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

the Same as Domestic Ones.
Akin to the question discussed, but
separate ana distinct from it, and not in
anywise dependent upon its disposition is
the subject of licensing and taxing cor
porations. BY wise and well-considered
legislation on this subject, you can OBJ
tain an amount of revenue that will
more than make up for the proposed re-
duction in the tax levy and which will,
with other corporation taxes, in the course
of time. increase the permanent revenues
of the state to such an extent that di-
rect tax for the revenue fund can be dis
pensed with. Our law now requires the
payment of minimum Incorporation fee
of $50 to obtain a corporate charter, and
in addition, one tenth of l per cent on the
capitalization in excess of 600. This
provision is bringing large sums of money
into the treasury annually. 1t can and
should be extended to foreign corpora
tions doing business in this state. This
would only be a measure of justice to our
selves and to our own business interests.
The license fee should be uniform with
that imposed on our domestic corpora
tions, and may then be collected on the
entire capital stock of the foreign corpor-
alton, or on that portion OF the capital
engaged in business in this state, as is the
law in New York. Either course is valid,
and has been sanctioned by the courts of
of last resort, both state and federal.
Tax on Foreign Corporations.
In addition to this, many of our sister
states levy and collect an annual fran
chise tax upon corporations. Domestic
corporations and foreign corporations do
ing business in the state are alike subject
to it, with such exceptions as the legisla-
lures have chosen to make. This it seems
to me, is one of the most available as we'll
as legitimate sources that you can turn t.
for revenue without burdening the indi-
vidual citizen. The tax, in itself is a just
one, both on economic grounds and from
the standpoint of public policy. The cor
poration permits the union of the capital
of several owners in way peculiar to that
form of organization. 1t gives the mass
solidarity and efficiency that can never
be attained in partnership 1t is a well
recognized fact that there is an economic
advantage in the harmonious co-opera-
ton of numbers over individual effort.
The business of the corporation is not in
terrupted by the vicissitudes that befall
individuals. 1t enables the owner of linn
tied capital to participate in undertakings
that would be beyond his reach but for
it's aid If business reverses befall the cor
poration the shareholder is only liable for
its losses to limited degree. Numerous
other advantages might be referred to,
but this is enough to show that the state
confers special value when it grants a
corporate charter. The state comforting
these special powers and privileges, which
are constant and continuous in their
character, it is clearly just that an
Annual Return Should Be Rendered
for them. 1t is no sufficient answer to say
that the capital is taxed in the property in
which it is invested. The capital as such
would be liable to taxation in whatever
form. This principle cannot be better ex-
pressed than in the language of the SUI
preme Court of the United States (143 U.
5. 3O5). The court says: "The right and
privilege, or the franchise, as it may be
termed, of being corporation is of great
value to it's members and is considered as
property separate and distinct from the
property which the corporation may &C
quire, According to the law of most of
the states, this franchise or privilege Of
being a corporation is deemed personal
property, and is subject to separate taxa
tion." The state having conferred the
franchise-the special yalue-is entitled to
the taxes imposed 1t is one of the easiest
taxes to collect; practically self enforcing
If domestic corporation refuses to pay,
such refusal can be made cause of the for
fixture of the charter. In case of the for
eign corporations, they can be denied the
process of our courts. This is the law in
New York. What has been said with ref
erence to domestic corporations applies
with greater force to the numerous foreign
corporations doing a large and lucrative
business in this state, such as the various
machine companies the loan companies,
the various trusts, and mining companies
in the northern part of the state.
Express, Telegraph and other Taxation.
Referring to express, telegraph, tele-
phone and sleeping car companies, the
governor says that in his opinion the tax
of per cent upon gross earnings on bust
ness originating and ending within the
state is grossly inadequate, besides being
liable to abuse. Railroad companies pay
per cent of gross earnings including in
terstate business The tax, he says,
whether it be 3 per cent or greater rate
should be computed upon the valuation
of the corporations property employed in
business IN the state
TAXATION OF RAILROADS.
Rate on Such Property Is Considered
Too Low.