The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-11-12
Paying for Privileges.

Judge M. 3. Koon, who Is president
of the Minneapolis General Electrlc
company and counsel for the Twin
Citv Rapid Transit company, thinks
the charter commission proposes TO
tax too heavily the gross incomes Oh
public service corporations. ne
thinks that per cent for the first 11Ve
Years, per cent for the ten succeed
ing years and 5 per cent for the next
FIVE years is altogether too much IN
view of the fact that the companies
must also pay taxes on their real
estate and personal property besides.
n IT would, of course, be quite posi-
lie to make the gross earnings tax
too high, but there. is no injustice IN
requiring public service corporations
10 nav a gross earnings tax in addl-
ton to the ordinary real and personal
property taxes. The gross earnings
tax is a franchise tax; in other words
is a rental. Just as individuals ana
corporations have to pay taxes on
their real and personal property, so
should the public service corporation.
In addition it should be required to
nav a rental or franchise; tax for tge
use of the streets. The fact that the
railway companies of Minnesota pay
only tax on their gross earnings IS
not parallel case. for the reason that
the state has entered into an agree
ment with them to accept such
revenue in place of all others. There
{I,o rot 70
railways do not pay their fair share Of
taxation.
If the gross earnings tax were to be
substituted for all other taxes in the
case of municipal public service cor
porations. it should be made consid-
erably higher than the charter COM
mission proposes-the maximum be-
ing. 10 or IL per cent instead of per
cent. At present the total tax of the
4 Twin City Rapid Transit company is
about 100000, being, on the basis OF
gross income, about a per cent tax
The valuation is made for the express
purpose of taxing the franchise TIC
some extent, but it is not too high
During the first, five years, with Its
GROSS edIlllllSS lctACSi a. q pSA SSa1S' ettN
company would not have to pay more
than 8 per cent altogether, even If the
present valuation were maintained
after provision had been made fol
taxing the franchise thru earnings in
stead Of valuation. AS a matter O.
fact a. 8 per cent gross earnings tax il
not an excessive one compared Will
the taxation Of property on which
taxes are levied directly. There arr
successful public service corporation
that are now paying taxes that ar
higher.
1T is exceedingly doubtful whethe
the charter commission has the powe
to provide for a gross earnings tax ii
y lieu of all other forms of taxation
The lawyers on the commission prob
ably had this fact in mind for thu
draft OF the franchise chapter treat
the gross earnings tax as payment 70
a privilege instead of taxation proper
There is no question about the con
stitutionality Of such an arrangement
for it would simply be a contract be
tween the city and the corporation
the taxation authority vested in tn
legislature or with the constitutions
provisions regarding taxation.
One member Of the comnissio
makes the point that there should b
no direct charge for the privilege c
using the streets. but that compensa
ton for that privilege should b
looked for in reduced charges to til
public for service. This method j
probably the most rational, but i
practice it is easier to collect a gros
earnings rental than to secure a re
duction of rates as earnings Increase
T7ie Memphis Commercial Appeal d
sires its northern contemporaries to tai
notice that a white man has been sci
III prison for life in Mississippi for kilIii