The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1903-02-17
HOW RAILROAD HAVE Escape TAXATION
THROUGH GOVERNMENT BY INJUNCTION.

Judge Simonton has issued twcnty-four
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
a 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
ernment by injunction, Simonton vetoing
tax assessments and forcing compromises
that denied the State its just revenues,
his Legislature is face to face with the
problem of providing for a 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 lhan one
half of it's 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-
atoms by imposing a privilege tax on the
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 tho gross income
tax at that time had weight. The act of
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 s42, 600, 900 in round figures, a sum
much less than half the actual cash value
of the property. Before the assessments
We're on the textbooks, nine injunctions
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
ton Commission, and Governor-elect Ay-
cock agreed upon a compromise by which
the railroads agreed to pay the tax as
assessed upon condition that the Gov
crnor 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 adj
dressed the following message to the leg
islature:
To the Honorable, the General Assembly:
l transmit herewith the second an
nual report of tho North Carolina Cor
p%oration 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
fer 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
$12, $50, rs, the Southern Railway at
s14, 713, $50 and the Seaboard Air Line at
81, $50, 245, making a total assessment of
1913, $40, which was a total increase
on the three systems over the assessment
Of 1898 of 50, 022, 67S. The assessment Of
the three systems named in 1900 was
$36,373,3S2 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-
Die and systematic undervhluation CT
the other property of the State; and that
OIL 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-
tlon, and while evidence was being taken
at Wilmington early in January of this
year, | received a telegram from Hon
orable II. G.. Connor, of counsel for the
State of North Carolina asking me to
come to Wilmington. Upon my arrival
IN Wilmington, l found that propositions
or settlement were being discussed be-
tween those representing the railroads
and those representing the State. The
railroads insisted upon a reduction of