa rd of uniformity has to be gradual. The predominant position of t he property tax in the State-local revenue system (i t accounts for almost half of all State and local taxe s) is such that to attemp t to remedy all inequities overnight, so to speak, would be disastrous to local government finance. This is something, it should be emphasized, which involves not only public utility property but all types of prop- ery : Business and nonbusiness; r eal an d p ersonal; tangible and intangible; resi­ dential. farm, vacant lots, commercial and ind ust ria l; inventories, work in prog­ ress, stock in trade, and such ot her classifications and types. If property under one tyi>e of ownership or use is singled out for special treat­ ment under a Federal s tatute , ther e is no reason to deny similar treatm ent in the long run to any owner of proi>erty th at is used in or becomes the subject of trade in inte rsta te commerce. Such a policy would be tantamoun t to Federal super­ vision of the local property tax through Federal judicia l procedures, a fimction for which the Federal judiciary has no i>articular qualifications and. judging from the statements appearing now and then in U.S. Supreme Court opinions, no desire to undertake. On the other hand, the States and local governments have achieved a good deal of improvement in this field in recent years and the prospects are tha t they can do a great deal more i f the responsibility and means for dealing 

with the problem are left in their hands.

SOME SPECIFIC OBJECTIONS TO THE BILLS

There are several points a bout the bills which should be singled out for men­ tion. One has been suggested already , that they apply to all property owned or used by a carrier whether or not th at property is operating property used in the regulated business and not merely investment property. Second, in those instances where relief is sought directly against the State agency making the property tax assessment, these bills raise a constitutional question because under the typical State statu te authorizin g suits for refunds and reviews, the consent to sue the State is limited to proceedings in State courts. This difficulty, how’ever, would not arise in connection with suits against 

local governments.

8

 “Guide for Assessment-Sales Ratio Studi es,” repo rt of the Committee on Sales Ratio Data of the National Association of T ax Adm inistrators.

7

 “ Appr aisal of Railroad and Oth er Publi c Utility Prop erty for Ad Valorem Tax Pu r­ poses.” rep ort of the Committee on Un it Valuation, National Association of Tax Administrator s.

8

 “R eport of the Committee on Railroa d Allocation,” Nationa l Associa tion of Tax 

Adm inistrato rs.
82 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

The third, and, from a p ractical standpoint the most important point about this 

proposal, is that what it really does is to clothe the Federal courts with a veto 

power over State property tax assssment procedures with consequent adverse 

effects on local budgets. This follows because the remedy provided is an injunction against the collection of any tax adjudged to be invalid on the basis of the 

crite ria laid down in the bill. If tax collection were enjoined, it would mean 

tha t substantial amounts of revenue anticipated in local budgets would not be 

available for expenditure during the tax year as expected. Such a situation 

could be extremely serious for small- and medium-sized units of local government, including school districts, and particularly those operating under tax rate 

and debt limits. This is in contrast to the procedure ordinarily involved in the 

States which requires the payment of the t ax on the due date under protest. If 

it is subsequently determined that the assessment should be revised, the difference in the tax is refunded to the taxpayer. In the meantime, though, the 

operations of local governments are not jeopardized by the withholding of the 

entire amount of the tax.

It is, of course, possible th at once the Federal court takes jurisdiction of a case 

on the basis authorized in these bills, i t will proceed to revise the assessment 

itself and fix the amount of tax due in each local jurisdiction where the carrier 

property is situated. Whether such an intrusion by the Federal courts into the 

ordinary property tax assessments and review procedures historically reserved to 

the States and localities is within the general jurisdictional powers of Federal 

courts is not clear. At any rate, it certainly does not appear desirable. Aside 

from this point, there is the furth er objection tha t the whole review process 

w’ould then be channeled through the Federal system—to the circuit courts of 

appeal and the U.S. Supreme Court—rath er than through the administrative 

review agencies and courts of the States. The valuation and assessment of 

utility properties is a specialized field and the main function of the courts is to 

see that procedures are reasonably directed to obtaining a fair appraisal and 

assessment.

■ULTIMAT E EF FE CTS OF T H E H IL LS

If there is an effective remedy in the State courts to deal with cases of alleged 

discrimination, and we think it is quite clear tha t this remedy does exist in 

fact, what purpose do these bills serve? For one thing, they might serve as a 

sort of bargaining lever in the assessment process, the ever-present implication 

being tha t if the assessment is not satisfactory, it will be taken before a Federal 

tribunal for review under the injunctive process. Under the bills, the taxpayer 

has that option. This is not conducive to the continuance of a sound and equitable 

tax assessment process and it would not be good public policy to afford one 

group of taxpayers special remedies above and beyond those afforded to other 

taxpayers.

Even if the special remedial provisions in the bills were not utilized, they 

would have another and possibly more far-reaching effect; namely, the freezing 

of the status of carrier-owned or used property so as to render it immune to any 

system of classification now on the books or which might be adopted in the future by a State. It would likewise not be good public policy for Congress in 

effect to enact an insurance policy against changes in State property tax policy 

that the changing times might render desirable.

State tax agencies joining in this statement : Tax Division of Public Service 

Commission, State of Arka nsas; State Board of Equalization, State of California : Department of Revenue, State of Georgia; State Tax Commission. State 

of Idaho; Department of Revenue, State of Illinois; State Tax Commission, 

State of Io wa: Department of Property Valuation, State of Kansas; Department 

of Revenue. Commonwealth of Kentucky; State Tax Commission, State of 

Michigan; State Tax Commission, State of Mississippi; Office of the Tax Commissioner, State of Nebraska.

Mr. Conlon. My name is Charles Conlon. I am executive secretary 

of theNational Association of Tax Administrators, from Chicago.

The National Association of Tax Administrators is an organization 

maintained by the tax revenue departm ents of several States on a 

cooperative basis to cooperate in the handling of various technical, 

legal, administrative, and other problems in the research in the revenue field, and the like. It is strictly an association maintained by 

the revenue departments.
TAX ASSESSME NT S ON COMM ON CAR RIER PR OP ER TY S 3

I present this statement on 4972 and identical bills on behalf of the tax departm ents of the States of Arkansas, California, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Michigan, Mississippi, and Ne­ braska. The tax departments of these States oppose th e bills; first, because they think they would put any property owned by a common carrier subject to the interstate Commerce Act in a special category for purposes of State and local property taxes; and, secondly, because the bills would establish a special injunctive procedure in the Federal courts to review assessments of property owned by ICC carriers and thus bypass existing administrative and judicial remedies that are al­ ready provided in the States and by which remedial procedures other 

types of property-tax payers are now bound. As to the first point, I think paragraph 1 of the bills would have the effect of prohibiting the inclusion of any property owned by an ICC common carrier in any type of classified property tax system except, presumably, if it were included at the lowest assessment ratio that 

was set up under that system. Now concededly this is a matter of some question, the way the bill is framed, because it does refer to all other property; and it is not clear whether that means the average ra tio of all other property or the aver­ age ratio of the most common class of property, or the highest ratio of any type of business property. There are a number of choices 

that can be made in interpreting the bill in th is respect. Now, I think this point about classification is a rather important one, because property classification is already authorized by the con­ stitution or statutes of a number of the States and it is under consid­ eration in others. I think the reason it is under consideration in other States is that property taxes have gone up a great deal since World War II . The renewed interest in this possibility of the acceptance of a classified rather than a uniform property tax system arises because it affords the possibility of making a classification, for example, between the owner-occupied residence on the one hand, and various types of 

business, commercial or rental property on the other. The reason for this appeal is t ha t the owner-occupier of a residence must bear the total increase of any property tax increases, whereas the owner of a business or commercial property does have the oppor­ tunity of passing these tax increases along in the same way he can pass along any other type of cost. This is not true so far as the home- owner is concerned. 1 think this particular point has probably prompted some of the special exemption legislation tha t we see being enacted in the States now; for example, special property tax treatment for those people over 65, subject to some sort of means test. The general position of these States is that, where classification is legally permissible and is adopted by statute, the p roperty of an ICC railroad or carrier ought to be treated about the same way as the prop­ erty of any other person, corporation or business in tha t same general classification. However, as we understand the bill, carrier property would actually be frozen into some sort of preferred status. Ihe State’s view is that, whether property should be classified and how it should be classified is a matter of State policy subject to the one pro­ viso: namely, that these classifications be reasonable. If these classi­ fications are reasonable, it is our position there is no warran t for Federal intervention to prevent any of the States from adopting a
84 TAX ASSESSME NTS ON COMMON CARRIER PROPERTY

property classification system that seems appropriate to the needs of 

that State.

In passing, I would like to comment on a point tha t was raised 

this morning: namely, tha t these hills would apply to any property 

owned or used by a common carrier subject to IC C regulation. It does 

not make any difference whether this property is an office building, 

hotel, or resort property, or oil or mineral property, for example. Any 

type of these nonoperating properties would be subject to whatever 

relief is provided by the bill.

Now if property is properly subject to classification, or if by constitutional amendment or statute in the State it were made subject to 

classification, this type of classification simply would not apply to 

similar property owned or used by a carrier. “Owned or used’’ is the 

term in the bill. To the extent tha t nonoperating property owned by 

a carrier or used by a carrie r would be given a special type of tax status 

under these bills contrary to the provisions of the generally applicable 

State law, I should say they are probably objectionable on constitutional grounds.

I would suggest a difference of opinion there with Dr. Sanders, in 

that it seems to me that Congress has no warrant constitutionally in 

trea ting the property of a railroad as an investor differently from any 

other type of investor so far as this so-called nonoperating property 

is concerned.

Now as to this special injunctive procedure that is provided in the 

bill, I think it raises two points: One is, whether there is any need 

to set up this new Federal procedure; and the second is—and I think 

this is quite important—the extent to which this alleged discrimination exists as to common carrier property. At first glance, it seems 

to me that the request for a special remedy in the Federal court proceeded from the assumption tha t there wasn’t any speedy effective 

remedy at law in the S tate courts to deal with cases of alleged discrimination. But I apprehend from the testimony tha t has been previously 

given in respect to the bill that this fact of the presence or absence of 

a speedy or adequate remedy is immaterial in th is connection.

The proposal here is t ha t the Federal remedy be provided by Congress, whether or not the re is an adequate remedy through the administrative or judicial processes of a State. I think if you had said 20 

years ago tha t there was not an adequate remedy in these assessment discrimination cases in the State court, this could be said with 

some justification. But where this kind of issue has been presented 

in recent years, and I should say since World War II , the courts of 

the States where this issue has come up have almost without exception 

recognized the necessity of giving predominant consideration to the 

element of uniform ity of assessment rath er tha n to compliance with 

the legal standard, whatever tha t may happen to be, whether tha t 

is market value, 60 percent of market value or what have you.

Consequently, when the court recognizes the predominant element 

of uniformity, it will give special relief in those cases where the ta xpayer proves th at his property is assessed at a higher ratio of its true 

value than the property of other taxpayers, even though the assessment about which the taxpayer complains is concededly less than the 

constitution or statutes of the State call for.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 85

There have been a number of States—and I have listed them here— 

in which this principle of the predominant unifo rmity has been recognized and relief has been granted. In that connection, I would remind the committee tha t in those cases where there is no effective, 

adequate remedy in State courts or through State administrative procedures, t hat the Federal courts are now open to an adjudication of 

these questions in the absence of any new legislation whatsoever.

Now for a point or two on this matter of discrimination. Certainly 

no one who is familiar with property tax assessment practices will 

deny that in many States assessments simply are not uniform over 

the whole range of properties taxed. But I would like to emphasize 

this is a general problem, and it is one th at is by no means limited to 

common carrier property. Railroad common carrier property is a 

species of business property. Ins ofa r as you hear criticism about the 

fact that in some cases business property is unfairly assessed compared, for example, to residential property, I th ink we should be aware 

of just what the proportions involved here are. Locally assessed commercial an d industrial real property amounted 

to $75 billion in 1961, which is the latest year for which official nationwide census figures are available. State-assessed public utility property other than railroad property in the same year amounted to $18.7 

billion. State-assessed railroad property amounted to $5.9 billion. 

Now the total of those three figures that I have given you is about a 

hundred billion dollars. So we are talkin g about 6 percent of the 

business property assessed locally and at the State level, and I think 

this proportion would probably be even less if you were able to count 

in the local personal property—locally assessed personal property tha t 

is used in business. There are no adequate nationwide figures on tha t 

particular point.

So, my point here is that the special remedy tha t is provided in the 

bill actually would deal with only a very small proportion of all the 

property of a business type that is involved in this general problem 

of unequal property tax assessment. Now it seems to us tha t the 

major premise underlying the proposal in II.R. 4972 is that railroad 

property, as such, is assessed on a discriminatory basis compared to 

all other types of property. It is sought to show this by comparing 

the assessed values of railroad property which are generally assumed to 

be at the legal standard provided by the statute with the Bureau of the 

Census sales assessment ratios of transferred property by States in 

1961.

I take it from the testimony t ha t has been presented here th at these 

later figures have been brought up to date to cover the year 1964, but 

in general this is the procedure used here. Now I thin k it is rather 

difficult to accept this demonstration of proof of either the extent or 

the fact of the discrimination. Fi rst of all, may I call to your attention tha t there is not really any evidence in the picture which shows 

how railroad property tax assessments compare with property tax 

assessments on other types of business. Secondly, in the case of locally 

assessed property, the average level of assessment may be determined 

within fairly acceptable limits by sales comparison methods, simply 

because the types of property that are mostly involved here change 

hands frequently, so that you can compare the sales price figures with 

the figures on assessment rolls. So far as those types of p roperty are
86 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

concerned, it is possible without a great deal of difficulty to obtain a 

fairly reasonable figure of the relationship between the assessment and 

the value of the property.

But here the property of carriers and other types of public utilities 

are not subject to this kind of salesman comparison test for the simple 

reason they are very, very infrequently sold as going concerns. Thus, 

while the assessment ratios that are applicable to property generally 

in the census figures are based on objective standards derived from the 

census data and from carefully prescribed procedures, the assessment 

ratios that are attributed by the proponents of the bill to the carrier 

properties, I think, may fairly be said to be somewhat subjective. 

Certainly at the very least you can say of them tha t they have not 

been subjected to the acid test of the m arket process, as are the ratios 

with which they are compared.

I think it ought to be pointed out also that the sales assessment 

ratios that are produced by the Bureau of the Census and those 

produced by State and local studies—and these are conducted rather 

broadly now as a common feature of property tax administration— 

are based exclusively on sales of property; you don't get into the 

assessment ratio computation unless the property happens to be sold. 

So, by virtue of this fact, these official assessment ratio studies are 

bound to have only a small number of commercial or industrial 

properties in the sample. Actually, if you look at the census of 

governments report, you will find that there were only 6 States in the 

1962 census where basic sales data was obtained for even 25 sample 

industrial properties th at were used for the purpose of putting up 

these ratios.

This is a very natural thing. These are types of property tha t 

don’t sell frequently. They don't sell nearly as frequently as houses 

and acreage. I think it also ought to be understood that this survey 

of assessment ratios was limited to locally assessed properties, and 

that no attempt was made by the census to measure the relationship 

between locally assessed and State-assessed properties. This is explicitly stated in the census report.

If I may, I will read exactly what it says about it:

The survey was limited to sales of real estate listed on local property tax 

rolls. No study of the relation between assessed value and market worth has 

been attempted for State-assessed property or for locally assessed personal 

property.

Now what all this suggests, I think, is that if the estimates of the 

ratios of railroad assessments to assessments on other property are to 

have any really probative value, you must test, preferably m some 

kind of adversary procedure, at least two points: No. 1, What is the 

basic full value appraisal of tha t property; and, No. 2, W hat is the 

percentage of that basic full value which is actually put on the assessment roll. This is the key to the whole thing. If you do not have 

those two facts determined on a convincing basis, then the relationship 

to other property locally assessed simply does not hold for comparative 

purposes.

Now I think a final point along this line t hat I might call to your 

attention is the trend of railroad property tax assessments compared 

with assessments on public u tility property other than railroads, and 

also with all locally assessed property. Now here again you can look
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 87

at official figures. The census of governments property tax studies 

for 1957 and 1962 dealing with assessments in the previous year in each instance, show tha t between 1956 and 1961 St ate-assessed rail­ road property values declined moderately, while all other assessments 

rose substantially. I have the figures in my statement here. In 1956 State-assessed railroad property amounted to $6.5 billion; in 1961 it amounted to $5.9 billion. Thus in those 5 years it went down slightly more than 9 percent—the assessed value of railroad property State assessed went down 9 percent. St ate-assessed property of other public utilities rose from $13.3 bililon to $18.7 billion, or 40 percent. 

And all locally assessed pro perty went up 31 percent. It is true that much of this increase in the assessed valuation of the nonrailroad utilities and the locally assessed property is the result of new investment. However, it is also clear that in this period the railroads made substantial investments. In the 5 years inclusive, 1956 to 1960, these new investments by railroads in pla nt and equpiment amounted to $5.3 billion. Therefore, you have here a period when you had improving economic activity; you had generally rising prices, and you will find that the assessment of railroad property bv State agen­ cies showed not only a relative, but an absolute, decline. You can point tha t up a little hit more by looking at the 1956 State railroad property assessment, $6.5 billion, the addition in the next 5 years of $5.3 billion of new investment, and you end up in 1961 with a lower figure than you started with; as a matter of fact, a figure not greatly more than 

the total amount of new investment in that 5-year period. Incidentally, between 1961-62 and 1963-64 the annual percentage 

increase in expenditure for plant and equipment by the railroad indus­ try was higher than for any other industry. I think this all goes to show th at the problems of the lack of uniformity in property tax as­ sessments is recognized, certainly it has been recognized in the case of 

the railroads. The tax departments of the several States are aware of the situation and they know that work needs to be done to make all property tax as­ sessments conform to the standard of uniformity that is required by the constitution or statutes of the States, and they have done much 

to forward such a program. For example, working through this association the tax departments of the several States have formulated standard procedures for the conduct of sale assessment ratio studies, and these are now widely used. As a matter of fact, these standards tha t were formulated by the tax departments of the several States were actually used by the Censiis Bureau, so I think that gives you some warrant of the fact that this 

is satisfactory. This is a very important thing. It has done much to improve the 

degree of uniformity that has been achieved in the assessment process generally, because it is by means of these assessment ratio studies— on the basis of these pro perty tax assessment ratio studies—that the judicial remedy in discrimination cases has been made available. This improvement stems directly from the fact tha t we now have the means and we are using it effectively to tell whether and to what extent assessment of property that are subject to tha t process are not 

uniform.
88 TAX ASSESSM ENTS ON COMMON CARRIER PROPERTY

Now in the more specialized public u tility assessment field, a committee of this association has formulated extensive procedures for the 

valuation of public utility property. Mr. Travis referred to those 

this morning. Also, it recommended standards to be followed in 

allocating an appropriate portion of the taxpayer’s property among 

the taxing districts in each State in which the enterprise operates.

As an indication that these types of activities have been effective, I 

refer you again to those figures on trends in railroads and other public 

utilities assessments tha t I mentioned a moment ago.

The point that is of concern to the S tate tax officials about 4972 and 

the identical bills before the committee is, that in considering these 

you must give some thought to the potential impact of specialized 

treatment for a particu lar type of property on the whole process of 

property tax administration. As a practical matter, progress toward 

an acceptable standard of uniformity simply has to be gradual. The 

predominant position of the property tax in the whole State-local 

revenue system—by the way, property tax accounts for one-half of 

all the tax revenue in the combined State-local tax system, this is 

speaking nationally, the proportions will vary from State to State— 

speaking nationally, this in an indication of just how formidable a 

property tax is is as a component of the combined State-local revenue 

system.

It is so important, if you -were to attempt to remedy all the inequities 

that exist, to do so overnight, the result might be disastrous to local 

government finances. Now this is something, I think we should 

emphasize, that involves not only public utility property but it involes all types of property subject to ad valorem taxes—both business 

and nonbusiness prope rty; real and personal prop erty; tangible and 

intangible; residential, farm, vacant lot. commercial, and industrial 

inventories; work in progress; stock in trade, and other classsifications 

of types of property—they are all mixed up in this particu lar picture.

If property under one type of ownership or one type of use is 

singled out for special treatm ent under a Federal statute, as I think 

was suggested by a committee member this morning, there probably 

would not be any reason for denying similar treatment in the long 

run to any owner of prop erty that is used in or becomes subject to 

trade in interstate commerce. If you get moving in that direction, 

this is tantamount to Federal supervision of the local property tax 

system through Federal judicial procedure. I think this is a function 

over which the Federal judiciary has certainly no unique qualifications.

Judging from the statements that appear in the courts now and then, 

it is something th at they are not particularly desirous to undertake. 

On the other hand, working through the procedures and remedies and 

with the tools tha t have been utilized in the procedures that have 

been established in the past years, I think the States and local governments have achieved a good deal of improvement already, and the 

prospects are that they can continue to do so and do a good deal more, 

if the responsibility and means for dealing with the whole problem 

remain in their hands. The possibilities are not so good if they deal 

with part of the property and the Federal Government deals with 

some other part.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 89

Now I would like to mention a couple of points about the bills themselves, from the technical standpoint. One, suggested already, is tha t 

the bills apply to all property used by a carrier, whether it is operating 

properly or not. Secondly, I think that, despite what has been said, 

in those instances where relief is sought directly against the State 

agency that makes the property tax assessment, th at these bills raise 

a constitutional question where you are dealing with taxpayers who 

are not organized in the State where the remedial action is begun. 

This is because of the 11th amendment—the judicial facilities of the 

United States are not available in suits against States unless they consent to be sued, and none of the States do, as you know, consent to be 

sued in the Federal courts with respect to property tax assessments. 

This is an ordinary feature of the remedial provisions provided. 

Where you pay your tax and you pay it under protest and you challenge the assessment, then tha t challenge or request for refund, or 

whatever it may be, must be made in a State court.

Under these bills, tha t remedy would be in the Fede ral court.

The third, and from a practical standpoint really the most important point about the bill, is that what it really does is clothe the 

Federal courts with a sort of veto power over the State property tax 

assessment. These could have some adverse effects on the local budget. 

I think this follows, because the remedy provided is an injunction. It 

is an injunction against the collection of any tax t ha t is adjudged to be 

invalid on the basis of the criteria laid down in the bill.

Now if tax collection is enjoined, it means t hat the money anticipated in local budgets in th at year would not be available for expenditure durin g that tax year. Such a situation would be an extremely 

important one for a very small, medium size unit of government, including local school districts and rural school districts, particularly 

those which operate under tax rate and tax debt limits. In many jurisdictions the localities are right up against the tax r ate limitations now.

This remedy is quite different from the procedure tha t is ordinarily 

involved in contesting a tax assessment where the common rule is t ha t 

you pay the tax and pay it under protest and in the meanwhile the 

local jurisdiction has the money. If it is subsequently found you are 

correct, then you get the money back. But in the meantime, in contrast to what these bills provide, the operations of local governments 

are not jeopardized by the withholding of either all or part of the tax.

Now I agree, and I think my colleagues will, that it is quite possible 

that if a Federal court takes jurisdiction of one of these cases, under 

the procedure set up in the bill, it will proceed to revise the assessment 

and to fix the amount of tax due with each local jurisdiction where the 

carrier property is situated. Now this raises a dilemma. I think 

Professor Sanders touched on it this morning in his reference to the 

Moses Lake case where the U.S. Supreme Court said it was not the 

function of the Federal court to assess the p roperty in place of State 

agencies or local agencies.

I am not going to argue the point whether this intrusion by the 

Federal courts into the tax assessment process—or the tax review 

process, which is one that is historically reserved to the States or 

localities—is within the general jurisdictional powers of the Federal 

court. At any rate, I would make the point it does not seem desirable 

to do so. I do not see how in one of the proceedings contemplated by
9 0 TAX as se ss men ts on common car rier pro perty

H.R. 4972 a Federal court could refrain from finding out what the 

value of th at property was, at what proportion of its true value it was 

put on the tax rolls, and at what proportion of its true value other 

property in the jurisdiction was taxed, because, without doing that, 

there is no way by which the Federal district court could determine the 

amount of the illegal assessment; in other words, that part of the 

assessment which is attributed to the type of discrimination that is 

described by the proponents of the bill.

Therefore, you do not avoid this process of finding out what the 

value of the property is and what the assessment ratio is, and what 

the assessment of other properties are by transferring the review procedure over to the Federal court. The Federal court would have to do 

the very things th at have to be done now in State administrative agencies or State, courts in order to make this kind of determination. It 

is a factual determination. I think there is no way to shortcut the 

determination of the facts.

Furthermore, if you are in the Federal courts, if you don’t like the 

decision of the Federal courts, your appeal is going to be channeled 

throu gh an entirely different review process from that now followed 

where you go from the district or county court to an intermediate a ppellate court and the State supreme court, and then, if there are any 

Federal questions, to the U.S. Supreme Court. When you start in 

the U.S. district courts, you will go from the district court to the 

courts of appeal, and then to the U.S. Supreme Court, and bypass 

whatever administrative or judicial machinery is provided by the 

State.

If you concede—and I think the proponents of the bill do concede— 

that there is an effective remedy, at least in many States, for this type 

of situation, what real purpose is served by the bill ? I think certainly 

the enactment of the legislation serves as a sort of bargaining lever in 

the assessment process; because, if the taxpayer can go into either 

the State court or State administrative agency, or the Federal court, 

I think that the implication is going to be tha t if they don’t like the 

assessment here they will take it before a Federal tribunal for review 

under the injunctive process.

Under the bill, the taxpayer would have th at option. He could go 

to the Federal court, or State court. He can exhaust administrative 

remedies or choose not to do so. He has that kind of option. I think 

this is not conducive, to the continuation of sound, equitable tax assessment procedure, and I think that it would not. be good public policy 

to give one group to taxpayers a special remedy above and beyond 

those accorded to other taxpayers who have the same type of property—namely, business taxpayers generally.

Also I would suggest that even if the remedial provisions in these 

bills were not utilized, even if you found it was unnecessary to go into 

the. Federal courts and you obtained whatever relief you thought you 

were entitled to administratively or in the State courts, you still would 

have this prohibition against, classification which would, in effect, 

freeze the status of carrier-owned property so as to render it immune 

to any type of classification system that is now on the books or which 

might be adopted by any State in the future.

I think it would not be good public policy for Congress in effect to 

sort of provide an insurance policy against changes in State property
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 91

ta x policy th at one aspe ct or an othe r of the ch an ging tim es mi gh t 

rend er desirable to the legislatu re.

I h ave lis ted on th e back o f t hi s statem ent , M r. Ch airm an , the a gencies o f the St ate s, the official nam e of the p rope rty tax assessment agencies th at join in thi s sta tem ent. I than k you fo r the privi leg e of 

presen tin g thes e comm ents on th ei r beh alf. An d, if I ma y, I would 

like to also file w ith the c ommittee f or the reco rd an ad ditio na l sta teme nt s ub mi tte d by Mr. E ar l Ber ry , dir ector o f the tax div ision o f the 

Arkan sas P ub lic Service Comm ission. I f I may.

Th e C hairm an. W ith ou t ob jection, it m ay be included in the record.

Mr. Conlon. Th ank you, sir.

(Mr. Ber ry 's statem ent fo llo ws:)

Statement of Earl Berry, Director, T ax Division, Arkansas P ublic Service

Commis sion

The Tax Division of the Arkansas Public Service Commission is charged with the responsibility of assessing for ad valorem tax purposes all carriers engaged in interstate commerce operating for hire within, into, from, or through the State of Arkansas. The tax division wishes to express opposition to the legislation proposed in II.R. 4972 and other identical bills dealing with discriminatory property tax assessment against common carriers. We would call attention first to a rticle 16. section 5, constitution of Arkansas. 1S74, which provides: “All property subject to taxation shall be taxed according to its value, that to be ascertained in such manner as the general assembly shall direct, making the same equal and uniform throughout the State. No one species of property from which a tax may be collected shall be taxed higher than another 

species of property of equal value * * *.” Section 84-103, Arkansas Statutes, 1947. annotated, as amended, provides that the public service commission shall determine and fix the ratio of assessed value to full market or actual value, and that all utility and carrier property assessed by the tax division shall be assessed at the per centum fixed by the public service commission. It further directs the public service commission to direct the county assessor, the county equalization board, and the county courts of the various counties to assess all property locally assessed at the same per centum of full market or actual value as that property assessed by the tax division. The Arkansas Public Service Commission has since 1951 ordered and directed tha t all property assessed by the tax division shall be assessed at 20 percent of its full marke t or actual value. It has also directed the assessor, the county equalization board, and the county cour ts to assess local property at 20 percent. In 1955. the General Assembly of Arkansas, by Act 153 of the 1955 legislature, provided for a complete reappraisal and reassessment of all property in Arkansas. This act has been amended by subsequent legislation which requires all local property to be assessed at 20 percent of its full market or actual value on penalty of losing a pro rata part of State revenues going to the various taxing units of the State if such taxing units fail to reach the required 20 percent. This legislation also requires the Assessment Coordination Division of the Arkansas Public Service Commission to conduct annually a survey to determine at what per centum property is assessed in the various taxing units. It requires a 3 percent sample of the various categories of property, both real and personal, in each taxing unit of the State to ascertain whether or not such property is assessed at 20 percent of its full market or actual value. A very few’ taxing units in the State of Arkansas have failed to comply, and these have been 

penalized by withholding of State funds. It is the considered judgment of the tax division that there exists little dis­ crimination against common carriers engaged in interstate commerce in Arkansas. It is further the judgment of the tax division that such discrimination, if such there be, could be eliminated through proper administrative procedures if used, and if not used, by court action in the State courts of Arkansas. Under provisions of (A) section 25-A, the expression t hat a value which bears a higher ratio to the true market value of such property than the assessed value of all other property in the taxing distric t subject to the same property tax levy bears to the tru e market value of all such property raises the question as to
92 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

whether or not such discrimination could be charged and pen alty invoked if it 

could be determ ined that any one species of prop erty in the given taxin g distric t 

were assessed at as high or hig her ratio than the carri er prop erty.

