The Washington times., 1909-05-17
VIDE DIVERSITY
Of TAX SYSTEMS
Contributions of Corpora
fionS Subject of Report by
Federal Review.
EXAMINE STATES
OF NEW ENGLAND
Four-Fifths of the Total Revenue
in Connecticut Comes From
This Source.

The first instaIIment Of the results
OF an inquiry by the Bureau Of Cor
porations into the systems of State
taxation of manufacturing, mercan-
tile. and transportation corporations
throughout the United States was pub
ushed today by Herbert Knox Smith,
Commissioner Of Corporations.
Today's chapter is devoted to the
New England States. In his letter OF
transmittal to President Taft, Mr..
Smith comments upon the wide diver
sity in these forms Of taxation in the
various States. and the fact that ad-
ministrauon OF the corporate tax laws
ranges from a system highly developed,
and handled centrally by State offi-
cials with large powers, to no central
ized administration whatever. He be
neves that the report will be particu-
larry interesting to legislators and tax
officials
Particular emphasis is laid on the sys-
TEN in Massachusetts taxation of cor
porate excess on the market value of
stocks less property otherwise taxed and
applied 10 all domestic corporations. The
total expense Of the State government
Is approximately S1S,5OO.0OO. One-third Of
this sum was paid In 1907 by the special
tax en- corporations.
An Old System.
Massachusetts is the only New Eng
land State which adopted and maintain
ed theory Of corporate taxation at an
earl date and under this scheme, prop
erty owned by corporations is taxed in
the ssTae way as that owned by individ-
uals.
"A feature worthy of note.' says the
report. lis that the tax for State and
local purposes on corporate excess is ex-
tended to what is known as business
corporations manufacturing and mer-
camille From this class OF corporations
alone there Is received more than ST.
000.000 yearly When II is considered that
this large sum comes from the taxation
OF the intangible value OF a class OF cor
porations which goes practically untaxed
under the systems Of other States some
idea Of the significance of the Adassa-
chusetts system is realized
Maine, according to the report, by
having Incorporation laws that are IA
vorzble to concerns not doing business
IN The State, has been able to collect
large annual fees. thus providing a good
revenue. The taxation Of railroads, In
cluding street railways, Is based upon
gross receipts. From this source, $780,
900 annually is realized, and other States
have taken the law as a model The
State tax on bank deposits nets $4,000
annually
In New Hampshire, all attempts 10
tax corporations on any other basis
than property have been abandoned.
The result is an income of 100000
yearly. In Vermont, the corporations
are paying 55 per cent of the total State
expense. Property and receipts are the
two bases upon which taxes are levied
End Corporations may take their choice.
Encourage inducements.
In Rhode Island. no corporation do
ing business IN the State, is taxed upon
Its intangible personality. Corporations
doing business in the State have an in
ducement TO incorporate there This
consists IN a deduction for actual in
debtedness from taxable property TO
domestic corporations only.
No corporation doing business in
Rhode Island is taxed on its intangible
personality, such as bank deposits and
net credits. The result is that II IS
not uncommon for most II not all Of
the personal property Of a domestic
corporation 10 escape taxation, the In
tangible personality not being assessed
by law and the tangible personality
being conceled by Indebtedness. Even
steam railroads in the State are taxed
only locally. exactly as individuals Saw
fngs banks. insurance, telegraph, tele-
phone. street railways, and express
companies are the only corporations
subject 20 a special tax
More than four-fifths of the total rev.
enue for State purposes in Connecticut
comes from state taxation Of corpora
tions IN 1908 the total State expenses
were nearly S3,5O0,O10, OF which the cor
porations doing business in Connecticut
contributed nearly 50 900. 900. and OF this
$3.Ooo,OO0 the railroads paid over 1900. .009
savings banks over 10000. and insur-
ance companies over $4,000