Omaha daily bee., 1902-11-20
TALKS RAILROAD TAXATION
Prof Ross Of State University Addresses
Real Estate Exchange
LAYS DOWN SOME CARDINAL PRINCIPLES
Argues that Capital Invested In Rail-
road Property IL as Able as other
Capital 90 Contribute 10
Government Expense.

The capacity Of the dining room Of the
Commercial club assigned to the Real Es-
tate exchange was taxed yesterday by per-
sons who met to hear an address by Edward
A. Ross, professor OF sociology at the Uni
versity Of Nebraska. In addition TO full at
tendance Of the members there we're state
senators, members Of the legislature. men,
bers Of the city council, representatives Of
the city legal department, the city tax
commissioner and a number of interested
citizens.
Mr.. Ross opened his remarks by saying
that he had no intention Of referring to the
conditions in Nebraska as to whether the
railroads of this state pay their just share
of the burdens of government, and then
laid down the following propositions:
Capital invested in railroads is as able
TO contribute TO the support of the govern
ment other forms of capital
The fact that a certain fraction of the
total macs Of property in 'he common
wealth. owing to the ease Of concealing 1t,
utterly escapes the assessor and eVades
taxation, constitutes no good reason for
ALLOWING the railroads a corresponding
Offset
tactly grown up of assessing property at
considerably less than its true value, then,
before entering 1t on the assessment roll, a
corresponding deduction must be made
from the true value of railroad property
scientifically ascertained
The money value OF n TallTOdu Is not lne
estimated price of its rails, ties roadbed
and equipment, separated and considered
apart from their use but it is their aggre-
gate value as going concern yielding
,proft-as a railroad, not as scrap heap.
The nonphyeical property of a railroad
f0anaed not koDTR o3 the shG OF dap
but on the possession OF trathc not exposed
70 composition. Far from being less able
TO bear taxes, II is more able to bear taxes
than most other forms of property.
Market Price of stock.
Tho market price of the stock and bonds
of railroad. as 1t is based on the capi-
ytalizaton of prospective rather than pres
ont profits and is, moreover, influenced by
the desirability OF shares for purposes of
control, Is. not entirely satisfactory as a
The fairest criterion of the amount of
property in a railroad is a computed value
ascertained by capitallzing at a low rate of
fion through a period Of ten years. In such
q period most railroads will have expert
enced both hard times and good times.
It is desirable that railroad property thus
scientifically aScertaned should be taxed
by the state alone for state purposes and
at the same rate as that borne by other
forms of property taxed.'
But II railroads are to contribute-as now
On most states-to local as well as to state
revenues, everything Off the main line,
such as yards, roundhouses, repair shops,
stock pens. offices, etc, should be assessed
by local assessors and taxed at the local
rate. Main line, rolling stock and franchise
lin word, all the rest Of railroad prop
at so much per mile and assigned to coun-
ties towns and precincts in proportion to
mileage.
II railroads are taxed on the gross earnings
instead of on property and consequently
ut a rate distinct from and higher than
that imposed on property generally the
difficulties connected with valuation are
avoided but the public mind Is confused,
the tax on gross earnings is invariably fixed
too low and the railroad companies bear
far less than their just burden.
Mr.. Ross objected to the use OF the
word franchise as a synonym for that
property which is not represented IN the
physical property and said that the fran
chise is as applicable to the physical as
to the non-physcal, which is the differ
ence between the cost of the physical
property and the capitalization Of the
railroad. In order to have 81 900 worth of
physical property $1,000 must be invested
but no money has to be invested for the
holder to enjoy the non-physical prop
erty.
He said the capitalization Of the net
earnings for ten years should be at 4 per
cent. Multiply the average income by
%; that II the taxation be made under the
eighth proposition the rate should be equal
to the sum of the rates upon other prop
erty for all purposes, city precinct, county,
school and state. Pennsylvania and Mas
sachusetts have in operation the plan men
TONED in the ninth proposition.