The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-02-05
F. D. LarTabee Believes Public Cor
porations Simply Charge It Back
on Their Patrons.
He Is Strongly in Favor of Reviv-
ing the Local Option Tax
Amendment.

ing The Local Option Tax
Amendment.
! While legislators and many citizens in
terested In taxation problems are debat-
Ing methods for increasing the gross earn
i 1ngs tax on certain public corporations
F. d. Larrabee, late democratic candi-
date for attorney general, goes to the
other extreme When seen to-day, he not
only aVowed his disapprova of the gross
earnings tax, but argued against ANY tax
whatever on such corpora tions.
There seems to be a demand upon he
part of some people in the state said
Mr.. Larrabee that the gross earnings
tax upon railroads be continued and be
increased from 3 per cent to 4 per cent,
+ and 1t is said by those who advocate it,
that If the Increase were made the pro-
ceeds would pay all expenses of operating
our. state government, and that no other
tax would have to be levied for that .pur-
pose
II am opposed to any tax whatever upon
railroads, street railways, telegraph, tele-
phone. electric light. gas or other public
FRANCHISE corporations for the reason thar
the companies do not bear the burden of
the tax. It is all indirect tax and they
shift 1t upon others; ultimately it does
not fall upon the people who should bear
the burdens of the state.
OF course. if railroad rates, street car
fares and charges of these public service
corporations were to be and remain the
same whether or not there were tax,
and If their charges We're so high that
they realized more than an ordinary rate
Of profit upon what it would it would cost
to reproduce their plants. then l would
not object to taxing them in any form that
would take away from them all of their
inordinate profit. But the charges Of pub
lie service corporations are not perma-
nently fixed. and they may be, and should
be, regulated by the state so that the
companies will not realize more than or
binary rates Of profit, considering the haz-
ards of their business, upon what would
be a reasonable cost of reproduction Of
their plants.
f This is the rule fixed by the supreme
court of this state in the case of Steener-
son against the Great Northern Railway
: company, 50 MINI. 1853. and before the
supreme court of this state fixed it. and
independently and alone,I am proud to
SAY, I reasoned it out that that was the
proper basis Of charges, and published
my opinion upon the subject in a book
under the title Functions Of Government ,
, IN January, 1897. s.-
A Railway. Illustration.
"Starting now with a railway company
with it's charges regulated by the state
so that it would realize from the charges
only an ordinary rate of profit upon the
legitimate basis spoken of and without
any tax Suppose a tax of any kind or
description to be collected of the COM
pany. whether gross earnings tax or A
tax upon it's property; inasmuch as every
court will permit charges of the railroad
company to be sufficient to enable it to
J realize that ordinary rate of prot if a
tax is levied. the company will have to
, increase its charges for freight and pas
| sengers. and the burden Of the tax then
would fall upon those who ultimately pay
, the freight and passenger charges Sup
pose a man travelling upon the railroad
) to be travelling salesman for a whole
sale grocer. The expenses are added to
the expenses of the wholesale house, and
the more is paid for railway fare the
greater the expense of the travelling man.
the greater the selling price of it's gro
= ceries, and the greater the freight paid
upon the goods shipped by it over rail :
roads, then the greater the selling price
. of its goods. If barrel of sugar, for in
stance. were shipped over the railroad
from Minneapolis to some point in the
country, the price of the sugar to those
who consume it at the point in the coun-
. try would be as much greater with the
. tax than without it as the tax amounts
,, to. It is the person. them who consumes
the sugar who pays the tax.
Think of the injustice of a tax to sup
port the state government levied upon
people in proportion as they consume SUI
, gar or other things that are shipped over
railroads.; think Of the injustice of con-
tnuing tax Of that kind and of the in
Justice of increasing it to such an extent
that there would be realized from it
} |cnough to maintain the state government.
and all the property interests of the state
absolutely exoperated from any tax what
e ever. --.-s-
r ~ A Tax upon Consumers.
e 1.-THE gross earnings tax of railroads,
whether Intentionally so or not l do not
. know, in truth and fact, is device
: whereby the burdens of the state are
: loaded upon pie in proportion as they
= consume-upo.- the poor as heavily as
upon the rich l am, therefore, opposed
e to the increase of the gross earnings tax;
i 1 am opposed to the Introduction of the
a gross earnings principle to public service
{ corporations other than railroads; I am
e in favor of starting IT. the opposite direc-
: ton and reducing the gross earnings tax,
e looking to the ultimate abrogation of it
d and the regulation Of charges of public
: service corporations so that they will not
), realize more than ordinary rates of profit
!, upon what it would cost to reproduce their
r plants, or, what is more nearly correct
y to reproduce reasonable plants to lake
the place of those already in use by them,
provided that cost is less than What 1t
, would cost to reproduce the plant which
: they have.
u. IF the state will regulate the charges
OF railroads so that they realize only or
binary rates Of profit upon what it would
cost to reproduce their plants, then we
10 would not care who owned the stock OF
railroads. The real question that the peo-
ple are interested in is the question OF
rates; not the question of ownership OF
stock of railroads.
u 1.-THE legislature. it seems to me. should
: revive the constitutional amendment pro-
: posed by the tax commission looking to
i ward local option in taxation
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, SHOES SAWN ASUNDER
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