The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1894-05-30
THE tax DECISION.

though there still remains a few cases of
gross undervalua ton of railroad prop
erty, the assessment is. in the main.
fair and satisfactory. The average as
sessment of railroad property under
the old system was a fraction
over % per cent. of true value,
with most glaring discrepancies be-
tween various roads. Under the pres
ent assessment the average rate is 65 to
20 per cent. of actual value. with OBJ
jectionable variations in but few cases.
This is a vast improvement on what ex-
listed before, in the enforcement of
equity between taxpayers, and ii is to
be hoped that the proper use of the pow
ers, now decided to be lawfully located
in the state board of tax commissioners,
will bring the system still nearer to per-
lection. The Sentinel will most earn
estly exert itself toward that result.
The decision is especially valuable in
that the facts. as presented to the court,
were obtained entirely from the anega-
tons of the railroad companies, and the
testimony of few officials. all of which
could easily be disproYen. In other
words, on the very best claim the rail-
roads could possibly make, and assuming
that everything they asserted was true,
the court decides that they have no law
full cause Of complaint, and in so doing
it disposes completely of all the fine
spun theories on which these companies
rested their hopes. The claim of lack of
due process of law is tossed aside in
a way that must shock the nerves of the
average railroad lawyer. The court says
that the companies do not have to be
specially notified that they are to be
taxed. or invited to come in and kick
about it, If they have an opportunity
to appear and be heard their constitu-
tional rights are satisfied, and one OPP
portunity is enough. They are not. like
the brook. entitled to go on forever"
The railroad attorneys were especially
cIamorous about the boards taking into
consideration the total value Of the
roads as shown by their stock and bonds.
but the court Endorses this as the very
best test of the actual value of a rail-
road.
When you have ascertained the cur
rent cash value of the whole funded
debt and the current cash value of the
entire number of shares you have, by
the action of those who above all others
hes "a fha
true value of the road. all its property,
its capital stock and its franchises; for
these are all represented by the value Of
its bonded debt and Of the shares OF It's
capital stock.
And it also indorses this test as to
interstate roads. for while admitting
some exceptional cases. it says:
Nevertheless. it is ordinarily true that
when railroad consists of a single con-
tinuOus line the value of one part is
fairly estimated by taking that part of
the value of the entire road which is
measured by the proportion of the
length of the particular part to that of
the whole road. This mode OF division
has been recognized by this court sew
eral times as emilently fair.
1t may be mentioned. in this connec-
ton. that in this state the assessment.
so far as founded on stock and bond
values, is more lenient to the railroads
than the supreme court rules, for it is
made not on 1.-The cash value of the
whole funded debt" but on it's face
value Most bonds on Indiana railroads
are at a premium, some of them as high
as 90 per cent, but it was held here, and
justly held, that the premiums had moth
ing to do with the case The bonds are
a lien on the road to their face value,
and the value of the road above that
incumbrance is shown by the market
value of the stock alone. If bonds are
at a discount, and stock has no value,
of course the market value of the bonds
but under no other circumstances should
the market value of bonds be con-
sidered any more than the premium on
United States bonds should be cOnsid-
cred in stating the national debt.
In Indiana, in the first assessment un-
der the new law. three principal lines of
fact were relied upon, viz:
l. The face value of bonds added to
the average market value of stock for
the year previous.
2. The actual cost of construction, as
by the companies.
3. The net earnings of the roads, as re-
ported by the companies.
From these facts. with such additional
as could be obtained, an es-
innate was made Of the actual value of
the roads in Indiana, and. to avoid any
possibility of injustice. very liberal
amounting TO about 30 per
cent. was made. AS nearly as can be
estimated. all other property in Indiana,
on the average, is assessed at about 20
per cent. of its true value, though there
are many instances of variation above
and below this rate. and. therefore, on
the average. railroad property is as
sessed as other property
One other point is worthy of special
notice. The court utterly disavows the