The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1908-07-09
CContinued)

In one respect. however, the stock
and bond method of valuation if col-
sistently used tends to a just assess
ment, for it takes into account losses |
as well as gains, and may yield a net |
below the full cash value OF
all the separate items of physical prop
erty involved therein. But it is gen
orally understood that in such cases
it is usually abandoned, the assessor
being privileged by the attitude of the
courts, and expected by the govern
ment to adopt that method which Is
productive of the largest tax, just as
sea-going freight carriers under their
ships option" charge either by weight
or by measurement so as to get the
largest possible revenue. 1t would not
be an optional matter with the assessor
of what is apparently mandatory I'M
der the law, which states that enter
prises for profit shall be assessed by
the unit method. But in any event
it cannot be expected that the stock
and bond" valuation, possibly in prac-
tice adopted off-hand by assessors as
the sole basis seriously considered, FOR
determining the fair and reasonable
aggregate valuation required by law,
will coincide with valuation measur-
ed by the capitalization of net earnings
/ according to current rates of interests
| or adopted by patiently and eXhaus
| lively considering all other facts which
! reasonably and fairly bear upon such
valuation. Though current rates OF
interest should determine what CO.
efficient of expansion should be used
from year to year in fixing capital va
luations from net profits, the writer
finds that arbitrary rates have general
ly been used which in any particular
year have not been uniform nor even
consistent with respect to the work OF
a single assessor. If capital values be
based on net earnings it is evident
that a closer approximation to proper
relative valuations will be obtained II
the expansion be first made by com
mon coefficient determined by current
interest rates, subject to subsequent
adjustments because of special condi-
tions of property under consideration
than if under different minor condi-
tions the coefficient be arbitrarily Sc
lected or changed in proceeding from
one assessment to others. The opes-
ations of so many Hawaiian enter
, prises are so great that oversights II
these matters lead to wide variations
: from fair and reasonable assessments
But apart from the imperfections o
this law and the monumental difhcul
ties in administering it so as to ap
proXimate equality in assessments, TIT
writer believes it to be economicaIl!
unsound and especially unsuited Il
conditions in Hawaii. 1t does no
argue that a revenue law is economic
ally sound because it has been judi
cially declared valid. The courts mus
! uphold statutes however burdensome
if they do not contravene fundamental
law. And this statute is burdel
and falls unequally on industry. Cal
power be rightly placed which compel
A to pay double the property take
land the enterprise tax is, legally an
exclusively a property tax that ar
paid on the same kind of property be
longing to B simply because of super
ior management and other cirCumstan
ces pertaining to AS conduct of his al
fairs, AS profits from his business
double that of BIS? AS personalit
and its actual and potential income
producing power is not property unde
the law. But this statute taxes, a
though property, the capitalization c
income from brains, skill personalit
and the good will it creates that is &C
quired in any business enterprise
begs the question to assert that i
Hawaii the selling value of propert
only is reached by this method of as
l sessment and that profits and stoc
values are merely phases bearing MOI
or less on such value for most OF
; know that they are used as measure
of value to determine assessments.
1t is true that the economic value
all property is dependent upon its cal
acity to produce income but huma
,, power and brain power and persona
ity or spiritual power are not propert
in the purview of the law, they ma
determine the value Of personal energ
- and service which have their econom
value but that value is not property
y free country. To capitalize the carr
ing power of managers and servan
and add the product to tax lists
property is to call back from tt
, buried past the discarded theories
" slavery days when every bondma
- was, under our Constitution, listed Z
a chattel.
But the earning power of our cit
zens may be reached by taxation an
y is arrived at through the income ia
s which is capable of reaching all Il
% intangible wealth producing agencl