The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1888-01-11
Railroad Taxation,
Communicated

| AUBURN, lnd., January 81 was
| pleased to read your editorial article in a
recent Issue OF the Seminal, and hope the
| press generally of the State will take no the
subject, so the lawmakers will see the
necessity of a change in the law in regard
! to the taxation of railroad properties. A
short time ago / had occasion to invssti-
gate this matter, and found no class OF
property that paid so little tax in proper
| ton to the value es the railroads in our
State. found also that no other class was
assessed with 50 little uniformity and
| equality, and that thereby our law-making
| power had permitted the constitutional
| provisions on that subject to be violated OF
/ ignored.
1t can be readily demonstrated that some
wealthy rail roads are appraised at as low
as Ii per cent. of their valae, while the
| poorer ones are appraised at from 40 to so
| per cent. OF their value. It can also be
shown that although real estate generally
is appraised at only one third its market
! value, our farmers pay two dollars to ev-
cry one paid by the most powerful corpl.
! ratlons in the way of taxes. The real
trouble is in our law, requireing certain
State officers to eppraise the rail ways,
some of which they have never seen, prob.
| ably not heard of, and by officers who NAV
not know anything about the value Of
such enterprises or the appliances whereby
they are operated. By the lsy they srs
not even compelled to appraise upon
actual view, nor have furnished 70 them,
| the first item of information on which to
! base any value whatever. By our present
statutes the railways are not required to
furnish for the information of the apprais-
/ ers word as to their profits, their groce
earnings nor the net income.
| submit that the only true criterion by
| which value can be sscertained, or as
/ to moneyed business or enterprise, is that
| OF its money producing power. Other
things have their values established upon
| different bases, and for other reasons, but
business matters are estimated by the
money they yield. Take a note, bond or
mortgage; If it yields yearly $50, and money
is worth per cent interest, we all know
that that note or bond is worth 81 900.
We know, too, that if a farm yields Sc per
acre let profit, that that land is worth for
that purpose 800 per acre. Why Because
it is the equal of gold loaned at the legal
rate of interest. And it makes no differ
ence what the land cost, whether $40, or
$500 per acre.
So it is with railroad enterprises. II we
can ascertain their net profits, those profits
sand as the premium or interest received
upon thing of value, which value is
easily computed when we determine the
use or for bsarance of money. n money is
worth per cent, the aggregate of net
profits is six.hundredthso of the value of the
enterprise; II per cent, then fiVe-hun-
dIedths, etc.
From Poor's Manual of Railroads for
1882" II will be found that the net earn.
iugs Of all the railroads in the United
States in 1881 was So 3 10 per cent. OF their
gross earnings. In other words, for every
dollar OF gross earnings, 80 cents and
mills were actual profit. This, OF course,
was the average. So. If the net profits are
given, small mathematical calculation
will produce the moneyed or cash value of
any railroad, or other financial enter
prise.
A further computation will show thatif
We take five railroads. having the follow
ing per centsges OF net earnings, viz: 30,
SO, SO, 80, a. the value of each respect
lively, upon the theory indicated above
will be D, 90, 6, 612 and times the gross
earnings Of each. So that here we have
as good basis for estimating the value of
railroad plant as we would have of the
value of wheat If we knew the amount It
sold for and the expense OF marketing it.
Ii other property in our State is an.
praised for revenue purposes at one third,
or other part of its real or money-produc-
ing value, so should railroad property be
appraised, and consequently the above
suggested railroads would, on the one
third basis, be appraised at 3, Sc,
= L .
respectively. And II the average
aggregate levies in the State
should be 81 so on the 800 valuation,
it is readily seen that the railroads spoken
OF should, if compelled to pay their Just
proportion of taxes according to values,
be assessed respectively the following per
centaee upon their gross earnings, viz:
pa, 2A, 3, 81 and 81. By this process,
uniformity is obtained as to that class of
property, and 1t is placed on an equality
with other money producing property, By
so dong the railroads have the benefit OF
all speculative values, with the intrinsic
value OF all the lands, Improvements aud
the material entering into their plants or
enterprises.
Some objection and many suggestions
detail may be imagined, but il is sabmit-
ted that no more feasible or uniform plan
can be adopted, and the wonder to the
writer is that the railroad officers them
selves have not urged its adoption.
AS stated above, by our present laws aud
the appIaisements under them, the least
paying railroads are assessed much too
high as compared with the best paying
roads, another instance of the weaker
bearing the greater burden-and of making
the rich richer and the poor poorer.
On the plan indicated 1t should be borne
in mind that, in order to ascertain the net
profits or earnings, all disbursements by
railroad shoald not be deducted from its
gross earnings, but only actual operating
or running expenses, and such items as
for litigation, damages for negligence, in
terest, loans fixed charges, etc., should
not be considered.
Hoping this subject may be agitated
until change shall be made, l submit
these thoughts. w. II. DILLs.