The tax division opposes this legislation because there is no clear-cut procedure 

set out in the legislation to say who is to determin e and wh at method is to be 

used to determine whether or not such discriminatio n exists. We oppose this 

legislation because various State s define fair market or actua l market value in 

different ways, and it is not cle ar the basis th at the Feder al court will use in 

determining the fair market value.

It is our firm conviction th at the prop erty tax is a matter delegated to the 

States by the C onstitution of t he United States, and, as such, should be reserved 

to the States without Federal interfere nce, unless such taxa tio n can be clearly 

shown to violate the In terstate Commerce Act, and by such violation, place an 

undue and unreasonable burden on intersta te commerce. Such legislation offers 

serious challenges to Sta te and local governments in financing State and local 

governments. It appears, furth er, th at such legislation would clothe the F ederal 

cou rts with the responsibility of evaluating, appraising, and assessing property 

which is not, in our opinion, a fun ctio n of the Fe deral judiciary .

In conclusion, in view of the potential dangers to Fed era l-State relationship 

we strongly recommend th at H.R. 4972 and other identical bills be given an 

unfavorable recommendation by the Committee on In terstate and Foreign Commerce of the United States H ouse of Representatives.

The Chairman. Thank you very kindly for coming here and arivinsr 

us your views, Mr. Conlon.

The l>ells have rung. I assume it is for record vote in the House. 

We have a vote coming up, an automatic vote. So we will have to adjourn at this time. We will recess and come back at 3:15.

I don't know if we are going to be able to finish with the witnesses 

this afternoon or not. We may be able to come back. It is our intention now to return at 3:15. If there is some other business of the 

House tha t precludes our coming back, we will have the clerk notify us. 

you-.

With th at u nderstanding the committee will adjourn until 3 :15. At 

tha t time, if you will, return fo r questioning.

Mr. Conlon. Yes, sir.

(Whereupon, the committee recessed to reconvene a t 3:15 p.m. of 

the same day.)

The Chairman. The committee will come to order.

As we recessed Mr. Conlon was the witness. Mr. Rogers, do you 

have any questions of Mr. Conlon ?

Mr. Rogers of Texas. Yes, sir, Mr .Chairman.

Mr. Conlon, I note tha t you say you are executive secretary of the 

National Association of Tax Administrators.

Now, do you appear here as spokesman for the association?

Mr. Conlon. No, sir. I am appearing at the request of these 

States whose tax departments I have enumerated to present this statement of their views, not for the National Association of Tax Administrators. The association lias had no occasion to take any policy 

view on this kind of proposal.

Mr. Rogers of Texas. Then, are you employed by these several 

State s that you listed here ?

Mr. Conlon. Indirectly ; yes, sir.

Mr. Rogers of Texas. You say indirectly ?

Mr. Conlon. I am employed by the National Association of Tax 

Administrators which itself is maintained by the revenue and tax 

departments of the several States.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 93

Air. Rogers of Texas. If you are not appearing here to pronounce 

their policy, I am at a loss to understand why you iden tify yours as being the executive secretary of that. Wha t difference does that make 

if you are not presenting their views ?

Air. Conlon. It does not make any difference.

Air. Rogers of Texas. Then it is not your intention to lead the committee to believe th at because you are executive secretary of the Na­ tional Association of Tax Administrators t ha t they agree with your 

pronouncement here ?

Air. Conlon. No, sir. If it will make this point any clearer to you, 

I suggest that we just excise that identification.

Air. Rogers of Texas. Now, you are paid to appear here by these 

different States ?

Air. Conlon. Not specifically fo r the purpose of coming down here 

today and appearing; no.

Air. Rogers of Texas. You are not running around the country free 

of charge. You are collecting a fee for working for these people, 

aren’t you ?

Air. Conlon. I work for the National Association of Tax Administrators.

Air. Rogers of Texas. Are they the ones who are paying you for 

appearing here today ?

Air. Conlon. Yes, the National Association of Tax Administrators. 

This is a part of the activity that is conducted on behalf and for the interest of the revenue departments of the several States and here are a substantial number who have asked that a statement representing their 

views be presented and I am doing so.

Air. Rogers of Texas. How many people are members of tha t 

association ?

Air. Conlon. It is not people, sir-----

Air. Rogers of Texas. I know, but how many groups ?

Air. Conlon. It is the revenue departments of the 50 States.

Air. Rogers of Texas. The revenue departments ?

Air. Conlon. Yes, sir.

Air. Rogers of Texas. Is th at a State group? Is each State represented or do you have a number of different members in some of the 

States ?

Air. Conlon. It is an agency arrangement. For example, in Ill inois it is the departm ent of revenue. In your State it is the comp­ troller’s office. The comptroller handles the major tax administration 

function there.

Air. Rogers of Texas. You do not have members such as a school 

district or irrigation district or water improvement district?

Air. Conlon. No, sir.

Air. Rogers of Texas. These are just States ?

Air. Conlon. Tha t is right.

Air. Rogers of Texas. Have you ever submitted the propositions 

expressed in the legislation unde r consideration; have you ever sub­ mitted this to a vote of your group, the membership of the National 

Tax Administrators group?

Air. Conlon. You mean to the revenue departments? No, I have 

had no occasion to.

60-6 61— 66------7
94 TAX ASSESSM ENTS ON COMMON CARRIER PROPERTY

Mr. Rogers of Texas. But your statement is on National Association of Tax Adm inistrators stationery.

Mr. Conlon. Tha t is right.

Mr. Rogers of Texas. That would lead people generally to believe 

that the National Association of Tax Administrators has taken some 

position on this bill ?

Mr. Conlon. If there is any question about that, I say “No,” they 

haven't. They have no occasion to. The National Association of 

Tax Administrators has a meeting once a year at which tax problems 

and the like are discussed.

If there is any business on matters of tax policy that they would 

like to express their opinion it is brought up. They have had no occasion to consider this specific bill.

Mr. Rogers of Texas. Haven’t they discussed this basic problem several times, Mr. Conlon ?

Mr. Conlon. Proposal for Federal legislation? I don’t recall, no, 

sir.

Mr. Rogers of Texas. Haven’t they discussed the problem though 

tha t the railroads have been discriminated against or let us say the 

common carriers have been discriminated against on tax policy?

Mr. Conlon. They have discussed the problem of discrimination on 

tax assessment, yes, sir.

Mr. Rogers of Texas. Have they said it should be fully investigated ?

Mr. Conlon. Yes, sir. They have done a good deal of it. Not only 

a good deal of investigation but I think I recited in my statement they 

have conducted programs tha t have been very effective in dealing with 

this situation.

Mr. R ogers of Texas. In 1961 did you not have some kind of meeting and the President was instructed to appoint a committee to go 

into this? 6

Mr. Conlon. Yes, sir.

Mr. Rogers of Texas. Was that committee ever appointed?

Mr. Conlon. Yes, sir.

Mr. Rogers of Texas. Has it filed its findings ?

Mr. Conlon. Yes, sir.

Mr. Rogers of Texas. What were those findings ?

Mr. Conlon. Well, it wasn't a series of findings as such. It was a 

report outlining the practices of the States or the opinions of the 

persons in the revenue departments of the States with respect to a 

series of questions involving property tax administration.

These have been summarized and tabulated and reported back to the 

association.

Mr. Rogers of Texas. Was n’t it concluded from tha t investigation 

tha t there was discrimination ?

Mr. Conlon. If you will pardon me, I will have to refresh my 

memory here. If I may read, this is a letter of transmittal bv the 

chairman of the committee to the president of the association making 

the report.

I am att ac hin g a ta b u la ti o n which su m m ar iz es th e re sp on sibi lities to th e 

qu es tionnai re rec eiv ed from 44 ju ri sd ic tions. Th ese ta b u la ti o n s includ e (o ), a 

q u an ti ta ti v e su m mary of it em s th a t re quir e g re at resp on se an d ap pe nd ix of 

item s re quir in g lon ge r resp on se . We are att achin g cop y o f qu es tion na ire mailed 

to al l ju ri sd ic tion s an d to ac co unt fo r ot he r ju ri sd ic ti ons no t inc luded in th e 

ta b u la ti o n me ntione d above, w e had on e ju ri sd ic ti on th a t did no t respon d f o u r do n ot t ax pu blic ut il it ie s------
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 95

Air. Rogers of Texas. If you will excuse me, th at information is not 

pertinent, what you are reading there is not what I am afte r at all. Did you say 44 jurisdictions? Why did you confine this questionnaire to 44 jurisdictions ?

Mr. Conlon. The chairman’s report is that he had responses from 

44 States.

Mr. Rogers of Texas. Who is the chairman ?

Air. Conlon. The chairman was Air. James Dixey.

Air. Rogers of Texas. Did they file any findings at all ?

Air. Conlon. Yes, this is the report.

Air. Rogers of Texas. I don’t want a lengthy report that will consume a lot of time. You are the executive secretary of this. It would seem to me tha t you could say whether there was any definite 

conclusion reached.

Mr. ( ’onlon. There are no findings as such.

Air. Rogers of Texas. Then there has been no definite conclusion by 

your organization ?

Air. Conlon. On what point ?

Air. Rogers of Texas. On the question of whether or not there has 

been discrimination and something other to be done about it-----

Mr. Conlon. No, there is no finding on discrimination. There 

was a direction to this committee to check into the situation and make 

a report. Here is the report on the check into that situation.

Air. Rogers of Texas. Now, in 1961 wasn’t there a decision made that 

the president of the association appoint a committee to deal with all aspects of this problem including the several proposals to restrict ta x­ ing jurisdiction of the States as to the property used in interstate commerce by railroads ? Now that was in 1961.

Air. Conlon. Exactly what was proposed, I will have to check the 

record, sir, to tell you. But as far as the direction to make a study is concerned, this is the report made in response to that direction to the 

committee appointed by the President.

Mr. Rogers of Texas. Now this is 1966.

Air. Conlon. Yes, sir.

Air. Rogers of Texas. This is 5 years later at least.

Air. Conlon. Right.

Air. R ogers of Texas. As I understand it, there has been no definite 

conclusion made by the National Association of Tax Administrators?

Air. Conlon. In 1963 that assignment was completed by the filing 

of th is report. AVe have made no specific finding, if th is is your ques­ tion, tha t discrimination does exist in the railroad field measured by 

this test or by that test, in this State of tha t State.

Air. Rogers of Texas. Now, you are here presenting a statement on 

the stationery of tha t organization. Is tha t a corporation or is it a 

legal entity ?

Air. Conlon. It is an ad hoc entity of the tax departments of the 

several States. It is not an incorporated entity.

Air. Rogers of Texas. Are you an entity that could be sued in courts ?

Air. Conlon. I suppose so.

Air. Rogers of Texas. Or do you have a charter ?

Air. Conlon. No. We have a constitution and bylaws.

Air. Rogers of Texas. Do you have to file those w ith the secretary 

of state of Illinois or anyone ?
96 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Conlon. No, sir.

Mr. Rogers of Texas. Now you say you had 50 States. Do you include the District of Columbia, too ?

Mr. Conlon. Fif ty States and the District of Columbia.

Mr. Rogers of Texas. What about the Virgin Islands and Puerto 

Rico?

Mr. Conlon. We happen not to have any close administrative relationships with those jurisdictions.

Mr. Rogers of Texas. You represent 11 of those States here?

Mr. Conlon. Yes, sir.

Mr. Rogers of Texas. Now, what is the position of the other States?

Mr. Conlon. I don’t know.

I was going to ask the chairman, if I might, if there are other States 

that would like to join in this statement that they be given permission 

to do so, but these are the States which I heard 'from after I received 

notice of the hearings from the committee and these have asked that 

the ir views be presented in this respect.

There may be others. But as to those who are not listed here I can't 

answer your question.

Mr. Rogers of Texas. Then you are representing in this situation not 

the national association as such but only 11 States who have w ritten 

to you and asked you to testify ?

Mr. Conlon. Yes, sir.

Mr. Rogers of Texas. Now, Mr. Conlon, are they paying you a 

separate fee for this service ?

Mr. Conlon. No, sir.

Mr. Rogers of Texas. You are not collecting any kind of expense 

whatever from any of these States ?

Mr. Conlon. No, sir.

Mr. Rogers of Texas. Are these States discrim inating in their tax 

procedures with regard to common carriers, railroads, pipelines?

Mr. Conlon. I could not answer that question. I could say tha t if 

there is any discrimination of the type complained of in Georgia, 

Idaho, Illinois, Iowa, Kansas, Kentucky, Michigan, and Nebraska, 

certainly there are remedies in the State courts because those States 

have had cases tha t involve this issue of discrimination among dif ­

fere nt types of property and the courts there have granted relief in 

those cases even though the assessment compained of was lower than 

the statutory standard would require.

Mr. Rogers of Texas. Then you take the position tha t because these 

States want you to do this—this is a substantial minority of your organization and they want you to do this—then you don’t think any relief ought to be afforded even if the common carriers show that they 

have been discriminated against and it is a continuing discrimination ?

Mr. Conlon. I thin k the point of my statement was, Mr. Rogers, 

tha t there are procedures and remedies in the State to deal with this 

discrimination now. I thin k this is conceded by the proponents of the 

bill.

And tha t it is not solely because there are no remedies that H.R. 

4972 should be proposed.

Mr. Rogers of Texas. You say there are remedies in States tha t 

deal with discrimination ?

Mr. Conlon. Yes.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 97

Mr. Rogers of Texas. The fact is, Mr. Conlon, I might point ont tha t of the 11 you are representing, members representing 4 of those States have introduced a similar bill to this in the Congress of the 

United States. The point is th is: Isn ’t i t a fact that in these States tha t in a num­ ber of instances that it is openly admitted that they are using a different ratio with regard to market value in the assessing of taxes on property 

owned by common carriers t han the are other people ?

Mr. Conlon. No, I could not make tha t admission, sir. Considering the States listed in the testimony presented by Mr. Ogden, the first one here, Arkansas, is not listed in this tabulation. 

California is listed. As I recall it there have been on at least two occasions proceedings started by taxpayers in California to test whether there has been any 

discrimination but they were discontinued. There is a statement to that effect that has been submitted separately to your committee by the Board of Equilization of California. Now Georgia is not listed in the group of States hi the proponents testimony but Georgia is a jurisdiction where the courts have said t hat if there is a discrimination shown, then relief must be granted. There is at present in the State of Georgia an extremely broad p ro­ gram to equalize all types of property according to the uniform statu­ tory standard. This is, railroads and utilities, and residential property, and everything else. Now the State of Idaho is listed in the proponent’s testimony. It is my understanding tha t the courts of Idaho have given relief in 

discrimination cases. The next State I have, Illinois, is not listed here. There is no com­ plaint about them. Iowa is listed. There have been cases decided recently in Iowa involving railroad companies where the courts have 

granted relief. I think there are witnesses from the Iowa Tax Commission who will 

be testifying here in person. The same is true in Kansas. The next State I have is Kentucky, where there is a massive re­ appraisal program underway and tha t is not one of the States against which a complaint has been made. Neither has a complaint been 

made with respect to Michigan. Mississippi is included in here. I frankly cannot say whether under existing law, since the question has not been decided there, whether 

relief of this type would be granted in Mississippi or not. In Nebraska, which is the last of the States I have mentioned, they are not listed in the States complained of for having discrimination in 

these railroad assessments.

Mr. Rogers of Texas. Mr. Conlon, do you think that the States or 

any taxing subdivision in them ought to be allowed to discriminate with regard to railroads or anyone else so far as taxation is concerned ?

Mr. Conlon. No, sir. I th ink they should comply with the statutory 

standards.

Mr. Rogers of Texas. Now, did I understand you to say in your 

statement tha t you believe in th e different classifications of pro per ty; tha t is, if a property is owned by a railroad company or by a restau­ rant or something like that, the State ought to have the constitutional power to say that all resta uran ts will be taxed so far as property tax,
98 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

ad valorem tax is concerne d, on th e basis of 75 p erc ent of t he m ark et 

value an d everyo ne else w ill be taxed based on 50 pe rcent of the mark et 

value ?

Mr. Conlon. Let me put it th is way. I think I said th at if the 

co ns titution of the S ta te perm its the classification o f pr op erty an d the 

legisla ture in its wisdom does clas sify prop erty into typ es for tax 

purposes, I t hink th is is pe rfe ctly w ith in th ei r law ful pow ers and that 

if th e leg islatu re believes th is is a good exercise in th e public policy 

an d those classifications are reasonable , are no t arb it ra ry -----

Mr. Rogers of Texas. Do you mean classific ation of prop erty or 

classification o f ownership of pr op erty?

M r. Conlon. No; classificatio n of prop ert y.

Mr. Rogers of Texas. In ot he r word s, everybody who owns an oil 

de rrick wou ld be taxed on 75 percen t of the v alu e of tha t. Every body 

who own s an auto mob ile could be tax ed on 50 percen t of the ma rke t 

value ?

Air. Conlon. Yes, sir.

Mr. R ogers of Texas. Do you feel t ha t th at wou ld be in compliance 

wi th yo ur basic prop osition o f eq uality in tax ation ?

Mr. Conlon. I th in k it wo uld be in com pliance with the canon of 

eq ua lity of tax ation. I t would no t be in com plia nce wi th the rule 

wh ich has lieen followed in many State s r equirin g a bso lute u nifor mi ty 

of tax ation.

Mr. Rogers of Texas. Suppose a man owns five oil derricks bu t 

did no t own any automob iles. The fellow who owns five automobiles 

wo uld have a distinction so fa r as ta xa tio n is concerned.

Mr. C Conlon. It dep ends on wh at the rat io of assessment is.

Mr. Rogers of Texas. Seventy -five perce nt of the marke t valu e on 

derri ck s a nd 50 percent on auto mobiles.

Mr. ( Conlon. If the leg isl ature in its wisdom th in ks th is is a fa ir 

classification I th in k it would be entitled to a gr ea t deal of w eight.

Th e types of clas sific ations th at I th in k are rec eiv ing more attentio n are the classifications o f rea l estate that is owner occupied on the 

one ha nd and real estate used fo r busin ess pur poses on the other.

Many people feel th at t he p ro pe rty taxe s are too high. Th e owneroccupie d person has to bear th is increase whereas th e business owner 

can pass it on. It seems to me th at if it is permissible under the 

cons titution and the leg isl ature thinks it is ap pr op riate, i t is a ll rig ht 

to have a rule of tax ation of 75 perce nt of m arke t value for business 

pr op er ty a nd 50 perce nt of m ar ke t value f or ow ner-occ upied pro perty .

Mr. R ogers of Texa s. Is th at yo ur p ersonal obs erv ation or th at of 

the N ationa l Associatio n of T ax Ad minist rators now ?

Mr. Conlon. I am no t ad vocatin g classification. I am saying 

me rely th at this is a policy th at has been adopted by some legislatures 

and is und er con sideration in ot he r legislatu res.

Mr. R ogers of Texa s. I th ou gh t you said th is w ould be acceptable, 

th is wo uld be fair?

Mr. Conlon. I th in k th at it is the legi slat ur es prerog ative in this 

m atter, with in reasonable bounds, to decide som eth ing like th at. I am 

no t su gg estin g th at we ou gh t to have classific ation of pro perty . I 

do not addre ss m yself to t hat p oint.

Mr. R ogers of Tex as. Do n’t you th in k in yo ur own mind with 

ev erything else asid e th at th er e is definite dis cri mina tio n ins ofa r as
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 99

th e m at te r under conside ration is concerned here an d th at this can 

be established and proven an d has been on ma ny occasions?

Mr. Conlon. Mr. Rogers, I s aid in my sta tem ent t h at no one who is 

fa m ili ar wi th prop erty tax ad minist ratio n would deny th at the re is a 

lot of d isc rim ina tion all thro ug h the prop erty tax system and thi s is a 

very difficult thing to bring un de r control but th at ste ps hav e been 

tak en a nd I think it is being brou gh t more un de r control.

Mr. R ogers of Texas. Do n't you think it ou gh t to be c orrected?

Mr. C onlon. Well, sure. I have outlined a numb er of p rogra ms by 

whi ch S ta te supe rvisory officials have ta ken steps to aim towa rd the correction of this.

Mr. R ogers of Texas. Why d o you oppose thi s typ e of legislation if 

it is corrective legislation to co rre ct an admitted dis cri mi natio n ?

Mr. Conlon. Because I ha ve suggested tha t we have remedie s in t he 

ad minist rativ e and jud icial agencie s o f the State s to do this, that it is 

preferab le to do it at the St ates level and tha t it would not be, it seems to me a nd this is the gen eral view here, a des irable th in g to single o ut 

one type o f p rope rty owners fo r rem edia l pro vision s that are not a vailable to oth ers.

Mr. Rogers of Texas. I know, Mr. Conlon. Now the point is this , 

th at th e people who have been discr imina ted again st are the ones who 

are pe titioning th eir Go vernme nt and have come in and lai d out their 

case. Now if othe r ]>eople are b ein g d isc rim ina ted a gains t don't, you think 

it o ught to be up to them to come in an d file th ei r own petition an d make 

th eir own requ est for relief ?

Air. Conlon. I think that t hi s is reasonable.

Mr. Rogers o f T exas. You would not take the position th at because 

one fellow came in and prov ed he was bein g d isc rim ina ted again st, bu t 

there were a lot of oth er fellow s who were dis criminated again st but 

who were n ot complain ing, t h at because th ey are not comp lainin g they 

are not en titled to relief ?

Mr. Conlon. W ha t you really do tho ugh is to tr an sf er the supervision of the ad mi nis tra tio n of assessment laws to the Fe de ral courts 

instea d o f th e S tate courts.

Mr. Rogers of Texas. W ha t is wrong with that ?

Mr. Conlon. I d on 't th in k it is the most ap pr op riat e place to do it. 

Th e Fe de ral cou rts have h uge dockets. If th ey a re goin<r to deal with the same t yp e of problems th at St ate agencies hav e to deal with now 

they w ill do it in the same way. Th ey w ill no t save any time. There 

is no sh ortcut in this thing at all.

Mr. Rogers of Texas. You a re no t aga inst Fe de ral c ou rts as such ?

Mr. Conlon. Of course not.

Mr. Rogers o f Texas. Th e fa ct of the m atter is t hat the re are m any 

State m atters th at ge t into F ed er al co urts e very d ay.

Mr. Conlon. Not as to the general administ ratio n of St at e laws— 

I don’t th in k I would agree wi th you th ere. Th ere are ma ny matt ers 

th at invo lve citiz ens of d iff ere nt State s th at are in Fe de ra l cou rts, of 

course. But the ordina ry jud icial an d ad mi nis tra tiv e ap pe al channels with 

respect to the conduct of St at e and local business are by and large 

throug h the admi nis tra tiv e an d jud icial agencies of St ates or local 

governments.
100 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Rogers of Texas. Don 't you think tha t a man who has a wrong 

being done to him ought to have someplace to go to seek redress and 

to have his case heard ?

Mr. Conlon. I suggest that in those jurisdictions tha t I mention 

here he does have tha t redress already.

Mr. Rogers of Texas. Of course, tha t is a difference of opinion. 

Lots of times you may have the forum to go to but if the forum does 

not give you any relief and you know in advance they are not going 

to give you any relief you are wasting your time.

Mr. Conlon. I concede there is logic in what you say but until, say, 

20 years ago if you went into a State court and the statutory standard 

of assessment was fu ll value and you were assessed a t 75, and your 

neighbor was assessed at 50, you probably would not get any relief 

because the court, would say, “What we should do here is to take steps 

to move everybody up to th e statutory standard. Therefore, since you 

are not. taxed at the statutory standard we are n ot going to give you 

any relief.”

But this is all changed now. One of the reasons it has changed is because of the activities of groups of tax administrators and with the 

full cooperation of industry groups, among them the proponents here 

who have done a great deal of work in this regard, very constructively, 

who have worked out these procedures for the measurement of assessment levels of different types of property.

They have done this so tha t you are able to come before a court and 

say, “This is the assessment ratio on my property and this, according 

to an official finding, is the general level that prevails with respect 

to other types of residential property and what have you and I am 

assessed unfairly and I should have relief.”

The courts have changed their mind. In case after case in every 

jurisdiction I know in which this has come up in the last 15 years 

the court has said, “Even though you are not assessed at statutory 

standard you are entitled to relief because you should not be assessed 

at an average higher than th at of other property.”

There are even two courts th at in the last 5 or 6 years have reversed 

themsel f on this.

The thru st of my statement is that since there is recognition of the 

problem of discrimination, if it.is demonstrated, relie f will be granted.

Mr. Rogers of Texas. Th at is a violent assumption because if you 

don’t do something to provide the relief and effective relief or effective 

forum to which you can go you can have 50, 75 different decisions 

and different conclusions within one division of one district of a Federal court. It is very easy.

Mr. Conlon. I don’t follow you there, sir.

Mr. Rogers of Texas. What is that?

Mr. Conlon. I don’t follow you on that.

Mr. Rogers of Texas. If you confine them to the different State 

courts in the different areas of a division of a Federal district, of the 

different assessment agencies or assessment authorizations, it seems 

to me tha t tha t would be very obvious.

As a matter of fact, I think it has happened quite often.

I won’t take any more time, Mr. Chairman.

The Chairman. Mr. Younger.

Mr. Younger. Thank you, Mr. Chairman.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 101

I ha ve only one ques tion .

I t seems to me, Mr. Conlon, th at yo ur pos itio n is no t logic al from th is st andpoin t. You say th at the State s are g ra du al ly b rin ging t he ir leg islati on and th ei r assessment opera tion to a point where ther e is less 

differen ce with the ca rri er. They are d oin g th at grad ua lly , and the y 

can continue to do tha t. All th at thi s bill prov ide s is th at if a person, or a railr oa d or a 

ca rrie r feels it has been wrongly assessed the y can go into Fe de ral 

court. To sta rt wi th the y have to pro ve dis crimination. Th ey only a sk fo r 

th e excess over and above wh at they th ou gh t the y sho uld be assessed. So we are not ha mpe rin g the assessing au thor ities an d carriers fro m 

ge ttin g tog ether. As a matter of fac t, I th in k if this bill were passed it wou ld drive the 

St ates to ta king a mo re active role in seeing that discr im ina tio n d id not exist because af te r the y we nt into Fed eral c ou rt a couple of times and go t bounced back an d th e co urt said you were discrim inating then it 

would be corrected. Because all t he ca rrie r can d o is to go in and plead his case ; he can’t 

do a ny thing else. I f he gets licked, why he is licked. I t does not a t all interfere with the S tates pe rfe cting th ei r organizatio n as to be tte rin g 

th ei r assessment process.

Mr. Conlon. I concede t h at the enactm ent of th is b ill would no t of 

itse lf h ave any effect on th e work th e State s are doing to correct the 

sit ua tio n in this field. My point is th at the y have exa ctly wh at you des crib ed now, a rem edial pro ced ure in St ate co urts or before St ate 

ad minist rativ e agencies.

Mr. Younger. Th ey do n’t have it. You can’t establ ish th at because there a re ju st too ma ny jur isd iction s and the y have all trie d it. 

Th e ca rri ers have tri ed rig ht a long and it ha s not wo rked out.

Mr. C onlon. Th e c arrie rs, sir , have filed a numb er of suits in a nu mbe r of States. I t seems to me th at by and larg e they have p revaile d. Thy ha ve prevailed by u sing th e very techn iques t h at I have described 

as h av ing been developed a nd forw ard ed officially b y St at e revenue de ­

pa rtm en ts, namely these assevssment-ratio stu dies.

Mr. Younger. Can you fu rn ish the com mittee wi th a lis t of the 

ca rriers t ha t have gone into St ate cou rts an d been r elie ved ?

Mr. C onlon. I will be gl ad to.

Mr. Y ounger. W ill you fu rn ish tha t f or the hea rin gs ?

Mr. Conlon. Yes, sir.

Mr. R ogers o f Texas. I th in k it would be in or de r to also show the 

cases w here they hav e not been relieved.

Mr. Y ounger. I will get th at from the oth er side.

Mr. Conlon. I t hi nk t hat would be a fa ir divisio n of labor. I will 

be g lad to un derta ke that . Yes, sir.

