Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1906-01-19
FROM HISTORY TO TAXATION
Nesting of State Historical Society Dis
Osssss Present Day Problems,
NORRIS BROWN ON RAILROAD VALUATIONS
Prof. Ross of state University and
GovcraOr Mickey Also Deliver
Addresses ON the same
subject.
CFronl a Stan Correspondent

LINCOLN, Jan. 1s.-(Special. 1.-The meet
ing of the State Historical society at ST.
Pauls church tonight was devoted TO a
discussion of revenue and railroad taxation,
each of the three papers read being on some
phase OF this all absorbing question. The
church was crowded by people from all sec
tons of the state who are here attending
the agricultural meetings and the deepest
interest was manifested. Following the set
program a general discussion of the subject
occurred.
Prof. T.. A. Ross OF the state university.
in discussing "The Problem OF Railroad
Taxation" argued that the railroads should
pay their proportion of the state taxes. and
In arriving at the value of railroad prop
erty the franchise should he considered as
! a very valuable asset
| Attorney General Norris Brown who has
just won the railroad tax cases in Ne
braska. and who is thoroughly familiar with
| all the details of railroad taxation In Ne
braska, explained in his address the various
| ways OF arriving at the value OF railroad
property He discussed at length the stocks
| and bonds theory, the net earnings theory
and the valuation by considering the phys
| zeal property only The Nebraska State
| Board Of Assessment had used all three OF
these methods in arriving at the valuation
of railroad property In Nebraska.
! Governor Mickey gave an address on the
new revenue law and its workings. The
governor explained the lax system OF as.
| sessment under the old law and the greatly
increased assessment OF all property under
| the new law. He then gave sketch of the
now law as it has been interpreted by the
State Board of Assessment and Equalza-
| ton
During the evening B. p. Gillespie gave a
baritone solo and Howard Kirkpatrick gave
an organ solo.
Problem of Railroad Taxation.
| Prof. Edward A. Ross OF the University OF
Nebraska read paper on the Problem OF
Railroad Taxation" His points were:
| Capital invested in railroads Is as able to
| contribute to the support of the government
| as other forms Of capital.
The fact that a certain fraction of the
total mass of property in the commonwealth,
owing to the ease of concealing it, utterly
| escapes athe assessor and evades taxation,
constitutes no good reason Tor aio"lns
| the railroads n corresponding onset.
| If without legal warrant the habit mas
| tactily grown up of assessing property at
considerably less than its true value, len
before entering II upon the assessment role,
| a corresponding deduction must be mace
from the true value of railroad property
| scientifically ascertained
The money value OF a railroad is not the
I estimated price of its rails, ties, roadbed
and equipment separated ana o3ns aa'e,,'oi
gate value as a going concern yielding pront
as a railroad, not as a scrap heap
The nonphysical property OF the rsliroad,
commonly known as, the FRANCHISE Is
rounded not on the Investment of capital;
but on the possession of traffic not exposed
to bear taxes It is more able to bear taxes
than most other forms of property.
The market price Of the stocks ana o9 'tai :
of a railroad. as 1t is based on the capital
ization of prospective rather than present
profits and Is moreover Influenced by the de-
STABILITY of stock for purposes of control.
of the value of railroad property a.,
| 81 railroad Ia computed value ascertalneo
bv capitalizing at a low rate of interest
| the average net income from, opel alton
through a period of ten years s,rso,d ,ronertv
thus scientifically ascertained shouid De
taxed by the state alone for state pur-
and fo at sh Of see taxed
| But II railroads are to contributes
now in most states-to local as wei as 70
3. state revenues. everything on the man
Iine-such as yards. roundhouses, repair
shops, stock pens, Offices, etc.-should DC
assessed by local assessor ana stoc amy
franchise-in a word, all the rest OF rail
road property--should be assessed by state
t to Counties towns and precincts in pro-
portion to mileage.
II railroads are taxed on the gross earn
nmsentiv al a rate distinct from and higher
than that imposed on property generaily
the difficulties connected with valuauof
are avoided, but the public mind is con
fused, the tax on gross earnings Is invarla'
bly, fixed too low and the railroad com
panies bear far less than their just burden
Railroad Taxation in Nebraska.
Attorney General Norris Brown had the
subject, Railroad Taxation In Nebraska,
and discussed It chiefly as to the right Of
the state to tax franchises and the meth
DDS provided for finding the value Of tbs
property of the companies. The right OF
the state to tax railroad properties within
it's borders Is found in the constitution
Section / OF article TX provides:
The legislature shall provide such revenue
as may be needfu by levying tax By
valuation. so that every person and cor.
tbe value of his, her or its property anc
franchises, the value to be ascertained II
such manner as the legislature snail direct
Mr. Brown paid some attention to th'
passage of the present revenue law and III
provisions, especially the constituting Of
the state Board of Equalization and AS
sessment. which is composed of the gov
ernor. auditor, treasurer, secretary Of stats
and commissioner OF public lands and build
ines To this board the railroads are re
+ | ouircd by law to make sworn return
showing the amount of capital stock au
thorized and the number of shares; the
amount Of capital stock paid up the mar
ket value or the true value OF such stock
the total amount OF all indebtedness. ex
cept for current operation; the location
and actual value of all real estate and per
sonal property locally assessed; SECOND
return relating to the value Of stocks anC
bonds covering the entire property OF thu
railroad; third return calls for the earn
ings, gross and net, for the year previous
to the assessment. Under this the boarS
is enabled to have three tests of valuation
First, the physical values, established b,
the tangible property of the railroad; sec
e ond, the value tested by its stocks anC
bonds; third, the value tested by it's ne
earnings.
Obtaining the Valuation.
How to obtain the valuation under tn
physical test was explained by Mr.. Brown
who used a Nebraska road for example
This return showed the value per mile II
> Nebraska of this line to be $4,000. b,
the stock and bond test, the value per mil
| OF this road in Nebraska was found to b
slO2, 600, and by the net earnings test
| was found to be $4,000. dhe net earning
being capitalized at 6 per cent. Thes
sums averaged give valuation per mile o
road in, Nebraska of $1,000 but the stat
. hoard fxed the figures at $50 600 per mile