Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1880-02-26
THE QUESTION OF TAXATION.

EDS. REcoRD-UNIoN: The question of
taxation was the great one on which the bat
tie for the new Constitution was fought. It
Is very generally acknowledged by its sup
porters that no double taxation Of the same
property was sought or intended. But the
dominant idea controlling the advocates of
Article NH. of the Constitution was to
make the rich man pay taxes On all the
property owned by him. This, in theory, is
exactly right, but the attempt to indirectly
reach individuals through the direct taxation
of property has led to the difficulties now en-
countered by our Lawmakers in framing n
constitutional Act which will avoid double
taxation. Aside from poll tax, the amount
| OF which should be percentage on the wall
uation of the property owned by the indi-
vidual, the only practical mode of taxing
persons III proportion to wealth is an income
tax. But the adoption Of these two modes
would involve the abr0eation of the direct
property tax. The theory of our Govern
ment is to tax property, and not individuals,
and so long as this principle prevails prop
erty must be taxed wherever and in the pos
| session OF whomsoever found. The Govern
ment looks solely to the property fur its tax.
lt asks no personal Judgment or process
| against individuals therefor and when it
| proposes to determine ach0 should pay this
tax, it attempts an interference in the
private business relations Of the people,
which is alike detrimental to beth parties,
so long as the princip pie Of property tax is
| adhered TO. l. IS very generally held that
property is creation Of the law that only
that which the statute declares TO be property
! is property, and that anything declared by
law to be property is SUCH This is true. to
certain limited extent, and for certain pur-
poses. But the uDwritten common law of
universal usage among the cdllmon people
| says, that oily that is property which has an
independent value. The deed to my farm or
to your house and lot is property, recognised
as such by law, but no one would for mo-
ment advocate attaching any value to it for
| the purpose of taxation. My land, and Your
| house and lot are taxed, and universal con-
| sent recognizes that the whole property is
| taxed.
have before me Assembly Bills Nos. 403
and 404, which | have carefully examined
Neither OF them are complete, bnt the prin-
cipal difference involved seems to be the taxa
ton of stocks. Now what is the stock of a
corporation or Joint stock company? The
Bulletin, in its leader of the 18th, gives cor
rect, or at least very far definition of it,
| but to my mind draws somewhat incorrect
conclusion. A deed represents only real es-
tate. Stock represents both real estate and
personal property, which latter, under our
Constitution, includes "debts, credits, fran
chises," etc. Thus, if one person were to
buy all the stock of any corpora
tion, he would be sole owner of all
its real and personal property, franchise in
cluded, no more and no less, and his stock
would represent no other value-and the
market value of all that stock, unaffected by
bulling and bearing" would be precisely
| the estimated value Of all the real and per-
! cnnal of la bp
natural causes of advance in value of stocks
are additional improvements, additional Ia
| Dor performed and additional developments
| of wealth, which promise dividends. But on
each recurring day for the levy Of taxes the
| additional value thus produced by the im-
provements made, labor done, and developed
value OF the property will, or should be,
taxed. Hence an honest valuation of the real
and personal property of any corporation will,
at any given date, exactly equal the honest
valuation OF its capital stock. If the Legis-
lature desires to tax the fictitious values
created by gambling in stocks, let it do SO by
a license tax on the gamblers, for it is well
| known that the market values established by
| them, in nine cases out Of ten, bear no rela-
tion to an honest valuation of the property;
and to tax this fictitious value 20 the corpora
/ tioA would wrong innoct ut stockholders who
are not gamblers. If five meu INCORPORATE to
cary On business, owning shares equally,
| their interest Ia the Corporation Is
precisely the same as though they
had formed partnership for the same pur-
| poSe Plus tie advantage Of each being only
| able for one.itth Of the debts Of the corpo-
ration. instead of the whole debt in a part
nersnip; and this is the franchise except in
those corporations TO which certain exclusive
| privileges may be granted, in which case the
| value Of those privileges is also c part of the
franchise. To my mind the fair and honest
way to tax the property Of al corporations is
to declare the stock au interest in the prop
erty, and let an honest assessment of all its
real and personal property including the
value of its franchise, be the value Of such
stock and property. As to the provision in
the minority bill for taxing the owners OF
stock of foreign corporations with such stool.
l don't understand. The property which the
stock represents is taxed, aud the stockholder
pays his proportion Of his taxes If he
owns stock in a cooperation in Illinois, be is
taxed on it there if he owns q farm in Il
linois. he is taxed on it there. This State
does not attempt to tax him on the deed be
holds If the farm is rented, and ne derives
any income from it, the income IS taxed to
him here, or where he invests it. Ii divi-
dends are declared on his stock, and he in
vests it in this State, he is also taxed on
that. Just where the difference is which the
Legislature is attempting TO make between
'the taxation of the property of corporations
and that Of individuals, | must confess | am
at present unable to see.