(T he informa tio n requ ested f ollows :)

R ec en t Litigatio n I nvolving Ad Valorem T ax Ass es sm en ts on R ailroads,

Sup pl ied by C harle s F. Conlon, E xecutive Secretary, Nat iona l A sso ciatio n

of T ax Administr ato rs

ALABAMA

Appeals of 1964 assessments involving alleged disc rimination now awaiti ng 

tr ia l on the m er its : L. & N. R. Co. v. State, Circuit court, Montgomery.
102 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

ARIZONA

Relief from discriminatory assessment granted but only prospectiv ely: 

Southern Pacific Co. v. Cochise County, Arizona Supreme Court, 377 P. 2d 770 

(1963).

ARK ANSAS

Assessments upheld in the following ca ses: St. Louis San Francisco R. Co. v. Arkansa s Public Serv ice Commission, Arkansas Suprem e Court, 304 S.W. 2d 297 

(1957) ; Kansas City Southern R. Co. v. Arka nsas Public Service Commission,

Arkansas Supreme Court, 323 S.W. 2d 123, cert, den., 361 U.S. 825 (1959) ; 

Kansas City Souther n R. Co. v. Arkansa s Commerce Commission, Ark ansas Supreme Court, 326 S.W. 2d 805 (1960).

(Note.—Arkansas is not in the list of States where discrimination is alleged 

to exist with respe ct to 1964 assessments (api>endix A, stateme nt of the Assocation of American Railroads, p. 24, herea fter referred to as “app. A”) .) 

CALIFORNIA

No reported litig ation. Suits filed in 1959 by fou r major railroads but subsequently withdrawn (see letter of Alan Cranston, State controller, California, 

to Hon. Harley O. Staggers, chairm an, Committee on Interst ate and Foreign 

Commerce, dated Feb. 24,1966, p. 142).

FLORIDA

Railroad entitled to jud ici al relie f if allegation of overvaluation estab lished: 

Green v. Florida E.C. R. Co., distric t court of appeal, 141 So. 2d 326 (1962). 

Assessment upheld ; use of judgm ent fac tor in raising o r lowering assessments on 

other railroads not of itself discriminator y: Florida E.C. R. Co. v. Railroad Assessment Board, distr ict court of appeal, 178 So. 2d 355 (1965).

(Note.—Florida is not in the group of States listed in app. A.)

ILLINO IS

Railroad tax refu nds have been granted in a number of cases among which 

the following a re cited as chara cte ristic: People ex rel Hillison v. C.B.Q. R. Co., Illinois Supreme Court, 174 N.E. 2d 182 (1961) : People ex rel Enrietta v. G.M.O. R. Co., 29 Ill. 2d 605 (1964) ; People ex rel Musso v. C.B.Q. R. et al., Illin ois Supreme Court, 210 N.E. 2d 196 (1965).

(Note.—Illinois is not in the group of States listed in app. A.)

IOWA

Discrimination among rail roa ds recognized: C.A’.W. R. Co., v. Sta te Ta x

Commission, 137 N.W. 2d 246 (1965), case rema nded for furth er proceedings 

which are still pending. Issue of variati on from common level of assessment 

open to proof.

KA NSA S

If petitioner establishes assessment at high er ratio tha n other property, it is 

entitled to relief: Kan sas City Southern R. Co. v. Board, Kansas Supreme Court, 331 P. 2d 899 (1958).

MICH IGAN

Case now pending in U.S. district court (C.2V.W. R. Co.)

MONTANA

(Pipeline) Discrim ination alleged; court held that a taxpay er is entitled to be 

assessed uniformly only with respect to oth er prop erty in the same class ; assessment upheld: YelJwrstone Pipeline Co. v. State Board of Equalisation, Montana Supreme Court, 358 P. 2d 55 (1960).

NEBRASKA

Railroads are entitled to relief from discrim inatory assessm ents where thi s 

fact is established: C.B.Q. R. Co. v. State Board of Equalisation, 101 N.W. 2d 

856; C.N.W. R. Co. v. same, 101 N.W. 2d 873; U.P. R. Co. v. same, 101 N.W. 2d 892 (I960).

(Note.—Nebraska is not in the group of State s listed in app. A.)
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 103

NEW JERSEY

Railro ad entitled to relie f from discr imin ation if fact is esta blis hed : D.L.W.

R. Co. v. Neeld, New Jersey Supr eme Court, 130 A. 2d 6 (1 95 7) . Relief denied in U.S. distr ict court because of av ail ability of remedy in Sta te cou rts: D.L.W. R.

Co. v. Kingsley , 189 F. Supp. 39 (D. N.J . I9 60 ).

OREGON

Equ aliz atio n rat io on rai lro ad pro perty cann ot be set at hig her level th an 

th at of locally assessed prop erty. Union Pacific R. Co. v. Sta te Tax Commission,

Oregon Suprem e Court, 376 P. 2d 80 (1 96 2) .

( Note.—Oregon is not in the group of States l iste d i n app. A.)

SOU TH DAKOTA

Asses sment reduced to sta tutory st an dar d: C.M. St. P.P. R. Co. v. Gillis, South 

Dak ota Suprem e Court, 118 N.W. 2d 313 (1 96 2) . No relief on fac ts: C.N.W.

R. Co. v. Gillis, South Dakota Supr eme Court, 118 N.W. 2d 316 (196 2) ; C.N.W.

R. v. Gillis, 129 N.W. 2d 532 (1 96 4)—an oth er procee ding involving same asse ss­ ment yea r; court held the issue wa s alre ady decided in the ea rli er case. Valu ation case pendings: C.N.W. R. Co. v. Gillis.

TENN ESSE E

Jur isd iction in U.S. distr ict co urt assumed for wa nt of remedy in Sta te co ur ts ; alleg ation of disc rim ination su sta ined : inju nction withou t prejudic e to rig ht of Sta te board of equa liza tion to reconsider assessment. L. <6 N. R. Co. v. 

Public Servic e Commission, et al. (U.S.D.C.M.D. Tennesse e, Feb. 1, 1966.)

In a sep ara te proceeding in th e chance ry court of Davidson County, the chan cell or has direct ed the St ate board of equalizati on to equalize prop erty values, pur sua nt to the sta tut ory mandate, at actua l value. Sou thern R. Co.

v. St ate Bo ard of Eq uali sation, F eb ruary 15,19 66.

WE ST VIRGINIA

Disc riminat ion not establish ed whe re only showing is th at differen t methods of arr ivi ng at actu al valu e are used for different type s of prop erty. Western

M. R. Co. v. The Board of Public Works, West Virginia Supre me Court, 90 S.E. 

2d 438 (1 95 5) .

(Note.—West Virginia is not in th e group of Sta tes listed in app. A.)

WISCON SIN

Petition er faile d to establ ish th at the railr oa d’s opera ting prop erty was assessed at a gre ate r proport ion of its value tha n other rai lro ad oper ating pro perty or all property wit hin the State: C.N.W. R. Co. v. Dep artm ent of

Tax ation , Boar d of Tax Appeals, December 1960. Trial do novo gran ted, cir ­ cui t cou rt, Dane County, May 18, 1962. Proceedings subse quently dismissed.

WYOMING

Valuati on of railroad upheld; controve rsy primarily on valuat ion procedu re, pa rticu lar ly the fac t th at the asse ssin g agency did not use the unitary approac h : C.B.Q. R. Co. v. Bruch , et al., Wyoming Suprem e Court, 400 p. 2d 494 

(1 96 5) .

Mr. Younger. That is all.

The Chairman. Mr. Moss. Mr. Moss. Mr. Conlon, let me say I think you have made an excel­ lent. statement. I am particularly concerned with the second par a­ graph on page 8 and with the fears expressed in the second par agrap h on page 10. I think tha t the enactment of this legislation could lead—you used the term “leverage”—I think it could constitute a peculiarly effective form of harassment of many small tax levying districts across this
104 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Nation. I am much concerned with the impact it will have on those 

tax levying districts, particularly in my own State where we have 

many problems of growth.

I also concur with your observation that it is a matter of discrimination. Anyone at all familiar with the levying of taxes would 

recognize th at it does exist. It exists on business property not held 

by utilities just as it does on business property held by utilities.

But it has improved. I know, as a former member of the California Legislature of the efforts made by my State government to insure greater equalization between the tax assessing, tax levying 

entities in the State.

I think substantial progress has been made. This would not achieve 

equality of treatment, however, would it, the proposed legislation that 

we have before us here today ?

Mr. Conlon. No. For one group of taxpayers it is remedial legislation. As a m atter of tax policy this would tend to detract from the 

general performance or in the alternative it would cause the other 

to seek the same type of tax relief.

I thin k the Federal courts are not best suited to carry out this type 

of program.

Mr. Moss. We just voted to create some additional Federal judgeships about an hour ago on the floor. The case made for those additional judgeships was the heavy overload in the Federal courts.

I know th at is the complaint I get from my Federal courts out home 

all the time. They find it very difficult to schedule the business under 

existing law. This would impose a substantial additional burden.

However, I don't think we should deny justice because it might overburden the courts. I think the remedy there is to increase the number of judges. If we are going to grant justice we should gran t it 

equally to all and this does not even do that. It does not even take 

care of all of the utilities or all of the commerce burden because of 

whatever inequality might exist in the assessing or levying of taxes by 

local government does it?

Mr. Conlon. No, sir.

Mr. R ogers of Texas. I just want to point out we jus t passed a bill 

creating a lot more j udges.

Air. Moss. Yes, I just observed we have. We got four of them out 

in California. That takes care of about 2 million additional population. So they are still going to be overburdened. We don’t create 

new* judgeships fast enough to take care of the growth in population.

Again, I want to express my agreement with your statement and I 

commend you for it.

Mr. Conlon. Thank you, sir.

The Chairman. Mr. Nelson.

The Chairman. Mr. Nelsen.

Mr. Nelsen. Thank you, Mr. Chairman.

I understand from your statement that you agree that in the instance 

where there is discrimination that recourse should be provided and 

tha t it is your feeling that recourse is now provided under the existing 

court procedure; is tha t not true ?

Mr. Conlon. Yes, sir.

Mr. Nelsen. There is also evidence, as I think you would agree, that 

there is discrimination as to assessment levels in various parts of the
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 105

country. I th ink the record will clearly show tha t there is discrimination. I think it is also clear at this time th at many of the States are aware of the fact that they have exercised discrimination and are also aware of the fact tha t these practices are being exposed and some of them now are seeking to secure their position by legislative action. Fo r example, at the present time I think there is a movement underway in one of the States to get a constitutional amendment to permit 

discrimination. So, in this case recourse would never be available then to the rail­ roads in these particular States or any other prop erty if the State by constitutional amendment secures their malpractice of taxation. So this would be the only method then they could go to the Congress 

of the United States. Isn ’t th at true ?

Mr. Conlon. I don’t know that I agree with your premise, ISlr. Nelsen. You say th at the State s seek to justify thei r malpractice by con­ stitutional amendment. We have a constitutional amendment pending in Illinois. One of its provisions is to permit the levy of an income tax with a rate ceiling, to permit classification of tangible and other property, to permit the classification of real estate and several other 

things. I do not have any idea th at the amendment to permit the classifica­ tion of real estate or tangible versus intangible p roperty is intended to justify any illegalities. This is a proposal which the members of the legislature think has some appeal and they are putting it lief ore the 

people on that basis. I have no idea what will happen to th at amendment but I believe under our rules two-thirds of each house must concur before an amend­ ment is pu t on the ballot to amend the constitution, so apparently two- thir ds of those members th ink that some kind of classification within limits m ight have some appeal and be a desirable thing but I believe so 

far as I know this is to be considered on its merits.

Mr. Nelsen. The S tate you mentioned is not the one I had in mind 

but I might point out th at in our State of Minnesota we have vast iron ore deposits and our high-grade ore has been mined and we have lowgrade ore. We had a different method of taxation against properties in this case. So in our State a constitutional amendment was passed th at would provide tha t the mining deposits would be taxed on the same 

basis as other investments. The reason the amendment was passed is because obviously dis­ crimination had existed and a higher level of taxatio n had prevailed. As a result this amendment has given tremendous impetus to the ex­ pansion of northern Minnesota where capital has come in to invest in 

the development of our low-grade ore. Now the State 1 had in mind was Tennessee, and I think at the present time they are suggesting a constitutional amendment that will permit a different level of assessment against railroad property than other property. In my judgment this would secure the position of a practice which has existed which obviously must be considered even 

bv yourself to be discriminatory. I am wondering if the practice of the different levels of assessment has not been a deterring factor. Many of us find in our rural com­ munities where there is a petition for abandonment of the railroad,
106 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

immediately we are flooded with letters to hang on and at the same 

time there may be some reasons for it and it could also be taxation.

I just make this observation not with the idea that you will solve 

a problem so far as I am concerned but only to point out tha t what 

we are trying to do is to get some reasonable level and continue to have 

these systems tha t we believe have been in the public interest.

I have no more questions.

Mr. Conlon. That is perfectly reasonable. I recall a study by a 

State legislature a few years ago that recommended th at the legislature propose an amendment to provide for the assessment of public 

utility property generally at 50 percent of its m arket value and railroad property at 25 percent of its market value.

This was the proposal of a committee of legislators that had studied 

the subject at some length and presumably they thought that here 

was an instance where classification was justifiable. T do not think 

you can question th eir motives in making this sort of classification. 

This is simply what they thought was appropriate.

I give this example only to illustrate the differences of opinion that 

exist in this field and to point out tha t there are many people who 

think that property tax administration and property tax, itself, 

might be made a more viable institution in these days if there were 

differences in classification recognized for tax purposes because things 

now, so far as types of ownership is concerned, are very much different 

from what they were a hundred years ago when these uniformity 

clauses really had their beginning.

Mr. Nelsen. I have no more questions, Mr. Chairman.

The Chairman. Mr. Dingell.

Mr. Dingell. Thank you, Mr. Chairman.

Mr. Conlon. I would like to ask you, if I may, a little bit about 

remedies under State statute.

Am I fairly inferring t hat all the States who belong to the organization you represent have a device for judicial review of their tax 

assessments ?

Mr. Conion. Yes, that is true.

Mr. Dingell. Isn’t it a fact that all States have a judicial review 

of tax assessment?

Mr. C onion. I know of no instance where administrative review is 

final in tax assessment cases although I think it is within the power 

of the legislature to so provide.

Mr. Dingell. Now, with regard to these assessments, generally 

you would have the appeal route through the administrative function 

within the State; am I correct?

First of all, in most instances assessment o f taxes is done by the 

community, by the county, by the particular taxing authority, am I 

correct ?

Mr. Conion. Speaking of volume, yes. But if you are dealing with 

certain types of large business properties such as electric power companies that operate in more th an one jurisdiction or railroads or a irlines that operate in more than one State, it is not uncommon to have 

some State agency given the responsibility for deciding the value of 

tha t property in the first instance because it must be valued as a unit 

covering all the-----

Mr. Dingell. The value of the entity is decided by the State ?
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 107

Mr. Conlon. Right.

Mr. Dingell. But the assessment is made at the local level; is tha t 

right?

Mr. Conlon. That is rig ht. Well, there are a couple of exceptions 

but in general th at is what happens. Pa rt of the assessment that is logically applicable to the local gov­ ernment is put on the local rolls. Whatever rates tha t the local govern­ ments apply are applied against that value; yes sir.

Mr. Dingell. As I read this bill it would have nothing to do with the State agency which would determine the value of the property for the whole State. Am I correct on this? The language of the bill has nothing to do with the determination of the value of the whole property across the State. It simply deals with the assessment.

Mr. Conlon. In general what you are saying is correct.

Mr. Dingell. I am refe rrin g to page 2 of the bill.

Air. Conlon. It is possible th at in a couple of States, the valuation which is made by the State agency is the value against which the tax rate is applied on a statewide average basis. This is an exception.

Mr. Dingell. I am saying this bill in instances where the State draws the value of property across all the States, that there would be no relief from the valuation of the property by the State agency under 

t h i s bi 11. A m I correct ?

Mr. Conlon. I think there are a few States where because of the ----

Mr. Dingell. I am just asking you a particularly pointed question, 

Mr. Conlon. 1 want you to give me a brief answer. What I am saying to you is tha t there would be no relief to a utility particula rly a railroad tha t was complaining about the valuation of the property within the whole borders of State, if it was to assert a complaint against the State agency which happened to have fixed th at 

val ue. A m i correct ?

Air. Conlon. There are instances where it could assert that kind of 

complaint but, very few. In general what you say is true.

Mr. Dingell. Very good. Now further, what would be a representative form of judicial and administrative review of the assessment by the community of taxes on a particular railroad’s prop erty within the confines of tha t community’s border ?

Air. Conlon. The proceeding could be in the nature of, let ns say, 

a tax rate objection.

Air. Dingell. How would they do tha t ?

Air. Conlon. It seems to me what is involved in one of these pro­ ceedings is the necessity on the part of the person who complains to show, No. 1, what the full value of this railroad was and what per­ centage of it was put on the rolls in order to make the kind of com­ parison with the average ratio of other property that is needed to get 

the relief in the bill.

Air. Dingell. I am not asking you about under the bill. I am ask­ ing about under existing practices. Under existing practice what would happen? You would have the assessment of the tax?

Air. Conlon. Yes.

Air. Dingell. Would it be easily appealed to the court or would there be some intervening administrative agency which would review 

that assessment?
108 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Mr. Conlon. In some States there are provisions for appeal to an 

administrative agency. In general, what you do when you are assessed 

is pay the tax under protest or you have an opportunity to protest 

within a certain period of time; or you m ight institute an action in 

the circuit court or district court for recovery of so much money on 

the ground that that much was illegally assessed against you.

Mr. Dingell. So there is judicial review’ within the State?

Mr. Conlon. Yes.

Mr. Dingell. In tha t you can proceed for review thro ugh the whole 

structure of State judicial system right up to the supreme court of the 

State?

Mr. Conlon. Yes, sir.

Mr. Dingell. On both questions of fairness, policy, and so forth,, 

am I correct?

Mr. Conlon. That is right.

Mr. Dingell. Then at the conclusion of th is if you feel that there 

has been a denial of a Federal constitutional right, it then becomes the 

right of the litiga nt to assert tha t righ t and to appeal to the Federal 

judiciary?

Mr. Conlon. Yes.

Mr. Dingell. Over a question of the denial of a Fede ral constitutional right. Am I correct?

Mr. Conlon. Yes, sir.

Mr. Dingell. Then you have a full and a fai r review within the 

structure of the Federal courts, am I correct?

Mr. Conlon. Well, no.

Mr. Dingell. To ascertain whether there w as denial of a Federal 

right there ?

Mr. Conlon. The only appeal you have from the State court decision would be to the United States Supreme Court.

Mr. Dingell. That is right, but you would have at this point an 

opportunity for a review-----

Mr. Conlon. That is right.

Mr. Dingell (continuing). Of the Federal constitutional question 

within the Federal judiciary?

Mr. Conlon. Yes.

Mr. Dingell. On the conclusion of that action it would be appropriate action by the Supreme Court to ratify the State court's action 

and, of course, the action of the administrative agency or remand to 

the State courts or State agency for action in accordance with w’hatever ruling the court might make. Am I correct?

Mr. Conlon. Tha t is rig ht.

Air. Dingell. Thank you very much.

The Chairman. Air. Harvey.

Air. H arvey. Air. Conlon, these remedies that Air. Dingell has referred to have existed, I take it, almost from time immemorial, I think 

for a good long time. Is tha t not correct ?

Air. Conlon. No, sir; in theory they may have but I would not 

put it quite the wav you did because, let us say, p rior to World W ar 

II , it was a fairly common thin g that, if you went before a court and 

you had not been assessed at the statutory level, the court would not 

give you any relief even though you had been assessed higher than 

somebody else, as long as you were not assessed as high as the statu-
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 109

tory standard provided for assessment. But it is this which has 

changed.

Mr. Harvey. That has changed since when ?

Mr. Conlon. 

respect.

Mr. Harvey.

Air. Conlon.

Air. Harvey. 

does still exist?

Air. Conlon.

Air. Harvey.

I think there has been great change sine© 1946 in this

That is 20 years ago.

Yes, sir. Yet you are telling us today that the discrimination

There is discrimination in property taxes; yes. I served as a city councilman, mayor, and county 

supervisor in Michigan. I would challenge anyone who would say that discrimination did not exist because 1 think it does, not partic­ ularly against railroads but I think against business generally.

Air. Conlon. In some places it is against business: in some places it 

is in favo r of business. We have jurisdictions in Illinois where bus­ iness firms and commercial property are assessed a t a lower rate than 

residential property.

Air. H arvey. What I fail to see though is why this bill would hurt the municipalities or cities or jurisdictions which would have to appear

in Federal court. Why would they be afraid of appearing in Federal court?

Air. Conlon. I don’t know’ that they are afraid to appe ar in Fed­ eral court but I think the ordinary remedy for dealing with municipal and county and local affairs is in the State courts.

Air. H arvey. You have admitted after 20 years the discrimination 

is still there. It seems to me it is time we ought to sta rt looking for 

another remedy.

Air. Conlon. I don’t agree it has failed at all. I feel there have 

been tremendous strides made. Michigan is one of the State s where you can see a great deal of difference between 1946 and 1966.

Air. Harvey. Tha t is true but discrimination still exists in other 

States.

Air. Conlon. I am sure there is some but the area is being narrowed all the time. I don’t think you are going to change this overnight by 

going into the Federal courts.

Air. Harvey. I can’t believe the world would come to an end. I can’t believe it w’ould be as bad as you have portrayed it. I can’t believe tha t it would harass the taxing authorities. I think it is a

question of who is going to be harassed. We are talking now not only about my State but across the country. Is it the business or railroads that will be harassed or the tax authori­ ties that will be held accountable in other courts ? It seems to me that 

is a decision that this committee has to make. I have a feeling there is great resentment among the taxing authori­ ties to get into this problem at all in tha t they have felt, ‘‘Well, let 

leave things as they are; it is a hot problem.’’

Air. Conlon. It is an awful hot problem but so far as I know I must say that I know of no question of any feeling of resentment in this 

matter in any way whatsoever.

Air. H arvey. You are getting very close to local politics. If you 

have ever w orked on the local level, there is strong resentment no mat60-601—ee— s
110 tax as sess men ts on common carrier property

ter what taxing auth ority you are talking about, about getting into 

this question of assessments and values.

Mr. Conlon. There is a strong political difficulty here because if 

you try to do these th ings all in one fell swoop you may have a subst an tial transfer of tax burdens and this could make the life of 

political figures unbearable.

I think this change has to be made over a period of time. I recall 

a State where they trie d to do it overnight anti the roof almost blew off 

the statehouse.

Mr. Harvey. I think you have made a very fine statement and I 

thank you for it.

I have no further questions.

The Chairman. Mr. Conlon, thank you very kindly. You have 

been very patient. We appreciate your coming here.

Mr. Conlon. Thank you.

The Chairman. I defer now to Mr. Younger.

Mr. Younger. I would like to have Mr. Ogden furnish the other 

side of the picture that we have asked for, the cases where you have 

not received relief from the State court.

Mr. Ogden. I will be most happy to, sir.

(The information referred to follows:)

Gulf, Mobile & Ohio Railroad Co.,

Mobile, Ala ., March 25, 1966.

lio n. Harley O. Staggers,

Chair ma n, Comm itte e on In te rs ta te and Foreign Commerce,

Ho use of Repre sen tative s, Wa shing ton , D.C.

Dear Mr. Staggers: To ward the close of th e Com mittee’s March 2 he ar ­

ing pro ponen ts of the mea su re were inv ited to fu rnish inf orm ation re ga rd ­

in g unsucc essful ra ilr oa d ta x litigatio n.

I am pleased to resp ond by forw arding herewith a par tial list of pe rti ne nt 

cases. Fo r the m ost par t th e decisio ns listed were adve rse to t he railroa d or the 

ul tim at e result did not aff ord material relie f or th e lit igation is still pending.

A few case s which did n ot involve railr oa ds h ave bee n inc lud ed bec ause of th ei r 

im med iate or poten tia l effect on railr oa d assessments.

Th e list is not offered as being all inclu sive. It is ma inl y confined to t he m ore 

re ce nt cases. Many St ates are omitte d eith er because the y do not assess ra il ­

ro ad s fo r ad valorem taxe s or du e to pecu lia rities in t he ir a ssess me nt procedures.

Th is ma ter ial also po int s up an ala rm ing tren d to leg alize the dis cri mi nator y 

ta xat io n of rai lroads. Mo nta na. Kansa s, Idaho, Ke ntu cky, an d Ten nes see fu rnish examples of wha t has bee n done or threaten ed in th is area .

Sincerely ,

J ames N. Ogden.

ALABAMA

Appea led from a refusal by th e St ate de pa rtm en t of reve nu e to equaliz e 1064 

assessme nts and pen din g in th e Ci rcuit Co urt of Montgomery County, Ala., 

are th e following cases, all of wh ich ar e sti ll pe nd in g:

1. Louis vil le and N ashville R . Co. v. St at e of Ala bam a.

2. Illinois Central R. Co. v. St ate of Alabam a.

3. Seaboard Ai r Lin e R. Co. v. St at e of Ala bam a.

4. Gu lf, Mobile and Oh io R. Co. v. St at e o f Alabam a.

5. Atla nt ic Coast L ine R. Co. v. St at e of Alabama.

App ealed from a refusal by th e St ate de iia rti ne nt of reve nu e to equa lize 1065 

assessments and pending in th e Ci rcuit Co urt of Montgomery County, Ala., ar e 

th e follow ing cases, all of which ar e still pen di ng :

1. Lo uis vil le and Na shville R . Co. v. St at e of Alabama.

2. Ill ino is Central R. Co. v. Sta te o f Alaba ma.

3. Seab oard A ir L ine R. Co. v. St at e o f Alabama.

4. Gu lf, Mobile and Ohio R. Co. v. St at e of Alabama,
TAX ASSESSME NT S ON COMMON CAR RIER PR OPERTY 1 1 1

5. A tl anti c Coast Lin e R. Co. v. S ta te o f A laba ma.

6. Co lonial Pi pe Li ne v. S ta te o f A laba ma.

7. B ir m in gham S outh er n R. Co. v. Sta te o f A laba ma.

8. F ed er al Ba rg e L in es v. S ta te o f A lab am a.

9. So uth er n Rg. Co. v. S ta te o f Al ab am a.

30. Ala ba ma Great S ou th er n R . Co. v. Sta te o f A laba ma.

11. Cen tral o f Georgia Rg. Co. v. S ta te o f Alaba ma.

12. Birm in gh am Ter m in al Co. v. S ta te o f A laba ma.

13. Woo ds tock d B loeton Rg . Co. v. Sta te o f A laba ma.

14. P la nt at io n Pi pe Lin e v. S ta te o f Al ab am a.

15. A.T . d N. R . Co. v. S ta te o f A laba ma.

16. B ir m in gha m B el t R. v. S ta te o f A laba ma.

17. S t. L ou is an d San F ra nc is co R g. Co. v. S ta te o f Ala ba m a.

ARIZONA

1. South er n Pa cific v. Co ch ise Co un ty, 92 Ar iz., 395, 377 P. 2d 770 (196 3). A rizo na Su prem e Cou rt he ld th a t th e So ut he rn Pa cif ic had pr ov ed d is cr im in at io n in th e 1959 as se ss m en t of its pro pert y by o ffic ials o f Ariz on a, th a t th is d is cr im in a­ tio n vi ola te d the Ariz on a const it uti on an d st atu te s, bu t re fu se d to au th or iz e reco ve ry of ta xes ill eg ally im po sed. R at he r, th e court he ld th a t the ra il ro ad wou ld be en titled to in ju ncti ve re li ef in th e fu tu re up on pro of of di sc rim in at ory as se ss in g pr ac tice s an d th a t onl y a ft e r fi rs t ob ta in in g an in ju nct io n co uld th e ra il ro ad reco ve r ill eg al ta xes alr ead y pa id. Fo llo wing th is de cis ion th e le gi sla­ tu re in 1964 am en de d th e A rizo na Code e ffe cti ve ly nullif yin g th e dec ision.

AR KAN SA S

1. St. Lou is-S an Fr an cisc o Rg. Co. v. Ark . Pu blic Se rv ic e Co mmissio n, 304 S.W. 

2d 297 (195 7). Fo llo wing th e 15X55 as se ss m en t of Frisc o pro pert y in A rk an sa s by th e pu blic serv ice co mmiss ion of th a t St at e, th e ra il ro ad ap pea le d to th e cir cuit court w he re an or de r w as ente re d de ny ing re lief to th e Fr isco . On ap pe al to th e su pr em e co ur t it was he ld th a t th e Ju dic ia ry do es no t si t as an as se ss in g bod y an d, in th e ab sence of pr oo f th a t th e as se ssm en t of pro pe rt y fo r ta x pu rp os es is m anif est ly excessive, fr au d u le n t or op pressiv e, co ur ts will not dis tu rb th e fin din gs o f an as se ssin g bod y.

2. K an sa s Ci tg Rg . Co. v. A rk . Co mm erce Co mm iss ion. 323 S.W . 2d 193 (1959). 

Cas e d ealt w ith th e pro pe r 1957 ev al uat io n of pr oper ty of th e K an sa s Ci ty So uth­ ern R ai lw ay Co. No si gn ific an t ta x re lief o bt ai ne d by ra il ro ad an d th e co urt did 

no t d eal w ith t he equ al iz at io n prob lem.

