The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1914-07-06
OF PUBLIC SERVICE
CORPORATIONS.


The National Tax association sub
mitted the question Of the eaualiza-
ton of taxation upon public service
corporations subject to ad valorem
taxation" to committee which made
it's report at the annual meeting OF
the association, In Buffalo, in Octo-
Der, 1913.
The report OF the committee, pre-
pared by Professor Charles ]. Bullock
Of Harvard university, treats this sub
iect in practical and illuminating
manner. Three questions were con-
sidered: First, should public service
corporations be subject to special tax
| alton much heavier than that imposed
upon other classes OF business. or
property because they hold special
franchises OF great value. Second,
does effective regulation of public
utilities make it unnecessary to equal
lie taxes OF public service corpora
lions, with the taxation of other bust
ness or property? Third, should tax
alton of public service corporations
be governed by the general rule of
equality
The committee gave as a reason
for rejecting the first and second
theories, that effective regulation COM
pletely 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 reduction
in charges or Improvement In service
corresponding to the benefits derived
from such exemption, or, on the other
hand, taxes might be increased to any
desired extent without Injustice, pro-
vided rates for services we're permit
ted to be increased in corresponding
degree. With exemption the public
would secure untaxed service, and
with increased and disproportionate
taxes the government would employ
public service corporations as agen-
cies 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 govern
mental affairs, and that In none is 1t
more necessary than in the matter OF
taxtion. Equality Of taxation must be
real and not formal. Where conditions
differ equality can not be obtained by
the iron rule Of uniformity. The
committee discussed and approved
the doctrine of classification and held
that without classification, real, as
distinguished from formal equality, is
absolutely unattainable."
Our tax laws must recognize the
economic differences of the various
classes Of property Classification
can be approved only so far as the
circumstances Of each case justify it,
and the presumption is always in
favor of uniformity "The taxation
imposed upon public service COM
panies should be the same as that
imposed upon property subject to
the full rate of state and local taxa
ton Having assumed that public
service corporations, should be taxed
at the same rate as real estate and
other property the committee further
discussed questions concerning appli-
cation of this principle
It was clearly Of the opinion that
equality does not require ad valorem
taxation, but that taxes upon gross
receipts. or other specific taxes, can
be adjusted. from time to time, SO as
to make them substantially eQuiva
lent to the rates imposed upon all un.
classified property.
The committee closes its report as
follows:
tons 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
differentiation Of other property con-