The daily Argus. (Rock Island, Ill.) 1873-1877, 1874-02-16

road company,
Appellee
Concluded
And we say that this assessment cannot
be sustained:
LIST. Because the market value of the
shares of stock added to the market value
of the debt is not measure OF the value
of the property of the corporation. !.
The value of the shares of stock and OF
the debt of a corporation is governed by
its property, its credit, its realor supposed
OPPORTUNITIES for making money, the econ
omy and honesty with which it is man
aged, and the manipulations of stock gam
blers. Some Of these elements enter into
the amount of the income, but not into the
value of its property.
That the value of the capital stock is not
measure of the value Of the property OF
the corporation has been fully discussed
and clearly decided by the Massachusetts
wealth o. Hamilton Manufacturing Com
pany, 10 Allen, 29S), and fully affirmed
by the supreme court of the United States
in Hamilton Manufacturing Go. .. Com
monwealth, (6 Wall, 632), and other au-
thorities might be cited which affirm the
same thing; but the reason of the thing
so clearly supports these authorities that
it is unnecessary to cite them. In the
case, in the IL Allen, it is expressly decid-
ed that tax upon property, based upon
such valuation, is not proportlonate and
cannot he sustained, and / cite it as fully
sustaining my views of this case in several
of its aspects.
I'd. This tax cannot be sustained as a
property tax, because the good will of the
corporation enters into and frequently con-
stitutes great part of the intangible prop
erty, and this can only be taxed when the
good will Of others exercising like business
is taxed. A single instance will fully illus
trate this.
Let us instance two newspaper offices
They have buildings, machinery and stock
on hand to an equal amount, and are both
taxed on what they have, but the one is
owned by a corporation, and the other by
an individual. The Board of Equalization
adds the value of the capital stock to the
value of the debt and deducting the as
sessed value of the tangible property, de.
termines that the intangible property OF
the corporation is of the value of $23S, 900.
The other office, doing a like amount of bu-
siness, and having an equal circulation, and
making equal profits, is entirely free from
this assessment. Is this taxation in pro-
portion to the respective values of the
properties 1t would be an insult to ask
the court for a reply. am ready to ad,
NIT that the legislature may cause the
corporation to be taxed upon those franchis
es or privileges which it possesses, and the
individual does not but this capital stock
valuation of $23S, 200 is not laid on fran
chises or privileges given by the legisla
ture. 1t is the goodwill of the concern
which is valued.
If it were the value Of the franchise:
and privileges given it by the legislature
that other newspaper concern would max,
haste to organize itself into a corporation
for it is seldom that for FIVE dollars invest
ed in certificates of organization an oppor
tunity occurs to secure an instant return 0
$23S.000.
1t is apparent that this is not tax OF
the franchise, but on the good and cred
it of the corporation 1t is not taxin!
property which the corporation possesse
and the individual does not, but it is a bur
den imposed on the corporation, from whic'
the individual is exempt.
Its an unequal and consequently an un
just tax in direct contravention OF the spir
it and the letter of the constitution. 1t i
a discrimination which will drive from tn,
State every manufacturing corporation
within its borders. How can our pillow
companies compete with the partnership
or individual makers, if they are to pa!
from three to five times the amount Of
taxes? To so construe the law would be
breach of faith ON the part OF the State
which has induced capital to combine TO
the purposes of prosecuting large enter
prses under the implied agreement that il
should pay taxes only In proportion to 9th
er capital and property and now unde
this guise, it is sought to tax combined cap
ital at much higher rates than other CAPT
tai and property.
The case which | have stated more
clearly illustrates the facts than could b.
done by an illustration based on this cor
poration, but the result is the same. Tn
vital defect is that the value of the taxa
BILE property of a corporation cannot b
measured by the value of its shares o
stock, whether added to the value of tn
debt or not, nor does this give an approx
mate idea of the value of the franchise ant
taxable property of the corporation.
In taxing the shares of stock against thu
holder, the market value is fair basis, be
cause it is what he can realize but as
measure of the property of the corporation
it cannot render true results, and any ia,
based on values so ascertained must be un
equal and unjust
This tax cannot be justified as an excis
tax.
1st Because, as we have seen, the leg
islature clearly intended it as a propert
tax.
I'd. Because the rule adopted by tn
Board Of Equalization would be an entir
departure from the law, unless 1t is to b
justified as an attempt to ascertain the va
ue Of the property of the corporation.
1t is unnecessary for me to say more a
to the first reason.
As to the second, desire again toca
the attention of the court to the rule adop
ed by the Board of Equalization. Ih
theory of the Board was:
The legislature has directed us to asses
the corporation upon its entire property
every name, nature and description, and
has left it for us to determine the rules
produce this result.
They reasoned that if the market vail
of the shares of stock were added to Il
market value of the debt, the result won
approximate the total value of all that Il
corporation possessed, and so the will OF &
legislature would be fulfilled, viz: to t
all of its property
That the fair cash value of the debt a
ded to the fair cash value of the capt.
stock, is equal to the fair cash value Of t
capital stock, is a contradiction in tern
but not altogether absurd when it was us
as measure of the value of the emit
lOrnfN ,,HA