3. K ansa s Citg South er n Rg. Co. v. Ark . Co mm erce Com missio n, 326 S.W. 2d 

805 (195 9) . Fo llo wing th e ta x as se ss m en t of pla in ti ff ra il ro a d ’s pr op er ty fo r th e y ears 1955 an d 1956 by th e T ax Divisi on of th e A rk ansa s Pu blic Se rvice Co mmiss ion, th e ra il ro ad pro te st ed an d ap pe al ed to cir cu it co urt . Th e or de rs of th e pu blic se rv ice co mmission w er e affirm ed an d th e ra il ro ad ap pe aled to th e Su pr em e C ou rt of A rk ansa s b u t its ap pe al s w er e di sm isse d on mo tion by th e defe ndant on th e gr ou nd th a t th e reco rd of th e ca se s below ha d no t bee n filed w ith th e cler k of th e Sup re m e Cou rt w ith in 60 da ys a fte r entr y of ord er in th e c ir c u it co ur t, eve n th ou gh th e co urt below had fo rm al ly ex te nd ed th e tim e 

fo r fil ing th e r ec or d in th e s upr em e co ur t.

CAL IFO RNI A

1. Fort y-e ig ht se para te su it s ch al le ng in g th e lev el of as se ss m en t of ra il ro ad pro pert y fo r th e ta x year 1958 w er e filed in 48 se p ara te C al if orn ia Sup er io r C ourts by So ut he rn Pa cif ic Co. an d it s ra il affil iates again st 48 co un ties an d v a ri ­ ou s cit es in C alifor ni a, poin ting up th e cu mbe rsom e an d in ad equate ap pe al pr o­ ce dure pr ev ai ling in the Sta te . The ra ilro ad volu nta ri ly dis m isse d th es e su it s w ithout pr ej ud ic e on J uly 1, 1959, on an ag re em en t by th e C al if orn ia S ta te Boa rd of E qual iz at io n to eq ua liz e ra il ro a d as se ss m en ts a t th e ra te of 2% pe rc en t per yea r. How ev er, th e C al if or ni a S ta te Boa rd of E qual iz at io n has no t eq ua liz ed th e ra il ro a d as se ss m en ts as agre ed to, ac co rd in g on ly a fr acti on of th e re lief pr om ised . Seven yea rs la te r th e ra li ro ad as se ss m en ts in C al if orn ia re m ain 

tw ic e as hig h as o ther s.

FLORIDA

1. Se ab oa rd A ir Lin e R . Co. v. Gag, 74 So. 2d 569 (1954) C ir cuit Cou rt, Leo n 

Co un ty, Fla . (t ax y ear 1953 re li ef d en ie d).
112 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

2.Green v. Florida E. Coast Ry., 141 So. 2d 326 (1962) pleadings held to state 

cau se of action for tax year 1961; Florida E. Coast Ry. v. Green, 178 So. 2d 355 

(1965) the court of app eals affirmed the court below in denying the railroad relief 

for the tax years 1961 and 1962, the latte r having been brough t in by amended 

complaint. We understand this case is now being appealed to the Supreme Court 

of Florid a.

GEORGIA

1. After a court decision approved by the suprem e c ourt in 1965 requiring th at 

all property in every county be assessed at the same perc enta ge of value, the 

St ate’s revenue commissioner directe d all counties to levy taxes on a 40 percent 

asse ssment ratio. In 1966, the legislatu re passed a bill placing a 1-year moratorium on the equaliz ation order.

IDA HO

1. Union Pacific R. Co. v. St at e Ta x Commission, citation (1960).

2. Now pending in State of Idaho, Third Jud icia l Di str ict Court, Ida County, 

Various Railroads and Utilitie s v. Sta te of Idaho tests constitutionality of 

20-20-40 Classification Act of 1965 and is set for argument May 1966. This act 

was apparen tly for the purpose of legalizing and perpe tua ting the existing discrim ination between the assessment of railroa d and other prop erty.

ILLINO IS

1. Chicago d North Western Ry. Co. v. Illin ois Dep artment of Revenue, 6 Ill. 

2d 278, 128 N.E. 2d 722, cert. den. 351 U.S. 950, 76 S. Ct. 844, 100 L. ed. 1474, 

reh. den. 352 U.S. 857, 77 S. Ct. 22, 1 L. ed. 2d 69 (1955). Relief denied.

2. Chicago, Burlington d Quincy R. Co. v. The III. Dept. of Revenue, 17 Ill. 

2d 376, 161 N.E. 2d 838 (1959). Relief denied.

3. People ex rel. v. Chicago, Burlington d Quincy R. Co. et al., 33 Ill. 2d 88, 

210 N.E. 2d 196 (1965). The Supreme Court of Illinois held for the railroad in 

this case involving 6 years of claim s by 12 r ailroa ds (46 individual lawsuits) 

dealing with the same g eneral issues previously resolved in favor of the railroads 

by the Supreme Court of Illino is in ear lier appeals. The decision is now on 

app eal to the U.S. Supreme Court.

4. People ex rel. CdN W Ry . Co. v. Hultnan, 201 N.E. 2d 103 (1964). Relie f 

denied.

IN D IA N A

1. State Board of Tax Commissioners v. C.M. St. P. d P. R. Co., 96 N.E. 2d 

279 (1951). Lower cou rt granted railroad sub stantial relief, Appellate Court 

of India na reversed.

IOW A

1. Chicago d North Western Ry. Co. v. Ioica Sta te Tax Comm, et al., 137 N.W. 

2d 246 (1965). Still pending af te r reassessment under “show cause” citation 

for alleged contempt. (Current hearings began Jan uary 1966 and have not been 

concluded.)

2. Chicago d North Western Ry. Co. v. X. T. Pren tis et al. Still pending 

af ter consolidation with 1965 assessment appeal. Several railroads have filed 

sim ilar appeals.

3. Chicago d North Wester n Ry. Co. v. Lynn Potter et al. District Court, 

Polk County, Iowa (ta x yea r 1965). Still pending after consolidation with 1964 

assessment appeal.

K A N SA S

1. Kan sas City Southern Ry. Co. v. Board of County Commissioners, 183 Kan. 

675. 331 P. 2d 899 (1958). This case held that the protest filed by the railroad 

in the lower court stated a cause of action and should not have been dismissed 

on dem urre r.

Justice Fatze r in his concurring opinion on page 905 makes the following 

observations of assessment practic es over a period of 20 y ears in the Sta te of 

K an sa s:

“In the instant case the pro tes t alleged that for more than 20 years, as a 

result of the commission’s own assessment ratio studies, it was advised
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 113

tha t the average rate of assessment of property to its true or market value in Cherokee County, which was not assessed by the commission, was 21 per­ cent. Thus, for a period of years the commission was advised by its own studies tha t the statutes of the State were being flagrantly disregarded by the local assessment officials in Cherokee County, but it failed to take cor­ rective measures to require that the assessments be made at the true or market value of the property asse ssed; consequently, such failure, over such period of years, can justify no other conclusion than tha t of an adopted policy or practice of constructive fra ud and discrimination against the plaintiffs and their property * * *.”

Before trial on merits, cases dismissed under threat of classification by legislature.

2. Union Pac. R. Co. v. Sloan, 188 Kan. 231, 361 P. 2d 889 (1961). Held that absent statutory right of appeal, fraudule nt and oppressive official conduct can be judicially challenged only through appropriate extraordinary legal remedies, 

such as injunction, mandamus or quo warranto.

Russman et al v. Luckett, et ah, 391 S.W. 2d 694, decided June 8, 1965, by the Kentucky Court of Appeals (State court of last resort). By this decision all property must be assessed at its f air cash value, starting January 1, 1966, as pro­ vided by tlie Kentucky constitution. The court warned all assessing officers would be held strictly accountable. It was understood this would produce equalization through the assessment of all property, including railroads, at the same level. Shortly aft er this decision, the Governor called the general assembly into spe­ cial session commencing August 23, 1965, and the needed legislation to implement the court decision was promptly enacted. 'Subsequently, in the concluding minutes of the regular session of the Kentucky General Assembly (near midnight, March 18, 1966), there was enacted a bill for 1966 and 1967 that will require the use of ad valorem tax rates against rail­ road and other public service companies different from those to be applied to property generally, for tlie purpose of collecting from such public service com­ panies the same or more revenue received from them during the 1965 tax year. Thus, the general assembly has taken action to deprive the railroads and other public service companies in like position from enjoying the benefits of the equalization program during the next 2 years. There is no assurance that these 

same tactics may not be repeated indefinitely.

LO U IS IA NA

1. Dixon ct ah v. Flournoy (tax year 1964), 247 La. 1067, 176 S. 2d 138 (1965). 

Relief denied.

2. Russie et ah v. Long et ah, U.S. Distric t Court, Eastern District of Louisiana, 

'C.A. No. 3345 (filed 1966). Suit to require tax commission to equalize assess­ ments throughout Louisiana and to enjoin commission from approving tax rolls and the collection of taxes not assessed on a basis of full cash value.

M IC H IG AN

1. Chicago and North Western Ry. Co. v. Michigan Department of Revenue,

U.S. district court, southern division, western district (tax year 1965), pending 

•on State’s motion to dismiss for want of jurisdiction.

2. Wyandotte Chem. Corp. v. City of Wyandotte (tax year 1960), 321 F. 2d 

927 (1963) decision of circuit court of appeals, sixth circuit, reversing district court decision in taxpayers favor on the ground tha t the taxpayer's remedy in 

State court was adequate.

M IS S IS S IP P I

1. There are no recent cases, which may possibly be accounted for by reason of the fact tha t a losing taxpayer in an assessment appeal must pay 10 percent of 

the contested taxes as a penalty (code 1940 § 9853).
114 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

MISSOURI

1. Norfolk d Western Ry. Co. v. Missouri Sta te Tax Commission, Circuit Court, 

Cole County, Mo. (tax year 1965), relief denied December 1965, pending on appeal 

to Missouri Supreme Court.

2. May Dept. Stores Co. v. State Tax Commission of Missouri (tax year 1955), 

308 S.W. 2d 748 (1958). Relief denied.

MONTANA

1. Yellowstone Pipe Line Company et al. v. State Board of Equalization, 138 

Mont. 603, 358 P. 2d 55 (1960). (Relief denied because State constitution permitted classification of pro per ty for assessment.) A diss enting opinion in thi s 

cas e found systematic, inte ntional discrimination by the board in its practice of 

assessing pipeline properties.

NEW JERSEY

The following suits for decla ratory ju dgments involve 1966 assessments:

1. Lehigh Valley R. Co. v. Kingsley, Sta te Division of Taxation et al.

2. Erie Lackawanna R. Co. v. Kingsley, Sta te Division of Taxation et al.

3. New York Central R. Co. v. Kingsley, Sta te Division of Taxation et al.

4. Pennsylvania R. Co. v. Kingsley, State Division of Taxation et al.

Superior Court of New Jers ey. This remedy is being tried because of long 

delays in obtaining decisions on appeals to Sta te division of tax appeals. 

There are still pending 167 railroad appeals covering years 1953 through 

1965 which have n ot reached the tri al calendar. One ra ilroad estim ates th at 

the e arlier cases may not be concluded u ntil about 1970.

5. Dela. Lackawanna d Western R. Co. v. Director, Sta te Division of

Taxation, 23 N.J. 561 (1957). Relief denied.

6. Lehigh Valley R. Co. et al. v. Director, 26 N.J. 173, cert. den. Relief 

denied.

7. Lehigh Valley R. Co. v. Director, 26 N.J. 188 (1957). Relief denied.

NEW YORK

1. New York Central R. Co. v. Assessors of the City of Buffalo, in Supreme 

Court for Erie County, N.Y. Sep arate suits riled fo r each tax year 1955 through 

1965. In 1964, cases for the years 1955 through 1959 were perm itted to lapse, 

acco unt impossibility of matching proof to burdensome prerequisites of city 

assessors.

In January 1965, cases fo r years 1960 through 1964 came to tria l. On one 

item, partie s agreed to reduce assessm ent by abo ut 50 percent, prio r to conclusion 

of trial. On another item, court reduced assessment by abo ut 60 percent and 

asse ssors have appealed. Case for y ear 1965 still pending.

SOUTH DAKOTA

1. Chicago and N orth Western Ry. Co. v. Gillis et cet., 118 N.W. 2d 316 (1962). 

Relief denied rega rding tax year 1962 in action f or wr it of mandate.

2. Chicago and North Western Ry. Co. v. Gillis, et cet., 129 N.W. 2d 316 (1964). 

Declarato ry judgment action rega rding 1962 tax year and relie f was again 

denied.

3. Chicago and North Western Ry. Co. v. Sta te Director of Taxation, Circuit 

Court, Lincoln County, S. Dak. (ta x year 1963). Decided September 1965, pending on appeal to supreme cou rt.

TENNESSEE

1. Nashville, C. d St. L. Ry . v. Brow ning et al (ta x year 1938), 176 Tenn. 245, 

140 S.W. 2d 781 (1940 ) 310 U.S. 362 (1940). Relief denied.

2. McCord et al. v. South ern Ry. Co. (tax year 1945), 187 Tenn. 247, 213 S.W. 

2d 184 (1948). Relief denied.

3. McCord v. Nashville, Chattanooga d St. Louis Ry. (ta x year 1945), 187 

Tenn. 277, 213 S.W. 2d 196 (1948). Relief denied.

4. Browning et al. v. Alabama Great Southern Railroad Co. (two cases ). 

McCord et al. v. Alabama Great Southern Railroad Co. (ta x years 1945-7-9),
TAX ASSESSME NT S ON COMMON CAR RIER PR OP ER TY 1 1 5

195 Tenn. 252, 259 S.W. 2d 154 (1953), 187 Tenn. 302, 213 S.W. 2d 207 (1948). 

Relief denied.

5. A.G.S. R. Co. v. Railroad and Public Utility Commission of Tenn., U.S. 

District Court, Middle District of Tennessee (ta x year 1949). Decision not reported (1950) , relief denied.

6. Biltmo re Hotel Court v. City of Berry Hill (ta x year 1963), 390 S.W. 2d 

223 (1963). Relief denied.

7. LAN R. Co. v. Public Serv ice Commission of Tenn., U.S. D istric t Court, Middle District of Tennessee (ta x ye ar 1965), pending on appeal to sixth circuit 

(1960).

8. Southern Railway Co. v. Clement et al., Chancery Court, Davidson County, 

Tenn. (ta x years 1964, 1965), pending on apiieal to Supreme Court of Tennessee 

(1966).

9. Souther n Railway Co. v. Clement et al., Chancery Court, Davidson County, 

Tennessee (ta x year 1965), still pending (1966).

The c urren t round of ta x litigation in Tennessee commenced with th e Browning

case decided by the Supreme Court of the United States in 1940. That decision in effect held that railroads could he assesed at full value, even though other prop erty was assessed at only a small fraction of full value. Through the years, rail roa ds have employed various legal theories in attempts to obtain relief from discrim inatory and burdensome assessm ents, but because of the decision in 

Browning, all efforts have failed . Afte r yea rs of frustration, one railro ad has Anally persuaded the F ederal Dis­ trict Court at Nashville to retai n jurisdic tion of an ad valorem tax case on the ground tha t there is no adequ ate remedy und er Sta te law. IAN R. Co. v. 

Public Service Commission, docket No. 4310, M.D., Tennessee (1966). A decision favo rable to the railroads has been appealed to the U.S. Circ uit Court of 

Appeals for the Sixth Circuit. Another phase of the ad valorem tax problem appears to be moving toward 

decision in the case of So. Rxvy. Co. v. Clement et al., supra, which is presently 

on appea l to the Supreme Court of Tennessee. Here, petitions w ere Aled request­ ing that all assessments in Loudon and Hawkins Counties be raised to actual cash value, or 100 percent. The chancery court of Davidson County sustained 

the jjetitions and the Sta te has appealed. Following the decision in the two latte r cases, plans were made to avoid the effect of the decisions should they become Anal. The Governor of Tennessee called t he leg islature into special session commencing March 14, 1966, to consider an amendment to the constitution to read, “The legislature may also provide for the assessment at different ratio s of value of such differen t classiAcations of property as they may by sta tute recognize.” This proposed amendment is aimed 

directly a t railr oad and other utility property.

VIRGINIA

1. Richmond, Fredericksburg and Potomac R. Co. v. Commonwealth of Fa., 

203 Va. 294,124 S.E. 2d 206 (1962).

WYOMING

1. CB A Q R. Co. v. Bruch et al, (ta x year 1962), 400 P. 2d 494 (1965). Relief 

denied.

2. CB A Q R. Co. v. Bruch, distric t court, Laramie County (ta x yea r 1963). 

Dismissed because of sim ilarity to issues involved in 400 P. 2d 494.

3. CB A Q R. Co. v. Bruch, d ist ric t court, Laram ie County (ta x yea rs 1964r-65). 

Two cases still pending relating to t ax years referred to.

Mr. Younger. Thank you.

The Chairman. At this time we will hear from Mr. Robert 

McDowell.

Will you come forward, sir? Mr. McDowell, attorney for the State property valuation depa rtment appearing for Gov. William H. Avery.
116 tax as sess men ts on common car rier property

The Governor is a former member of this committee. We are 

happy to have yon as his representative. We hope that when you go 

back you will give him our best wishes and so fo rth for a good term 

of office as Governor.

Mr. McDowell. Thank you, Mr. Chairman.

STATEMENT OP ROBERT 0. McDOWELL, ATTORNEY POR THE 

PROPERTY VALUATION DEPARTMENT, STATE OF KANSAS

The Chairman. You may proceed.

Mr. McDowell. Due to the lateness of the hour, Mr. Chairman, I 

do have a rather short statement which I would like to read to the 

committee with their permission.

Chairman Staggers and members of the Inte rsta te and Foreign 

Commerce Committee.

It is indeed my pleasure and privilege to appear before you today 

and bring you the personal greetings of our Governor William II. 

Avery, former member of this committee. Governor Avery has requested that I extend you his personal regard and well wishes. Also, 

on behalf of Governor Avery and Mr. Alvin E. Jones, director of 

property valuation department and other tax officials of the State of 

Kansas, we wish to make a statement in regard to II.R . 4972.

Fir st and foremost, let us emphasize tha t tax officials of the State of 

Kansas are not opposed to legislation requiring tha t all property be 

assessed for tax purposes at the same ratio of full value. Therefore, in 

principle Kansas is not opposed to subsection 1 of section 25a. We do, 

however, have some question as to whether this legislation is either 

necessary or desirable. We do have particula r objections to subsection 

2 as being neither necessary or desirable.

The premises on which this proposed legislation is based appear 

to be—

1. That property of interstate carriers is assessed for purposes 

of property tax at a higher rate of true market value than other 

property, and

2. That adequate judicial remedies are n ot now available to interstate carriers through State appeal boards or State courts.

Since the main objection is centered on subsection 2 of the proposed 

legislation, we shall first discuss pertinent Kansas statutory provisions 

as well as the judicial remedies now available to any taxpayer including 

interstate carriers.

Kansas statutes enacted in 1963 require th at all property be assessed 

for taxation purposes at 30 percent of full value. The statutes also 

provide that any assessor whether on a county level or on the State 

level or the State board of tax appeals or any other person responsible 

for determining assessed valuations shall be subject to a criminal 

penalty if they shall fail or refuse to assess any and all property at 30 

percent of full value.

Railroad, pipeline, electric power, telephone and telegraph companies operating in more than one county in Kansas are assessed by the 

State property valuation department. Any of these companies have 

the statutory right to appeal their assessments first to the director of 

property valuation and, from the director’s decision appeal may be
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 117

carried to the State board of tax appeals. After this, appeals may be 

taken to the State district courts or taxpayers may file an original 

action in the State district courts. The decisions of the district courts 

may be appealed to the State Supreme Court of Kansas.

The Supreme Court of the State of Kansas in a 1963 decision dealing 

with discriminatory assessments stated clearly this S tate’s views upon 

such practices by holding as follows:

Unif ormity of taxa tio n does no t pe rm it a syste ma tic, ar bitra ry , or intenti on al 

va lu atio n of the propert y of one or a few taxp ay ers at a su bs tantially hig her 

va lu atio n th an th at placed on ot he r prop ert y with in th e same taxing dis trict.

It might, be added that the principle of this language was clearly followed by the Supreme Court of Kansas in a case involving a specific 

railroad operating in Kansas upon their charge tha t their property 

was assessed at an arbitrary and discriminatory amount in relation to 

other property in the State of Kansas. Thus, we would submit to the committee for the ir consideration, 

tha t adequate tribunals now exist for the determination of any and 

all questions concerning alleged discriminatory taxation practices and 

that such tribunals fairly and equitably decide these issues.

In regard to the premise that interstate carriers are assessed at a 

higher ratio than all other property, we would caution the committee 

against accepting at face value all information presented to the committee purportin g to support tha t such discrimination does exist or 

tha t it exists in the degree indicated. It is acknowledged that through the history of the property tax, 

there have been problems of unequal assessments. These problems 

have come about due to the diversified nature of tax administration, 

changing values and technical problems of determining sale, market, or 

true value. However, in recent years taxing officials in the several 

States and, of course, I am limiting my remarks to the State of Kansas 

particularly, have made marked progress in the techniques of assessing 

and in achieving uniformity. In some States, this progress has just 

recently showed visible results.

Kansas State tax officials were instrumental in the passage of the 

1963 legislation requiring th at all property be assessed for tax purposes at 30 percent of the full value. While this legislation applies 

to all property, the real problems were with real estate assessments.

As of this writing, 3 years afte r the passage of the legislation, 97 

of the 105 counties of the State have either completed an appraisal of 

each parcel of real estate in th e county or are in the appraisal process. 

When the appraisal program is completed in a county, the property is 

placed on the tax rolls at 30 percent of the full appraised value.

By law in the State of Kansas, personal property assessed values 

must conform to values prescribed by the State property tax department. These values which are determined annually with the cooperation of various industries and economic groups, are printed in catalog 

form and furnished to each assessing official. This has resulted in 

personal property being assessed at an extremely high degree of u niformity at 30 percent of full value. For a number of years, the State property valuation departm ent in 

assessing railroads, pipelines, electric power, telephone and telegraph 

companies has been striving to arrive at a 30-percent ratio for these 

companies and this goal has largely been achieved.
118 tax assessme nt s on common car rier property

In assessing interstate carriers and utilities, the department in 

Kansas has used established methods of determining values, utilizing 

the standard approach as developed by the National Association of 

Tax Administrators.

Also, Kansas officials actively participate in utility assessing seminars sponsored by the Midwestern Association of Tax Administrators 

so as to continually improve assessing techniques.

We agree with and endorse the statement and position taken by 

Mr. Charles F. Conlon, executive secretary of the National Association of Tax Administrators, in a letter dated August 13, 1964, addressed to the Honorable John Williams, chairman of the Subcommittee on Transportation and Aeronautics, in which Mr. Conlon ably 

describes the efforts of S tate taxing officials in achieving equalization 

of assessments of all property and the potential adverse effect this 

legislation may have on taxing subdivisions of the State which are 

heavily dependent on property tax revenue for financing their 

operations.

If this legislation were to pass, it could greatly increase the caseload in an already overcrowded docket of Federal courts so tha t it 

could be a number of years before cases were decided. With the 

injunction feature of this proposed legislation, anticipated tax revenue 

of local taxing districts could be impounded for such a duration that 

it could result in a chaotic financial situation for such districts.

It is respectfully suggested that, before action is taken on this matter, 

full consideration be given to the potential impact upon local taxing 

districts and that the committee consider the progress States are 

making toward the elimination of discrimination in assessments.

Therefore, Mr. Chairman and members of this committee, we request that the record of this proceeding show that the State of Kansas 

is opposed to the enactment of H.R. 4972.

The Chairman. Mr. McDowell, we thank you for coming to the 

committee with your views.

We also want to thank the Governor. I assume th at the Governor’s 

statement will be in the record.

Mr. McDowell. Yes, sir.

(The following letter was received from Governor Avery, of 

Kansas, stating his views:)

T h e S ta te of K a nsa s. 

Topeka, Kans., February 25, J966.

Hon. Harley O. Staggers,

Chairman, Committee an Interstate and Foreign Commerce,

House of Representatives, W ashington, D.C.

Dear Mr. Staggers : This is in reference to H.R. 4972 which is before the 

committee for consideration.

Fi rst and foremost let ns emphasize th at tax officials of the State of Kansas 

are not opposed to legislation requiring that all property be assessed for tax 

purposes at the same ratio of full value. Therefore, in prin cipa l Kansas is not 

opposed to subsection 1 of section 25 (a). We do. however, have some question 

as to whether this legislation is eith er necessary or desirable. We do have 

pa rti cu lar objections to subsection 2 as being n eith er necessary or desirable.

The premises on which thi s proposed legislation is based api>ears to be—

1. That property of interstate car riers is assessed for purposes of property 

tax at a higher rat e of tru e market value than oth er property, and;

2. That adeq uate jud icial remedies are not now available to inters tate 

carriers through S tate appe al boards or S tate courts.

Since the main objection is centered on subsection 2 of the proposed legislation, we shall first discuss pertin ent Kansas sta tut ory provisions as well as
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 119

the judi ci al rem edies now av ailable to any ta xp ay er inc lud ing in te rs ta te 

ca rrie rs . Kan sa s stat ut es enact ed in 1963 requ ire t hat all pr op erty b e ass ess ed for ta xa­ tion purposes at 30 percent of fu ll value. The stat ut es also pro vid e th at any ass ess or, whe ther on a cou nty le vel o r on the S tate level or the Sta te bo ard of ta x appe als or any oth er person res ponsi ble for deter mi nin g asses sed val uatio ns, sh all be subje ct to a crim ina l j>enalty if they shall fail or re fu se to asses s an y 

an d a ll pr op erty at 30 pe rcent of fu ll value. Ra ilr oa d, pipeline, ele ctric pow er, telephone, an d teleg raph com panies op erat­ ing in mo re than one cou nty in Kan sa s ar e assessed by the Sta te propert y va lua­ tion de pa rtm ent. Any of the se com pan ies have the s ta tu to ry r ig ht to api»eal thei r assessm ents first to the director of prop ert y valuati on , and fro m the director ’s decision ap pe al may he ca rri ed to the State board of tax appeals . Af ter this, appeals ma y be tak en to the Sta te di stric t co urts or taxp ay er s may file an origi na l actio n in the St ate di st rict cou rts. The decision of the di st rict courts 

ma y be ap pe ale d to t he Sta te Suprem e C ourt of K ans as. The Supreme Court of the Sta te of Kansa s in a 1963 decision dea ling with disc rim inatory ass ess ments stat ed clea rly thi s Sta te ’s views upon such practices 

by holdin g as fo llo ws: “U nif ormi ty of taxa tio n does no t pe rm it a syste ma tic, ar bit ra ry or inten­ tio na l va luation of the prop erty of one or a few taxp ay ers at a subs tantially hig her va luation tha n th at pla ced on oth er prop erty with in th e sam e taxin g 

di st rict .” It mi gh t be added th at the principle of thi s lan guage wa s clea rly followed by th e Supreme Court of Kan sas in a case involving a specific ra ilro ad opera ting in Ka nsas upon th eir charg e th at th eir pro perty was asses sed at an ar bitra ry and disc rim inatory amoun t in relatio n to o ther property in the St ate of Kansa s. Thus, we would sub mit to the comm ittee for thei r co nside ratio n th at adequate trib un al s now exist for the de term ination of any and all questio ns concern ing alle ged discrim inato ry taxa tio n pr ac tic es and th at such trib un al s fairl y and 

eq uitab ly decide these issues. In rega rd to the premise th at in te rs ta te c ar rie rs ar e ass ess ed a t a hig her ratio th an all othe r pro per ty, we would caution the com mittee ag ai ns t accepting at fac e va lue all inf orm ation pr esen ted to the com mittee pu rp or tin g to support th at suc h discri mi natio n does ex ist or th at it exists in the deg ree indica ted . It is acknow ledg ed th at throug h the his tory of the pr op erty tax, there hav e been pro blems of unequal asses sm ents. These problem s hav e come about due to the diversifie d na ture of tax ad m in istrat io n, cha nging value s and tec hnica l prob­ lems of d etermi nin g sale, marke t, or t ru e value. How ever, in rece nt y ea rs ta xing officials in the sev era l St ates have ma de ma rke d pro gre ss in th e technique s of asses sin g an d in achieving un ifo rm ity . In some State s, this prog ress has ju st 

rec ently showed visible results. Ka nsas Sta te tax officials we re instru m en ta l in the passa ge of th e 1963 legisla ­ tion re qu iri ng th at all prop ert y be asses sed for tax pur poses a t 30 percent of the full value. Wh ile this leg islation ap plies to all pro perty , the re al problems w ere 

with real es ta te assessments. As of th is writing, 3 ye ars af te r th e pas sag e of the leg isla tion, 97 of the 105 counties of the State hav e eith er com pleted an ap pr ai sa l of each parcel of rea l es ta te in th e cou nty or ar e in th e ap pr ai sa l process. When th e ap pr aisa l pro ­ gram is co mplete d in a county, the p ro pe rty is p laced on t he tax rolls at 30 perc ent 

of th e full ap praised value. By law , perso na l pro perty asses sed values must conform to va lues pre scribed by th e Sta te pro perty ta x de pa rtm en t. The se values which ar e det erm ine d an nu ally with the coo peration of va riou s indu str ies an d econ omic groups, ar e pr inted in ca tal og form and fu rn ishe d to each ass ess ing official. Th is has re­ sulte d in perso na l propert y being assessed at an extre me ly hig h degre e of un iform ity a t 30 p ercent of full value. Fo r a nu mbe r of yea rs, the St ate pr op erty valuati on depa rtm en t, in assess ing railr oa ds , pipelin es, electri c power, telepho ne, and teleg raph com pan ies, ha s been striving to ar ri ve at a 30-percent ra tio fo r the se com pan ies an d th is goal has 

largely been achieved. In asses sin g in te rs tate ca rrie rs an d utilitie s, the de pa rtm en t ha s use d es tab­ lished me tho ds of deter minin g value s, uti lizing the st an da rd ap proa ch as de­ velo ped by th e Na tional Assoc iation of Ta x Adm inist rators. Also, Ka nsas officials ac tiv ely pa rti cipa te in utility asses sin g semi na rs spo nso red by the Mid­ we ste rn Assoc iation of T ax Adm inistra tors so as to continu all y impro ve as ses sin g 

tec hniqu es.
120 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

We agree with and endorse the statement and position taken by Mr. Charles 

F. Conlon, executive secretary of the National Association of Tax Administrators, 

in a letter dated August 13, 19C4, addressed to the Honorable John Williams, 

chairman of the Subcommittee on Transportation and Aeronautics, in which Mr. 

