New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-08-01
TAXING OF CORPORATIONS
Report to Taft Shows Plans in
Eastern Central States.
.WISCONSlN'S YIELD HEAVY
Amounts to II Per Cent of the
States Observation-Disclosures
Gets Only 10.


alton taxing systems USED IN the Eastern
Central states are contained in a report
10 the President made to-day by Herbert
Knox Smith. Commissioner OF Corpora
tons. Ohio, Indiana, Illinois. Michigan and
Wisconsin are the states discussed. Mr.
Smith already has reported on the taxing
systems Of the New England and Middle
Atlantic states
In the Eastern Central group, Mr.. Smith
reports. shares Of stock are exempt whers
the corporate property Is taxed The
amounts realized vary from Il per cent in
Wisconsin TO 10 Per cent in Indiana Of the
total state taxes collected Ohio ee.s 81
per cent from its corporations Illinois q
Per cent. and in Michigan the A per cent
collected goes 10 the school fund. Mr..
Smith points out that Michigan and Wis
cousin. IN contrast 20 most other states,
base the corporation tax on an ad valorem
basis rather than on the gross earnings
method Mr. Smith says
The Eastern Central group differs from
the Middle Atlantic group IN using much
more extensively the general property tax
for state revenue. Wisconsin alone ap-
prOaChes a separation Of sources Of reVe-
nue.. and its special taxes yield sufficient
revenue for ordinary state expenses. Ohio
I
erty tax 20 the same corporations for state
purposes. Indiana and Illinois levy prac-
tiCally no special taxes on corporations.
The constitutions Of three states in this
group-namely Ohio. Indiana and Illinois
prohibit the exemption OF corporate prop
ertv from the general property tax. Rail
road and insurance companies are among
the heaviest taxpayers in this group.
Referring TO Ohio Mr.. Smith reports
The total state revenue from taxation in
1903 was a little more than lOo00e0 OF
this amount over 30 per cent was from cor
porations state and local taxation Of cor
porations is by the al valorem method,
supplemented by special methods OF state
| taxation Thus. IN addition 10 the state tax
on property. railroads pay on gross earn
inEs: express. telegraph and telephone com
panies on gross receipts, and mercantile.
menufac curing and miscellaneous corpora
tons on capital stock
The new law Of 1910 provides for the most
highly centralized administration found in
any OF the states thus far studied. Inc
State Tax Commission has wide admins
trative powers II assesses the property Of
practically all public service corporations
and 5pporti0ns IT'S value among counties
and local districts. II fixes the amount
upOn which the state collects taxes on cor
p0rate earnings and capital stock and has
supervisory and administrative authority
over local officials. with additional power
10 change local assessments upon its own
initiative.
part.
state and local taxation Of corporations
Is almost wholly by the general properly
tax, or ad valorem method Special cor
porate taxation IS apphCable 10 certain
financial, Insurance. navigation ana car
companies only Administration is central
ICED 70 the extent that the more important
classes OF public service corporations ts9cn
as railroad. express, telegraph companlle5s'
etc. whose property usually derives aodl-
tional value from statewide and interstate
operations. are assessed by central state
board. Other corporations are assessed DL
county boards The largest single item or
revenue from state taxes in 1910 was from
steam railroads, something more than
S50010. the next was from insurance COM
panies si7i 600; and the third from incor-
poration fees, Hll,0m.
"The Illinois system applies special taxa
ton 10 no corporations except 10 the Hi
nois Central Railroad and 20 certain kinds
Of insurance companies All other corpora
tons pay the general property tax locally
for state and local purposes. Property IS
assessed Il one-third fun value Mr.. Smith
reports. Then he says.
State assessment is limited II reaches
only the excess Of capital stock value over
the value of tangible properly OF domestic
corporations and the value or certain phySi-
cal property OF railroads. OF the property
assessed by. the state the eQqalized value or
n
6f capital stock Of railroads and also the
excess Of telegraph companies are distrlD-
uted on the mileage basis 20 the counties
through which the routes pass. Inc tsngl-
HE rroperrv Of all corporations other than
railroads is assessed locally.
In his report IN Michigan the Commits
sioner says.
The important corporation tax IN lAchi-
zau is the state administered al Nalorem
tax. II ie levied at the average rate Of
4 nf-a to. raj IrTz "a fl e. r.
tnIAnhOue express and car companies.
Other state taxes on corporations, though
comparatively unimportant. are levled al
specified rates upon the PAID up capllal
stock Of canal ana river improvement com
r.9rias and upon the net proNts of plank
and gravel road companies. Taxation by
nominated by statute Speclnc taKation
= avenue therefroin is. by constitutional
provision. applied 70 The primary sch .7CI
fund only Revenue Tor support OF the
state IS from the general property tdA:
administration in Michigan was for
snort period as highly centraHZeo a. III no"
i- .u Ohio. From 1929 10 1905 the state
Board Of Tax commissioners had power 70
rbanga 0f i-7 own motion any and all local
refreshments not made az true cash value.
II can 90 so now only upon appeal me
trend elsewhere almost uhlFeissa' I l,os az a.
valorem 10 the earnings mein9,d "as ~
Formerly paid on gross earnings are now
taxed ON the ed v9iorem ha7'S. WISCONSIN,
has followed this change.
Commissioner smith ends his report with
, discussion Of WISCONSIN, system.
There is a tendency toward separation
Of sources Of taxation. he says. Income
f,o,, enecial sources is generally sufficient
Gov 6.na~v state expenses without resort
70 the general property tax. Al PIesent
the support Of schools anu ne D.1 i,. 20
u new statehouse occasion the only stare
levies on general property. 49,, e..,.r ~.
peculiar 90 Wisconsin is the uXlhS ~
statute at the state capital OF me ie -ssi
eitus FOR purposes Of tdXatom or an real
ard rersonal property OF corporations SUD-
iecr 10 the state ad valorem tax. Inc rae
"a The average rate Of taxation ana IS III
len of all other taxes on property ne,'s
sarv TO the operation of the corporate
franchise. ...o,.,,,,,,1i,, central
izod County supervisors are unde, tne u
- oor-r0l of the state Tax commission
,-Eeee -uptrvisors direct the attention OF
tt,.',,-t,. boards 90 omitted or underValueu
rTouertv. and they have power 70 cao as
~ ~er,ovaI Of local assessors. L.ocal as
w however. cannot BE- changed by
- 49, commission. except upon appeal
c1Trn rOp 6500 000