The Somerset reporter. [volume] (Skowhegan, Me.) 1868-1909, 1906-05-10
Taxation Of Railroads
SPEECH OF E. N. MERRILL
OF SKOWHEGAN
In the House Of Representatives Upon the Merrill Bill for
the Taxation of Railroads, at the Seveny-second
Session Of the Legislature Of Maine

receipts per mile they pay one per
cent of the gross transportation re
ceipts. Therefore, | have made this
table. | have made it with a great
deal of care and great deal of study,
and first have given the gross assets
of each railroad. Then | divide their
gross assets--and that is the provision
of the statute as it now eXists-by the
entire number of miles operated
which gives the gross earnings per
mile, and multiply that by the mum
Der of miles in Maine gives the
amount upon which the tax is assess
ed in the State of Maine. For in
stance, you may take the Bangor q
Aroostook Railroad, the first in the
list. Their gross assets are S14, 900,
900 in round numbers Their gross
transportation receipts are 81, 1886, 900
Their gross transportation receipts
per mile, arrived at by dividing the
81, 1886, 900 by the number of miles OPP
Grated, gives S3951.11 That is their
gross transportion receipts per mile.
When you get their gross transporta
ton receipts per mile, then you de-
termine the rate as first stated, what
their rate of taxation will be. For
instance, at S3951 under the present
rate of taxation their taxes would be,
as you will see under the heading of
''present rate" .0l75 per cent of their
gross transportation receipts. You
multiply their gross transportation
receipts by that number and it gives
you their present tax, 500, 5l5.68.
Now, under the proposed bill | start
with the same sum, $1,000 as the start
ing point Why is that? 1t is because
it is believed, and think acknowl
ed by all, that small road, a new
road, earning but little, and being
sort of public institution in a way, a
quasi public corporation, it being of
advantage to the State to have these
railroads sustained and maintained,
instead of taxing them upon the
value of their property they tax them
upon the ability that the several
roads have to pay taxes. In other
words, instead of taxing them upon
the amount of money that has been
invested, they tax them upon their
ability to pay taxes. Their earning
capacity.
Now, what does that mean? Per-
haps | can illustrate it better by an
example. Suppose there are two
men. They start out as young men
! together. One man has a capacity
and an ability TO earn So or So per
day The other one, common la
borer, with no such ability, earns
81 80 a day or 81. Now the man who
earns 81 80 or 81 a day, by strict econ
omy and frugality lays aside a few
! hundred dollars, and by and by he
| buys himself a little home. The fell
low that gets his S6 day lives up to
the very limit of every dollar that he
receives, and by and by he has no
more than he had to start with. He
has lived up to the limit of his in
come. But the man who by his fru
gality, by his care and economy, has
saved the few hundred dollars and
put it into a little home, that man is
taxed in the State of Maine on an ay-
erage 2.017 per cent annually. Now
the man who has had his So or S6
day and spent it in living, he is taxed
simply poll tax. Which one of
those two men is really the best able
to pay tax and to help maintain our
institutions? The one who earns his
SO a day or the one who earns So?
There is only one answer. 1t is the
man who earns the So. Here are
these railroad corporations, here is a
railroad that earns up to $1,000 per
mile. They are taxed five mills on
the dollar. When they earn $1,000
they are taxed seven and one-half
mills. When they earn $500 gross
transportation receipts per mile then
they are taxed one per cent. Or, in
other words, as their income increases
and their ability to pay increases,
their tax increases. Now the in
crease under the law as it exists to-
day is one-fourth of one per cent
upon every $500 extra earning limit
ed at four per cent. When they earn
sufficient to pay four per cent of their
gross transportation receipts under
the present law, then they stop pay
ing above that rate. That Is, they
pay only four per cent, it matters not
whether they earn $1,000 or SD, 900 or
$40, COO per mile. Now, the more
they earn the more able they are to
pay. As drew this ball in the first
instance | made the limit 10 per cent.
| think it was Just, do not think il
was out of reason, and | have care
fully considered, | have carefully
figured and looked upon it in almost
every view, and in every view | could
conceive of as to its bearings upon
the road and its bearings upon the in
dividual in the State and upon the
owners of the property. The com
mittee on taxation had a long hearing
of about five hours, before which APP
peared practically the entire railroad
interest, might say, of the State of
Maine, fighting any change in this
laW-there was president and there
were directors of the various roads
with their hired attorneys who have
been here from the day this Legisla
ture opened and who were the first