Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1904-04-13
DID NOT PAY TAXES.
Governor Will Start Action to Re-
cover Sl,O00,00O or More
from Railroads.
FAIL TO REPORT THEIR EARNINGS
State Railroad Commissioner Says That
Companies Have Escaped Paying
Taxes by False Statements.

Madison, Wis, April 11.-Gov La Fol
1ette last night gave it out that an in
vestigation Of the books of the railroads
had shown that the state had been de-
priyed Of taxes as the result of incorrect
reports, and that $1,O00,000 or more
would assuredly be received from the
corporations. The announcement was
accompanied by figures of an extended
expert investigation made by accountants
under the direction of ]. ". Thomas,
state commissioner of railroads The
figures show that it has been the custom
for the railroads to omit to report in
their annual statements Of earnings, sub
Stantial items of various kinds, and par
tlcularly the amounts of rebates paid to
favored shippers, these latter amounting
to millions Of dollars. These unreported
earnings are subject to the state license
fee tax of 4 per cent. on the gross earn
ings.
Refuse to Show Books.
The railroad commissioner reports that
the railroads have refused him access to
some OF their books. particularly the Chi
cago, Milwaukee & st. Paul company,
which refused to give information regard
ing free transportation and mileage al
lowed by the road. He recommends that
the powers of the commissioner be in
creased, if necessary, that the investiga
ton be widened in scope and that the
examination Of the books be carried into
all related departments of railroad bust
mess and carried back as far in years as
the roads have been operating in this
state.
( A similar procudule was had in Mime
sofa and for the period of only six years
that state recovered S143, 900. 1t is inn
possible for Minnesota to go back far in
years because of the statute ofllmitations
existing in that state. Gov. La Toilette
+ho+ Ia c+a %,74o of s}atio
not operate against the state in Wiscon-
sin and that the recovery will be made
for all taxes which the railroads ever
wrongfully withheld from the state.
Text of Report.
Madison, Wis. April 9, 1904. To His Elk
cellency Robert NJ. La Toilette, Governor of
Wisconsin-Dear Sir: In accordance with
suits, progress and all other information
in possession of this department relating to
the investigation OF the books and reports
of the railroad companies operating lines
in this state, for the purpose of ascertaining
If said companies have properly reported
their gross earnings for taxation, such In
ter 431, laws of 1903, I would respectfully
report that the work has progressed fairly
well. in consideration of the great amount
of labor required to check over the books
of the railroad corporations, whose gross
earnings amount to S40,O0OO0O to $oO,oOO.-
900 per annum, as is the case with several
sin.
Progress and Results.
The Wisconsin Central railway books have
been checked over for 1902, but the work
reported The Chicago & North estern
railway is nearly completed for 1901 and
1902: that part reported is given herein
The same will apply to the Chicago, Mil
waukee & st. Paul, the Chicago, st. Paul,
Minneapolis & Omaha and the Minneapolis.
St. Paul & Sault Ste Marie. For several
9Th rJy iC roll I'm hQn
will be submitted to you as reported.
Repayments to Shippers.
I have included herein the results of the
investigation reported to me by the eX-
perts Tor the roads above named. covering,
as stated, the years Of 1901 and 1902 The
work has been confined to aScertaining
what rebates, if any, have been paid ship
pers, thereby reducing their rate below the
in effect at the time OF shipment. and dc
Quoted from gross earnings before reported
for taxes. This is indicated below as re
payment to shippers and also to see If I
proper division of earnings from the opera
tion of the roads in Wisconsin have been
reported for taxes This Is Indicated below
as "other earnings not reported.
Results:
so7,o23.o IN Taxes Due the State.
1902 c. & NV
Repayment to shippers. $685.. .O3
other earnings not reported. 53,614.52
s7s7, $50 50
1O91-2 c.. NJ & s.. P
Repayment to shippers. POI 1858
Other earnings not reported. S6,875.02
$63s, 760.95
1902 c.. st. P, NJ. 6 o.
Repayment to shippers ..... 1e7. $50 G,
Other earnings not reported. -. 5000. 90
$173,53o.6 5
1902 NJ, st. p & S. Ste NJ
Repayment to shippers. ........ 81. 76:s. %
reported Il
$14s, O94. IS
Total not reported. .......... ST ,69S, O76. Is;
At per cent. there would be due the
state in taxes on this amount $67 .923.07.
The accountants assure me checking
over or review Of the work given will in
crease rather than diminish the amounts as
submitted in their reports to this office.
Admitted by One Railroad.
Since this investigation began, one of
the roads included In this report has fled
dts annual statement of gross earnings for
the year 1903. An examination of the books
of the company for that year now in prog
!resS shows that 1t restored to its gross
earnings account, before making its sworn
statement to the state for 1908, vouchers
for rebates to shippers representing various
classifcations of refunds This railroad
company has By It's action regarding gross
earnings for 1903, therefore, practically ad-
mitted the claim Of the state to have these
rebates Incorporated in the report of gross
earnings upon which taxes should have
been paid.
This report embraces no deductions from
gross earnings on account of refunds or
Rebates on mileage books special passenger
rates, or free passage or mileage books is
sued, for the reason that the Chicago, Mil
waukee & st. Paul company has refused
access to the books containing these rec
ords, and because this branch Of the work
has not yet been reached by my experts in
the Offices of other companies.
Shippers Who Get Rebates.
This office Is in receipt Of information
giving the names and addresses of shippers
who it is claimed are getting rebates regu-
larly. Many OF these names do not appear
on the accountants reports. l believe this
information reliable and that the scope of
the investigation must be broadened to
cover the entire field and that it is the
plain duty of this department to continue
this investigation until all the facts per-
tanning to the earnings fg;s, of the railway com
Enclosed will be found copies of state
ments made by accountants to this depart
ment, giving all the facts as to rebates
made to shippers and other earnings not
reported, as requested. Respectfully sub
,,fttad JOIIN w THOMAS