The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-09-28
Taxation in Virginia
The Corporation Tax.--VI. Taxation of Rail
roads i903-t8I2.
ny EDGAR sYDENsrRrcKER

roads, 1903-f9I2.
How are public service corporations taxed
in Virginia now"
1t is in response to the above question, asked
Of the writer by reader of The Sfrg inian with
a suggestion that a brief outline Of tho system
now in force be given In this series of articles
on taxation in Virginia, that / am devottng the
space at my disposal today to comply with ms
request In fact, 1t is perhaps not an exaEsefa-
tOn to say that comparatively few citizens know
hos railroads and other public service corpora
tons are taxed with what method, on what basis
ard Ut what rates. The corporation commission
does the work. and unless some agitation Is
started the citizen has occasion OF be told and
no especial incentive to find out A short state
ment therefore without any expression OF critt-
cism praise may be OF general service.
Let take the taxation of railroads. FIRST,
the method:
Under the present constitution. two kinds Of
taxes are loyed-the property tax and the fran
chise tax. Railroad property Is taxed at lhe
same rate other property, but 1t is assessed
only by the corporation commission Railroads
are required to report to the commission an
property, tangible and intangible. in every dis
trict of each county and in the cities. The COM
mission assesses ii and reports 1t 20 the state
auditor who levies the State tax. and TO local
commissioners of the revenue. who levy the local
tax When the assessment is made the railroads
are given opportunity to protest. The present
rate os State tax Is IS cents on the hundred
dollars valuation. Rolling stock was until the
act OF 191l-12 assessed as property within the
city whore the central office Of the railroad was
located. In the last assembly the movement In
the counties and some towns and cities against
allowing all the local revenue to go into the
Golfers Of a few favored cities eliminated in
law which allowed 25 per cent Of the rolling
stock TO I've assessed as property of these cities
and provided for the remaining 8 per cent to be
taxed property in other localities in proper
ton to the mileage they contained.
As pointed ont in the last article. the ad-
ministratton Of the franchise tax the great
est Improvement made by the new constitution.
The franchise tax on railroads IS tax equal
TO one per cent upon the gross transportation
receipts" and the shares of stock IN the hands
Of individual owners are not taxed The chief
advance consisted in che substitution of a gross
en-
determined by ascertaning the average gross
transformation receipts per mile" over the whole
extent of an interstate road within and without
this state. and multiplying the result BY the num-
Der miles operated within this state" 1t Is
especially provided, however, that from the
sum ascertained there may be deducted a
reasonable sum because of any excess Of value
of the terminal facilities advantages situated
in this state" This tax is also levied by the
corporation commission,
In the second place, the operation of the tax:
The valuation of railroad property increased
and s105.01t,7s9 In 1910. The greatest in
crease in any ono year since the creation Of
1909 to the valuation in 1910 The valuation
for 1912 s116,T33156, The following sta
tistios for the years indicated show the receipts:
Year. Property. Franchise. Total
1900 -.... $226829 26.724 s253,o54
1905 ........ 345625 s78,5S0 624,206
lSlO $1,000 33l690 4S4'S sZtS9a
While the increased valuation of railroad
property has nearly doubled in twelve years and
the revenue shown corresponding increase,
the greatest increase has been seen in the reve
nue. from the franchise tax. The year after the
constitution went into effect (1e03) however.
the receipts from taxation of railroad property
were s236.l35 and from franchise tax s34S,271,
Comparing this with the 1912 receipts, we find
that receipts from tax property increased about
SO per cent compared with about SIS per cent
from the franchise This. of course, indicates
a greater rate of Increase in property valuation
by the State government than took place in
the gross earnings Of the railways themselves.
In this connection 1t will be interesting TO
recall the inquiry made hy the general
bly, Of 1906 into the railroad property assess
ment The United States census estimated tho
commercial value of railroads operating property
In Virginia in 1904 at $21l,3l500o. or ave-
rage Of $53,700 per mile. In the same year the
corporation commission assessed the physical
property Of railroads in this state at $63269,6 s2.
The corporation commission in It's reply to the
general assembly explained It's reason for the
low property assessment, and It's answer affords
a good idea Of the method as we'll az the basis
employed.
DR. Z. A. Magrudor in his monograph on
Recent Administration nj Virginia" gives
very clear synopsis Of this reply, which quote:
THE commission says in substance, that the
franchise tax, with the property tax, is in lieu
of all other taxes or license charges whatsoever
upon the franchises of railroad corporations.
The commercial value OF $211 $4,000 repre-
SCENTS the net earnings capitalized and much
of the earnings result from the franchise tax,
which has a gross receipts tax in lieu of other
taxes. Hence the franchise tax for tho year,
per cent Of the gross receipts, or s3b4,173.
represents a tax of 35 cents on the hundred
dollars estate rate) for s10l,142.S47 worth of
property Add to this the property assessment
of sea ,623, and the roads have paid State
taxes on $1e4,461997 worth of property. which
is rs per cent OF the government commercial
valuation of $2t1.315,00 Personal property In
the State is assessed at only "a per cent of the
value assigned to It by the United States esti-
mate for 9o4 hence the railroads are taxed more
than twice as heavily personal property. The
same condition exists in regard to realty"
Records of receipts from local taxation of
railroad property 50 incomplete that no basis
for comparison with past years is possible Or.
D. S. Freeman N his report to the tax com
rnisSiGn in lqIl. stated that local an rail
road, canal and electric line property in 1910
were as follows:
Ty counties .................S5576 56
by cities Observation-Disclosures. 3971T3I
Total by localities ..,,............ 1854 829
Add this sum to the receipts for State taxes
of the same year, and the railroads paid total
of Sl176,S26 IN taxes, less that paid by canal
corporations and electric railway companies