The San Francisco call., 1909-12-05
EXPLAIN HOW THEY
ASSESS RAILROADS
Members of the State Board of
Equalization Use Gross
Earnings as Basis
Statement as TO the Procedure
by Whict Percentage for
Tax Rate Is Determined

ilon-
The state board of equalization has
been requested TO explain publicly the
method now in use by the board in
arriving at the assessment of railroads
falling under its jurisdiction, namely
those railroads operated in more than
one county. and which definition eX-
cludes street railroads.
The method of assessment has been
outlined in two biennial reports of the
board Gs07-I909), but without any
attempt al elaboration.
From another source, more personal
than public, comes demand that we
prove that the assessments we make of
the railway properties are on a basis
Of 50 per cent Of value. From the same
source comes the indictment that in
performing our duties as a board Of
equalization for the current year the
majority of the state board of equaliza-
tion did willfullN, maliciously, and with
malice aforethought Increase and raise
county assessments. with the intent
then and there TO reduce the tax TO be
paid by the railroads"
PERCENTAGE OF ASSESSMENT
As 10 the request for proof we viii
say right here that we do not propose
10 attempt to prove the percentage of
assessment value of the railways, and
the reasons for our refusal viii develop
as we proceed with this article; at its
conclusion. the fair minded reader is
left to his own conclusion as to what
The percentage Of assessment is.
AS TO the Indictment on equalization,
we deny that any thought of railway
taxes was in the minds of those mem
bers of this board who did the equaliz-
ing. and say that. if the railroad taxes
were reduced, il was merely Incidental
following equalization. County assess
ments were equalized 10 stop certain
counties (some Of them notorious at
the game for years. from robbing other
counties which had returned fair as
sessments (among which latter was the
county of Sacramento), and railway
taxes did not bear upon this robbery
question in the remotest degree
The assessment of railroads is made
by this board by what may be appro-
priately termed a percentage of gross
earnings" plan True the board uses
every avenue il can discover or invent
10 check up and prove these assess
ments, but the leading measure Of
value is the gross earnings plan.
Ever since its statehood California
has had, and still has, what is known
as the ad valorem system of taxation
Every species of property is assessed
for taxes on its value, and hence
all assessments made by this board
must be on the same basis
STATE TAX COMMISSION
During the administration of Gov
ernor Pardee there was created COM
mission on revenue and taxation, with
the governor as a member and chair
man Of the commission. The duties Of
this commission were to investigate our
present system of revenues and taxa
tiOn and to recommend a plan for the
revision and reform thereof. Governor
most every session il held and was a
very able and enthusiastic member.
The result Of this commissions deliber-
ations was the publication of a 800
page pamphlet.
The commission proposed and recon-
mended the adoption of 4 constitutional
amendment separating the state reve-
nues from those of the counties, and
proposing that the state should be sup
ported by a number of public service
corporations TO be taxed by taking q
percentage of their gross earnings, GO
ing wholly 10 the state, and leaving the
taxation Of all other property, under
the ad Valorem system, 10 the counties.
Under this plan the railroads were
annually to contribute TO the state 4
per cent of their gross earnings in the
state, in lieu Of taxes of every descrip-
tion, state, county and municipal, upon
all of their property actually used in
the operation of their roads.
1t is this plan of taxation that the
state board of equalization has been
carrying into effect for the last four
years.
THE BOARDS PROCEDURE
AS to the procedure adopted by the
board for making our assessments: AS
q preface, the reader must bear in
mind two important matters in this
connection.
First. that in the assessment of q
railroad there is a divided authority.
The state board assesses only the fran
chise. roadway, roadbed, rails and the
rolling stock" and the assessment OF
the depots, stations, station houses. ter
minals, telegraph line, block system
sidings, turnouts, switches, in fact, al
other property belonging to the rail
road, falls TO the county assessors.
Second, that for the purpose Of ouI
example (assessment) this board is
compelled to use the total taxes PAID
by the railroad the preceding year, as
also the ad valOrem assessments Of the
preceding year Estate board and county
assessor) to determine the average ta2
rate.
SOUTHERN PACIFIC ASSESSMENT
Having now given our formula for
assessment, we Will take for an Illus
of the Southern Pacific railroad
The total mileage of the Southern
Pacific railroad in and out of the state
is 3,01l.45; mileage within the state
2z5I21, or 1886 per cent in California
The gross earnings OF this road (fron
EI Paso west), in and out of the state
for the year ending June 80. 1908 was
S43, ,S32 S55.7S. On railroad mileage
basis" therefore. the state was entitled
10 S1.3s6 per cent thereof, or $35,677,-
7Sz31 In the total gross earnings
however, the company, by error, in
cluded sl56.e290S. the earnings Of the
Inter-California railway in Imperial
county,. which had to be deducted, as
that branch line is assessed locally by
the county assessor. This deduction
left S35.521,155.23 as the states portion
of the gross earnings, on which to base
the state boards assessment.
BASIS FOR AVERAGE
For the basis upon which to establish
our average tax rate we took the 1905
assessment of all Operative property
Of this road, viz:
Assessment by state board in
sors. 1908. .....,......-. s.772.2s:
tive properly. 1908. 80. $50. .sO7, 30:
l.. = L.