The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1896-04-08

stock TO them, two kinds o. property
were created the definite tangible
property Of the corporation. and its
stock, which was, by reason OF the
rights given 10 the corporation by the
state. taxable as personally; and that
such taxation was not a double tax.
The same principle applied when banks
were being taxed on deposits. and de
positors were being taxed on their BALI
ances in the banks. There were two
separate and distinct taxes being paid
on identically the same property, but
the tax paid by the banks could be
properly collected because the banks
were corporations. deriving the right to
their existence from the State.
In view OF the fact that courts have
adopted this line OF reasoning, and OF
the further fact that corporations are
after all, merely an aggregation of in
dividuaIs a great deal of the best legal
knowledge and skill has been exercised
in perfecting some method of single
taxation which shall be just and equit-
able. and il seems to be the conclusion
of nearly all men expert in the matter
of taxation that a tax on corporate
earnings and franchises is the proper
solution of the matter. By first taxing
the franchise. always according to its
value. the corporation is being charged
for its right to exist and carry on buSl-
ness-it is paying the community for
those rights which are not inherent in
il. but which are given il by the COM
munity: and by then taxing, its in
come it is being made TO pay on the
real value of it's property, for corporate
property is valuable only according to
its income-bearing capacity. rail
road thousand miles long, with its ties
and rails laid, and right of way paid
for. is not worth one dollar to its stock
holders if it cannot pay dividends. Ii
they choose to continue to operate it,
they are paying for their right to do SO
in paying taxes on their franchise.
In such case the community would be
benefited more by the operation of the
road htan the corporation, and taxes
should be nothing, or nearly nothing,
for the franchise would not be valuable
So in the case of sugar plantation
Let it first pay for it's right to operate as
a corporation, and then pay taxes on its
income If it's income is nothing, it
should be charged nothing, further than
the tax on it's franchise. And the argu-
ment that it owns property of great
value and should be made to pay taxes
irrespective of income is not tenable.
1t is paying taxes. 1t is taxed every
time it pays its men, every time it buys
ton of coal, every time it ships bag
of sugar. If it were not, it would pay
taxes on it's income. And if in addition
to paying all these taxes, it's property
is valuable enough to produce an in
come, it pays an additional tax for the
additional value of its property. Be-
sides, every dollar that has been in
vested by a corporation has enhanced
the value-the income bearing value
of all property in its vicinity ,sand the
community is benefited thereby to eX
aCtly that extent.
l might go on at great length adj
vancing arguments in favor of this sys-
TEN, but it seems to me that its justice
is apparent, prima facie. There are
many details, of course, that cannot be
gone into in an article OF this kind.
and that would require much time
and labor to perfect, but from the main
points as here written it seems to me
the advisability of this mode is self-evi-
dent. At any rate, it is the method
that will undoubtedly be adopted in
many of the United States in the near
future.
Much that has been said here applies
also to taxation on certain kinds of in
dividual property, but it has not been
my intention to touch on that point.
There are SO many other matters that
arise in individual taxation that l have
tried to entirely ignore that class in
this article. 1t is also understood that
only the taxation of corporations or
ganized and doing business for profit |
has been travelled over. Nothing here |
applies to religious understandable cor
poratiOnS. BISSEh THOMAS.