The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-02-15
HOW RAILROADS HAVE ESCAPED TAXATION
THROUGH GOVERNMENT BY INJUNCTION.


injunctions against the actions Of the
State Corporation Commission. They were
nearly all issued to defeat just taxation
of railroad property in North Carolina.
This State has had a taste of govern
ment by injunction" which is solely re-
sponsible for the present deficit in the
State Treasury. But for the fear of in
junction and the multiplicity of injunc-
tions, the property of quasi public cor
porations would have been taxed at some
thing like their value during the past
ten years, and instead of having to face
deficit the present General Assembly
would have sufficient surplus to meet
the needs Of this progressive State. Be-
cause this State has been cursed by gov
eminent by injunction, Simonton vetoing
tax assessments and forcing compromises
that denied the State it's just revenues,
this Legislature is face to face with the
problem of providing for deficit. Every
dollar of the deficit has been honestly
expended, under appropriations OF the
General Assembly. The revenues have
not been sufficient because the most
valuable property in the State has paid
tax on an assessment of less than one
half Of its actual cash value.
At the session of the Legislature of
1899 the first Democratic Legislature af-
ter the reign of Fusion, the House
sought to put an end to the absurdly
small tax paid by quasi public corpor-
ations by imposing privilege tax on the
gross income of corporations. The bill
passed the House. after a contest. and
went to the Senate. 1t was argued in the
Serate that the imposition of that speci-
fic tax would not add more to the rev.
enues than would be assessed by an act
directing the Corporation Commission to
assess the franchise for taxation. along
with the tangible property, and In doing
so to take into consideration the gross
income. Besides that argument other
reasons for not imposing the gross ,ncCne
tax at that time had weight The act of
1899 was drawn by Hon. Frank
l. Osborne, chairman of the Finance
Committee. In consideration of
| that course being pursued, at the request
of those who opposed the gross income
tax it was understood that the railroads
would not contest the assessment. Later
on in that year, 1899, he Corporation
Commission assessed the railroad prop
erty at $40, 000, 900 in round figures, a sum
much less than half the actual cash valae
of the property. Before the assessments
| were on the x-books. nine injunctions
were issued by Judge Simonton
against the collection of the tax. The
State was forced into Simonton's court,
evidence was taken all over the State, and
| for nearly two years this costly litigation
proceeded on it's snail-like course. Fin
ally about the last of December. 1900,
| the attorneys for the State, the Corpora
tion Commission, and Governor elect Ay--
cock agreed upon compromise by which
the railroads agreed to pay the tax as
assessed upon condition that the Gov
ernor would recommend in the future
| that the assessments be made
| only once in four years, as real estate is
| assessed for taxation. In pursuance of
| that agreement Governor Aycock ad-
dressed the following message to the leg
islature:
| To the Honorable, the General Assembly:
/ transmit herewith the second an
nual report of the North Carolina Cor
poration Commission. You will observe
| from said report that the cases known as
| the Railroad Taxation cases, pending in
| the Circuit Court Of the United States
| for the Eastern District of North Caro-
| lima, have been compromised and settled
| Under the provisions of law the Corpora
| ton Commission in 1899 assessed the
| property of the Atlantic Coast Line at
| 81, SS5,775 the Southern Railway ct
| $14, 713 $50 and the Seaboard Air Line at
| 81 $3.50, PAS, making a total assessment of
| 35,579, $40, which was a total increase
| on the three systems over the assessment
| of 1898 of s9022,67S. The assessment OF
| the three systems named in 1900 was
! $36, 373, 1892 In a short time after these
| assessments were made the three sys-
TENS named secured an injunction from
| the Circuit Court of the United States
! for the Eastern District of North Caro-
| lima, restraining the collection of taxes
| on the assessment over and above the
| assessment of 1898 During the tendency
| OF these suits much evidence was taken
on both sides-that on the part of the
railroads tending to show a considera-
| Bile and systematic NATURALIZATION OF
the other property of the State; and that
Oh the part of the State, while showing
| differentiation in many instances, tend
| ing to show that the differentiation was
| cratic and not systematic.
| During the tendency of the investiga-
| ton. and while evidence was being taken
! at Wilmington early in January of this
year, | received a telegram from Hon
orable H. G.. Conner. of counsel for the
| State of North Carolina asking me to
come to Wilmington. Upon my arrival
in Wilmington, found that propositions
of settlement were being discussed no.