The Montgomery advertiser., 1906-05-06
RAILROAD PROPERTY ASSESSMENT.

MucH mas idtcfy peeH sa4u oy Hh' Conner and his adherents with refer ence to assessment of the railroads in Alabama for taxation. and an analysis of the subject at this time may prove of interest In the first place. 1t comes in rather poor grace from a man who owns two cotton mills that are exempt from taxation to be clamoring for a raise in the taxes of other corporations; but it is no argument to say that be- cause Mir. Corners cotton mills are ex- empt from taxation that. for this req son. other property should escape. The Advertiser will. therefore. treat this question wholly upon its merits.
 The agitation of this matter has brought out the fact that. whether un- dervalued or not. the railroads pay within fraction of one-sixth of all the taxes collected in Alabama. The rail- roads are assessed in round numbers at $5s,e0o.o0o on their road beds, main lines. side tracks and rolling stock. and in addition they are assessed local 1y upon their depots. section houses. lots. shops. wharfs, tanks. tools, and machinery. which if added to the s5s,- no0. .ooo. would very materially increase their assessment. They pay at least sToo, ,ooo annually on their road beds.
 main lines. side tracks and rolling stock alone.
 It has been estimated by State off, ciais. in position to know. that prop aIr tions Is not assessed at exceeding SS per cent of its real value, while many cotton mills valued at several hundred thousands of dollars escape taxation entirely. It Is an undisputed fact that If all other property was assessed ap- portionately as high as that of rail- roads, the tax rate in Alabama could very easily be reduced. It is fair to state. that so long as railroads bear their just proportion of the burden of taxation. the agitation looking to an increased assessment should not be aimed exclusively at railroads. It Is also interesting to note another feature of this question. The gross earnings of all the railroads in. Ala bama for 1905. from all sources, will amount-approxim round num- hsrs to ss0.0oo.ooO. only one-third of which Is local or intra-state business. Now the railroads pay over s7oo.oo0 taxes. which is 1-2 per cent on their gross earnings from all sources. and more than per cent on their gross earnings from local business. The Su- preme Court of the United States has held that the States cannot tax earn ings derived from interstate business. It follows. therefore, that upon the present basis of assessment. the State of Alabama is actually collecting Ia per cent of the entire gross. or more than per cent on the local gross earn irgs. In this connection it is also in teresting to note the fact that the rail roads pay out in Alabama annually to their employees more than $Sf5,O00. 900. add to this $$7OO, 900 taxes and it will be seen, that while the State can not .di- rcctly tax interstate business, tho rall- roads have to draw upon their inter state earnings annually to very large extent to pay their Alabama em- ployes and taxes. In addition to this they pay out in Alabama hundreds of thousands of dollars for steel rail, ties. coal and other necessary supplies, which are produced In this State There Is no other business in Alabama of any kind or description which pays as high a rate as per cent on the gross earn ings in the shape of taxes. and cer- tAlnly no other business in Alabama. which pays out so large an amount of its gross earnings which the State di- rectly, and Indirectly through it's citi- zens, becomes the beneficiary of.
 In summing up 1t may be said that as a basis for assessment for railroad property, gross earnings can not be ta- ken alone. for the reason that only about one-third of these earnings are subject to taxation In Alabama. the other two thirds being interstate bus mess. These earnings fluctuate and are subject to many outside influences, such as lean years, orders of State and Interstate Commissions. and unusual dCCAQ0hASs IO COol Ol IGPIOuuCllOn also unsatisfactory for the reason that in nearly every instance the cost of building railroads, where earnings are largest Is less than where the earnings are smallest Usually railroads run ming through level and thickly popu- lated sections can be built at much less expense than those running through sparse1y settled and hilly sections. A road with an earning capacity of $10,- 900 per mile In one section in Alabama which could be reproduced say for $S0,- 900 per mile, might cost to reproGuce in some other section in Alabama s3O.0OO per mile with an earning capacity of only $3,000 per mile, hence it would be manifestly unfair to assess both roads at the same value. Railroad stocks do not form a satisfactory basis, for the reason that they usually pay no divi- dend whatever. and are valued so low in the market as to form no satisfact- ory basis of agreement, neither can the bonds be taken as a correct basis, for the reason that they are personal prop eTly OWAeu Dg HUH ASoANOAIS anu ANt subject to taxation in Alabama.
 Net earnings would not be a proper test for the reason that road operat- ing at a deficit would have no value whatever. besides to take anything like gross earnings or. net earnings as ba- sis, would put premium upon poor management of railroads. for it is well