The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1908-07-08

been made to tax their general cor
porate powers, as substantial grants or
privileges or as property, requiring
special forms of taxation not inn
posed on individuals or unincorporated
associations, provision being made
merely for the payment of reasonable
fees for service in connection with the
administration of the laws relating
thereto Nevertheless, the unit me-
thod of assessment as embodied in our
tax laws and established in its mode
of operation by our courts, extends
to all our agricultural, manufacturing
and mercantile enterprises that prin-
ciple of assessment which, elsewhere
il used at all, seems to be exclusively
applied as a corporation" or quasi
corporation" tax in order to reach GER
tain intangible elements of value pos
sessed, especially by interstate rail-
road telegraph and express companies
OF rhonopolistic character, and in
long time possession of untaxed but
valuable franchises, grants and privi-
leges. Generally these have been
originally given without providing for
remuneration to the granting authority
or to other jurisdictions into or
through which their operations have
| been extended. To get at these in
tangible values of franchises, good
will, ETC., some states now tax such
companies and corporations under spe,
cial tax laws, measuring the value of
their combined tangible and intangible
properties by their annual earnings or
| the proportion Thereon assumed to be
earned within the respective states
that levy the tax, which is usually a
| fixed percentage on gross earnings. To
copy and adopt this special form of
corporation tax and apply it to forms,
plantations, and mercantile estab-
lishments engaged in simple forms of
enterprise which are subject to the
full sweep of competitive commercial
forces worldwide in their scope marks
an extreme departure from the other
wise conservative statutes which make
up the balance of Hawaiian tax legisla-
ton.
Our enterprise for profit tax, however
illogical have been it's modes of oper-
alton, has succeeded in yielding much
revenue. The secret of it's productive
capacity is simple, though not always
appreciated by the taxpayer who finds
his property taxes raised at times
when market values of realty have per-
ceptibly declined. For if his business
enterprise combines in use real es-
tate and personally or several kinds
of personally the value of his pro
perty' may be measured in toto by the
profits of his industry, by the market
value of the certificates of stock of the
business, if incorporated, or by the
, value of his lands and personally as
sessed by separate items If he were
a mere landlord his property could be
valued only at eight times his yearly
income from it (unless the resulting
: figure were obviously unfair or unjust)
but if planter or merchant he might
have his annual business income in
creased eight times, ten times or a
dozen times, the basis adopted depend
, ing upon the mental acumen of the
local assessor making the assessment.
? The problem which confrOnts him I'M
der the unit method" of valuation as
compared with the former exclusive ad
valorem method, is of ever increasing
compleXity, charged as he is with the
duty of considering the significance of
stock values, of debts, of gross and
net earnings, and of Fall other mat
, ters' bearing on the aggregate value
of the property assessed.
) To attempt to reach approximate JUS
tice and equality of taxation under
these complex conditions of law and
fact, when a simple, direct assessment
of land and personally, coupled with
our income tax, is always feasible,
seems to the writer unnecessary and
, unjust. But it is urged that the as
sessments of our incorporated enter
prises are apt to be more exact than
, those of individuals or associations,
because their STOCK and bond quota
lions on the Honolulu market are
readable induces of the selling value of
their property. But the "stock and
bond" method of valuation is as I'M
reliable as the capitalization of earn
ings' plan and generally fails of its
purpose. This Is because the quota
lions of any corporation stock are gen
orally dependent on variety of con-
ditions other than the selling value OF
the property or even its estimated va
lue in use to its owner" as measured
by its net profits or otherwise, though
the latter value, it seems, may not law
fully be adopted by the assessor. Thus
during the past half year the quota
lions of the common stock OF the
Union Pacific Railroad Company have
? advanced over forty per cent. while in