New Ulm review., 1912-09-04
TAXATION IN MINNESOTA
THE FOLLOWING Is ONE OF SERIES OF ARTICLES PUBLISHED
By REQUEST or THE MINNESOTA TAX COMMISSION
CRITICISM Or SUGGESTION IS CORDIALLY INVITED
Gross Earnings Tax.

Gross Earnings Tax.
The law provides two general meth
DDS of taxing the property Of corpora.
tions in Minnesots- general prop.
erty tax and, the gross earnings tax.
The property of corporations engaged
in manufacturing and business enter.
prises, and the property Of certain pub.
lie utility corporations. such % tele-
graph and sleeping car companies, and
water, gas and electric light compan.
ies is assessed and taxed on the ad
valorem basis the same - like prop.
erty OF individuals. Railroad and
freight line companies. and express
and telephone companies pay q Ger.
tain specified amount Of their gross
earnings In lieu Of all other taxes. In.
surance companies pay two per cent
Of their gross premiums. sg,
The first departure from the general
property tax as the sole system OF tax
alton was made before the territory
was organized % a state. In 1857 the
territorial legislature granted char
ter to the st. Paul and Pacific Rail
road company, now Z part of the
Great Northern system, which pro.
vided that, In consideration Sof the
grants and privileges therein con.
tanned, the company should pay into
the treasury of the territory or fu-
ture state, three per cent of its gross
earnings in lieu of all other taxes and
assessments. A number OF other
railroad charters we're granted in that
year carrying the three per cent gross
earnings provision. &-a t
Prior to 1871 the rate of the gross
earnings tax was fixed by the legis-
1ature. In that year constitutional
amendment was adopted which provid-
ed that any change in the taxation OF
the gross earnings Of railroad COM
panies, either in rate or method must
be submitted to the people for their
approval.
In 1903 the legislature proposed an
increase of the gross earnings rate of
railroads from three to four per cent.
The increase was ratified BY the peo-
pie In the general election Of 1904 and
became effective In 1905.
The special session Of the legisla-
ture held in June of this year provid.
ed for an increase of the rate from
four to i've per cent and IT approved
by the people at the ensuing general
election the new rate will become ef-
fective in 1913. It is also proposed
to require semi-annual payments of
the tax instead of annual as hereto
fore. ......
The gross earnings principle Of tax
alton has been extended to telephone,
express, freight line and insurance
companies. Telephone companies pay
three per cent, and express and
freight line companies six per cent OF
gross earnings, and insurance cOmpan-
les two per cent of gross premiums.
On or before February 1st of each
year all companies subject to the
gross earnings tax are required to file
an itemized statement with the tax
commission and duplicate with the
public examiner showing the gross
earnings for the preceding year.
The tax commission computes the
tax and certifies the amount to the
state auditor who makes draft on
the company for the amount Of the
tax and places it in the hands OF the
state treasurer for collection.
| In case of failure to report earn
ings within the prescribed time the
tax commission notifies the company
of such failure, and if the default con-
tinues for thirty days after the SER
vice of such notice, the commission
proceeds to fix the amount OF the
gross earnings for the preceding year
from the best evidence 1t can obtain
and then adds a penalty equal to
twenty-five per cent of the tax for
such failure.
With the exception of the tax on
Insurance premiums no distribution OF
the gross earnings tax is made to mu-
nicipalities. The receipts from this
source are credited to the revenue
fund of the state and In 1911 consti.
tuted about 81 per cent of the total
state revenues derived from taxation.
Basis Of Valuation for Taxation Pur'
Ever since Minnesota became q
state we have had a law among our
statutes requiring that "all property
shall be assessed at its true and full
value in money" Another statutory
provision equally ancient defines "true
and full value" as meaning "the usual
selling price at the place where the
property to which the term Is applied
shall be at the time of assessment,
being the price which could be OBJ.
tained therefor at private sale, and
not at forced or auction SALE" 1t Is
hard to see how these statutes could
ho made more explicit or how any
thing could be added that would make
them easier to understand: but not
withstanding their clear and manda'
tory terms they have never been en-
forced or .obeyed, but have been will
fully and unblushingly violated by as
SCISSORS, boards of equalization and
taxpayers everywhere from the very
beginning. Never since the first asses
sor started on his thankless task has
property of any kind in Minnesots