Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1907-09-19
FRANCHISE TAX NOT FAVORED
Allen R. Foote Delivers Address Be-
fore Municipal League.
GOOD SERVICE MAIN ESSENTIAL
Exclusive Privileges, Together with
Perpetual, Untaxed Franchises,
said to BE solution of
Problem.

| Satd TO Be solution OF
Problem.
| NORFOLK Va, Sept Js.-Allen Ripley
Foote, president of the National Tax asso-
citation, and commissioner of the Ohio
State Board Of Commerce, delivered an
address before the eleventh annual meet
ing Of the League of American Munich
palities here today on the subject of Low
Rates for Public Service VS.. Franchise
Taxation"
The most useful tax to place on public
service corporations" said he, "is to re-
quire them to provide a service capacity
much greater than is sufficient to supply
present demands and to extend their ser
vice lines beyond present paying limits,
thus causing them to serve as a factor in
improving and building up the ever wild
ening limits Of the municipality, increasing
and diversifying the Industries of its in
habitants and contributing to their com
fort and prosperity. Investments In public
service utilities should be limited only by
the requirements to be provided for. and
the right of way for their service lines
should be unobstructed."
Continuing. Mr.. Foote said In part:
Enhanced Cost of Public Service.
Taxes upon the property of public ser
vice corporations not only enhance the
/ cost of the users Of the services, but they
accomplish this for the beneht OF non
users and alien property owners. All per
sons are not users of these services, nor Is
all property owned by such users, but all
property within a municipality is taxed.
II the property of public corporations is
not taxed, the tax on all other property
may be increased a trihe. This increase
would fall upon the property Of nonusers
and alien owners, and equally with that Of
users. but the users Of the service would
be benefited by the decreased cost of the
services to them When a user of a public
service votes TO tax the property or the
franchise of the corporation rendering the
service he votes to reduce the taxes OF
nonusers and alien property owners and
generously pays the amount he thus saves
for them out Of his own pocket. Taxes on
the means by which supply for a need
Is produced are a part of the cost or pro-
ducing the service.
The policy OF low taxes or no taxes,
should not be adopted unless the interests
| of the people are well safeguarded by legal
requirements that will make 1t certain that
correspondingly low charges for services
rendered. The demands of economic law
should find correct expression in the con-
ditions created by statutory laws.
Securing Best Results.
To secure the best possible public services
at the lowest practical price, economic law
requires:
First-'That a public service corporation
organized to supply perpetual public need
shall have the exclusive right to supply
such need perpetually.
Second-That all accounts shall be hon
estly and correctly kept; that economic
thrift shall be insisted upon in every de-
partment; and that charges for the use
of these services shall bear a fixed rela-
u1n rdo 10 tae t neGessaTy cost OF proauStion,
interest of users, of municipalities and OF
1.-The, state. will be best served by granting
exclusive. perpetual 4rand-untaxed fran
Cnispg to public service rOYDOTAtiOnS. When
operating under such conditions, public
service corporations can render the best
rates, and can satisfy the users of their
services that they are doing so.
Experience of Michigan.
Mavor w. w. Todd of Jackson, Mich,
spoke on Low Rates for Public Service
Against Franchise Taxation" before the
annual convention of the League of Amer
lean Municipalities here. He said, in part:
Personally, my experience and observa-
ton have taught me that the creatures of
! the public corporations have not borne
! their Just share OF taxation. Their financial
strength has given them undue political
Z influence. This influence has been erected
to the detriment of the people in many
! cases. Michigan believes in equal oppor-
tunities, equal rights and equal taxation.
! Her cities, like those of most other states,
derive their powers through the legislature.
The legislature in 1900 on the recommended
ton OF Governor Pingree repealed the char
/ ter of the Michigan Central railway and
compelled the railroad to carry for 2 cents
J per mile.
Events immediately demonstrated the
! wisdom OF this course, for 1t was not only
beneficial to the people, but to the rail
The former paid less for their transpor-
+, tation, aud the latter through increased
, traftc, obtained better revenue.
TwO-Cent Fare In Michigan.
Mayor Todd also related to the movement
which brought about the 2-cent fare in
/ Michigan. Il mention these facts simply
to show that the great corporations in
! Michigan at least land l think Michigan
: is no exception TO the general rule) have
received special favors in years gone by,
and that 1t only requires an awakened pub
/ lie conscience TO secure the treatment from
these public service corporations to which
! the people are entitled"
He further said:
The Michigan law forbids the taxation
! Of franchises as such, but allows the COM
! mission TO take them into consideration
my mind that the real object of any nmb,ic
service corporation, so far as the people
are concerned, is to serve the public fairly,
rates This cannot be dSectiy iya'ondOif ana
! hardly think, indirectly, accomplished by
equitable taxation 1t fails to accomplish
the aforesaid object OF these corporations
,
service.
The main object of all legislation, IT seems
/ to me, should be service to the people at
| just and reasonable rates.
All Property ON same Basis.
| The state, so far as state corporations
/ are concerned. and the federal government
so TAR as interstate commerce is concerned
/ have ample power to regulate these cor
! porations, inasmuch as there is a way TO
| oblige these companies to pay their tust
| share OF the taxes, as has been demon
strated In Michigan by ad valorem valua-
/ tions, 1t seems to me it is the height OF
wisdom TO insist through legislation upon
such reasonable rates as Investigation will
/ demonstrate can be imposed, and at the
same time put all corporate property for
taxation purposes on the same basis with
! that owned by individuals
The question is a big one. but the demand
/ for equal and exact justice which during
/ the last few years has been sweeping the
country like an epidemic, is working out
/ II seems to me- this. the greatest problem
now before the American people.