The news & observer., 1901-01-06
Examples of Other States in the Matter of
Railroad Taxation.
AK ON PROPERTY VALUATION BASIS BEST
The Majority of the States Have Laws Similar to That in North
Carolina. Opinion OF Supreme Court Justices.
SYNOPSIS of Laws of Other States.

To the Editor:-Complying with your
request desire to say have been called
upon from other and different sources for
statement of earnings of the railroads
in the State, and further inquiry as to
the amount of tax that could be realized
based upon a per centum of gross receipts
as levied in some of the other States.
Inasmueh as the matter of taxation OF
railroads is being discussed, and infor-
nation on this line is desired, | give you
in a condensed form some information
touching the matter.
In the outset / do not concur in the
proposition to tax our railroads upon
gross receipts alone, as in Minnesota
for instance. 1t would be a backward
step to adopt a system of percentage on
gross earnings in the place of an ad "a
loren tax based on cash value of the
property. In Minnesota the railroad COM
panies are taxed from one to three pei
cent on gross earnings; this in lieu OF
all taxes. 1t is optional with the rail
road companies to accept this system OF
taxation in lieu of the general tax upon
a valuation basis; all railroad companies
accepted it, The gross earnings for the
State of Minnesota amount to $4,000, ,000
with over six thousand miles of railroad
track. The maximum of Minnesota three
per cent applied to the gross earnings in
North Carolina from both intra and in
terstate business would not amount to
more than the railroads in this State
would pay nthe valuation xed by the
Corporation Commission. The Auditor of
the State of Minnesota estimates the
value of the roads of Minesotna at $780,,
000, 900; if the roads in that State were
assessed and taxed at their cash value
the State would derive forty per cent
more taxes than it does. The per centum
tax on gross earnings in lieu of all taxes
has never been satisfactory in States
where tried. Most all of them are aban-
dcning this method; one of the latest,
the State of Michigan, the Governor OF
which called a special session of the
Legislature to consider the question OF
taxing roalroad property. The Legisla-
ture convened and has submitted the
question of changing the constitution OF
the State so as to allow tax to be levied
on the true value of property and repeal
ing the statute relating to gross earn
ings.
Governor Pingree says in his message:
"The present law of taxing on gross
earnings has worked disastrously to the
State. 1t is Objectionable in many ways
1t opens the door for fraud, against
(which the State has no protection. The
State is practically compelled to ac-
cept the reports made to it by the rail
road companies. Our State is discrimi-
mated against; many of our railroad
lines cross into the adjoining States o
Ohio and Indiana where there is ta2
upon the value of the property. If the
railroads in Michigan were taxed upor
true value as in above mentioned States
our tax would be two or three times as
much"
However, there are many methods o.
taxing railroads, no doubt any one o.
which can be made equitable and con-
venient and which can be so adjusted as
to place valuation or levy on the rail
road property and a collection of such
taxes as is just and right In the words
of Commissioner Billings of Michigan:
'The interminable legislative discussion
and strenuous and costly contests in the
courts concerning changes in taxation and
valuation of property are not generally
due to any defect in principle or diff
Guilty in discovering the best practicable
plan of adjusting assessments and rates
but to the persistence of different classes
OF property owners in opposing changes
or assessments which they claim an(
often believe to be unfair to them as
compared with other classes"
| find that the majority of the States
have laws similar to that in North Caro-
lima, that is, the railroad property is as
sessed upon cash value or based upon the
same value as other property. The valu
ations are determined by the Railroad
Commissioners or other State board, anC
by these boards certified to the various
counties and towns. Various methods
are used in coming at these values; bu
TO receive the sanction OF the Unitet
States court is this Look to the capita
stock. the corporate property, the fran
chiscs Of each company and the gross
receipts, the market value of the share;
of stock and bonded debt. In this con
nection l quote you from authorities al
follows:
The values of railroad property are no
limited to the value of the roadb
rails, cross ties. superstructure and roll
ing stock. nor those of telegraph and tele
phone properties TO the value of polls
wires and instruments. Corporate prop
critics of this class generally and witt
tVew exceptions have intangible ant
franchise values which cannot be ascer
tanned or computed by the physical o
tangible values of tie properties witt
which they are connected in a unity o
use. These intangible and franchise val
ues constitute a large portion of the tota
value of the corporate property often ex
ceeding the physical properties
In this connection, it being admitte
that the franchises of railroads are tax
able as property. then it is questio
as to whether IL would be advisable [
separate this from the other values.