The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-01-10

i sary call for additional statements or in
i formation. The tax commission having
4 revised the statement, is to place the
same before the state board of review at
it's session in September. The state
4 board of review is authorized to require
I the attendance of any officer or agent
4 OF any such company before it, with Or
without books or papers, and furnish it
with any further information which it
may require. Stringent provisions are
made for the enforcement Of such reports.
/ 1t is made the duty of the State Board of
Review to assess the property of each Of
said companies
/ the valuation OF such property is to be
| ascertained as provided in section 81 OF
the bill. In brief, the State Board of Re-
! view first ascertains the true cash value
i of the entire property owned by such
/ company, taking for that purpose the ag-
gregate value Of all the shares of capital
stock, if such shares have market value,
1 otherwise taking the actual value Of such
/ stock or of the capital of the company,
| where it has no shares of stock, and
/ adding thereto the funded or bonded debt,
| if any. The aggregate amount thus OBJ
! tanned is to be taken as the basis for
ascertaining the valuation of the prop
| erty of the company.
| Having obtained such total valuation,
/ a mileage, valuation is thereby obtained
| by a simple arithmetical computation and
! the valuation of the property is distribute
ed, for accuracy of computation, to the
political subdivisions of the state in
which the company has mileage; and in
proportion therto The amount of tax
| which the company would pay, il subject
| to ordinary taxation for general or local
purposes in the several taxing districts
| into or through which its mileage ex-
tends, is then ascertained, from which an
| average rate upon the total valuation ol
| the company is computed.
The company is required to pay into the
| state treasury taxes computed according
! to such rate, which will thereupon be in
lieu Of all other taxes for state and local
purposes upon its property, except such
as is not properly promotive OF us
ordinary business. The rate thus oo-
tanned will be as nearly accurate as 1t IS
possible to be made.
| This method of taxation of public serv-
! ice corpora tons is not only just but has
| already been tried in other states and is
| sustained by high authority. That the
assessment of the property of that class
| of companies should not rest alone upon
| the value of their outstanding stock is
demonstrably clear. Their bonded in
debtedness is frequently a safer criterion
| than their stock issues. While it is a
notorious fact that the market value or
| stock is greatly Influenced by manipula-
! lions and the strife of bulls and
| ''bears'' in the pit, their normal value is
! dependent upon the amount of bonded in
| debtedness which the company has in
Cured A company with a property val
| ped at $4,000, 900, a capital stock or l0O,-
| coo shares having a par value per snare
! of 500 could properly be assessed upon
| the basis OF the stock alone If had no
| bonded debt. In such case, the value
| of the stock would equal the value OF its
| property But the stock Of such COM
| hoy
| 100000 would naturally be much less
| than par. The extent to which It falls
| below par will depend upon the company
| earnings the dividends declared and its
| future prospects. Theoretically, the mar
ket value of the stock together with the
| value of the bonds equal the value of the
property. No more scientific or just ba-
sis for arriving at the valuation Of such
| property for assessment purposes is con-
/ ceivable.
So able writer as Mr.. Seligman en-
dorses the method of valuation In "Es-
says in Taxation where he says (page
26D:
s'%The logical plan for the immediate fu-
ture is to tax corporations on their net
receipts, or on a valuation equal to the
stock and bonds, for state purposes; and
to tax them on their real property Tor
| local purposes. This and this alone sat
1 isles the demands of scientific method
1 and OF practical pOl1cy.
| Elsewhere in the same work, the author
says (page 104
| I'm the United States, for example, it
is we'll known that roads are built mainly
on the proceeds of mortgage bonds. To
exempt the mortgage debt in the case OF
these corporations would thus be inequit-
able, for only byNtaxing both capital stock
and mortgage debt can the state reach the
true faculty of the corporation
To tho Same effect & the view of DR..
Walker: y.
1.-The real taxable value of corpora
ton is the tangible property plus the
franchise Where no liability exists, the
value of the capital stock will correspond
i closely with it. But if liabilities exist,
they diminish the value Of the capital
stock, proportionately. If we should add
the debts to the capital stock the actual
value of the property would be approx
mately determined. We may express this
1 idea in an equation: Capital stock plus
debts equal tangible property and fran
chise." Studies in Hist. Econ. and Pub.
Law, vol. 5, page 16, Columbia College.
This method of assessing corporate
/ property has already been adopted bA
| Colorado, Connecticut and other states,
+, and was provided for in the bill creating
a tax commission enacted by the legisla-
ture of Texas in 1899.
/ 6. Mining Companies-In providing for
B.
state, the commission was seriously handl-
capped by the provisions of our constitu-
ton. In 1895 Article 9 of the constitu-
ton was amended for the purpose of per.
hitting greater freedom on the, part of
the legislature in the taxation Of certain
companies and interests, including min
ing properties. No constitutional provi-
sion was ever more unhapplly framed
than the one in question. So far as il
applies to mining properties, it's provi-
sions are so extremely vague as to in
vest with doubt the meaning intended. AL
though it may be ultimately held that 8
true construction of the constitution au-
thorizes the imposition of a tonnage tax
upon the output of mines, the commission
) was unwilling to assume, in view OF the
uncertainty attending the subject, that
such authority exists. In being thus
|cpmpelled to refrain from providing for
: a tonnage tax, it had no alternative than
to provide for the taxation of mining prop
r critics by the ordinary method. No one
regrets such restraint more than thE
| members of the commission, for it Is
) their unanimous opinion that tonnage
tax is the only appropriate means for
!. the taxation of the output of mines. 1t is
) professionally true that the, state has
been a great loser in the past from want
| of wisely framed measure providing such
form of taxation for that class of prop
, t erty.
, The experience of Michigan, state IN
which mining interests have reached a
high degree of development, is instructive
in this connection 1t has tried both the
| tonnage and the ad valorem methods OF
, taxation. The report of the tax CONF
mission of that state for 1900 contains
the following:
"By many it has been claimed and Is
claimed that the truest method and the
| n q G