The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1900-11-27
QyAS|-PUBL|C
CORPORATIONS
They Largely Escape Just
Share of Public Burdens.
THE GROSS INCOME TAX
Is a Just Method Of Placing Taxes on
the Franchise.
EXPECT THE USUAL STOCK ARGUMENTS
''Of Driving Capital Out Of the State, Confisca-
ton Of Wealth, and Anarchistic Opposition
to Wealth." to Come From Cor
p~oration HireIings.

pJIdiUl 1UhCIH'SS'
To the Editor:-l am glad to take ad-
vantage of your request to give expression
to my view on the subject of the proper
method of taxing the quasi-public corpo-
rations in our State. The agitation of
his matter in the last Legislature was
but a preliminary skirmish. A few States
grappled the subject years ago and it
is uncertain yet where the victory lies.
Others, like ourselves, are just joining
the battle; while in still more the taxa
ton of public service and other corpora
tions has not yet been given the promi-
nence which it is bound to receive in the
near future.
One would suppose that the varied expe-
rience already gained by governments in
respect to this great department of their
business would long ago have resulted in
the correct and accurate establishment
of certain principles, which would be gen.
orally adopted and acknowledged as the
basis for practical application. But no
such result has been accomplished. Not
merely is the proper taxation OF corpora
lions a veXed and unsettled question, but
the entire scheme of taxation, an essen
tial for the maintenance of all govern
ment. is a patchwork more resembling
the structure of a crazy quilt than an
orderly and we'll conceived pattern.
A student Of this subject can find in
his Investigations unlimited examples Of
the appropriation of private property, un-
der the name of taxation, which have
been prompted by greed, or necessity, or
both, in the desire to retain power.
It seems useless, however, profitable
it might be, to attempt a discussion of
the economic principles which should gov
ern when selecting a proper system OF
raising revenue for State purposes. Ger
tain lines have been followed for years
in North Carolina and it will be a slow
process to change them.
In my opinion the vital question before
us is this: Are we to permit the great
changes which nave been made in late
years in the industrial development of
this country, come TO pass without an eff
fort to adapt ourselves to them in this
important and overshadowing question
of taxation?
Not many States have struggled with
the difficulties which have beset North
Carolina in the efforts to construct a sat
isfactory financial system. The pOpula-
ton Of the State being in a great meas
ure rural, the great advance in the organ
ization and growth of corporations has not
been noticed to the same extent as it
has been in some other States. We
have accordingly been content to raise.
the chief portion of the States revenue
from the general property tax, the anti
quated poll tax, and certain questionable
license taxes. A pretence to collect an
income tax is made, but the result hardly
warrants giving it the dignity of a sepa-
rate designation, while the equitable and
all important and fully sustained system
of inheritance taxation is banded about
by succeeding Legislatures as a trife.
The time has come when the general
property tax cannot satisfy the demands
of State, as we'll as county and municipal
government without becoming over-bur-
densome In 1890 the per capita valua-
ton of assessed property in the United
States was S40S. In North Carolina it
was S145. One State alone had a lower
per capita valuation than North Carolina.
The populations of North Carolina and
Virginia are nearly the same while the to-
tai assessed property in Virginia was in
1890 415 million dollars, while in North
Carolina it was 235 million dollars.
One remedy (without going into a dis
cussion of the defects in our machinery
act) is an introduction into our laws
of q Just and equitable but very positive
scheme of corporation franchise taxes.
as d matter OIL course the most prominent
corporations which would be concerned
would be the corporations of a semi-pub-
lie nature, and chief among these are the
railroad, telegraph, telephone and ex-
press companies.
The president of one of our greatest
railroad companies not long ago in a pub
lie discussion of this question:, when the
great value of the franchise Of his road
was referred to, is said to have fippantly
replied that these franchises were things
which he could purchase at fifty cents
the dozen. This may be true. Large corpo-
rations sometimes have a way of accom-
plishing their object in mysterious wavs.
All franchises, however, are not so cheap.
We have in mind one short mile of road
which, although the franchise cost it's
first owner possibly even less than fifty
cents, is now, according to the statement
OF a prominent railroad man, worth to
It's owner in the neighhorhood of fifty
thousand dollars. This mile of railroad
is able to control a good part of the
wholesale trade of Wilmington. It is
assessed for taxation at $3.50. To our
mind the difference between the value of
this road to its present owners, and the
cost to actually replace the angihle prop
erty. less a proper allowance for derre-
citation, is the value of that intangible
thing called franchise and which most
towns and States also, are too prone to
give away for the asking.
In the recent edition of The Theory
and Practice of Taxation by Mr.. David
a. Wells, it is very plainly stated that
tine recognition of franchises. a species
OF property as invisible and intangible as
the soul in a mans body, as a proper OBJ
ject for taxation is now regarded by
many as beyond any dispute. 1t is pc
c~uliarly appropriate as a source of reve-
nue. for the exclusive use of the State,
inasmuch as the grant of franchises en-
anates from the State in it's sovereign ca
pacity.' MIR. Wells further illustrates by
| quoting from decisions of the Supreme