The Wahpeton times. [volume] (Wahpeton, Richland County, Dakota [N.D.]) 1879-1919, 1914-07-16
TAXATION OF PUBLIC
SERVICE CORPORATIONS

EQUALIZATION OF taxation upOI
Public Service Corporations sub.
iiect to ad valorem taxation" to 8
COMMITTEE which made its report
at the annual meeting of the AS.
ISOLATION. in Buffalo, in October
1913.
Thee report of the Committee
prepared by Professor Charles j
Bullock of Harvard University
treats this subject in practical
and Illuminating manner. Three
questions were considered. First
should public service corporations
be subject to special taxation
much heavier than that imposed
upon other classes of business or
property because they hold spec
ial franchises of great value. Sec
ond, does effective regulation OF
public utilities make it unneces-
sary to eaualize taxes of public
service corporations. with the tax-
alton of other business or prop
erty. Third. should taxation of
public service corporations be
governed by the general rule of
equality.
The Committee gave as a rea-
son for rejecting the first and
second theories. that effective
regulation completely alters the
incidence of special taxes upon
monopolies and at the same time
removes the evil which has led
many to demand such taxation.
In addition. exemption from all
taxation would presuppose reduc-
ton IN charges OF improvement
in service corresponding to the
benefits derived from such en-
emptiOn or. on the other hand,
taxes might be increased to any
desired extent without injustice,
provided rates for services We're
permitted to be increased in cor
responding degree. With exemp-
ton the public would secure un-
taxed service. and with increased
and diSproportionate taxes the
government would employ public
service corporations as agencies
for the collection of heavy taxes.
These theories the committee was
compelled to reject as unsound..
They held that equality should
be the controlling principle in
governmental affairs and that in
none is it more necessary than
in the matter of taxation. Equality
of taxation must be real and not
formal. Where conditions differ
equally can not be obtained by
the iron rule of uniformity. The
committee discussed and approv-
ed the doctrine of classification
and held that without classical
ton, real. as distinguished from
formal, equality, is absolutely UNI
attainable.
Our tax laws must recognize the
economic differences of the var
ious classes of property" "Classi-
tication can be approved only so
far as the circumstances of each
case Justify it. and the presump-
ton is always in favor OF uni
formity." The taxation imposed
upon property subject to the full
rate of state and local taxation.
Having assumed that public SER
vice corporations should be taxed
at the same rate as real estate and
other property the committee fur
Their discussed questions concern
ing application of this principle.
1t was clearly Of the opinion
that equality does not require ad
valOrem taxation. but that taxes
upon gross receipts. or other spe-
ciiic taxes, can be adjusted, from
time to time. so as to make them
substantially equivalent to the
rates imposed upon all unclassi-
fled property.
The Committee closes it's re-
port as follows: Whether public
service corporations are taxed at
local or at average state rates,
they should be subject to the true.
and not the nominal. rates of
state or local taxation. So long as
continues. therefore. we hold that
either the valuation Of public SER
vice corporations should be made
on the same basis as that of 9TH
er property. as is the practice in
a few states. or that the corpora
tions should be taxed at the true
rate imposed upon other proper
ty. as is the practice in Wiscon-
sin. Better still, would the eradi-
cation of the evil of undervalua-
ton Of property by the local ass
essors as is now attempted in
Kansas, Arizona, Colorado and
New Mexico; but this must neces-
sarily be a work of time. and in
the interim public service corpo-
rations are entitled to fair play"
The report of the committee is
we'll worth careful and serious
consideration by tax administra-
tors in the several states and by
LEGISLATORS in attempts to equita-
bly, distribute the necessary tax
burden Of government.