Conlon ably describes the efforts of State taxing officials in achieving equalization 

of assessments of all property and the potential adverse effect this legislation may 

have on taxing subdivisions of the State which are heavily dependent on property 

tax revenue for financing their operations.

If this legislation were to pass, it could greatly increase the caseload in an 

already overcrowded docket of Federal courts so tha t it could be a number of 

years before cases were decided. With the injunction feature of this proposed 

legislation, anticipated tax revenues of local taxing districts could be impounded 

for such a duration that it could result in a chaotic financial situation for such 

districts.

It is respectfully suggested tha t before action is taken on this matter, full 

consideration be given to the potential impact upon local taxing districts and that 

the committee consider the progress States are making toward the elimination of 

discrimination in assessments.

Respectfully submitted for the committee’s consideration.

Yours very truly,

Wm. H. Avery, Governor.

The Chairman. Mr. Rogers.

Mr. Rogers of Texas. Mr. McDowell, I wish you would extend my 

personal regards to the Governor, Mr. Avery, on your return—although I am in disagreement with him on the conclusion.

Mr. McDowell. I will convey these sentiments.

Mr. Rogers of Texas. So far as Kansas is concerned you take the 

position that, by State law, violation of which would create a situation 

where criminal penalties could be invoked, 30 percent of the market 

value is the fixed percentage at which all property regardless of who 

owns it has to be assessed.

The only question in your mind or in the Governor’s mind would be 

with regard to the amount or value th at was fixed by the State board.

Mr. McDowell. Mr. Rogers, maybe I did not clearly get into it 

enough in my statement, but our constitution in Kansas requires the 

legislature shall provide for a uniform and equal rate of assessment 

and taxation except mineral products.

The legislature in carrying out the mandate set the rate at 30 percent of what we call justifiable value. The assessors cannot even 

agree on this term. It would be full value or market value.

Mr. Rogers of Texas. Your State board fixes it at the market value.

Mr. McDowell. Well, our State board of equalization will hear an 

appeal but we have our taxing-----

Mr. Rogers of Texas. Who fixes the market value ?

Mr. McDowell. In the assessment of the interstate carriers this is 

done by the property valuation department using the recognized 

methods of valuing property. Of course, information is submitted by 

the industry on this. Then this valuation is determined and 30 percent is applied.

Mr. Rogers of Texas. Now valuation that is determined, in order 

for you to get into court on this I presume you would abide by the 

procedures of the Administrative Procedures Act and require a showing that arbitrariness or capriciousness prevailed in order to upset the 

valuation board.

Mr. McDowell. Yes. In Kansas by State law we do require this 

showing to be made.

Mr. Rogers of Texas. Let me say this.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 121

So f ar as Kansas is concerned then, you feel th at you are all right, 

the people are treated fairly. If a showing is made that in a number of other States the same thing does not exist don’t you think tha t 

people who are being discriminated against ought to have a forum to 

get some kind of correction of their ills ?

Mr. McDowell. Again you understand my position; I am testifying 

for Kansas. I would say th at if the situation would exist among any property 

owners and not just interstate carriers where they were not assessed 

uniformly, then certainly relief is needed. But again I question, and again I am sorry to keep locating myself 

back into Kansas on the specific issue, I personally feel if all the 50 

States had the same setup tha t we have in Kansas maybe this problem 

would not exist. But many other States have good State administrative remedies that 

possibly should be explored.

Mr. R ogers of Texas. You tell the Governor if he has this worked 

out in Kansas he had better watch out, we will turn the problem over 

to him to sell to the other 49 States.

Thank you, Mr. Chairman.

Mr. Younger. I have a statement for you to take back to the Governor. I have worked several years with him on the committee. I am 

very positive if he were on the committee he would be in favor of this 

legislation.

The Chairman. Mr. Nelsen.

Mr. Nelsen. I join with my colleague in sending greetings to Bill. 

Bill served on this committee with us and I have a very high regard 

for him. I hope you will deliver this very personal message to Bill.

Tell him I took one bottom off my plow. lie will know what I mean.

Mr. McDowell. I will, Air. Nelsen.

The Chairman. Thank you again, Air. AIcDowell.

Air. AIcDowell. Air. Chairman, I thank you for the time and consideration. I know’ the hour is growing late.

The Chairman. We are sorry if we held you up.

Air. AIcDowell. That is quite all right.

The Chairman. Our next witness will be Air. William E. Peters. 

Is he present ?

I would like to discuss this with you briefly before you start.

The committee will have to go and answer a quorum call. Do you 

want to wait until we reconvene and proceed this evening or do you 

want to pu t the statement in the record as given ?

We will come back if you want us to come back.

STATEMENT OF W ILLIA M E. PETERS. STATE TAX ATTORNEY, 

LINCOLN, NEBR.

Air. P eters. I would like to abide by the convenience of the committee. I will put my statement in the record with one request, if I may be 

so bold, tha t for the committee’s benefit on the request of the committee to the industry representatives who are proponents of this bill, 

when the industry representatives tabulate the States wherein they do 

not feel they have received due process or adequate State remedy that 

they also will advise the committee of what action they have taken
122 TAX ASSESSME NT S ON COMMON CAR RIER PRO PER TY

un de r existin g Fe de ral leg islation, which leg islation provide s them 

a Fe de ral remedy u nd er section 1341, title 28, when the re is not an adequate State remedy to pr otec t th eir c on stitut ion al rig hts .

I think that an exam ina tio n of this would be v ery int ere sting to the 

committee. And, if t here is a question, as some of t he ind ust ry mem ­

bers have told me, th at th ei r problem in ge ttin g there is th at the 

Fe de ral courts have dec lined to exercise juris diction, then maybe we 

have a jur isd iction al an d pro cedural problem wi th reg ard to our ju ­

diciary and not w ith in terfer in g, as Neb raska would say, with rega rd 

to t he righ t o f the S tate to work out an equitable t ax policy.

My fu rthe r co mments I w ill sub mit in wr iting , sir.

Th e Chairman. Tha nk you, Mr. Peters.

Do either one of you gen tleme n have a ny ques tions ?

Mr. Rogers of Texas. No.

Mr. Younger. You a re r ef er ring to a section of the Trans po rtation 

Ac t?

Mr. P eters. Section 1341 of tit le 28 of the Uni ted State s Code of 

the Ju di ci ar y Act which pro vides with rega rd to St ate taxa tio n if 

there are no adequate remedies------

Mr. Younger. Yes, th an k you.

Th e Chairman. Tha nk you. Your sta tem ent will be made a par t 

of the record a nd also yo ur sta tem ent you have ma de here.

Mr. P eters. Th an k you.

(T he statem ent re fe rred to foll ows:)

Sta teme nt of George J. D worak, Nebraska State T ax Com mi ssione r;. 

Subm itted by W il i.iam E. P ete rs, Stat e T ax Attorney

T here a re tw o f eatu re s of II .R. 4972 an d th e co mpa nion h ills on wh ich N eb ra sk a 

de si re s to comm ent. The se const it ute su bs ec tio ns 1 an d 2 of th e prop osed section 25a of th e In te rs ta te Co mmerce Act.

SU BS EC TI ON ( 1 )

The fi rs t ob se rv ation on su bs ec tio n (1) is to ca ut io n th is co mm itt ee th a t therea re m an y pro ble ms in det er m in in g w hat is “t ru e m ar ket valu e” an d th is, w ithout de velop ing ra tios , in an d of it se lf is a d is ti nct an d co mplex pro ble m ar ea . 

T his poin t need no t be ela bora te d a t th is tim e. You a re on ly aske d to ac ce pt 

th e val id ity of th is st ate m ent from a S ta te who se re ve nu e sy stem is curr en tly 

ba se d pri m ar ily upon th e pro pert y ta x.

Mo re se riou s th an po ssi ble te ch ni ca l im pl em en ta tion is th e e xp re ss ion of p olicy 

co nta in ed in su bs ec tio n (1 ). Invo lved he re is th e ri ght of th e se ve ra l S ta te s 

to det er m in e th eir own ta x st ru ctu re . N eb ra sk a be lie ve s th a t th e Sta te s shou ld 

be allo wed to es ta bl ish re as ona ble cla ssified as se ss m en ts w ithout th e Fed er al 

Gov er nm en t impo sin g c ond itio ns a nd po lic ies up on the S ta te s.

The citiz en s and vo te rs of N eb ra sk a will th is yea r vo te on a co nst itutional 

am en dm en t to au th ori ze clas sifie d agri cult ura l la nd . T his ty pe of leg isl ati on ! 

is no t new . And, N eb ra sk a fe el s th a t its vo te rs sh ou ld be per m itte d to ad op t 

th is pu blic policy w itho ut th e un se en fe de ra lly im po sed co nd iti on of th e same 

tr eatm en t fo r s elec ted in dust ri es.

N eb ra sk a is no t sa yi ng th a t we en do rse dis cri m in ato ry cla ss ifi ca tio ns . No 

ad m in is tr ato r ca n sa y in go od fa it h to th is co mmitt ee , nor an yo ne else, th a t 

cl as sifica tion s can be an y o th er th an reas on ab le. But th ere is no thing ob jec ­

tionable to re as on ab le cl as sifica tion . And it is su gg es ted th a t th e in trod uc er s 

of th is legi slatio n do no t obje ct to re as on ab le cl as sifica tion s or inte nd to deny 

re as ona bl e cla ss ifi ca tio ns . T he lang ua ge does not pro hib it lower ra tios , no r 

do es it pr es cr ib e th e same r a tio s ; th e lang ua ge on ly pro hib it s hig he r ra ti os fo r 

th e se lected in du st ries .

On ly one fu rt h er po in t on su bs ec tio n (1 ). N eb ra sk a wou ld qu estio n w het he r 

th ere is su bsta nti ati ng ev iden ce th a t w ha t m ig ht be ca lled classif ied as se ssm en t 

is eit h er di sc rim in at ory to or a bu rd en on in te rs ta te co mmerce . Th is is espe ­

ci al ly tr u e wh en al l in dust ri es w ithin a gr ou p are tr eate d un ifor m ly .
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 123

SUBSECTION (2 )

Th e S ta te of N eb ra sk a is op po sed to su bs ec tio n (2 ). The op po sition to th is 

se ct ion re su lt s from th e op inion th a t th is se ction is no t ne ed ed , co uld work a 

se riou s hard sh ip upon th e S ta te an d th e S ta te ’s pol itic al su bd iv isio ns , an d th a t 

it is an in fr in ge m en t up on th e ri g h t an d th e dut y of th e S ta te court s to in te rp re t S ta te law .

T he S ta te of Neb ra sk a, fo r a very goo d reas on , do es no t al lo w in ju nct io ns 

again st th e co lle cti on of ta xe s. T his policy is n eit her a rb it ra ry nor ca pricious . 

I t was de sign ed only to in su re th e ord er ly flow of re ve nu es in to th e S ta te and 

th e politica l su bd iv isio n. If th e in ju nct io n pr oc es s co nt em pla te d in th e legi slation w er e to be use d, it wou ld po se se riou s fina nc ial th re a t to N eb ra sk a m et ro ­

pol itan are as. This wo uld be ac co m plishe d by de privin g su bd iv isio n go ve rnm en ts of cri ti cal reve nu es and del ay in g th e re ce ip t of su ch re ve nu es unti l su ch 

tim e as th e Fed er al ju dic ia l pr oc es s ru ns its co urse.

N eb ra sk a prov ides a very adequate remed y th ro ugh it s court system fo r de ­

te rm in ati on of pr op er ty as se ss m en ts. Ther e is, of co urse , no ne ed fo r th e Fed ­

era l court s to be in jected in to S ta te ta xati on in th e m att er co nt em pl at ed by 

th is bil l. N eb ra sk a co ur ts are m or e fa m il ia r and ha ve had m or e ex pe rien ce 

w ith th e de te rm in in g val uat io ns and th e pro pe r metho ds invlov ed . To ch an ge 

th is pr oc ed ur e wo uld ac co mplish uncert ain ty , de lay, and unn ec es sa ry ex pe ns e 

to th e S ta te of Neb ra sk a an d it s politica l su bd ivisi on s, w hi le do ing no th in g to 

th e su pp os ed prob lem refle cted in su bs ec tio n (1 ) of th is le gi slat io n.

F u rt h er, N eb ra sk a’s po sitio n is th a t it s own court s are th e pro per co urts to 

in te rp re t and co ns true N eb ra sk a la w s. Co nseq ue ntly, N eb ra sk a is oppos ed to 

th e p ro vi sion s of su bs ec tio n (2 ).

SUMMARY

N eb ra sk a is opposed to II .R . 4972 an d th e id en tica l co mpa ni on bills which 

ha ve been in trod uc ed be ca us e it is an unw arr ante d in fr in gem en t up on th e ri ght 

of th e S ta te to de term in e S ta te ta x in g policy an d be ca us e it is an unw arr ante d 

in fr in gem en t upon th e ri ght an d d u ty of th e S ta te court s to de cide th e co ns titu ti o n ali ty of s uc h ta x policy.

N eb ra sk a, th er ef or e, re sp ec tfully re qu es ts th a t th is co m m itte e re fr ain from 

re port in g th is b ill o ut of co mmitt ee .

(The following statement was later also submitted by Mr. Peters:)

Su pple m e n t a l Sta te m en t of W il l ia m E. P et er s, Sta te T ax Att or ney , Sta te

of Neb ra sk a

Bec au se of th e sh or tn es s of tim e on M arch 2, 1966, I ch ose not to pre se nt ora l 

te st im on y a t th e he ar in gs on II. R. 4972 an d th e 12 id en tica l bills . I, th er ef or e, 

su bm it th is st ate m ent fo r th e be ne fit of th e co mm itt ee an d a s a su pp le m en t to th e 

st ate m ent of N eb ra sk a S ta te T ax Com miss ione r, Ge org e D wor ak , a copy o f whic h 

w as file d w ith th e cler k of th e co m m itte e on M arch 2, 1966.

H.R. 4972 is de ce ptively s im ple in it s a ppe ar an ce s an d l en gt h. How ev er, no on e 

ca n ov er st re ss th e se riou sn es s and c om pl ex ity of t h is le gi slat io n. T his b ill is no t 

on ly sign ific an t be ca use of th e pr ob le m which it att em p ts to m ee t, but also beca us e of th e im pa ct it wi ll ha ve if pas se d in its pre se nt form .

Befor e di sc us sing t he i ss ue s invo lved , I wish to com men t re gard in g t he val id ity 

of th e st ati sti cs pres en ted. F ir st , th e in dust ry is no t ex ac tly un bia se d in th is 

m att er. Second, th e st ati st ic s pre se nte d are no t co mpr eh en sive and do no t re ­

flect th e si tu ati on ex ising ac ro ss th e United Sta te s. F or ex am pl e, N eb ra sk a 

which has co ns itutiona l an d sta tu to ry classif ied as se ss m en t is no t includ ed . 

T hi rd , th e st ati st ic s are in accura te an d do no t refle ct pre se nt co nd itio ns . If th e 

co m m itt ee had ha d mo re tim e fo r te st im on y, it wo uld ha ve heard te st im on y th a t 

th e st ati sti cs su pp lie d fo r Iowa and K an sa s were in ac cur at e. An d, fo urt h, th e 

st ati st ic s a re pr em ised on th e co nc lusion th at all ra il ro ad pro pert ie s are inde ed 

val ue d a t “t ru e m ar ket va lu e, ” a co nc lusion which wou ld appear to be so m ew ha t 

tenu ou s. T h at th er e are ta x la w s an d adm in is tr ato rs sy m pa th et ic to ra il ro ad is 

as tr u e as th e st ate m ent th a t th ere a re la w s an d ad m in is tr ato rs not sy m pat he tic 

to th e in dust ry .

W hy ha ve I mad e th e ab ov e co m m en ts a bout the s ta ti st ic s? Si m pl y be ca us e of 

th e fu ndam enta l im po rtan ce of su ch st ati st ic s to th e co m m ittee in det er m in in g 

th e pr op er re m ed y to pu rs ue on ce th e pu blic policy is es ta bl is he d. I will ou tlin e 

und er th e disc us sion o f s ub se ctio n 2 o f th e prop osed s ec tio n 25A w h at I feel wo uld 

be ne ed ed sta ti sti cal in fo rm at io n.
124 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

SUBSECT ION (1 )

Before discussing classified assessments, I would urge on the committee that 

nonoperating property of inte rstate carriers he excluded for the purposes of this 

act. I believe there is a substantial difference between operating property which 

carries or is incidental to the carriage of persons or property and property such 

as grazing lands, warehouses and factories, timberlands, oilfields, resort areas, 

etc. Taxation of such property, which is more in the nature of investments, 

under a reasonable classification system would not appear to be a burden upon 

interstate commerce.

The basic disagreement over subsection 1 is tha t of the propriety of classified assessments. This usually takes one of two forms, either a different means 

of arriving at value or a different percentage of value for the assessment rate. 

Another means of achieving this is to apply a different mill levy or exempt certain property within the taxing district from particular mill levies.

Resolving this disagreement is apparently a policy decision for the committee. 

But, before the committee condemns State classified assessments, it should be 

observed that reasonable classified assessments have long been permitted. No 

one has said that reasonable classifications are wrong, except those who are not 

in the preferred classes.

The decision before the committee would appear to be to permit reasonable 

classifications—the status quo—or to give interstate carriers most-favorednation treatment. If the latter course is followed, then certainly everyone connected with interstate commerce, as the same is being defined by Congress and 

the courts, will be petitioning to be brought under the most-favored-nation 

treatment.

At this stage Congress will then be close to declaring t ha t due process requires 

equal assessments rather than working under the inte rsta te commerce clause. 

When this develops, then where is the logic not to apply the principle to income 

tax as well as property tax? And then what about the preferred treatment which 

Congress and States have seen fit to give certain industries? Isn’t this then 

discriminatory? It has to be because reasonable classifications are declared discriminatory by H.R. 4972.

If we are truly concerned about the different treatment of interstate commerce 

carriers, then why not strike the words “a higher” and insert “any other” ? 

SUBSECTION (2 )

Once the policy dispute is resolved, then it is necessary to make a serious study 

of the needed remedy. This is the very reason why current and detailed s tatistics on all the States are necessary. It would appear that the committee would 

want to know exactly what States discriminate, the degree of such discrimination, whether discrimination is by administrative practice or by law, and if by 

administrative practice, whether such is sanctioned by the courts of the particular 

jurisdiction. The committee is urged to have its own finding to rely upon or to 

afford adequate opportunity for both sides to verify the statistics relied upon. 

Further, it is questioned whether the Federal judicial process is any speedier 

than State judicial processes in those States where there is a significant delay 

before trial.

A proper grouping of the several States is necessary in order to determine 

whether or not a new and different remedy is needed, especially in light of basic 

policy innovations made in subsection 1.

If discrimination is by law, then adoption of subsection 1 will immediately 

invalidate many State statutes and constitutional provisions, at least so fa r as 

they apply in their operation to interstate commerce carriers. In these instances, 

it is submitted, there is no need shown for a new and unique Federal remedy. 

Certainly the State courts should not be judged as having failed to comply with 

Federal law, especially when they have not had the opportunity to do so.

If discrimination is the result of administrative practices, then it is necessary 

to determine if such action is sanctioned by the highest courts of the State. 

There is no reason to take away jurisdiction from State courts and place it in 

Federal courts unless the complainant has at least made a bona fide attempt to 

exhaust State remedies.

In addition to determining the true position of the States a t the present time, 

it would appear advisable for the committee to seek advice as to present remedies 

available in the Federal courts. With a clear statement of public policy as subsection 1 would be, it is very possible that adequate remedies already exist and 

need only be tried.
TAX ASSESSME NT S ON COMMON CAR RIER PROPERTY 1 2 5

Cert ain ly a pr oc ed ur e which w il l: (1) in cr ea se th e Fed er al co ur t do ck et ; (2) 

hin de r, de lay , an d co nfus e th e ad m in is tr ati on of S ta te an d loc al ta x es; (3 ) de ­

pr iv e S ta te co ur ts of th e ri ght to de te rm in e S ta te ta x quest io ns; an d (4 ) je op ­

ard iz e S ta te an d loc al re ve nu e flows, shou ld no t he ad op ted unl es s th er e is a need 

fo r s uc h a dra st ic reme dy.

Eve n if th er e is a ne ed fo r w ho lesa le re m ed ial ch an ge s, cert ain of thos e pr ovide d in s ub secti on 2 sho uld not be ad op ted.

F ir st , th e powe r to re st ra in by in ju nc tion th e as se ss m en t, lev y, an d colle cti on 

of any ta x is ba sica lly fo re ig n to good go ve rn m en t an d is contr ary to ex is ting 

F edera l ixdic.v. See section 1341, United S ta te s Code, ti tl e 28. Not only dot's 

th is d is ru p t efficient ta x adm in is tr ati on, but it ma y also se ri ousl y de pr iv e local 

go ve rn m en ts of reve nu e wh en ne ed ed . On flit' oth er ha nd , it is not fa ir to re ­

quir e ta xes to be pa id. an d. if ille ga lity is de te rm in ed at some fu tu re da te , to 

re pa y on ly the am ou nt ori gin all y pa id. C er ta in ly a prov ision re qu irin g S ta te 

an d lo ca l go ve rnmen ts to pa y in te re st on tin* po rtio n de cl ar ed ille ga l at th e same 

ra te as is ch arge d de linq ue nt ta xpayers wo uld no t be unfa ir . Thi s ap pr oa ch 

wou ld appear to he a re as onab le comp romi se, pro te ct in g bo th S ta te an d loc al 

go ve rn m en ts a nd th e ta xp ay er .

Second, subsec tio n 2 pr ov id es th a t S ta te remed ies do no t have t o be ex ha us te d. 

It is re qu es te d th at thos e S ta te s which prov ide ad eq uat e S ta te remed ies no t be 

pu ni sh ed fo r th e om iss ions of oth ers un les s ab so lu tely ne ce ss ar y. It is, th er efore, su gg es ted th a t th e ex haust io n of Sta te remed ies be re quir ed ex cept in thos e 

si tu ati ons whe re one or mo re of th e follo wing ex is ts : (1 ) S ta te co nst itutional or 

st atu to ry prov isions are c o n tr ary to su bs ec tio n one; (2 ) adm in is tr ati v e p ra ct ices 

which re su lt in di sc rim in at io n hav e bee n sa nc tio ne d by th e hi ghes t court of tin1

S ta te or whe re sa id co urt has re fu se d to hea r or de te rm in e th e val id ity of such 

pra cti ces; (3) adm in is tr ati ve pra cti ces ha ve co nt in ue d dis cr im in at io n de sp ite 

S ta te court decis ion s to th e c o n tr a ry ; an d (4 ) a det er m in at io n ca nn ot be ha d 

th ro ug h an ap pe al to a sing le adm in is tr ati v e ag en cy w ith fu rth e r court ap pe al s 

to a co urt h av ing st at ew id e ju ri sd ic ti on.

In essence, Co ngres s wo uld be de fin ing fo r pu rp os es of In te rs ta te Co mm erce 

w ha t is n ot a “p lain , spe edy, an d eff icient rem edy in S ta te c ourt s. ” It wo uld t he n 

he un ne ce ss ar y to ch an ge or am en d section 1341 of ti tl e 28 of th e Un ite d Sta te s 

Code. F urt her, th is w ould leav e th e t h re a t of i nj un ct io n or o th er Fe de ra l proc ess 

fo r th os e Sta te s wh ich do no t pro vi de ad eq ua te S ta te re m ed ie s fo r in te rs ta te 

comm erc e.

C er ta in ly th e ap pr oa ch an d po ss ib le alt ern ati ves which I ha ve proposed he re 

will invo lve som e eff ort. How ev er , it is we ll-spe nt effo rt fo r thos e of us who 

be lie ve we m us t mak e ev er y ef fo rt to pr es er ve th e in te gri ty of th e Sta te s in ou r 

F edera l sy stem of go ve rnmen t.

CONCLUSION

I reaffir m th e su pp or t of N eb ra sk a an d ou r en do rs em en t of the s ta te m ents m ad e 

by o th er Sta te s. F urt her, N eb ra sk a is opposed to th e le gi sl at io n co nt em pl at ed i n 

H.R. 4972. Ho we ver, if th e co m m itte e’s ju dgm en t is diffe re nt fro m th a t of 

N eb ra sk a. I wo uld re sp ec tful ly urg e th e co mmitt ee to co ns id er th e prop os als I 

ha ve mad e. Cer tain ly I be lie ve th e so lu tio ns di sc us se d ab ov e wo uld be mo re 

ac ce pt ab le t han thos e pro po sed.

The Chairman. This will conclude the hearings on this and allied 

hills. The record will be held open for 5 days for .any other statements 

t o he submitted for the record.

The committee will adjourn.

(The following material was submitted for the record:)

Sta tem en t of Lyn n P otter, C h a ir m a n of t h e I ow a Sta te T ax Co m m is si o n

H.R. 4972 co nt ai ns a ba sic pr ov isio n ap pe ar in g to in su re com mo n carr ie rs 

again st an as se ssed va lue be ing as cr ib ed to th eir pro pert y by an y S ta te or su bdivi sion at a high er ra tio to “t ru e m ark et va lu e” th an is used in det er m in in g th e 

as se ss ed v al uat io n of all oth er p ro pert y in such d is tric t.

W hile ass er tion of th is ba sic eq uitab le pr in cipl e is la ud ab le , th e qu es tion s of 

it s ne ce ss ity becomes se riou s whe n it is re alized th a t such pr in ci ple is al re ad y 

re si dent in S ta te laws an d th a t su ch re lief fo r ag gr ieve d ta xpayers , as is availab le to al l oth er ta xpa ye rs , is abundantl y av ai la bl e to ta xpayers wh o are comm on 

carr ie rs . Sinc e th e Sta te s alr eady ha ve th e pr in ci pl e of th is bi ll in clud ed in 

th eir sta tu te s an d inde lib ly ex pr es se d in com mon law , it se em s th a t a re pe tition 

in a Fed er al pu blic law is no th in g m or e or les s th an re du nd an cy .

(5 0- 00 1— 06 — - 9
12() tax assessme nt s on common car rier pro per ty

P ara g ra p h 2 of th e hil l ta k es aw ay from th e Sta te s ju ri sd ic ti on to en force the 

sta tu te s th e Sta te s al re ad y ha ve whi ch ass ert th e ri g h t of all ta xpay ers to ha ve 

th eir pr ope rt y asse ssed on th e sa m e ra ti o as all oth er pr oper ty .

Can i t be th a t com mon ca rr ie rs a re a cl as s a p a rt a nd e nti tl ed t o s pe cial Fed er al 

le gi sl at io n whic h o th er ta x p ay e rs a re den ied ?

The as se ssm en t of th e pro pert y of com mo n carr ie rs is ac co mplish ed in mo st 

S ta te s by a ce nt ra l S ta te as se ss m en t au th ori ty . C en tral as se ss in g auth ori ties 

ha ve comm only fol low ed th e sta tu te s of th eir Sta te s, ha ve oft en bee n th e su bj ec t 

of su it s of common ca rr ie r gro ups an d in di vid ual enti ti es and ha ve been su bje ct ed to wides pr ea d hyper cr itic is m .; bu t ha ve nev er be en ex em pt ed from su its 

in th e pr op er Sta te co urt s re la ti n g to th e ex er ci se of th eir as se ss m en t powe r. 

