Daily Kennebec journal., 1911-02-24
The TAXATION COMMITTEE
0as NE" England Telephone and Tele
graph Co. on the Rack.


New England Telephone a re,epra,,f
Go. Vn tn rack Thursday afternonn
"1th hearing was held ua Senator
os1orh Dill changing the rate of
taxation on telephone and telegraph
companies. The Maine T,lcpbonc &.
Ieiegraph GO. and the Aroostook Tclt-
Phone x Telegraph Co. and the West :
crn tnian viii have to paw slightly in
creased taxes under the bin. hut tnev
made no objection TO the blu at tbe
hearing.
ht New England Go. was represent
ID by NJ B. Jones counsel and L. ".
Longiy, the auditor Senator Osborn
hISt explained his bin 10 the com =
pdn% aud then Mr.. Jones stated tie
position OF his company. He explained
tEat the STATE nov lcvics a tax of
/ per cent on the gross earnings of
the company. including Interstate as
well as state business This had
bsen settled tWo years ago and the
company hoped the arrangement would
stand for some time. Taxation alWays
fiaaily falls on the consumer and
courts have decided that rates should
pe nigh enough to pay running eX-
pens :, depreciation and the legal rate
of interest on the money invested. II
the tax Is Increased so that this legal
rate Of interest cannot b. returned
It. the investors rates will have to
be Increased. The company has never
VT earned tire legal rate of interest
N H. investment in Maine although
the service has been as good here as
in other states. Taxing gross receipts
makes the burden heavier for t"le-
phon companies than taxing revenue
per mile does for railroads. as " hill,
the telephone company may have 4
large business the cost Of conducting
it may cut tire profits 10 q snlall Zig
urc. The railroad plan comes near
ing 10 taxing according to the profits
carued.
Mr. Lehgly stated that the company
as q whole pays six per cont. divi-
dends. 1t is taxed four pcr cent. ON
gross earnings but in addition To this
il reserves one place for Il cross arm
ON all its poles fvr the free Us, by
for their wires and also
ole duct in such cOnduitS as are laid.
He estimated that this fre" service
represents an Investment Of s@"'.ooo
in Maine and means Il charge Of Over
three p.r cent. on the gross Income.
The in. eStment Of the company in
Maine Yields return Of "a per cent.
on the capital and the gross earnings
We're returned as 81 1890 last year
i'll Maine which was more than was
actually the case because much toll
business outside the state was in
cltlled. The replacement value in
Maine is A,S00oo0. Depreciation Is
figured at -. per cent. The increase
in the taxes under the new bill would
be about $36.0oo making q total TO
be paid the company of $4,000. Local
taxes amount to about 500. The cap
it;,l stock Of the company is about
s40,o40,000 and it has u surplus OF ST.
100000. The company pays AZ per
cent of it's gross income to the Amer
lean Telephone Company for royalties,
use of patents etc, which company is
really a holding company for the
smaller corporations in the business.
The annual increase in business i'll the
State is from eight to nine per cent.
t1r. LOngly was subjected to many
questions from members of the COM
mittce and methods OF taxation in
other states We're reviewe ed at length
Mr.. Longly himself preferred tax
alton on the basis of gross income
to valuation of property and thought
the Maine principle a fair one if the
rate were not made too high.
The bill increases the tax of the
Western Union Co. about 5000 but no
objection was made.