Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1903-02-10
EARNING POWER BAG|S
Proposed Law For Taxation Of
Capital Stock of Corpora
tons In Illinois
NEW RULE IS PROVIDED
NEW RULE is PROVIDED
Measure Made to Follow the Decision
of Judge Grosscup in the Case
Brought by the Chicago Teachers
misunderstanding Power to Be
Used as a Basis of Valuation.


of the capital stock of corporations, ac-
cording to a rule fixed by law, is the
object of bill which has been pre-
pared by Representative A. c. Murray,
of Springfield, and which he will intro
duce in the house today or Wednesday.
The Murray bill is an effort to crys-
tallize into statutory form the princi-
pies laid down in Judge Grosscup's de-
cision in the franchise tax case. II
market value of corporation stocks the
basis of valuation foritaXing purposes.
1t fixes per cent as a proper return
for funds invested In corporation secur-
tiles. and the assessed value of capital
stock is to be fixed by the state hoard
of equalization with direct reference TO
it's earning power.
Two years ago the Chicago Teachers.
Federation went into court to compel
the state board of equalization to assess
the capital stock of corporations at It's
market value. Judge Thompson OF the
cirucuit court here issued an order on
the state board of equalization to SO
assess capital stock The state SUI
preme court sustained Judge Ihomp-
sons ruling.
The case was taken to the United
States court and Judge Grosscup tore
holes in the state courts decisions. He
held practically that investors in stock
of corporations are entitled to u per
cent on their investments If the corpo-
rations earn so much.
Mr. Murray's bill follows this plan
and makes a 6 per cent earning power
the basis of taxing corporation capital
stock. According to the Murray Dill,
the state board of equalization is re-
CURED to take the gross earnings of
corporation, and from that amount de-
duct all operating and other expenses,
except sums expended for permanent
betterment of the property and set
aside for a sinking fundThe balance of
the gross earnings, the operating eX-
renses being deducted, is to be consid-
cred the corporations net earnings.
These net earnings are to be consid-
cred further for the purpose of taxa
ton as per cent of the actual value
of the stock without regard to its quo
tation. In other words, the state board
of equalization is required to ascertain
the net earnings of corporation. and
this by 16 2-3, to find the
value of it's capital stock.
For example, if a corporation shoulu
show gross earnings of 100000, with
expenses of $3.50, 600, leaving net earn
ing of s150,000, the state board of
equalization shall fix the value of It's
capital stock at S2,500,00O, without re-
gard to its face or market value. the
$150,000 net earnings being considered
as per cent of the value Of the capital
stock.
This method of procedure is made
on the state board of equal
ization by the Murray bill in arriving
at the value of corporation capital
stock. After the value Of the stock has
been arrived at in this way, the board
is to follow the usual process Of equal .
iZing taxation, and is to list one-hftl
CT the value for taxation.
To compel corporations to make
truthful return to local assessors of
their gross and net earnings, Mr.. Muir
rays bill will provide that when the
county clerk doubts the accuracy of
returns made by corporation to the
assessors, or when no return is made,
he shall file complaint against the cor
with the county court. The
county judge is given power to call
the suspected corporation before him
and compel it to produce its books
and to make return that shall salts
fly the court. Severe penalties are i'm
posed on corporations failing or re-
fusing to comply with the law.