The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-09-20
axation in Virginia
The Corporation Tax.-IH. From 1860 TO the
Underwood Constitution.
ny EDGAR sYDENsTRrCKER

underwood AonSt1tWtfOu
The corporation tax, particularly of railroads,
In Virginia prior to the civil war. and even prior
to 1882, was little more than series of ex-
periments. In the preceding article we have
seen that in 1s42-1S43 all Joint stock com
panies" chartered by the State, except those
especially exempted. had to pay tax of one
and one-half per cent each dividend OF
profit" and that in 1S551s56 railroads and
other taxable carriers were taxed one mill per
passenger mile and were required to furnish
sworn quarterly statements showing the number
of passengers and the aggregate miles OF their
transportation, Failing to furnish these state
nents they were assessed on the real property
basis. the cost of construction being tho measure
of their property value. This penalty was pro-
rided fer in all the acts until the STATE govern
men disorganized in 1855.
In 1S59-1s60 an important new tax vas levied
on railroads we'll all other carriers among
Internal improvement companies This was
tax on gross receipts from the transportation
Of oue per cent. The amount of revenue each
road had to pay was based, as In the case OF
passenger earnings. staten Nnts furnished
by the ~ailroaGs themselves, with an important
provision az follows:
such company whose road s only
in part within the Comm onwealth. shall re-
port as aforesaid only Of such amount re-
ceved for the transportation of freight, as
the part of its said road which is
within this Commonwealth, bears to the
whole of the road"
1t Is thus evident that the lawmakers had
arrived at that point In the evolution OF rail-
road taxation when they recognized ta) the
feasibility of the gross earnings tax and (hl the
necessity for making provision for interstate
carriers.
| The first was due To the growing influence of
the western section of the State in a larger
representation In the assembly upon the basis
of white manhood suffrage and determine
ton to make the railroads, now becoming fac-
/ tors Of importance among those property own
! in the support Of the State, do their part as
revenue contributors The heavy expense OF
! internal improvements then being carried on by
| the State and of the interest on large state
debt also forced the assembly to seek revenue
/ from every possible source. even from those
sources which only few years before were gem
orally regarded exempt from taxation on ac-
! count of their public enterprise character
I Tho second principle That was recognized was
due to the fact that In the last decade before
the civil war the railroads passed the bound
aries of the State to form trunk lines. In fact
these same roads are today the trunk lines OF
| the large systems passing through Virginia
l. The gross receipts tax was extended in 1852
so to other public service corporations as we'll
Express companies had to pay tax OF one
half of one per cent receipts from general
transportation and one-fourth of one per cent
Of receipts from carrying banknotes. The latter
provision meant to encourage the use OF
the notes of State bank. Express companies
were also made to pay a license tax of $50 tc
the State which was Increased to $3.50 in 1861
1852,
During the civil war the extraordinary de-
mands made upon the treasury caused higher
rates of taxation In nearly every direction.
the multiplying of special exemptions of railroads
and other internal Improvement companies and
the taxation of public service enterprises here
tofore not taxed. For example. railroads were
taxed in l86l-1S62 one and half mills pei
passenger mile and three -fourths Of one pei
cent of gross freight receipts. These rates were
again greatly increased in 1863. The express
companies tax increased to one and one
faf per cent On gross receipts.
Among the public service enterprises not taxed
before, but taved during the war, were gas
steamboat Inlrcai and other corporate oHs rot
( inc orporated ~ the State and telegraph com.
panies Various methods of taxation were used
in dealing with these taxables. Gas and
telegraph companies paid fiat sum license
tax until 1S63 when telegraph companies PAID
in addition two per cent on gross receipts Rail
road and other corporations not receiving q
charter from the Virginia State government in
t1s61-1S62 called upon to pay ten per cent
of their dividends If their dividends be less
than six per cent, then the tax was sixty cents
companies in 1853 taxed II per cert oil
I their dividends. # dividends be a. the rate al
one per cent of their capital. In addition
10 per cent tax all net profits over $4,000
was levied. In all instances, statements Of earn
ings, gross or net, were furnished by the cor
contribute greatly to the needs OF the treasury
While the records of tax receipts incomplete
except for the years s62 and 500, enough are
available to show that the amounts received
from all corporations, except railroads. were
insignificant. The total receipts from the cor
porauon tax in 1862 was s31633. OF which
s29.912 from railroads In 1863 receipts
from corporations was $187.175, Of which 1885,
SS5 came from railroads
During the civil real development OF
the corporation tax system took place except
application. The important step in the evolu.
ton of the tax during the decade prior to the
gross receipts tax applied to freight. When
the assembly met after the Underwood consti-
tuition went into effect, however, 1t found that a
radical change was necessary under the new
organic law. This we shall discuss in the next
article.