The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-01-05


business in this state. as Is the law in New
York. Either course is valid. and has been
sanctioned by the courts of last resort. both
courts. especially in the rural districts. is
occupied by litigation brought by foreign
corporations, who in the past have contrib
This license fee, like that collected upon the
issuance of domestic charter, would be pay
able only once.
WHAT OTHER STATES DO.
In addition to this, many OF our sister
states levy and collect an annual franchise
tax upon corporations. Domestic corpora
tons and foreign corporations doing business
in the state alike subject to 1t. with such
exceptions as the legislatures have chosen
TO make. This, it seems to me. is one of the
most available as well as legitimate sources
that you can turn to for revenue without
burdening the individual citizen. The tax
IN ltselr, Is just one, both on economic
grounds and from the standpoint of public
pohcy. me corporation permits the union
OF the capital of several owners in a way
peculiar 10 that form of organization 1t
gives the mass solidarity and efficiency that
can never be attained in a partnership. It
Is well recognized fact that there is an
economic advantage in the harmonious CO.
operation of numbers over individual effort
Ten men equally capable working together
on pulldlng or In shop, can accomplish
alone in ten days. The cumulative efficiency
OF capital is even greater. To the old adage
that in union there is strength" might we'll
be added and greater efficiency" when an
piled to trade or production. The BUSINESS
OF the corporation is not interrupted by the
yiclssltudes that befall individuals. 1t ena-
bles the owner of limited capital to partic-
ipate in undertakings that would be beyond
his reach but for its aid.
If business reverses befal the corpora
tion the shareholder is only liable for its
losses in a limited degree Numerous other
I advantages might be referred to- but this is
T enough to show that the state confers special
value when 1t grants corporate charter.
The state comforting these special powers and
privileges. which are constant and continuous
in their character, 1t 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 expressed than in
the language of the supreme court of the
United States GAS U. S. 905). The court saws:
The right and privilege. or the franchise as
it may be termed, of being corporation, is
of great value to its members. and is con-
sdered as property separate and distinct from
the property which the corporation may ac-
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 taxation The state
having conferred the franchise-the special
value-is entitled to the taxes imposed 1t is
one of the easiest taxes to collect; practical
ly selfenforcing. If a domestic corporation
refuses to paw, such refusal can be made
cause of the forfeiture of the charter IN
case of the foreign corporations, they can be
denied the process of our courts. This is the
LAW IN NEW YORK
The laws of that state on this
subject were recently before the su-
preme court of the United States, and were
sustained in the case of Park, Davis & Co.
vs. Roberts, decided Oct. 81 last. What has
been said with reference to domestic cor
porations applies with greater force to the
numerous foreign corporations doing 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.
1t is not necessary that all corporations
should be subjected to the tax. Those in re-
gard to which the state has adopted special
method of taxation should be excepted. New
York also excerpts manufacturing companies
which carry on the business Of manufacture
wholly within the state. But these are mat
tiers of detail to which it is not deemed neces-
sary to further call your attention
The legislation now in force for taxing eX-
press, telegraph telephone and scleeping car
companies N this state is. In my judgment,
radically defective and should be revised.
The rate imposed of per cent on-the gross
earnings, computed solely on local business
Originating and ending within the state =
is grossly Inadequate. Most Of the railroad
companies pay per cent of their g-oss earn
ings. including the Interstate as We'll as the
local The earning capacity and rate OF profit
on the actual capital invested in the monop-
olies referred to are certainly greater than in
rallr0dulnS. ana tnere Is no SOOu reason why
the state should not collect a fair proportion
of its revenues from that source. 1t is not
alone the rate OF taxation imposed upon these
monopolies q use the term monopoly in its
economic sense) that needs revision. 1t is
the basis for computing it which is wrong.
COMPUTATION OF TAXES.
Situated as our state is on the highway of
| commerce between the two oceans, with our
large centers of population the state
lines. it is but a small proportion of our
businss that is strictly local; that is to say,
business originating and ending within the
boundaries of the state. Under these eircum-
stances, the business done wholly within the
state Is manifestly criterion by which you
can judge either of the actual intrinsic value
of the property subjected to taxation or the
actual amount of revenue derived from its
use, beth of which items are factors in
making a proper estimate of its value and of
the revenue which should be exacted by the
state. Besides, this basis Tor computing tax
alton is necessarily capable Of gross abuses.
Our law was evidently copied from the Wis
consn law Under the Wisconsin law,which
limits taxation on sleeping companies to
the gross earnings from business originating
and ending wholly within the state (the same
as oursl, the companies have adopted rule
| by which they refuse to sell sleeping car
tickets from a point within the state to a
| point near the state line when there is city
! beyond the state line, but insist, for instance
on selling ticket for Madison to Duluth to
! passengers going to Superior, as 1 discovered
| by personal inquiry. system that leads to
such subterfuges cannot be reformed too
speedily.
| To impose a percentage tax or any tax
levied directly on the gross earnings state
and interstate, of these monopolies, would
be held a violation of the Federal constitu-
| ton. The tax, whether 1t be a 8 per cent or
greater rate, should be computed on a val
uation of the corporations property employed
in its business in this state. The method for
arriving at such valuation, and the only plan
| by which proper rate of taxation can be
fairly and legally imposed, is according to
| the provisions of chapter 100 of our laws
| OF 1897. This ect appears to have been care
! fully drawn is in admirable form. and SINH
lar legislation has been upheld by the SUI
! preme court of the United States on appeals
| from the States of Maine, Pennsylvania. In
! diana and Ohio. change in the basis for
computing these taxes to that prescribed in
| the chapter referred to. and which l earnest
| ly recommend, would increase the revenues
IL l..