The Calumet news. [volume] (Calumet, Mich.) 1907-1938, 1911-10-02
KELLEY DEFENDS PROPOSED
new TAXATION PLAN
CONTINUED from Page one)

earning value over physical value,
would be taxed at the average rate Of
taxation-thc rate the railroads now
pay onto pay the state expenses.
"rhe problem would be figured thus:
Valuation of corporation based on
earnings ........,... ........$5 1000
Valuation of corporation, physi-
cal assets, now taxed ........ 1000
Excess of earning value over
physical value, the amount to
be taxed for state expenses. 1000
Auto Plants Would Pay More.
Mr.. Kelley does not deny that the
corporations prcmonitlon is practi-
cally true. The huge dividend earning
automobile manufactures and other
large manufacturing institutions i'm the
state will be called on to pay a large
lump of the state expense, some OF
them several times the tax they now
pay, but Mr.. Kelley explains the
scheme further:
I'm the first place let it be under
stood that the plan is not new one
1t has been in operation i'm exactly this
form i'm Massachusetts for As years,
since 1865. 1t hasn't driven Industries
away from the state and il has been
thrcshed out and sustained in every
court" he said.
THE plan will not specifically pro-
vide that the excess value of Michigan
corporations, over and above their
|physcaA valuation, shall be figured by
Icapitalizing the earnings at 10 per cent
Personally / do not think such a plan
would be unreasonable, but the COM
mission will leave ii largely to the dis
erection of the state board Of assessors
composed Of the governor and the tax
commission, To decide on the exact
method of arriving at intangible cor
porate values
IF anything like the yearly earn
ings capitalized at 10 per cent. was
actually placed on the roll am con-
fident the new tax would pay the en-
tire state expenses and more. our in
vcstigation shows that the corpora
tions of Michigan had net earnings
of s1O0,O00,00O last year. This in
cludes tho railroads, not proposed to
be taxed under our plan, but It does
not include foreign corporations doing
business i'm Michigan or Michigan cor
porations having their Offices outside
of the state. This earning value would
be taxed Ct the average rate of taxa
tion in the state, now in the neighbor-
hood Of SIS per one thousand.
Massachusetts reaps $4,000 900 from
it's corporation tax, levied exactly as
we propose. but instead of paying state
expenses with the money thus raised.
the tax is turned back to the local dis
tricts' exactly as our primary school
money is turned back
by the plan the state would SIM
ply reach out and grasp property for
purpose of taxation that is not now
taxed at all. The property now taxed
would continue to be taxed exactly as
IL is.
ut Is true that the big corporations
would be called upon to pay the bur
den of state expenses but the burden
would fall strictly on the people able
to pay. The small corporation, which
pays just a fair profit on the money
actually invested would not pay any
additional tax. The corporation that
is earning very small dividends or none
at all would have its tax, as paid al
present on physical assets. reduced in
the amount of the present state tax
which we hope our plan will take of
the shoulders of the general taxpay-
crs.
Again, the big corporations would
not be subjected to double taxation
Such portion of it's earning value as
is now represented by actual physical
assets and thus taxed, would not be
taxed a second time under the new
plan.
"Would Encourage Industries"
The plan would actually encour-
age new industries to come to Michi-
gan. In the first stages of develop
ment. before dividends begin To come
taxes here would be low. The COM
pany would simply pay more taxes
as it developed and was able to pay
them"
The plan as worked out by the spe-
cial commission, Mr.. Kelley. Prof. Hen
Try G. Adams, Of Ann Arbor, and Roger
lWykcs. of Grand Rapids, is carefully
devised not to interfere in any direc-
ton with the present system Of taxa
ton i'm Michigan. For instance, mos
schemes previously suggested have in
volved a turning of the present pri-
mary school money into other channels
From the fact that 60 counties il
Michigan receive more primary schoo
money than they pay in state tax. tn,
commission understood from the star
that. If its plan was To find favor viii
la majority Of the state legislature. this
primary school money must not be
disturbed.
The railroads, telegraph and tele-
graph companies of the state will still
pay taxes. based on actual stock and
learning value together with physical
lassets, for primary school purposes
Mr.. Kelley, at least. of the commission
believes that interurban railroad.
should be taxed by the same plan. III,
would exempt the interurbans-not ci.
lty railway lines--from local taxation