Omaha daily bee., 1902-07-17

this was paid Fixed charges, taxes and In
terest. Then, my friend Harrington has a
proposition. He is going to reduce rates
Is per cent. Now, then. l say this un.
covers a little Of this moonshine on the
shovel. II is interesting to find GENTLE
men who have time to Engage in such
abstruse questions-interesting to listen to
this new school of philosophers. whose
time has heretofore been limited TO trac-
ing the distinction between a living hero
end a dead "Jackass"-dilate upon the
question Of valuation Of railroad proper
ties.
Another point / want TO make here is
this. The rule Of taxation in this state
provided by the constitution Is upon the
valuation OF property. It is upon nothing
else. 1t is not upon brains, neither lie It
upon the value Of labor nor the value Of
anything intellectual, nor the value Of
energy, but upon the value of property.
The constitution determines that taxes shall
be raised upon the value Of property and
nothing else. We have no business to levy
taxes upon any other basis. The constitu-
tion Of this state by section 1 OF article
TX, provides for the raising Of revenue by
taxation upon the value Of property. II
does not provide for the assessment and
taxation upon the value Of mental or phys
ANai AaDol tmpAOgtu III lHt use VI property
The different enterprises OF the present
day. with reference to the production of
pecunlary returns, may be classified about
as follows:
1. Enterprises which depend more upon
the capacity for management and the APP
plication of mental and physical labor
2. Enterprise in which profits accrue
more largely through the use of property
than of labor employed.
h. EntpTpriSRs In which prndfa ora "a
turned through the employment of prop
erty and labor in about equal parts.
In the operation Of railroads 1t is fair
to say that from IS to 70 per cent Of the
gross income thereof is expended in the
cost Of operation. The compensation OF
employees Of railways represents from IS
to so per cent Of the operating expenses OF
the road, and 80 per cent Of their gross
earnings, as is stated in the fifteenth an
nual report of the Interstate Commerce
commission for 1901, page 81. distributed
among t~rackmen, brakemen, conductors,
flremen, engineers, shopmen, machinists
and operating and managing officials.
When one considers the army of en-
ployes in the service Of the Burlington,
Union Pacific and Elkhorn companies, the
truth Of this statement will hardly be dis
puted. Therefore, to the extent that
interest payments are made Upon bonds,
dividends declared upon stocks. OF net
earnings are derived from the operation Of
railroad property, It must be remembered
that about one-half thereof is contributed
by labor, and only one-half by the prop
erty used. Hence, II assessments Of value
are to be placed upon the aggregate worth
of securities, or net earnings are to be
capitalized, II is clear that only about one
half Of the result thus obtained can be
! trulU trarad 20 The volua of the pronartv
used. The balance OF the result is due
to the labor employed. When values thus
ascertained are used for the purpose of ss-
sessment and taxation, the companies are
thereby compelled to pay taxes not only
upon property used in their business, but
upon earnings resulting far more largely
from the employment OF labor than the
value Of property, thus doing violence to
the constitutional requirement that taxes
shall be derived from a property valuation.
In illustration OF the three classes above
referred to, I will present one under the
first class. We will suppose that a party
organizes a district messenger service.
The only property used in the business
consists of desks, chairs and books for the
purpose of keeping memoranda and ac-
counts. This would be q business in which
there was little or no tangible property,
ohN III "hANA NAO " NoAAN
must be placed upon the good management
of the proprietor, and the faithful service
and intelligence of the boys employed as
messengers. In the first instance the busi-
ness IL conducted by one man, who hires
the boys and takes all OF the proceeds
and enjoys the profits. He may hire twenty
boys from whom he makes 20 cents apiece,
which would be 81 q day. 1t Is apparent
from this that the profits accrue from the
physical and intellectual labors Of the
manager or owner Of the business and
those whom he employs.
Now, will it be contended for a moment
that In order to ascertain the value of the
mans property invested In the business
it is to be ascertained by capitalizing his
net earnings for the year at 6 or s per
cent? II this could be done 1t would be
an instance in which the entire taxable
value is that which results from the en-
ployment of labor and not from the prop
erty itself.
After conducting the business in this
way for awhile he finds 1t advisable to in
corporate. Thereupon the required num-
Der form q corporation, and the services
thereafter are rendered by a greater num-
Der OF boys employed by the new company
an increase of mental and physical labor.
Relatively no greater amount OF tangible
property is used in the transaction of the
business than before the formation of the
new company. But the net profits may be
double what they were before, all resulting
from the increase in labor, mental and
physical, employed in the transaction Of
the business. There is no more reason
now, since the institution has become a
corporation, for capitalizing the business
on the net profts and using the sum thus
ascertained for the purpose OF valuing the
property Of the corporation for the pur-
poses Of taxation. than when 1t was con-
Quoted in the name of a private party,
nor is the constitutional objection OBJ.
waited that the tax Is not made upon prop
erty because OF the business being con-
Quoted by a corporation.
II capital stock is authorized, issued and
dividends declared, the dividends simply
measure the right Of the holder Of the
stock to participate in the earnings Of the
company through the dividends. 1t in no
manner measures the value Of the prop
erty used by the corporation, because such
value Is no greater relatively now than 1t
was when carried on in the name OF one
individual.
/ will take another illustration. Sup
pose a person Is occupying a house, In
which he lives with his family. II the
property be occupied simply as a family
residence. no earnings are made upon the
wronaHfy II m the 0fhar hand the Rame