If th e co urt s of the Sta te s ob lig ed to si t in ju dg m en t of th e ac tion of all as se ss ­

ing bo dies ar e to be ci rc um ven te d so th a t th eir ju dgm en t ap plies only to 

pro pe rt y ot he r th an th a t of comm on carr ie rs , it is qu es tionab le w he th er a consi sten cy betw ee n th e as se ss m en t of all oth er pro per ty an d th e as se ss m en t of 

th e pr oper ty of comm on ca rr ie rs cou ld ev er be on th e sa me ba sis.

In essenc e th is bill sp lits th e ju ri sd ic ti on be tw ee n th e S ta te co ur t sy ste ms 

an d th e Fed er al co urt sy ste m. I t is difficult en ou gh fo r S ta te co urt sy stem s to 

be co nsi st en t w ith ou t th e addit io nal jeop ar dy of ad din g anoth er voic e to th e 

co nfus ion.

Bey on d th e di sc rim in at io n be tw ee n ju ri sd ic tions pr op os ed in th is legi slatio n 

by as sign m en t of som e ju ri sd ic ti on to Fed er al co urt s an d some ju risd ic tion to 

S ta te co ur ts lie s the very pra cti cal fa ct (b at Fed er al dis tr ic t co urt do ck ets ar e 

st il l sufficie ntl y crow ded to po stpo ne ju stic e.

T he pra ct ic al tr u th is th a t su it s in it ia te d in F edera l d is tr ic t co ur ts ma y be 

co nt in ue d fro m tim e to tim e, and in th e m ea nt im e ta xin g dis tr ic ts sorely in 

nei'd of reve nu e mig ht be de nied an y reve nu e a t al l from th e as se ssm en t an d 

lev y up on t he pr op er ty o f co mm on c arr ie rs .

Arm ed w ith th e pr ov isions of II.R . 4972, com mon carr ie rs m ig ht find a wa y 

to po stpo ne pa ying pr op er ty ta x e s fo r ma ny year s in man y d is tr ic ts with re su lting ov er bu rd en in g of oth er ta x p ay ers lia ble fo r pro per ty fa x to thos e dis tr ic ts 

an d tin1 unju st en rich m en t th ro ugh lack of asse ssmen t an d levy of the common 

ca rrie rs .

If comm on carr ie rs did not hav e th e same re dre ss to th e court s of the Sta te 

as oth er ta xp ay er s, j ust if ic at io n wo uld be su bs la nt ial fo r a m easu re su ch as II.R. 

4972. Tin* sim ple fa ct is that, no su ch si tu at io n ex ists. Co mm on carr ie rs have 

come in to Sta te co urts, ha ve had th eir gr ieva nc es re dr es se d, an d have, in ma ny 

in stan ce s, ob tain ed advan ta ges not sh ar ed by oth er ta xpayers . To giv e the m 

th e ch oice of going th ro ug h th e S ta te co ur ts or th e Fed er al co urt s fo r re dr es s 

of gri e va nc es is to give them a ri ght an d pr iv ile ge which is pat en tly denied 

o th er ta xp ay ers .

In Io wa, in te rs ta te co mmerce re ce iv es th e sa m e ri ghts an d pr iv ile ge s gr an te d 

to do m es tic comm erce. In te rsta te ta xpayers a re gra nte d th e same ri ghts an d 

pr iv ileg es th a t in tr ast ate ta x p ay e rs enjoy. In ad di tion in te rs ta te en tities ar m ed 

w ith Fed er al pub lic law s ha ve de man de d an d all too often rece ived mo re fa vorab le tr eatm en t th an do mestic pro pert y ow ne rs can im ssibly rece ive un de r Sta te 

st atu te s.

If th is bill become s law , th e pr om ise th at S ta te s m ak e in th e ir st atu te s an d in 

th eir comm on law th a t al l ta x p ay ers sh al l be tr eate d eq ua lly will become an 

iinp os sibilit y. Sta te s ca nn ot po ss ibly ho no r th eir co m m itm en ts whe n thos e com ­

m itm en ts are su bj ec ted to sep ara te ju ri sd ic ti ons ov er which th e Sta te s ha ve no 

co nt ro l.

Con ce ivab ly in te rs ta te co mm on carr ie rs could find them se lv es in a po sit ion of 

uneq ual tr eatm ent by reas on of a Fed er al co urt de cis ion be ing more st ri ngen t 

up on th em th an the S ta te sta tu te s or th e decis ion of th e S ta te c ou rts. It is possibl e th a t in te rs ta te carr ie rs co ul d eit her be plac ed in a po sitio n of ad va nt ag e or 

be pl ac ed in a p osition o f d is advanta ge u nde r t he p ro vi sion s of th is a ct w ith r esu lting loss o f e qu ity the y may n ow e njoy , by re as on of d iverge nc e of ju dg m en t on th e 

p a rt o f t h e tw o c ou rt sys tem s.

In a ve ry re al sense in te rs ta te carr ie rs are now in su re d again st ineq ui ty by 

S ta te st atu te s an d by S ta te ju ri sd ic ti onal proc ed ur es. A de m an d fo r se par at e 

tr eatm en t is a de man d fo r sp ec ia l tr ea tm en t an d a de man d fo r spec ial tr ea tm en t 

is a pass port to in eq uity.

Statement on Beh al f of th e State of W yoming on I I.R . 4972

On beh al f of th e S ta te of W yo ming th e following st ate m en t is h ereb y pr es en ted 

to th e C om m itt ee on In te rs ta te a n d Fo reign Co mm erc e o f t he 11.S. Ho use of Re pre-
TAX AS SESSME NT S ON COMMON CAR RIER PR OPERTY 127

se nta ti ves fo r the reco rd . Tlie S ta te wo uld ha ve mad e fo rm al ap pl ic at io n to 

appear be fore t he com mitt ee , hu t we rec eiv ed a bs ol ut el y no no tic e of th e he ar in gs .

F ir st of all , we wi sh to co m pl etel y co nc ur an d jo in in th e st ate m ent an d te sti ­

mo ny giv en by Mr. C ha rles Co nlo n, of th e N at io na l A ss oc ia tio n of Tax Adm inistr ato rs . Wyoming’s Con gr es sm an , Te no Ito nc alio was a sp on so r of 11.It. 5310 

which is one of the co mpa nion bi lls to II. R. 4072. We h av e sinc e n otifi ed C on gres sman Ito nc alio of ou r co m pl ete op po sit ion to su ch le gi sl at io n an d our re as on s 

th ere fo r an d he ha s ag re ed to re co ns id er hi s po si tion in th e li ght of the co mplete 

tes t imony be fore you r co m m ittee. We did no t le arn of th e hear in gs on th is le gi sla tion be fore we a rr iv ed in W as hi ng to n, D.C., to te st if y be fo re a noth er co m m ittee 

w ith re ga rd to H.R. 11798 an d th en im m ed ia tely mad e arr angem ents to su bm it 

ou r testim on y as soo n as po ss ib le in the ho pe th a t th e sa m e co uld be includ ed in th e reco rd , in case we are too la te we beg th a t our te stim on y be in se rted an yw ay 

if th is c an p oss ibly be do ne a s we believe t h a t w hat we h av e to say w ill be v al ua bl e 

to th e co mm ittee. We ha ve been invo lved in li tigat io n w ith th e Ch ica go, Bur ling to n & Qu incy 

R ai lr oad an d ha ve th us acq uir ed cert ain in fo rm at io n in th is re gard wh ich wi ll 

ha ve sjtec ial j>ertinence. In th e pre par at io n of our ca se we ha d occasio n to re ­

vie w th e hi st or y of ra il ro ad ta x ati o n . W he n th e ra il ro ads ha d vir tu al mo no po ly 

fo r so many, ma ny y ears the y ga ve l it tl e i f no co ns id er at io n to ta xes b ec au se th ey 

m er ely pa ssed the m on to th e ir cu stom ers. Thu s th is actu ally was a bit of in ­

dir ect ta xati on of th e jte op le which was indu lg ed in by bo th th e ra ilro ads an d 

th e ta x ad m in is tr ato rs ; he nc e an y err ors whi ch were m ad e by the ta x ad -, 

m in is tr ato rs of the var io us S ta te s we re le ft un co rrec te d, an d we su bm it th a t 

th is w as a t leas t in par t tin* fa ult of tin* ra ilro ad s. R eg ar dle ss of th e skill of 

th e ta x adm in is tr ato r in ap pra is in g, he c an not po ssibly le arn an d kno w as mu ch 

ab ou t th e ra il ro ad’s pr oj ierty as th e ra ilro ad its el f. Now th a t th e ra il ro ads 

ha ve co ns id er ab le co mjte tit ion th ey ha ve beg un to ob ject to tin* ad valor em ta xes 

an d th er e have been co ns eq ue nt re fo rm s an d adju st m en ts . T here ha ve been 

tr em en do us ad ju st m en ts in th e last 10 or m or e ye ar s, bu t th e ra ilro ads ha ve 

tr ie d to ta ke ad va nt ag e of th is si tu ati on an d pu sh it fa r beyond th e po in t of f a ir 

adju st m en t. To be su re , som e S ta te s m ig ht st ill be remiss in th eir ta xati on of ra ilro ad s, but 

th e ra il ro ads lik e an y oth er ta x p ay er ha ve ad eq uat e re co ur se in S ta te co ur ts. 

T hi s ha s been pro ven in th is la s t year alo ne in N eb ra sk a and Illino is an d pr ob ­

ab ly oth er Sta te s as w ell.

The bill pu rp or ts to give ori gin al ju ri sd ic tion to th e F edera l dis tr ic t co urts 

to h ear an d de term in e in te rs ta te carr ie r ta x di sp ut es , b u t do es no t ta ke th e 

ju ri sd ic ti on of th is su bj ec t m a tt e r aw ay fro m the S ta te co ur ts. On th e fa ce th is 

seem s to be ha rm less en ou gh , an d th is is prob ab ly wh y our Co ng ressman w as 

in cl ined to sig n th e bill an d te sti fy thereo n. How ev er, whe n one looljs a li tt le 

de ep er in to th e si tu at io n an d th e ram ific atio ns of th e bil l th e ra th e r su bst anti al 

and sw ee ping ch an ge s which th is prov ision alon e cr eate s bec om e more clea r. It 

wo uld appear th at th e fu ndam enta l ru le of law th at on e m ust first ex hau st his 

adm in is tr ati ve remed ies bef or e se ek in g ju dic ia l review is ab ro ga te d. T his ru le 

of la w is stee jte d in ju dic ia l pre ce den t an d wisdo m. The ori gin al tr ib unal m us t 

be give n th e fir st ch an ce to corr ect it s mista ke s be fo re se ek in g rev iew . Thi s is 

es pe ci ally tr u e co nc erning ad m in is tr ati v e ag en cies which are ex p ert in th eir field 

of re sp on sibi lity . Wyo mi ng like mos t, if no t all oth er Sta te s pr ov ides fo r an ad ­

m in is tr ati ve pr ot es t he ar in g. T his is a very sjteed.v an d ex pe di tiou s remed y. 

We a tt a c h he re to as ex hib it I o u r ad m in is tr ati ve ru le which pr ov ides fo r th is 

he ar in g. Th e in fe renc e of th e bi ll an d som e of th e testim on y be fore yo ur co mm itte e is th a t th e ta x ad m in is tr ato rs ar e pre ju di ce d again st th e ra il ro ads an d 

th at th ey ha ve a de fin ite in te re st in co lle cti ng as mu ch mo ne y fo r th e S ta te as 

po ss ible fr om th e ra ilro ad s. W e su gg es t th a t th is is co mpl etely un ju stified, 

fa ls e and un ca lhxl for. T he on ly in te re st of th e ta x ad m in is tr ato rs is to a d ­

m in is te r th e Sta te ta x laws as fa ir ly an d prof iciently as po ssible. All th e te sti ­

mo ny be fo re yo ur co mmittee , es pec ia lly th a t of Ja m es N. Og den, pre si den t an d 

gen er al co un sel fo r Gu lf. Mo bile & Oh io R ai lroa d Co., co nc ed e th a t all th e ta x a ­

tio n la w s of a ll the Sta te s are com pl etel y sa ti sf acto ry i f pro jter ly a dm in is te re d.

T here is also a ve ry se riou s in fe re nce in th e bill an d th e te st im ony th a t Sta te 

co urt s do no t aff ord un bi as ed fo ru m s fo r hea ri ng ra il ro ad ta x ap pe al s. Thi s 

is a te rr ib le slap in th e fa ce to no t on ly th e Sta te s, but also to al l th e la w yer s 

an d ju dges of th e va riou s Sta te s. We intend to ta ke th is m a tt e r up w ith th e 

S ta te and American B ar A ss oc ia tio ns . The re i s no t one iota of e vide nc e or ju sti ­

fic ati on to su pp or t th is infe re nc e. Su ch sugg es tio ns are lib elou s an d sc an da lo us , 

an d te nd to sm ac k ag ai ns t one of th e br an ch es of ou r G ov er nm en t which has a
128 tax assessme nt s on common car rier property

lo ng stan di ng he rita ge stee pe d in re sp ec t an d ju stic e. Mo st, if no t all , ta x li ti ­

ga tion doe s not inv olve a ju ry tr ia l. Ch ecking th e his to ry of ra il ro ad litiga tion , 

on ly a ve ry sm all an d in sign ific an t nu mbe r of S ta te ra il ro ad ca ses ha ve bee n 

re ve rs ed by th e Fed er al court s. As men tio ne d be fore, th e S ta te co ur ts st an d 

re ad y an d ha ve no t be en a fra id to st ri ke d ow n S ta te ra il ro a d ta x asse ssmen ts.

We sugg est th a t mo st of th e testim on y in fa vo r of th e bill ha s been bias ed 

an d di st ort ed by ra il ro ad in te re st s who are se ek ing th is special leg islatio n. 

F or exam ple, Mr. Ogd en’s ap pe nd ix A show s th a t th e S ta te of Wyoming in 1964 

as se ss ed ra ilro ad pro pert.v a t 60 pe rcen t of th eir tr u e m ar ket va lue an d only 

as se ss ed ot he r pr oper ty a t 20 pe rc en t. This is co mplete ly untr ue. Wyomi ng a tte m pts to asse ss al l prop ert.v in ac co rdan ce w ith the unif orm it y re qu irem en ts in 

its co ns titu tion . We be lie ve th at, w ith th e ex ce pt ion of m in er al prod uc tio n, no 

pro per ty is asse ssed in ex ce ss of 30 pe rcen t of it s tr u e val ue in Wyoming, an d 

th ere is re liab le ev iden ce th a t th e av er ag e pe rc en ta ge of as se ssm en t to tr u e 

va lu e is 25 pe rcen t. O ur ta x expert s ha ve at te m pt ed to as se ss ra ilro ad pro per ty 

a t 25 pe rcen t of tr ue va lue.

E xact ju st ic e in m att ers of ta xat io n is no t po ss ib le; howe ver, Wyom ing is 

m ak in g a co ns ta nt effo rt to eq ual iz e all clas ses of pro pe rt y as is re qu ired by law .

T his br in gs us to a ra th e r in te re st in g su bjec t, to wit, how to va lue ra il ro ads 

fo r ad va lorem ta x pu rp os es . In ou r litiga tion w ith th e Ch ica go, Bur ling to n & 

Quinc y Railroa d, an d in heari n g an d co ns id ering p ro te st s by ot her ra ilro ad s, 

ne ve r did th e ra il ro ads a tt a c k our pr op er ty val uat io ns as suc h, ra th er they 

ch alle ng ed ou r th eo ry of as se ss m en t. It has bee n th eir co nt en tion th at th e ra il ­

ro ad pr op er ty wa s w or th on ly w ha t it cou ld pro du ce and th a t we shou ld only 

co ns id er income an d capit al stoc k va lues. Of course, inco me ca n be hidd en an d 

th e man ag em en t efficiency ca n also ca us e su bst an tial var ia tions. F urt her, th e 

av er ag e m ar ke t va lue of stoc k does not includ e th e va lu e of comp let e or even 

co nt ro llin g ow ne rsh ip. The pl ai n tr u th is th at a pro per ty ta x is ju st th at, i.e., 

a ta x on prop erty. A ra ncher or home ow ner mus t pa y a ta x on th e cos t of p u rch as in g th eir pr op er ty re gard le ss of w he th er it ea rn s th em a cent. Th e dis tr ic t 

co urt an d the Su prem e C ou rt of th e S ta te of Wyo mi ng sta te d th a t logic dic ta te s 

an d th e Wy om ing ta xati on la w s with re gar d to ra il ro ads prov ide th at cert ain 

th in gs shou ld be co ns id ered in va lu in g a ra ilro ad, an d th a t as lon g as th is was 

do ne an d the pr op er fig ures us ed , th e ta x adm in is tr ato rs w er e ac ting pr op er ly. 

The co ur t als o st ate d th a t th e adm in is tr ato rs were no t bo un d to follow an y 

spe cif ic form ula or th eo ry su ch as th e ra ilro ad at te m pte d to pu sh off on the m. 

By th e wa y. th is fo rm ul a wou ld ha ve lef t ab so lu te ly no dis cr et io n to tin1 adm in ­

is tr ato rs , bu t ra th er wo uld bi nd them to a m at he m at ic al fo rm ul a. W itho ut a tte m pt in g to he co nceit ed, we ta x ad m in is tr ato rs are su pp os ed to ha ve a t lea st 

some sp ec ial kn ow led ge o f ta x ati o n an d pr ope rt y v al ua tion .

The ra il ro ads offered su ch te stim on y as was giv en to th is subcom mi tte e. Most 

of it w as bia sed an d dis to rt ed. The co mmitt ee shou ld an al yz e thes e st ati st ic s 

by ask in g them selves who gath ere d an d comp iled th is m ate ri al an d fo r w ha t 

pu rp os e. Ano ther e xa m pl e of th e tyi>e of evide nc e th e ra il ro ad s prod uc e is ac tu al 

sa le s pr ic e of va riou s ra il ro ads. Upo n an al yz in g th es e fig ures it will be see n 

th a t th ey are al to get her unre li able be ca us e th ey are eit h er di st re ss or ban kru pt 

sa le s or are no t ar m 's-l en gth tr an sa ct io ns. Ev en th e Su pr em e Co urt of Illino is 

wh o st ru ck down it s S ta te 's as se ss m en t came to th is co nc lusio n co nc ern ing thes e 

fig ures.

The Sta te s are no t hi de ou s mon ey gr ab be rs as som e of th e tes tim on y would 

lead yo u to believe. A ltho ug h Wyo mi ng was su cc es sful in its litiga tion w ith the 

Ch ica go . Bur lin gton & Quinc y R ai lroa d, its as se ssed val uat io ns of th e ra ilro ads 

co nt in ue to be redu ce d. (T he litigat io n co nc erne d th e 1962 asse ssmen t. Th e 

ra il ro a d filed ap pe al s fo r 19(53 and 1964. A fter th e 1965 as se ss m en t the ra ilro ad 

no t on ly did no t ap pe al th e 1965 as se ssm en t, lint als o dr op pe d the 1963 ap pe al. 

C urr entl y we are liti gati ng th e 1964 ap pe al .) Furt her m ore , of its own volition, 

th e S ta te bo ard of equal iz at io n has en ga ge d a pr of es sion al ap pra is al firm to 

co mpl etely re ev al ua te al l ra il ro a d s with in th e S ta te of Wyo mi ng . Th is will not 

be av ai la bl e fo r th e cu rr en t as se ss m en t ye ar , but cert ain ly will be av ai la bl e 

fo r th e ne xt.

A not he r ob jec tio n to th e bi ll is th a t th e Fed er al do ck ets are us ua lly cro wd ed 

w hi le th e Sta te co ur ts a re no t. T his ca us es c on side ra bl e de la y an d the fu nc tio ns 

of go ve rn m en t mus t co nt in ue re gar dle ss of w het her or no t al l th e ta x mo ney s ar e 

co lle cte d. In fact, th e C on gr es s in man y in st an ce s ha s en ac te d laws wh ich sj»ecifica lly pr ov ide th a t no in ju ncti on can be iss ue d w ith re gard to ma ny Fed er al 

ta xe s. The ge ne ral ru le is th a t an in ju nc tion ca n only be is su ed to re st ra in th e 

co lle cti on of an ill eg al ra th e r th an an ex ce ssive or oth er w is e im prop er ta x
TAX ASSESSME NT S ON COMMON CAR RIER PR OPERTY 129

Ev en th en , a bon d m us t be po sted to pr ot ec t th e pu blic reve nu es . It is no t cl ea r 

th a t th is sa fe guar d m us t st il l be follo we d un de r th e pr ov isio ns of the* bill. We 

a tt ach se ve ra l ex hi bits as ap pen di xes to th is st ate m en t wh ich are sel fexpla nato ry .

SUM MARY

W e vigo ro us ly opp ose H.R . 4J172 an d an y si m ilar legi slatio n. The re is no need 

fo r su ch le gi slatio n an d th e enac tm en t of th e same wo uld d is ru p t th e co mp let e 

p ro pert y ta xati on se tu p of m os t of th e St at es . The prob lem has been dis to rt ed 

an d ex ag ge ra te d ou t of pro po rtio n by the testim on y of th e ra il ro ad in te re st s. 

The in fe re nc es wh ich im ping e on th e in te gr ity of th e S ta te ta x adin in is ra to rs 

and S ta te co ur ts are sc an da lo us , libelo us, ab su rd , an d co mpl etely un ju stifie d 

an d un su pp or te d. Th e S ta te s sh oul d be le ft a lone to c or re ct th e ir pr ob lems in th is 

ve ry sa cr ed an d sovereign are a co nc er ni ng th eir ta xati on an d reve nu es , espe ciall y 

be ca us e th e ra ilro ads ha ve ju st , spee dy , an d ad eq uat e re m ed ie s be fore th e S ta te 

ta xin g ag en cies an d S ta te co urts. We wi sh to mak e it cle ar, ho wev er, th at the 

re as on s fo r wh ich we oppose tin* b ill are tho se he re in be fo re se t fo rt h. We do no t 

an ti cip ate th at th e re su lt of any litiga tion in th e Fed er al court s wo uld differ 

fro m th e re su lt of the same li ti gati on in the S ta te co ur ts . We ho ld th e in te gri ty 

an d im p art ia li ty of the fo rm er court s in ju st as high re gar d as we do th e la tt er. 

Fin al ly , we wish to stro ng ly urg e th a t th is t.vi>e of legi slat io n is in co ns iste nt w ith 

ou r fe dera l syste m.

Res pe ct fu lly su bm itt ed .

Sta te B oard of E qua liza tion for t h e Sta te of W yom in g, 

R ic har d J. L u m a n , Ch airm an ,

F rancis H illa rd, Me mb er,

Rudolp h An selm i, Mem ber.

A tt e s t:

[ sea l]

A lex J. E li o pulos, Se cr etar y.

E xhib it I

C hapte r 11-A—Ad Valorem T ax—Ass es sm en ts by th e Board

Section 1. No tic e an d Hea ring .

a. All ta xp ay ers as se ssed fo r ad va lorem ta x pu rp os es by th e B oa rd sh al l be 

no tif ied of th ei r re sp ec tiv e fin al, tr u e an d as se ssed valu ati ons on or be fore th e 

firs t w ee k da y in Ju ne . All ta x p ay ers pro te stin g th eir res pec tive valu at io ns s ha ll 

tile th eir pro te st s wi th th e B oa rd no la te r th an eigh te en (18 ) days from an d a ft e r 

th e d ate such no tif icati on w as pl ac ed in th e United S ta te s mai ls. A fter rece iving 

a pro te st , th e Boa rd sh al l se t th e p ro te st down fo r ora l heari ng if it th in ks th a t 

or al heari ng is ne ce ssary an d sh al l de po sit a no tif ic atio n of th e tim e of hea ri ng 

in th e U ni te d Sta te s mail w ith p ro per po stag e affixed an d pro per ly ad dr es se d to 

th e pro te st in g ta xp ay er no la te r th an sev en (7 ) day s be fo re th e d ate of th e ora l 

he ar in g. F or th e pu rp os es of th is se ct io n th e term “w eek day” sh all mea n Mo nday, 

Tue sd ay . W ed nesday. T hurs day o r Fri da y.

b. Tlie file d pr ot es ts sh al l in cl ud e th e m ate ri als and be in co mpl ianc e w ith th e 

re quir em en ts of Se cti on s 6 an d 7 in C hap te r I.

c. T his ru le an d an y am en dm en ts th er et o sh al l appear on an d be att ac hed to 

all no tifica tion s of val ua tion whe n se nt by th e Boa rd to a re sp ec tive t ax pa ye r.

E xh ib it I I

E xc er pt s F rom t h e Min u t e s of t h e Sta te B oard of E qua li za ti on

B rief resu m e of m in ut e re fe re nce s to Chica go. B ur lingto n & Qu inc y as se ss 

m en ts sinc e 1924. Ju ly Id. 1924: Motion pa ss ed de ni ed ap pl ic at io n of var io us ra il ro a d s fo r re du ction on ba si s th at re al pro per ty in S ta te as se ss ed a t fu ll and tr u e va lue as are 

ra il ro ads. Ju ly 12, 192 6: C.B. & Q. di d not ap pea r to pro te st 1926 valu ati on wh ich w as 

se t fo r th is d ate so no heari ng h eld .

Ju ly 25. 192 7: C. B. & Q. appeare d an d pro te sted it s 1927 as se ss m en t.
130 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

July 30, 1927: Final valuation on railroads fixed. No change from tentative 

valuations.

June 28, 1928; C.B. & Q. appeared and made oral argument in support of 

written objection to 1928 value.

July 10, 1928: Board used several factors in arriving at railroad valuations 

inclu ding stocks and bonds and net earnings capitalized at 7 percent (see State 

board of equalization minu tes a t p. 84 of vol. 9).

July 6, 1929: Final valu atio ns on railroads fixed. No mention of any protest 

by C.B. & Q.

July 10, 1930: C.B. & Q. represen tatives met with board but made no formal 

objection to 1930 assessment.

July 23, 1930: Final valuations on railroa ds fixed for 1930.

Jul y 23,1931 : Final valuations on railroa ds fixed for 1931.

May 28, 1932: Minutes sta ted : “After considering all tlie evidence presented on 

behalf of the railroads (C.B. & Q. was listed as present) the board very carefully 

made a recheck of the retur ns submitted and arrived at the final valuations for 

all railroad companies as h ere ina fter set out with the express understanding that

such value is placed on the property of the various railroad companies in Wyoming

on account of the poor financial condition of such companies and not as representing the true value of such prop erty nor as an ackno wledgement of precedent for

future consideration of the value of such companies.” [Em phasis supplied.]

June 14, 1932: C.B. & Q. appe ared and protested 1933 assessment.

Jun e 19,1933: Final v aluatio ns (ixed on railroads.

June 8, 1934: Final 1934 valuations on rail roa ds set with no protests noted.

June 7, 1935: Final 1935 valuations on ra ilro ads set with no protests noted.

May 21, 193(5: “The board this day determ ined value s of tlie railroad compan ies’ physical properties (emphasis supplied) in Wyoming for taxation for (lie 

year 193(5, and set same.”

June 12, 193(5: Board met with C.B. & Q. representativ es relative to tax value 

for tlie year 193(5.

June 1G, 193G: Board reviewed the assessment of the C.B. & Q. together with 

the protest and showing made by said company on Jun e 12 and placed a final 

value for tax purposes for the year 193(5 in the amount of $21,(529,841.

Jun e 25, 1937: Board reviewed tentati ve values on C.B. & Q. and others and 

declared the tentative value as set to lie the final value for taxatio n purposes 

for the yea r 1937.

June 13. 1938: Discussed C.B. & Q. assessment for 1938 w ith its representa tives 

and took the m atte r un der advisem ent.

June 15, 1938: Fixed final 1938 valuation on C.B. & Q. same as tentative.

Jun e 12. 1939: Ten tative valuation s on railroads set for 1939.

June ?8, 1939: C.B. & Q. representatives protested 1939 assesseinent.

Jun e 30, 1939: Final valuation s set on railroads for 1939.

June 19. 1940: Tentative valuation s on railroads set for 1940.

Jul y 2, 1940: C.B. & Q. rep resentatives protested 1940 assessment.

July 9,1940: Final valua tions set on railroads fo r 1940.

June 1(5, 1941 : Ten tative valuation s on railroads set for 1941.

July 1, 1941 : No protest shown by C.B. & Q. on 1941 ten tativ e assessment.

July 3, 1941: Final valuation s on railroads set for 1941.

June 11, 1942: Ten tative valuation s set on railroads for 1942.

June 2(5, 1942: Fin al valuation s on railroads set for 1912. No protest noted 

for C.B. & Q.

May 19,1943 : Ten tative v aluatio ns on railroads set for 1943.

June 9. 1943: Final valuation s on railroads set for 1913. No protests noted.

May 19, 1944: Tentative valuations set on rail roa ds for 1944.

June 13, 1944: Final valuation s on railroads set. No protests.

June 5, 1945: Tentative valuations set on railroads for 19*5.

June 11. 1945: Board discussed 1945 tentative valuation of C.B. & Q. with 

compa ny representatives.

June 2(5. 1945: Final valuations on railroads set for 1945. No protests noted.

