, 1906-01-10
GOVERNOR STOKES
ANNUAL MESSAGE
Continued from page 6

ton of taxes as is paid by other property.
no more. no less. AS Governor Albeit
said. Equal burdens and equal rights for
all. corporations as we'll as individuals.
are the principles that should control our
tax legislation" In order to produce this
equality not only the rate. but valuation.
must be weighed. One class OF property
may pay the same rate as another. but if
1t is subject to a lower or higher valua-
ton the principles of equal taxation are
violated.
There are two distinct methods by which
this class of property may be taxed-one
by taxing it locally, the other by taxing
1t by the state.
Taxation by Local Assessors.
The taxation of the main stem by local
assessors involves the cutting up of this
class of property into sections, contermi-
nous with the boundaries of the taxing
districts through which it passes. This
would destroy for purposes of taxation
the value which it derives by virtue of
its continuity from terminal to terminal
and would result in a corresponding loss
in revenue. AS l said in my inaugural:
Property of this kind Is valued as a
whole. Divide it and you destroy It,"
One mile of the main stem of a railroad
is as valuable as any other mile for the
purpose for which it is designed. and yet
under a system of local assessments one
mile of railroad would be valued at one
rate. another at another. One mile, for
example, might be valued at $40, 900, an
other at $25, 900. another at $50, 1000. The
mere statement of this fact shows the
possible inequality of such a scheme.
Taxation by the State.
The main stem is a class of property
particularly fitted to be set aside for tax
alton by the state. 1t belongs to no one
city or county. but extends through the
various counties and municipalities of the
state. Its patronage is derived not from
one section, but from all sections of the
state, and the interstate traffic, which
adds greatly to the value of our railroad
highways, cannot be claimed by any one
section, but by all sections of the state.
The revenues out of which the taxes are
paid are either contributed by the people
of the state or derived from a source in
which they can all claim equal right. In
deed, the authority of the railroad to do
business is granted by the legislature.
representing all sections of the state.
Equitable considerations therefore would
seem to regard this class of property as
a source of revenue for all the people of
the commonwealth. If the main stem
should be taxed in this way the applica.
ton to this property of the average tax
rate of the state would seem to be logical
and complies fully with the requirements
of equal taxation.
The average tax rate of this state Is
about 2 per cent. The main stem. includ-
ing franchises which are figured in the
value of the main stem, together with the
personal property, produces a revenue to
the state of a little over 1851 600. If the
average rate Of the state were applied
this class of property, instead of paying
1851, 900. would pay, subject to equalization
of valuation, about SO, 800, 600, within $500.
600 of the present total state income from
all sources. The railroads now pay taxes
of over 81, lao, 900 a year. which is turned
directly over to the municipalities. so that
this would make the total taxes paid by
railroads for all purposes about 81, $40, 900,
or nearly & per cent of the total taxes
now paid by all the property of the state.
Methods of Distribution.
The distribution of the tax derived from
the main stem is a separate and distinct
proposition from the method of taxation.
The state might retain a portion of the
tax and distribute the balance to the mu-
inequalities through which the main stem
passes, according to the proportion of the
main stem lying within each municipal
ty. This tax might be devoted to the
school fund for a permanent investment
for that purpose or might be distributed
by the state under the act of 1900, as now,
to the various taxing districts for the
payment of school taxes and the elimina-
ton of the state school tax. This would
reduce the tax rate in every taxing dis.
trict 17T points. The present amount re-
ceived by each district would of course be
proportionately increased. Hudson coun-
ty now receives from this source $3.50, 070;
II would receive about $718, 466. Jersey
City now receives from this source $780,
b63; it would receive about $340, 1913. Es-
sex county now receives from this source
1926. ASS; 1t would receive about 1896, $40.
NTor,orI1 DoVr TaCeiyec from this SOI1rca
s163. 34S; it would receive about $500, 722.
Monmouth county now receives from this
source $54,0 22; it would receive about $780,
2S3. Mercer county now receives from this
source $50, 0S5; 1t would receive about $780,
915. Trenton now receives from this
source $40, SOS; it would receive about $154,-
43S. Passaic county now receives from
this source SIS, S74; it would receive about
s2SS, 321. Paterson now receives from this
source $4i, 373: it would receive about $685.
636. These Illustrations, subject to equal
iZation of valuations and to changes in
local tax rates, and not purporting to be
accurate to the dollar, might be multiplied
to cover every community in the state.
They are based upon the assumption thai
the increased revenue would be distribut-
ed, as now, for the benefit of our taxpay-
ers and schools. a portion of it, how
ever, might be devoted to the development
of our system of good roads. Schools and
good roads are vitality important to the
welfare of our commonwealth, and both
of them are necessarily dependent for
uniformity and effectiveness upon state
aid and state care.
The merits of these two systems-taxing
the main stem locally or by the state-are
purely questions of policy.
Preservation of the States Revenues.
Consideration of the interests of all the
people of the state argues for care in
preserving the states revenues. A state
tax will never be welcome. Our policy
ghould look to the future. Revenues that
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