The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1899-01-06

would probably not fall below $4,000 per
mile on an average At this low valua-
ton, a rate of taxation, the same as is i'm
posed on the other property in the state,
"a mills on the dollar, would have
brought 81 40, 900 for the current year.
So it will be seen that our rate of taxation
on railroad property on the basis of valua-
ton is only about two-thirds that of the
other property in the state.
Higher Rates in Other States.
You will also find upon investigation
that our rate of taxation by percentage
on the gross earnings is much below the
rate that prevails in our sister states,
which are within the domain of the sys-
TENS transacting most of the business in
our state. All of our railroads, with the
exception of possibly one. are interstate
roads and not operated with reference to
state lines, but as systems. The COM
panies do not keep separate accounts in
each state. For the purpose of taxation
they apportion the gross earnings of the
system among the several states through
which they run in proportion to the mile
age in each. This is the only practicable
way and is approximately correct and
fair. So far as our railroad traffic is con-
cerned, we are to all intents and purposes
one jurisdiction with Northern Illinois,
Iowa and Wisconsin, and to some extent
with the states west of us. This
group Of states are on the whole
traversed and dominated by the
same systems, and the business
of each system operating within
the group is treated as unit. Our state
is therefore (aside from the need of the
revenue) interested in seeing to it that it
obtains substantially as large a proper
ton of the earnings of these companies
for the support of it's government and in
situations as is taken by the other states
in the group. If we do insist upon this,
we simply compel our people to help pay
taxes in the other states. If our railroads
were confined in their business operations
wholly within the boundaries of this
state, the rate of taxation imposed would
perhaps not be so material, for a high
rate of taxation would necessarily
in the course of time, be reflect
ed in higher transportation rates;
so, also, a lower rate of taxation would
have a tendency to produce lower trans
portation rates, but inasmuch as we are
part .and parcel of the states referred to
for transportation purposes, we cannot, in
justice to ourselves, be governed by any
such considerations, unless they are also
needed by the other states in the group.
Lower Transportation Rates.
Iowa and Illinois have already secured
materially lower transportation rates
than we have. If we continue to also per-
NIT them to exact higher rates of taxation
from the railroads which operate in those
states, and in ours, than we collect, mani
fest injustice will be done to our people.
The maximum rate of gross earnings tax
in Hi nois is z per cent; in Wisconsin, 4
per cent; in Iowa, 4 per cent; in our own
state, per cent The average rate actu-
ally collected in the several states is 2.S
per cent, in Minnesota, 3.5 per cent in
Wisconsin, Sc per cent in Iowa, per
cent in Illinois, as appears by the state
ment furnished by the board of railroad
and warehouse commissioners which APP
pend. The average rate of gross earnings
tax collected in the three states named is
over 4.3 per cent; more than one-third
higher than the rate imposed in this state.
In other words, if the railroads had been
subjected to the same rate of taxation in
this state, as the average of the rates in
Iowa. Wisconsin and Illinois, we would
have received last year over 81, 700 900, in
stead of something over 100000. 1 am
also advised that notwithstanding the
fact that Wisconsin already collects a
much larger rate than we do, and on a
less volume of business, the executive of
that state will urgently recommend to the
legislature at the ensuing session to in
crease the rate now in force to keep pace
with the increase in the rate of taxation
upon other property in the state. That,
also. is feature that should not be lost
sight of, for increased taxation and higher
civilization go hand in hand.
Some Alternative Propositions.
The Chicago Great Western Railway,
which is operating under an old terri
torial charter which fixed the rate OF tax
alton at per cent on the gross earnings,
has not accepted the provisions of the
saltwater Act" under section l of Chap
ter II of the General Laws of 1887, and
therefore contends that it is liable to pay
only per cent. AS we have no general
provision of law imposing the per cent
gross earnings tax, it is probably right in
it's contention, at least, it has prevailed
with the state authorities up to this time,
and it is therefore imperatively necessary
that legislation should be enacted to cover
that case.
am fully aware that the argument will
be used before you that it is unsafe to at
tempt any revision of the gross earnings
tax law in this state; that by SO doing you
will jeopardize the benefits that the state
now derives from that method of taxation.
No Question of Acceptance.
There is no question but that the COM
panies will much prefer to pay a reasona-
BILE gross earnings tax than to have their
property and franchises taxed upon val
uation. But if it is feared that any COM
,pany might resist the payment of higher
gross earnings tax than is now levied, on
the ground that it is in violation of fed
eral law to impose a tax upon the income
from interstate commerce, as a pre-
caution, you can readily obviate this diff
Guilty by also enacting an alternative
mode of taxation, providing: That in the
event that any railroad company, subject
to the payment of taxes in this state, shall
refuse to adopt and abide by the rates of
taxation OH gross earnings which you es-
tablish in communication of other forms of
taxation, then the property and franchises
Of such corporation shall be taxed upon q
valuation the same as other property in
the state, and at the average rate of taxa
ton in the state; thus leaving it to the
corporations themselves to determine
whether they will pay taxes on a valuation
the same as other property in the state, or
accept your gross earnings communication
nlan in lien of that form of taxation YOu