May 29, 194(5: Tentative valua tions set on railroads for 194(5.

June 21, 194(5: Final valuations on railroads set for 194(5. No protests noted.

May 27.1947: Tentative v aluatio ns set on railroad s for 1947.

Ju ne 17, 1947 : Representatives of C.B. & Q. appeared and prote ted 1947 ten tative assessment.

May 28, 1948: Tentative valuations set on railroads for 1948.

Ju ne 18, 1948: Representatives of C.B. & Q. a pp ea ml and protested 1948 tentative assessment.
TAX ASSE SS M EN TS ON COiMMON CARRIE R PR OPE RTY 131

Ju ne 21,194 8: Fi na l va lu atio ns se t on r ailroa ds fo r 1948. May 31, 1949: Ten tativ e va luations set on ra ilro ad s fo r 1949. .Tune 17, 1949: Re pres en tativ es of C.B. & Q. appe ared and pro tes ted 1949 te nt at iv e valua tion and ce rtai n adjustm en ts were ma de (m inutes do not show 

det ai l) . May 29, 1950: Ten tativ e va luations set on ra ilr oa ds fo r 1950. Ju ne 14, 15)50: Re pres en tativ es of C.B. & Q. ap jtea m l and pro tes ted 1950 ten­ ta tive valua tion. No change ma de by boa rd (no mi nu te en try on 15)51 te nta ­

tiv e va luation). Ju ne 28, 1951: Rep rese ntatives of C.B. & Q. ap pe ared and pro tested 1951 

asses sm ent . Ju ly 5, 1951: Fi na l va luations set on railr oa ds for 1951. Ju ne 6, 1952: Te ntati ve va luations set on ra ilr oa ds fo r 1952. Ju ne 24, 1952: Re pres en tativ es of C.B. & Q. ap pe ared ami pro tes ted 1952 

asses sm ent . Ju ly 8,195 2: Final ra ilr oa d va luations fixed for 1952. May 29 ,1952: T en tativ e v al ua tio ns set on railr oa ds for 1953. Ju ne 15, 1953: Re pres en tativ es of C.B. & Q. appe ared ami prote sted 1953 as ­ ses sm ent and pre sente d a nu mbe r of exhibit s showing ne t railw ay op erating 

inco me and the avera ge m ar ke t v alu e of secur itie s. Ju ly 1, 1953: Fina l va lu atio ns on railr oa ds fo r 1953 fixed sam e as tentati ve . May 28, 1954: Ten tativ e va lu atio ns set on ra ilr oa ds fo r 15)54. Ju ne 18, 1954: Re presen tativ es of C.B. & Q. apjiea red and prote sted the 1954 

ass ess me nt. Final valuati on s w ere tixed this day. Ju ne 10,1955 : T en tativ e v alua tio ns set on r ailroa ds for 1955. Ju n e 28, 15)55: R ep re se nta ti ves of C.B. & Q. ap pe ar ed an d pr ot es ted its 15)55 as se ss m en t. Sta te m en ts and exhib its we re pr es en te d in su pport of pr ot es t. Ju ly (5, 15)55: Fin al valu ati ons on ra il ro ads fo r 15)55 fixed with cer ta in 

ad justm en ts. Ju n e 12, 15)02: Mr. R. R. Lines , ap pe ar ed on beh al f of th e Cn ion Pa cific R ail­ ro ad Co. an d th e Ore gon Sh ort Line Railroa d Co. an d th an ked th e bo ard fo r its 

co ns id er at io n in fix ing the 1902 va lu at io n on its pr op er ty. Ju n e 20, 1903: Mr. It. R. Li ne s. ap pe ar ed on beh al f of th e Un ion Pacific R ai lro ad Co. an d the Oregon Sho rt Li ne Railroa d Co. an d th an ke d the bo ard fo r its 

co ns id er at io n in fix ing th e 15)03 va lu at io n on its pr op er ty. Mr. R. It. Line s is th e he ad ta x official of th e Cn ion Pa cific R ai lroad .

E xh ib it I I I

Chicago, Iturlington rf Quincy Railroad tonnage handled each year, 1933-63'

To ns

(2,00 0 po un ds )

1933 ____________________ 23,944, 824

1934 __ _____________ 25, 126,645

15)35____________________ 25,45 4,9 88

15)30____________________ 31,397,941

1937____________________ 32,00 1,2 50

15)38_____________________ 28, 131, 527

15)3!)______________________ 25). 419, 597

1940 ______________________31,01 4,0 14

1941 _____________________ 38. 121. 400

15)42____________ i _______ 45). 200, 890

15)43_____________________ 55, 890, 010

15)44_____________________ 57,091,7 00

15)45____________________ 50, 142, 477

15)40_____________________ 51, 574,1 35

15)47______________________ 50 ,892 ,233

15)48____________________ 54,530,025

1

 Fro m annu al rcp< ts to Public Service Commission. Acco unt 541

To ns

(2,0 00 po un ds )

1949 ____________________ 45. 882, 336

1950 _____________________ 49,050,732

1951 _____________________ 53, 344, <507

1952 ____________________ 50, 264. 504

1953 _____________________ 50, 230, 447

1954 ____________________ 47. 010, 718

1955 ____________________ 49,183,080

1950____________________ 50, 130, 458

1957 ______________________47 ,131 ,182

1958 ______________________47, 007, S3!)

1959 ____________________ 48, 817, 715

1900_____________________ 47, 272, 863

1961 _____________________ 48,3 28,095

1962 _____________________ 52,340,45 1

1903_____________________ 54.092,1 28
132 tax as sess me nt s on common car rier property

E x h ib it IV

Comparison of railroad assessments in Wyoming, 1955-65

Chi ca go , B url in gto n & Q uin cy R R . C o. :

1955 ________________________________

1956 ________________________________

1957 ________________________________

1958 ________________________________

1959 ________________________________

1960 _______________________________

1961 _____________________________ .

1962 ________________________________

1963 ________________________________

1964 ________________________________

1965 ___________________________ ____

T o ta l_____________________________

C hi ca go & N o rt h W est er n R y . C o.:

1955 ___________________________

1956 ___________________________

1957 ___________________________

1 9 5 8 - ._________ ______________

19 59 ... ________________________

1960 ___________________________

1961 ___________________________

1962 ___________________________

1963 ___________________________

1964 ___________________________

1965 ___________________________

T o ta l__________________

C olo ra do & S out her n R y. Co.:

1955 ______________________

1956 ______________________

1957 ______________________

1958 ______________________

1959 _____________________

1960 __________ ____ ______

1961 ______________________

1962 ____ _________________

1963 _____________________

1964 ______________________

1965 ______________________

T o ta l.....................................

O re go n Shor t Lin e R R . Co.:

1 9 5 5 .. ..................... ................

1956 ______________________

1957 ______________________

1958 ______________________

1959 ______________________

19ti0______________________

1961 ______________________

1962 ______________________

1963 ______________________

19 64._____ _____ _________

1965 ______________________

T o ta l................. ..

U n io n Pa cific R R . C o. :

1955 _______________

1956 _______________

1957 _______________

1958 _______________

1959 _______________

1960 _______________

1961 _______________

1962 _______________

1963 _______________

1964 _______________

1965 _______________

T o ta l____ _______

Asses se d

v alu ati o n

A m ount of 

dec rea se 

fro m 

pr ev io us 

ye ar

P er ce nt of 

decrea se

24, 866,9 94

24, 772,8 39 94,155 0.3 8

24, 297,3 65 475,474 1.92

24, 298, 752 i 1.387 • .00 6

23,3 06,4 51 992,301 4.0 8

22,7 31, 772 574,679 2.4 7

21,284 ,41 3 1,447,359 6.3 7

20,71 9,6 60 564,753 2.6 5

19,978 ,427 741,233 3.58

19,275,171 703,256 3.52

17,610 ,25 5 1,664,916 8.6 4

7,162,584 ’ 28 .8

2,7 66 ,81 9

2,6 71 ,06 2 95,757 3.46

2,418, 731 252,331 9.45

2, 297, 734 120,937 5. 00

2,0 90,10 3 207,691 9.0 4

1,8 65,12 2 224,981 10.7 6

1,7 56,69 0 108,432 5.81

1,65 8,6 94 97.996 5. 58

1,5 23, 194 135,500 8.1 7

1,457,784 65.410 4.2 9

1,266, 785 190,999 13.10

1,500,034 ’ 54.22

3, 596,638

3, 580, 224 16,414 . 46

3, 426, 599 153,625 4.2 9

3, 420,895 5,704 .17

3,130, 086 290,809 8. 50

2, 800, 729 329, 357 10.52

2, 571,9 28 228,801 8. 17

2, 446,692 125,236 4.87

2,3 43,58 0 103,112 4.21

2,31 0, 444 33,136 1.41

2,30 8, 282 2,162 .09

1,288,356 ’ 35.82

5, 941,5 45

5,9 18,48 2 23,063 .39

5, 838, 661 79,821 1.35

5, 797,411 41,250 .71

5, 624, 736 172,625 2.9 8

5, 475,476 149,310 2.6 5

5,3 51,47 7 123,999 2. 26

5, 248,9 14 102,563 1.92

5,1 63,19 4 85,720 1.63

5,1 11,56 2 51,632 1.00

4,8 84,98 3 226,579 4.4 3

1,056,562 ’ 17.78

52,5 85, 202

52,3 84, 739 200,463 .3 8

52, 048,421 336,318 .64

51, 594.9 71 453, 450 .8 7

50, 091 ,90 7 1,503, 064 2.9 1

49,0 59,10 1 1,032,806 2. 06

48, 053,948 1,005,153 2.05

47, 115, 431 938,517 1.9 5

45,94 4,7 75 1,170,656 2.4 8

45,42 1,9 42 522,833 1.14

44,3 39, 543 1,082,399 2.3 8

8,245, 659 ’ 15.68

1

 In cr ea se .

2 Sin ce 1955.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 133

E xh ib it V

Assessed valuations of class I railroads in Wyom ing since 1930

Y ear

Chi ca go ,

B u rl in g to n 

& Q uin cy 

R R .

Chica go 

& N o rt h 

W est er n 

R y .

C ol or ad o &

S o u th ern

R y .

O re go n 

S h o rt L in e 

R R .

U nio n 

Pac ific 

R R . Co.

1930 ___________________________ $27 ,692,772 $7,970 ,916 $3,8 44,691 $5 ,94 2,3 12 $43,071,204

1931 _____________________ ____ - 27, 675 ,34 5 7,881,004 4, 297,108 5,7 52, 620 43,473 ,252

1932 _ __________________ 25,7 38,0 71 7,329,334 3,8 34,22 9 5,41 1,56 0 40,350 ,986

1933 _ _ _______ _________ - 24, 890 ,74 4 7,082,363 3,6 31,43 8 5,2 32,26 4 39,097 ,83 0

1934 _ _ __________________ 24, 890 ,74 4 7,00 0,0 00 3,6 31,43 8 5,21 8,46 6 39,249 ,576

1935 __________________________ 24, 700 ,34 7 5, 520,751 3,5 45,16 8 5,108, 581 40,0 00,0 76

1936 __________________________ 24,629 ,841 4,81 6,4 86 3,5 40,94 8 5,308, 698 40,434,344

1937 . ________ ____ ________ 24,64 2,7 50 4,816. 486 3,4 70,13 3 5,4 38 ,27 0 41,4 95,5 23

1938. _ ______________________ 24,76 2,7 56 4,238, 508 3,5 46,11 0 5,417, 413 41,354 ,280

1939 _ _______ ______________ 24,76 1,6 86 4, 013,508 3,4 70,49 3 5,7 27,16 4 41,354,541

1940 ________________________ 22, 787 ,39 5 3,42 7, 536 3,322,361 5,4 10 ,32 2 41,350,125

1941 ________________________ 22,5 52,7 21 3,290, 435 3,2 79,95 5 5, 464,425 41,763 ,626

1942 __________________________ 22, 391 ,93 3 3,2 18, 816 3,1 70, 492 5,5 91 ,72 0 42,8 18,0 83

1943 ___ __________ _______ 22,74 7,4 69 3,234, 677 3,232, 361 5, 611,005 43,4 52,6 04

1944 ____ __________________ 22,63 9,1 34 i 2, 590,326 3,1 10,68 8 5,6 31 ,97 8 44,15 4, 543

1945 ___________________________ 22,92 2,6 98 2,670,377 3,212,95 5 5, 695,854 44,669 ,762

1946 ____________________ 23,20 0,9 77 2,6 70, 377 3,2 14,47 8 5, 573,301 44,650 ,602

1947_____ ___________ ____ _____ 23,4 27, 861 2,69 9,901 3,2 27, 838 5,6 12 ,34 0 45,187,751

1948 _ - ____________ 23, 744 ,98 4 2, 708,172 3, 248,429 5,6 62 ,17 0 45,656 ,369

1949 _ _ _ ____________ 24, 007,475 2,902,357 3,3 36, 819 5,704, 603 45,918 ,376

1950 ________________ 24,29 5,2 70 2,902,357 3,5 41,61 8 5,7 06,28 2 47,920,399

1951 ____________________ 24, 652,048 2,814, 852 3,5 41,61 8 5,8 13 ,92 0 48,626,159

1952 _ _ ____________ 24,67 1,7 19 2,814, 852 3,5 50,10 6 5,9 06 ,34 2 49,6 70,1 46

1953 - ________________ 24,66 7,1 76 2,810, 435 3,5 43,06 8 5,9 79,64 5 2

 52,515 ,905

1954 _ - - ______ ______ 24,68 2,5 86 2, 774,332 3,5 96,63 8 5,9 80, 555 52,528,151

1955 ____________________ 24, 866,994 2, 766,819 3,5 96,63 8 5,9 41,54 5 52,585,202

1956 - _______________ 24,77 2,8 39 2,67 1,0 62 3, 580,224 5,9 18 ,48 2 52,384,739

1957 . . ___________________ 24,29 7,3 65 2, 418,731 3, 426,599 5,838, 661 52,04 8,421

1958 . . ______________ 24,29 8,7 52 2, 297,794 3, 420 ,895 5, 797,411 51,59 4,971

1959 _ _ __________________ 23,306 ,451 2,09 0,1 03 3,130, 086 5, 624,786 50,091,907

I960 _ ___________________ 22, 731 ,77 2 1,865,122 2,8 00, 729 5,4 75 ,47 6 49,059,101

1961 _ __________________ 21,2 84, 413 1,756,690 2,5 71, 928 5,3 51 ,47 7 48,0 53,9 48

1962 _ _ ________________ 20, 719, 660 1,65 8,69 4 2,4 46, 692 5,2 48,91 4 47,115,431

1963 - ________________ 19,978 ,427 1,523,194 2,3 43,58 0 5,1 63,19 4 45,944, 775

1964 - -- _____ 19,275,171 1,45 7,78 4 2,310, 444 5,1 11 ,56 2 45,4 21,9 42

1965_______________________ ____ 17, 610 ,25 5 1,266 , 785 2,3 08,28 2 4,8 84,98 3 44,339, 543

1 84.03 m iles o f m ain tr ack r em ov ed in 1943.

2

 43.00 m iles o f m a in tra ck ad ded in 1952.

E x h ib it VI

Percentage changes in ad valorem assessed v aluation of various types of property

in Wyom ing from 1962 through 1965

P erc en t of 

in cr ea se

P er ce i.t of 

de cre ase

28 .5

D ry f ar m la nds ~ 25 .0

5. 0

El oc t ric u ti li ti es _

5.0

6.9 2

E x h ib it VI I

Chicago, Burlington & Quincy R.R.

Year ad de d:

1955 ______________ ($1,0 14,60 2)

1956 ______________ (12 4,5 40)

1957 _______________ 15,047, 040

195S______________ (6S, 297)

1959 _______________ 475, 320

1960 _______________ 82, 083

Co. bette rmen ts and/o r additions

Year added—Continued

1961 _______________ 37, S49

1962 ______________ (14 ,760,654)

1963 _______________ 6, 970

1964 _______________ 102,474

1965 _______________ C)

1

 N o t a v a ila b le a t th is ti m e .

N o t e .— F ig u r e s in p a r e n th e s e s r e p r e s e n t d e c re a s e s .
134 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Exhibit V I I I

Before the State Board of E qualization for the State of Wyoming

G ENERA L ORDE R NO. 2 , 1 9 6 2

(Buildings and/or structures)

In the Matter of an A dju stm ent in the Boeckh System of Valu ation for Taxation

Purposes of Building an d/or Struc tures Located on Urban, Suburban, Rural

and Industrial Property, by Changing the Equalization Factor, the Yearly

Depreciation Rate and the Max imum Tota l Alloicablc Depreciation

To the County Assessor and the Board of County Commissioners o f ________

_________County, Wyoming:

By the Bo ard:

Whereas it is apparent to the Board that the assessed valuation of buildings 

and /or structures located on urban, suburban, rural, and industrial property, 

as calculated under the Boeckh System, are not properly equalized with other 

classes of property in the St ate; and

Therefore, under the authority vested in the Board by Section 30-26, Wyoming 

Statutes. 1957, as amended by Chapter 158, Session Laws of 1961,

It is hereby ordered tha t the following adjustments in the application of 

the Boeckh System in the assessment of buildings and /or structures located on 

urban, suburban, rura l and industrial property, shall be made effective for the 

taxing year of 1963:

1. The equalization factor shall be changed from 60% of the depreciated 

1938-39 replacement cost to 63% of such cost.

2. The annual normal rate of depreciation of such buildings and/or structures shall be changed from two (2%) percent per year to one (1%) 

percent per year.

3. The maximum normal total allowable depreciation shall be changed 

from 60% to 56%.

It is further ordered tha t the County Assessor and the County Commissioners

o f _________________ County shall take the necessary steps to carry out the

provisions of this order as above set forth so th at changes in the valuations of 

buildings and/or structures located on urban, suburban, rur al and industrial 

property shall be made effective for the taxing year of 1963, and so remain until 

furthe r order of the State Board.

Made and entered at Cheyenne, Wyoming, this 8th day of May A.D. 1962.

State B oard of E qualization for th e State of Wyoming, 

Albert P. Bruch, Chairman.

Walter W. H udson, Member.

Wm. “Scotty” J ack, Member.

A ttes t:

[sea l] D. W. Dahlm an, Secretary.

E xh ibit I X

State Board of E qualization of Wyoming,

Cheyenne, Wyo., December 20,1965.

Ad Valorem Tax Department

G ENERA L ORD ER NO . 2 , 1 9 6 6

(Inventories)

To the Honorable Chairman, County Board, of Equ alization and the County

Assesso r:

By the Boa rd: Pu rsuant to the authority granted to the State Board of Equalization under Section 39-26, Wyoming Statutes of 1957, this Order is hereby 

certified to you in accordance therewith.
TAX ASSES SMENTS ON COM MON CAR RIER PR OP ER TY 135

It is he re by or de re d th a t m er ch an di se in ve nt or ies, in cl ud in g co ns ig ne d an d 

floor pl an ne d pr op er ty , be as se ssed fo r th e year 1966 a t 30% of th e av er ag e 

in ve nt or y, a t co st F.O.B. po in t o f a ss es sm en t. It is f u rth e r or de re d th a t S. B. of E . F orm No. 23 (I n v e n to ry ), be us ed to ob tain fa ctu al in fo rm at io n on wh ich to ba se in ven to ry as se ss m en ts fo r th e y ear 1966. D at ed a t Ch eyenne, Wy oming , th is 20 tli da y of De cembe r A.D. 1963.

State Board of E qualization

for th e S tat e of W yo ming, 

Richa rd J . Lum an, Cha irman .

F rancis Hillard, Mem be r.

R udolph Anselm i, Mem be r.

A ttes t: Alex J . E lio pulos, Se cr et ary .

E x h ib it X

State B oard of E qua lization of W yo ming,

Ch eyen ne , Wyo ., Dec em be r 20, 1965.

Ad Valorem T ax D epa rtm ent

GENE RAL ORDER NO . 3, 19 G6

(U se d Moto r V ehicle & F arm M ac hi ne ry I nven to ries)

To th e Hon or ab le Ch air ma n, Cou nt y B oard of Equ al iz ation an d th e Co un ty

Ass es so r:

By th e B oard : P u rs u an t to th e au th o ri ty gra nte d to th e S ta te B oar d of Equa l­ iz at io n under Se ctio n 39-2 6, W yo ming S ta tu te s of 1957, th is ord er is he reby 

ce rtified to yo u in a cc or da nc e th er ew it h. I t is he re by or der ed th a t us ed m ot or ve hi cl e in ve nt or ie s be as se ss ed fo r the year 1966 a t 30% of th e av er ag e in ven to ry . Valu e of sa id in ven to ry to be ba se d on av er ag e loan va lues as sh ow n by th e Official Usd Car Guide , M ou tain S ta te s Edi tion , is su ed by th e N at io nal Autom ob ile D ea le rs Assoc iatio n, in cl ud ing ac ce ss or ies and eq uipm en t. Ave rage lo an val ue to be us ed ra th e r th an av er ag e w ho lesa le va lu e in or der to m ak e an ad di tion al al lo wan ce fo r av er ag e reco nd itio ni ng co sts . Th e Co un ty A ss es so rs sh al l ex er cise th eir be st j udgm en t as to th e va lu e of us ed mot or v eh icl es in unusu all y poo r, ob so lete or unusu al ly good 

co nd ition . I t is fu rth e r or der ed th a t us ed fa rm m ach in er y in ve nt or ie s be as se ss ed on th e sa m e ba sis as has l»een orde re d fo r as se ss m ent of used m ot or ve hicle in ve nt or ie s, 

us in g th e Official T ra cto r an d F ar m E quip m ent Gu ide as a base. D at ed a t Ch eyenne, Wy oming , th is 20 tli day of De cembe r A.D . 1965.

State Board of E qualization

for th e State of W yo mi ng , 

Richa rd J . Lum an, Cha irman .

F rancis Hillard, Mem be r.

R udolph Anselm i, Mem be r.

Alex J . Elio pu lo s, Sec re ta ry . A tt e s t:
136 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

E xhib it X I

State B oaed of E qualiza tio n of Wyomin g,

C hey en ne, W yo., D ecem ber 2 0,19 65 .

Ad Valorem T ax D epa rtme nt

GE NERAL ORDER NO. 4 , 1 9 6 6

(P ersona l P rop erty)

To the Honorable Chairman, County Board of Equalisation and the County

Assessor:

By the B oa rd : Pursu ant to the a uthority granted to the State Board of Equalization under Section 39-26, Wyoming Statutes, 1957, this Ord er is hereby certified to you in accordance therew ith.

It is hereby ordered that the “Official Tra ctor and Farm Equipment Guide” 

be used as a base for assessing far m machinery for the ye ar 1966. On new 

mach inery use 30% of the “Current Suggested Retail Price,” which is shown in 

the guide as “C-SR P” or “LP -SRP .” On older mach inery use 30% of the 

“Average As Is” value f or the proper year.

It is furth er ordered th at Boats l»e assessed on the same perce ntage as has 

been ordere d for the assessment of farm machinery. Inform atio n on boat prices 

can be obtained from Outdoors, Inc., 103 G uitar Bldg., Columbia, Missouri.

It is furth er ordered th at Aircr aft be assessed at 30% of “Approx. 

Current Retail” prices as shown in the Aircraft Blue Book. This book can be 

obtained from Aircraft Dealers Service Association, P.O. Box 621, Aurora 8, 

Colorado. The subscription rate on this publication is $25.00 i>er year for 

quarterly issues, hut it is our und erstanding that one issue can be ordered at a 

cost of $7.50, which should give you sufficient information. We suggest that 

you order the one for the 4th qu arter of 1965.

It is furth er ordered th at Commercial Fur niture , Fix tur es and Equipment 

(Line 79 on Abstract) be assessed at 25% of depreciated value (cu rre nt value). 

Depreciation Pamphlet, S.B. of E. Form 24, ATD, with which you have been 

supplied, is designed to produce this result when properly applied. It is recommended that this Depreciation Pamp hlet be studied carefully and th at it be 

utilized whenever practicable.

It is recommended that th e enclosed 1966 revised schedule covering Household 

Furni tur e, Refrigera tors, Musical Instruments, Office Fu rnitu re, etc., be used 

as a guide in all counties for 1966.

It is f ur ther ordered that the enclosed 1966 schedule covering Oil Field Equipment and Tankage be used in all co unties for 1966.

It is fu rth er ordered th at the enclosed 1966 schedule covering Construction 

Machinery and Equipment be used in all counties for 1966.

Additional copies of any schedules will be mailed on request.

Dated at Cheyenne, Wyoming, this 20th day of December, A.D. 1965.

State Board of E qua lization for th e State of W yomin g, 

Richard J. Lu m a n, C hair m an.

F rancis H ill ard, M em ber .

R udo lph An selm i, M em be r.

A ttes t:

Alex J. E lio pu lo s, Secr et ary .
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 137

E x hib it X I I

■nils ch art shows the percentage changes in as se ssed va lu ations of the four

ra ilr oa ds in looming sinc e 1930.

The act ual figu re s are: Reduction

■ 1930 196$ of

Union P aci fi c Railroad Co. 100% 100.1*3% .1*3% »

Chicago, Bur ling ton & Quincy Railroa d Co. 100% 63.59% 36.1*1%

Colorado 4 Southern Railway Co. 100% 60.0l*% 39.96%

Chicago & North Western Railway Co. 100% 16.09% 83.91%

wlncrease

The forego ing figu re s were taken from o f fic ia l reco rds o f the St at e Board

of Eq ua liz ation and are av ai la ble to th e pu bl ic.
13S TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

E x h ib it X II I

\ -------------------- ---------------------------------

r. ?41H|.| f I.1 .U I. : i lb M :

•I-H

.rr ijH -H

| H ! i

ii ir L

Thia cha rt shows the changes in as se ss ed va lu ations of the fou r major ra ilro ad s

in framing si nce 1930.

The actual fi gure s are*

Union P acif ic Railroad Co.

Chicago, Bu rlington & Quincy Railroad Co.

Colorado 4 Southern Railway Co.

Chicago 4 North Western Railway Co.

Reduction

of

• 211,010 *

10, 082 ,517

1,536,1*09

6,601*, 131

einc rease

1965

I 1*9,221*,526

17 ,61 0,2 55

2,3 08 ,282

1,26 6,78 5

1930

$ 1*9,013,516

27, 692 ,77 2

3,814*, 691

7,8 70 ,91 6

The fore go ing figu re s were taken from o f f ic ia l recor ds of the St at e Board

of Eq ua lis ation and are av ai la ble to th e public.

Notra Bona:

I t should be pointed out th at part of the red uc tio n given to the Chicago and North

Western Railro ad was due to the fa ct that sa id ra ilr oa d abandoned some 8l*.O3 m iles'

of trac k, and the Court should take ju d ic ia l not ic e th at th is ra ilro ad ia now r enting CB&Q trac k fo r th ei r needs in th ia are a (s ee 13th bie nnia l rep orts o f the State

Beard of Eq ua lis at ion, 191*3-191*1*)
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 139

State m ent of t h e D epa r tm en t of R ev en ue, Sta te of S o u th D ak ot a

BA CKGROUND

In 1957 South Dakota Sta te Legislature enacted a law whereby real esta te and personal property would be assessed at GO percent of i ts ma rke t value rather than, as formerly at full and tru e value or 100 percent. This procedure has been followed by the majority of the counties and has been retained by them witli a reasonable degree of success. Inasmu ch as the ad valorem ta x is entirely dele­ gated for the support of primary and secondary education and the suppo rt of local government, the Sta te government of South Dakota does not rely on the ad valorem tax in any way for the supp ort of Sta te government. Although the State government is not direct recipient of the a d valorem tax. yet it is the S tate department of rev enue th at has the responsibility of assessment and apportionment of ra ilroad and public utilities valuations.

OBJE CT IO N

Although the rati o of assessment of all property in South Dakota has remained at a fairly static condition from 1955 to 19G5, the actual gain in dollars of tax ­ able value has been an increase of 72.87 i>ercent. In spite of this increase our ratio of assessments to tru e and full value has remained about the same due to creeping inflation ary economy. Railro ad company assessments, however, have been reduced by 35.34 percent durin g this same period. This has resulted in a reduction of the railroad companies valuation s for 1955 of $35,077,035 to $22,- 679,714 in 1965 of a decrease of 35.34 percent. This decrease of 35.34 percent on railroads, as compared to the increase on all other property of 72.87 i>ereent, clearly indicated that the Sta te of South Dakota has recognized the problem of equity in arriving at the tax able valunatio ns per tainin g to the railroad 

problem. In South Dakota once the ini tia l assessments on railroads are made then the Sta te board of equalizatio n reviews these valuations and then proceeds to equalize these assessm ents to the end th at all railroads are assessed equitably one to another. The State board of equalization has established very generous factors of obsolescence to compensate for any d isparities. This proves, beyond question, th at the alleged discriminatio n against railroads as fa r as South Dakota assessment procedure is concerned, is unfounded and 

untrue. Any inju nctive procedure, provided for H.R. 4972, in the Fed era l courts would not accomplish any more beneficial res ults for the railroads than is now accom­ plished by a careful yearly analy sis each year as made by the departm ent of revenue and when deemed necessary by the State courts. Knowing how greatly there is an overcrowded docket in th e caseload of Federa l courts, it could be a number of years liefore cases could be decided. This would mean that the anticipa ted revenue in local taxing dis tric ts could be impounded for such long duration, and that it could result in a chaotic financial situ atio n 

for all d istric ts affected. A decision from the State Board of equalization of South Dakota can be taken and trie d as a single case to the circuit court. The decision on a single county court case could be applicable to all counties in the Sta te witho ut the necessity of furth er appeal to all other counties. A decision by the circuit court may then be followed by an appeal to the 

South Dakota Supreme Court.

