Amador ledger., 1907-01-04
TAX REFORM.
By Carl G. Plehn, of the Commission
on Revenue and Taxation.
Editor Amador Ledger {:

Editor Amador Ledger:
A copy of the interesting article on
lax Reform appearing in your issue
of December IA, 1906, has just come
to my attention. | should esteem 1t
favor to be allowed to present some
further considerations on the same
line.
You raise the question whether or
not the plan of tax reform propose d
by the commission would tend to
carry the corporations into politics
to greater extent than does the
present system. The present system,
it must be remembered, places wide
and arbitrary. powers in the hands of
the assessors in all matters relating
to the taxation of corporations. The
courts have decided that they will
not review the valuations placed
upon property by an assessor for pur-
poses of taxation, such valuation
being matter fully within his dis
cretionary power. He may include
in the assessment of corporation a
valuation of the franchise in
amount sufficient to cover all the
intangiblesalu which arise from a
corporations earning capacity. The
same board powers are now vested in
the state board of equalization with
regard to the assessment of railroads.
Under the present system there Is
every inducement for corporations to
go into politics.
Under the plan proposed by the
commission there would be substi-
tuted for the arbitrary power now
held ami exercised by the assessors
and the state board of equalization
mathematical rule, which will elImi,
nate the necessity for the exercise of
Judicial discretion by any officer.
The gross earnings of our public SER
vice corporations are definite facts,
easily ascertainable, and hard to
conceal or manipulate. Once the
gross earnings are ascertained all that
remains is to multiply them by the
tax rate and collect the amount due.
1t is the view of the commission that
this will take the matter of the taxa
tion of public service corporations
out of politics entirely. They could
not by political influence lower their
taxes nor could the masses of the
voters even if they have a "deep
rooted prejudice against corpora
tions," run rlotously into extrava
gance.
At first sight it may seem to be an
objection to the plan of the commiss-
ion that under it the states revenues
would be samewhat rigid or inelastio.
1t is, however, easy to exaggerate the
Importance of elasticity in a revenue
system. Under the proposed plan
the revenues of the state would in
crease with the growth of the earn
ings of the public service corpora
tions. This Is the same as saying
that they will vary with the prosper
ity of the state and grow with its
growth. If 'thard times" come again,
which we hope may not happen, the
revenues of the state might stand still
or even decrease, But would it not
be appropriate, that in hard times,
when all the taxpayers are pinohed
nd have to economize, the state too
should retrenchY Ii the plan of the
commission had been IN operation in
1905 the revenues of the state would
have been SO, 400, 900 or about 5000, 900
short of what they actually were
But by the time the plan can go into
operation it is estimated that the
revenues obtalnable hereunder will
be ample for all necessary purposes,
and yet not so large but that the
legislature would have to weigh very
carefully the relative merits of the
various claims on the treasury.
AS you state, the question OF tax
reform is serious problem. The
commission has studied it carefully
for two years; its recommendations
are not untried novelties. but are
strictly in line with good precedents
in other states.
T
nh