CO NCLU SI ON

In conclusion, it is our belief th at the discrimination in assessment of common carriers is grossly exaggerated and th at it stems from the selfish interests of certain railro ad companies who ar e not honest enough to recognize the true effort which the several States have made and are making to solve thi s very enormous 

problem of equity.
140 tax assessme nt s on common carrier property

Statement of Eugene W. Ward, General Counsel, Tennessee Public Service

Commission

Chairman Staggers and honorable members of the Committee on Interstate 

and Foreign Commerce, I appreciate this opportunity to present my testimony 

to this committee.

I am Eugene W. Ward, general counsel for the Tennessee Public Service 

Commission, Cordell Hull Building, Nashville, Tenn. My testimony is presented in opposition to H.R. 4972 and the 12 other bills dealing with discriminatory property tax assessments against common carriers.

The Tennessee Public Service Commission is the agency in the State of 

Tennessee designated by the legislature with the duty to assess for ad valorem 

tax purposes the property of the various railroads, motor carriers and public 

utilities.

I can say to you without the least hestitation or equivocation tha t the Tennessee Public Service Commission does not now, nor has it ever engaged in 

discriminatory practices in assessing the property of any motor carrier, railroad, or public utility subject to the jurisdiction of that commission.

Tennessee Code Annotated, section 67-901, charges the Public Service Commission with the duty of assessing the property of all the public utilities in 

odd years at its actual cash value. The commission distrib utes these assessments to the cities, counties and taxing district where they apply their tax 

rate and collect the taxes.

The commission assesses the inte rstate common carriers by the same formula 

and by the same criteria tha t it assesses the property of intrasta te common 

carriers. The commission has no jurisdiction over the assessment of the property of any other citizens and residents of the State other than the public utilities, 

railroads, and motor carriers.

It has never been alleged th at this commission has taxed differently the property of intrastate and interstate carriers.

The only problem this commission has had with interstate carriers are those 

carriers tha t do not maintain any local property in Tennessee, but who use the 

highways of the State of Tennessee for the sole purpose of pickup and delivery 

in the State or traverse the State, and these interstate carriers maintain that 

they do not have a situs in the State. This m atter has been litigated a number 

of times in the courts of the State of Tennessee, and the irregula r route interstate carriers have been found to have a situs in the State of Tennessee for ad 

valorem ta x purposes. I refer you to the cases of Jack Cole v. Buford Ellinffton, Howard Sober v. Frank Clement and E. d L. Transport v. Ellinffton. In the recent case of Burnham Van Lines, v. Pentecost, the Supreme Court of the United States on November 15, 1965, dismissed an appeal by the petitioners 

from the Supreme Court of Tennessee for the want of a substantial Federal 

question. This case held tha t the taxing for ad valorem tax purposes of the 

property of these interstate car rier s and the distribution to the various cities, 

counties, and special taxing dstricts was not a burden on interstate commerce.

H.R. 4972 proposes an amendment to the Interstate Commerce Act. to permit the U.S. district court to assume jurisdiction upon a complaint that an 

interstate common carrier is being discriminated against by the assessment 

of a property tax at a value which bears a higher ratio to the true market 

value of such property than the assessed value of all other property in the 

taxing district subject to the same property tax levy bears to the true market 

value of all such property.

These interstate common carriers already have this remedy of applying 

to the State courts or the Federal courts whenever adequate remedy is not 

readily available in the State courts when they feel they are being discriminated 

against by being taxed at a higher value than local citizens.

In the case of Southern Railway Co. v. Clement, chancery court of Davidson County, Tenn., the chancellor held that the assessment of local tax assessors in 

Hawkins and Loudon Counties assessing property of local citizens at less than 

actual cash value was illegal and void. That there was no provision for assessment of less than 100 percent of value.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 141

Also the case of Louisville & Nashville Railroad Co. v. Public Service Commission and State Board of Equalisation, civil action No. 4310, the U.S. District 

Court for the Middle District of Tennessee held on February 11, I960, tha t the 

assessment by the Tennessee Public Service Commission of the property of the 

Louisville & Nashville Railroad Co. at actual cash value was illegal and void 

since other private property in the cities and counties through which the 

railroad operated was assessed at approximately 30 percent of value. The 

Tennessee Public Service Commission was made a defendant in tha t case so it 

could be enjoined from distributing the assessments to the various cities and 

counties. There was no allegation that the commission assessed the Louisville & Nashville in excess of 100 percent; in fact, the commission alleged that 

the assessment for the current biennium amounted to approximately 65 to 70 

percent. The Federal court held even this amounted to discrimination.

The Louisville & Nashville did not even have to argue tha t the assessments 

were a burden on interstate commerce. The only issue determining whether 

the Federal court could assume jurisdiction or not was whether the railroad 

had “an adequate remedy in State courts.” The Federal court found there 

was no such remedy in Tennessee at that time.

Since then the chancellor of Davidson County chancery court issued his ruling 

in the Southern Railroad case.

These cases are a step in the right direction, and it is my opinion that the 

situation is being corrected and is being corrected as expeditiously as if these bills 

were passed.

On February 24, 1966, the parties entered into an agreement whereby the 

Louisville & Nashville Railroad Co. would pay, under protest, its ad valorem 

taxes for 1965 on the basis of 85 percent of the final assessment of the State 

board of equalization.

A number of similar cases have been filed in other States with similar results 

(Kentucky and Florida).

The interstate common carriers already have an adequate and speedy remedy 

available to them without the adoption of H.R. 4972 and other similar bills. 

There is no burden in the State of Tennessee on carriers engaged in interstate 

commerce, but if these bills were adopted it would most certainly be a burden 

on the Tennessee Public Service Commission and the State board of equalization. 

In other words these carriers would be holding this commission resi>onsible for 

the conduct of the local tax assessors even though the commission has taxed the 

properties of all carriers under its jurisdiction at actual cash value. To require 

the commission to take into consideration the tax ratio and tax rates of approximately 425 cities, counties, and special taxing districts in the State, in arriving at 

the amount of the tax to be distributed to these taxing bodies, would require employment of triple the personnel employed by the tax department.

Thank you for the opportunity of expressing the views of the Tennessee Public 

Service Commission.

Statement of North Dakota Tax Commissioner Lloyd Omdahl, Secretary, 

State Board of Equalization, State Capitol, Bismarck, N. Dak.

On behalf of the political subdivisions of the State of North Dakota. I wish 

to express my objection to passage of H.R. 4972 as it appears before your 

committee.

In 1963, the North Dakota Board of Equalization, which has the responsibility 

for assessing public utility properties in the State, recognized tha t North Dakota 

had been leving discriminatory and unconstitutional assessments against the 

utilities and railroads. This became very apparent to the board when a series 

of court decisions were issued upholding the public utilities in cases relating to 

unfair assessements in other States.

The State board initiated a program in 1963 tha t would gradually bring all 

properties in the State to a common level. As a part of t ha t program, utility 

assessments have been gradually adjusted.

On February 17 and 18 of this year, we held a series of conferences with the 

various utilities—including common carriers—to discuss the progress of this 

equalization program. There was unanimous agreement tha t the equalization 

program in North Dakota would be reasonable and acceptable if continued to its 

stated conclusion.
142 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

Since North Dakota is alread y tak ing steps to achieve the intent of II.It. 4972, we must object to the passage of this proposal. It would create two major 

problems th at are being avoided with our own program. 1. Tlie measure would req uire that railroad prop erty be assessed at the same level as other property in each tax ing district. With some 2,000 assessing dis­ tricts and considerable more tax ing districts, this requirem ent would certainly confuse and compound the problems of a prese ntly complex tax structure. In addition, it would be difficult to determine the tru e assessment level in each of 

the taxing districts. 2. If H.R. 4972 were passed, the equalizatio n would tak e effect immediately. This would resu lt in serious disruption s in our financing of school d istricts and oth er political subdivisions since th ere is an admitted difference between the level of assessments of railroads and th at of local property at the prese nt time. We recognize that some political subdivisions in our Sta te are benefiting at the expense of othe rs because of the lack of uniformity in assessments of local property at the present time. However, steps are being made to establish a statew ide level of assessment tow ard which all political subdivisions will move. Per hap s the progress being made in North Dakota is little consolation if other Sta tes a re still continuing discriminatory assessment practices. However, there app ears to be little justice in penalizing North Dakota for the discrimination in 

other States.

Controller of the State of California,

Sacramento, Calif., F ebruary 24, 1966.

Hon. IIarley O. Staggers,

Chairman, Committee on Intersta te and Foreign Commerce,

House of Representatives, W ashington, D.C.

Dear Congressman Staggers : AA’e have ju st received information that the 

Committee on I ntersta te and Foreign Commerce will hold hearings on March 1 and 2, 1966, on H.R. 4972 a nd 12 other identical bills dealing w ith the property tax assessments of common c arrie rs subject to the Interstate Commerce Act. Under the Constitutio n of the Sta te of California, the prop erty of railro ads, utilitie s, and certain other assessees is assessed annually by the California State Board of Equalization. When assessed, such properties are subject to taxation to the same extent and in the same manner as other prop ertie s. As State con­ troller and a member of the State hoard of equalization, and as chairman of the board's committee on valuation of the prop erty of Sta te assesses, I am quite concerned as to the effect the proposed legislation would have upon Califo rnia if enacted. My fellow board members are equally ap prehensive about the drastic 

consequences th at could follow such action by th e Congress. AA’e are unable to arrange to testify personally before the committee on the dates th at have been scheduled for hearing. Nevertheless, it is our desire to express our views in opposition to H.R. 4972 and the oth er rela ted bills. It is requested that our objections and views contained herein be made part of the committee record and be made available to the full comm ittee membership. The proposal of the bill to allow use of writs of inju nction or other extraord i­ nary judicial process in the distric t courts to r est rain the normal tax assessment and levy procedures could cause chaos in the budgeting and other fiscal affairs of local units of government in our State. The extrao rdi nary remedies provided by the bill could operate to suddenly cut off a sub stantial portion of the flow of tax moneys to local governmental units and could deprive them of their ability to ope rate pending the outcome of protrac ted litig atio n begun in the lower 

Fed eral courts. The approach of the bill const itutes a most dra stic departu re from widely ac­ cepted principles in tax matters th at have been followed by the States and by the Congress in not allowing remedies prior to payment of tax to inte rfere with the flow of essential funds to Governm ent. Section 1341 of title 2S, United States Code, is a recognition by Congress that extraord ina ry remedies should not be afforded where to do so would be disruptive of sta te fiscal procedures. H.R. 

4972 would be a complete rev ers al of th at philosophy by the Congress. In California, tax es pa id by the railroads represent in m any local jurisdictions a sub sta ntial portion of the fiscal lifeblood of counties, school districts, and other units of local government. If thi s flow were inte rrupted by the injunctive pro­ cess, chaotic conditions would surely result. For example, railroads constitute 13.9 percent of the prop erty tax base of Lassen County; 10.3 percent of the tax
TAX ASSES SMENTS ON COMMON CAR RIER PR OP ER TY 143

ba se of Mo doc Cou nty; an d muc h la rg er pe rc en ta ge s of th e ta x ba se s of som e 

of th e sm all er loc al go ve rn m en ta l u n it s th ro ugho ut th e Sta te . A lto ge th er th e ra il ro ad s pa y ta xes am ou nt to ap pro xi m at el y $30 mill ion to C al if orn ia loc al 

go ve rn m en ts. I t shou ld also be poi nt ed ou t th a t some loca l gov er nm en ta l units 

op er at e under ta x ra te an d deb t li m itat io ns an d wo uld hav e no alt ern ati ve 

so ur ce s of in te ri m reve nu es to tu rn to in or de r to te m pora ri ly re pla ce ta x do llar s 

which co uld be with he ld from th em unti l reso lu tio n of F edera l litigat io n.

A no th er ob je ct io na l fe atu re of th e bil l is th a t it wo uld te nd to ch an ne l th e 

who le re vi ew proc ess fo r cert ain as se ss ee s th ro ug h th e d is tr ic t court s to th e ci rcuit court s of ap pe al an d th e U.S. Sup re m e Cou rt ra th e r th an th ro ugh th e es ta blish ed adm in is tr ati ve review ag en ci es an d th e court s of th e Sta te . The val uation an d as se ss m en t of th e tyi>e of pro pe rt ie s invo lved is a hig hl y sp ec ializ ed 

Held, an d th e mai n fu nc tion of th e court s ha s been to see th a t pr oc ed ur es ar e 

re as on ab ly di re ct ed to obt ai ni ng a fa ir appra is al an d as se ss m en t. The Fed er al 

ju dic ia l pr oc ed ur e w ith ou t pri or adm in is tr ati ve review wou ld te nd to be ex ­

ce ed ingly cu mbe rsom e an d wou ld be in a field fo r which th e F edera l ju dic ia ry 

has no p art ic u la r qu alifi ca tio ns .

We qu es tion th e ob vio us ba sic ass um pt io n of th e bill th a t F edera l le gi slat io n 

is ne ed ed or de sirable. The ra il ro a d s as we ll as oth er S ta te asse ssee s, ha ve 

co nten de d th a t they are a ss es se d a t a hig he r pe rc en ta ge o f va lu e th an ot her pr op ­

er ties . S uits desig ne d to te st th is co nt en tion were filed in C al if orn ia by th e fo ur 

m aj or ra il ro ad s in 1959. Th ey w er e su bs eq ue nt ly w ithdra w n. U nder th e pre sen t law , w he re a Fe de ra l const it uti onal qu es tio n is invo lved in su it s in th e st ate 

co ur ts, th e de cis ions of thos e court s a re re vi ew ab le in th e U.S. Su pr em e Co urt. 

We do no t be lie ve th a t it ca n be as su m ed th at th e C al if orn ia court s wo uld fa il 

or ha ve fa il ed to en force th e 14tl i am en dm en t pr ov isions pro hib itin g a S ta te 

fr om d en yi ng to any p erso n w ithin it s j uri sd ic ti on t he e qu al p ro te ct io n o f t he law.

We be lie ve th er e ma y he a const it uti onal qu es tio n in th e bill w ith re sp ec t to 

th os e in st an ce s whe re re lief m ig ht be so ug ht dir ec tly again st a S ta te ag ency 

mak in g th e pr op er ty ta x as se ss m en ts . W he th er an in tr usi on by th e Fed er al 

court s in to th e or di nar y pro per ty ta x as se ssin g an d revi ew pr oc ed ur es his ­

to ri ca lly re se rv ed to th e S ta te s an d lo ca lities is w ithin th e ge ner al ju ri sd ic tional 

po wers of Fed er al co ur ts is no t cl ea r. The Sta te has on ly co ns en te d to be sued 

in lim ite d pr oc ee ding s in th e S ta te cour ts . The af fo rd in g of sp ec ial F edera l ju dic ia l re lief in pr ob lems invo lving in ­

eq ui ties to on e segm en t of in dust ry invo lv ed w ith in te rs ta te co mmerce wo uld se t 

a pr ec ed en t fo r ot he r as se ssee s to pre ss fo r si m ilar tr eatm ent. T his could lea d 

to Fed era l su pe rv isio n of th e loca l pro pert y ta x th ro ug h F ed er al ju dic ia l pr oce du re s fo r no t on ly com mon c a rr ie rs but utilities an d co m m er ci al an d in du str ia l bu sine ss es wh ich ar e e ng ag ed in in te rs ta te comm erc e. In a ny ev en t, shou ld 

liti gati on be in it ia te d und er th e bi ll fo r th e com mo n carr ie rs , th ere co uld u lt im at el y be invo lved th e as se ss m en t of th e pro pe rty of al l u ti li ti es an d re la te d 

as se ssee s who se pr op er ty is as se ss ed by our bo ar d on a st ate w id e ba sis. We 

be lie ve t h a t th e a pp ro ac h of th e bill is an un ne ce ss ar y an d u n w arr an te d in trusi on 

of th e F edera l Gov ernm en t in to th e pro per ty ta x proc esses.

I g re atl y ap pre ci at e th e opport unit y to br in g th e ab ov e-m en tio ne d po in ts to 

th e att enti on of th e In te rs ta te and For ei gn Co mm erc e Com mittee . We wo uld 

st ro ng ly reco mmen d ag ai ns t en ac tm en t by th e Co ng ress of II.It. 4972.

Cor dial ly,

A lax Cranston.

New Mexico State Tax Com mission,

Santa Fe, N. Hex., February 23, 1966.

House Committee on I nterstate and F oreign Commerce,

Rayburn House Office Building,

Washington, D.C.

Gentlemen : I ha ve a tech ni ca l cr it ic is m o f H .R. 4972.

The se ct ion to be ad de d by th is bi ll wo uld pr oh ib it as se ss m en t of a c a rr ie r’s 

pro pert y “a t a va lu e which bea rs a hig her ra ti o to th e tr u e m ark et va lu e of 

su ch pro pert y th an th e asse ssed val ue of al l oth er p ro per ty in th e ta x in g dis tr ic t 

su bje ct to th e sa m e pro pe rty ta x b ears to th e tr u e m ark et valu e of all such 

pro pert y.”

Thi s se ts up a st andard fo r ju dgin g th e fa ir nes s of th e as se ss m en t of th e 

c a rr ie r’s pro pe rt y, an d th e st an d ard is th e as se ss m en t of “a ll o th er pro pert y” 

su bje ct to th e sa m e pro pe rty ta x.
144 TAX ASSESSMENTS ON COMMON CARRIER PROPERTY

A hundred years ago, all property was in most States subject to a single rule 

of assessment and taxation. This bill seems to assume that the same situation 

prevails today.

“* * * immediately following the Civil War discontent with the workings of 

the uniform ad valorem system became general. * * * the system had long since 

been abandoned in most European countries for a system of classification” 

{Hilger v. Moore (1919 Mont.) 182 Pac. 477, 482).

Newhouse, in Constitution Uniformity and Equality in State Taxation (Michigan Legal Studies series), page 635, states that beginning in 1874, as State 

constitutions were written or reviewed, there was a departure from the strict 

uniformity requirements in somewhat older constitutions, in favor of clauses 

stating tha t taxes (meaning property taxes) should be uniform upon the same 

class of property. Implicit in these provisions was a power in the legislature 

to classify property, and tax some property a t higher rates than other property. 

The only remaining restriction was tha t classes created by the legislature should 

not be arbitrary , that there should be some reason for the discrimination.

States that still have the old-style universal uniformity requirements, while 

maintaining a facade of the same rate of tax levy on all property, behind the 

facade tre at different types of property differently by assessing the property 

at different fractions of its true value. (Taxation of Intangibles Under the 

Illinois General Property Tax, 35 Ill. L.R. 716, 725.)

Of course, for practical purposes it does not matte r whether inequality results 

from different millages applied to different classes, or from different ratios of 

assessed value to true value. H.R. 4972 assumes th at there will be only one tax 

rate applied alike to carrier’s equipment and other property, and that discrimination will come only in the form of unequal assessment. But many States have 

several property taxes, one for local assessed property, one for centrally assessed 

property, one for intangibles, etc. A State that wanted to discriminate and did 

not have the old style uniformity clause could simply impose a special property 

(or excise) tax on carrier’s equipment, and then there would be no “other property * * * subject to the same property tax” with which to compare the carrier’s 

assessment.

A sounder approach would be by analogy with Revised Statutes section 5219, 

12 USCA section 548(1) (b), which prohibits State taxation of national hank 

shares in any way t ha t results in an effective ra te higher than tha t imposed on 

other moneyed capital.

The bill as proposed at best adopts a standard that no longer exists in most 

States; i.e., a single ra te (of both assessment and levy) applied to all property. 

At worst, it might force upon these progressive States an iron rule of equality 

which was long ago found unsuitable to their needs.

Yours very truly,

John B. Speer.

Tax Commission Attorney.

Oregon State Tax Commission,

Salem, Orcg., March J If, J9G6.

Hon. Harley O. Staggers,

Chairman, Committee on Interstate and Foreign Commerce,

TIouse of Representatives, Washington, D.C.

Dear Sir : The Oregon State Tax Commission has received and reviewed a copy 

of the statement on H.R. 4972 and identical bills made by Charles F. Conlon, 

executive secretary of the National Association of Tax Administrators, before the 

Committee on Interstate and Foreign Commerce March 2, 1966, and wishes to 

go on record as enthusiastically endorsing his statement of opposition to H.R. 

4972 and similar bills.

Although Oregon was not included in the Doyle report as a State discriminating against railroads in equalization of property valuations, it is appreciated 

that some States have reached a questionable level. We do not believe that review in the Federal courts is the solution until most if not all resources at the 

State level are pursued and exhausted. Recent action in some States and current efforts in others are examples to consciously resolve their problems which 

indicate the States are not unmindful of the need to reach a solution.
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 145

Although we believe th at Oregon is not a Sta te which is the target of H.R. 

4972, Mr. Conlon’s s tatemen ts seem very fair and should be considered carefully 

by you r committee. We also believe the type of legislation called fo r in H.R. 4972 

is not wa rra nte d at th is time.

Sincerely yours,

C. II. M a c k, Chairman.

State of Washington T ax Commis sion,

Olympia, Wash., February 28,1966.

Hon. J ohn Bell William s,

Committee on Interstate and, Foreign Commerce, House of Representatives,

Washington, D.C.

Dear Mr. Williams : I have read Mr. Charles F. Conlon’s p ape r to your committee rega rding H.R. 736 and H.R. 10169 and concur with his very fine and complete stateme nt. I would like to add to these s tate ments as reg ard s the Sta te of 

Washington.

The constitution of the Sta te of Washington requ ires th at all p roperty, whether 

it be locally assessed by the co unty assessor or assessed on th e Sta te level by the 

tax commission, be assessed at 50 percent of its fa ir ma rke t value for tax 

purposes.

Historically, up until 1951, the tax commission had made considerable effort 

to assess all State assessed properties, which includes all interstate utilitie s and 

railroads, at 50 percent of f air mark et value. Actually, in 1951 th e average level 

of assessm ent of all utilitie s and railro ads in this Sta te was 46 percent.

At th is time the legislature of the State conducted an extensive review and 

found th at locally assessed property (th at is property assessed by the individual 

county assessors) was being assessed, even in view of the constitutional mandate, 

at something less than 20 percen t of fair market value. The legislature demanded th at the commission commence a program whereby Sta te assessed and 

locally assessed property would be treate d in a like manner. A number of the 

counties in this State depend quite heavily—even up to as much as 35 percent of 

the ir ad valorem tax dollar, on uti lity and railroad property located within the 

confines of the ir respective counties. It would have been impossible and most 

certain ly disa stro us to have reduced or equalized the ratios on all locally assessed 

and Sta te assessed properties in these counties.

A serie s of meetings were held with the assessors and all uti lity and railr oad 

representativ es and a program was planned whereby the ratio of assessment on 

all utility and railroad properties would be gradually reduced over a number of 

years. This program was to begin immediately and continue until some time 

approximately the year 1967 and at this point the two classes of property would 

be equalized.

We have continued to meet annually with all the tax officials concerned and 

have felt that his continuing program has met with unanimous approval.

I am subm itting a cha rt which po rtrays the action taken since 1960 for your 

perusal.

Again, I concur with Mr. Conlon’s statements as submitted in his original presentatio n in 1964.

Sincerely,

George Kinnear, Chairman,

By Clyde B. R ose,

Property Tax Director.

Ratio comparison, 1960 through 1965

1960 1961 1962 1963 1964 1965

Indica ted co un ty ratio s as deter mi ne d by Sta te tax 

com mission ?- _________________ _____ ___ 23.9 19.7 19.7 20.0 19.9 18.8

Fix ed co un ty ratio s as set by State board of equ aliza ­

tion.................... ................. ................................ ........ . 32.3 30.9 29.7 28.2 26.4 23.9

N ot e.—All figu res are statew ide averages.
146 TA X asses sments on com mon carrier prop er ty

Transportation Association of America,

Washington, D.C., Feb ruary 28, 1966.

lion . Harley O. Staggers,

Chairman, Committee on In ter sta te and Foreign Commerce,

House of Representatives, 'Washington, D.C.

Dear Mr. Chairman : The Transpo rtation Association of America strongly supp orts the various identical bills (1I.R. 4972, etc.), which are the subject of hearings before your committee on Marc h 1 and 2. These bills would make it unlawful—as an unreasonable and un just discrimination against, and an undue burden on, int ers tat e commerce—for a Sta te to assess prop erty of any inter­ sta te common carrier at a ratio to ma rke t value higher than it assesses other prop erty in the same taxing d istrict. At the same time, these bills would provide a means by which such car riers could go into the Federal courts to seek relief 

aga inst disc riminatory prop erty tax assessments. For th e record, TAA is a national transp ort ation policy organiza tion composed of tra nspo rt users, investors, and ca rri ers of all modes who work collectively to develop sound natio nal policies aimed at the creation of the stronge st possible tra nsp ort ation system under private ente rprise. Policy positions, prior to final vote by the 115-member TAA board of directors, are first studied carefully by eight permanen t panels composed of approxim ately 350 leaders from user, in­ vestor, air, freigh t forwarder, highway, oil pipeline, rail, and wa ter car rier fields 

respectively. To ill us tra te the unanimity of TAA membership support for legislation such as under consideration by your committee, the TAA board adopted the follow­ ing policy position after receiving supporting recommendations from all eight 

of its a dvisory panels: “To declare unlawful, as an unreasona ble and unjust burden upon interstate commerce, the assessment of property of any common c arrie r at a value which bears a higher rati o to its tru e mark et value than the assessed value of other property in the taxing district sub ject to the same property tax levy. “In ord er to provide a forum to decide such unlawful assessment and collec­ tion. jurisdiction should be conferred upon the Federal dis trict courts to enjoin 

any such assessments.” While this problem is of concern to all intersta te common c arr ier s, a particu­ larl y stro ng case in support of the need for relie f proposed by this legislation can be made by the railroads. Several studies show tha t the ratio of assessments to fair ma rke t value in the case of rai lro ad property is more than double those on other property, which amount to an excessive tax burden of well over .$100 

million a year. An objective analysis of this problem by a special study group for the Senate Commerce Committee—see ch apte r I of pa rt VII of its repo rt on “Tra nsportation Policies in the United States,” Ja nu ar y 3, 1961—clearly points ou t the need for 

such legislation. Congress, in our opinion, has the constitutional autho rity to pro hib it States from unduly discriminatin g again st interstate commerce, as it has exercised by author izing the ICC to provide rel ief to int ers tat e common carri ers from dis­ crimin atory int rasta te rates and from unprofitable intrasta te passenger services. Finally, while judicial relief can be sought by carrie rs at the State level, the record indicates that this is a long, draw n-out process with generally unsatisfac tory resu lts. Therefore, we urge that your comm ittee tak e favorable action on this legislation at the earliest possible date. We reques t that, this lette r be made a pa rt of the official tra nscript of the 

hearings.

Sincerely, Harold F. Hammond, President.

American Trucking Associations, Inc.,

Washington, D.C., March 7 ,1966.

Hon. Harley O. Staggers,

Chairman, Comm ittee on Inter sta te and Foreign Commerce, House of Representatives, Washington, D.C.

P ear Mr. Chairma n: On behalf of the Nation’s trucking ind ustry we wish to express our inte rest in the legislation embodied in H.R. 4972, and similar bills, which would declare unlawful, and an undue burden upon inte rstate
TAX ASSESSMENTS ON COMMON CARRIER PROPERTY 147

commerce, the assessment of property of any common carrier which bears a higher ratio to its true market value than the assessed value of other property 

subject to the same property levy. We respectfully request tha t two changes be made so as to include Interstate Commerce Commission regulated motor contract carri ers within the scope of the bill and so as to make it entirely clear t ha t all motor c arrie rs subject to economic 

regulation by the Commission are covered. These changes are indicated by the following suggested substitute for the language beginning with “common car rier ” in line 6 and ending with “Act” in 

line 7 on page 2 of the bi ll:

“common or contract carriers subject to economic regulation pursu ant to the

provisions of the Interst ate Commerce Act” The suggestion that contract motor carrier s be included stems from the fact tha t in many areas of regulated motor carriage the common and contract opera­ tions are quite similar and e ntitled to the same protection sought to be provided by this bill. I refer particu larly to operations such as those of the automobile 

trans porters and the tank truck o perators. The purpose of the other suggested change (spelling out the name “Inter state Commerce Act” ) is simply to make it clear tha t the provisions of the bill apply to p arts of the a ct other than par t I in which the proposed amendment to section 

25 is to appear. We are grateful for your consideration of our position in this matter.

Very truly yours,

W. A. Bresnahan, Managing Director.

(Whereupon, at 4:45 p.m., th e hearing was adjourned.)