The Washington herald., 1921-05-03
Slight not what's near through aiming at
what's far.-Euipides-
Washington Street Railways.
VII. TAXATION

ii
discussion of the two railway systems, to
consider certain factors which are of great
importance in ultimate merger and in the relation
of public utilities to the public. The first of these
IS taxation A period of "soak-em" as a. taxation
policy is nearing its end. For years the public
rated public utilities as public enemies, and to be
so treated
This was not chance. 1t was not spontaneous
attitude 1t was the result of deliberate premedi-
tated exploitation Taking advantage of local needs
and ambitions, street railway companies quite uni
formly secured franchises which gave to cities only
the appearance, retaining the substance for the
promoters. They capitalized the future and it was
more the rule than exception that the total invest
ment cost was in the bonds, the stocks being used
promotion and bond bonuses
AS cities have grown and the public realized
how they had been induced to sign away a part of
tehir birthright, they have tried to even scores
through taxation. The companies instead of chang
ing their ways, became arrogant and masterful They
stood on their contractural rights and even rubbed
it in. They have maintained that since the cities
themselves put the handle only side of the
jug, it must stay there and have no mate. They
carried their defiance into politics. much as did the
liquor interests and not nfrequently in combination
with them, we'll with all public service cor
porations.
More recently, established regulation has be-
come effective and street railways have changed
their defiance to plant that since they are semi
public institution regulated by the public this pub
lie, in demanding service is under obligation to see
that that service is profitable the companies un-
der all circumstances and conditions. They demand
dividends their stock issues as justice to the
widows and orphans OF whom they are careful to
have selected supply, and stand on their vested
rights quite with the air of ill-used abused and un-
appreciated servants of the dear people.
The dear people are more and inclined
TO pay little attention to that sort of rhetoric and
to act through their utilities commissions in a way
which will result in benefit to them all the diverse
clements being carefully considered They are COM
ing to realize that the "soak-em" policy is not to
their interest Their interest is in adequate service
at the old, established scent fare and the company
which is fairly treated, given every possible advan-
tage and cannot make return in low fares, prop
erty which does not have current value.
Instead of getting from street railways heavy
taxes, their taxes and other burdens should be
hghtened to the utmost limit of equity to enable
them to reduce the rates of fare and as these bur-
dens ghtened, it should not be for their bene-
ht but for that of the whole community. In this
District the street railways now pay a 4 per cent
tax on their gross incomes, the current tax on all
their real estate and personally, and pay the cost
of traffic police
III.
excessive, and handicap to lower rates Of fare 1t
is manifestly unfair to any public utilities on
gross income Conditions are always such as to
make this inequitable, conducive to poor service
and restrictive OF improvements. A gross income
tax works to hold down operating expenses. That
IS where companies save al the publics expense
in fair play, upkeep, improvements and betterments
The nearest correct tax for the publc's good
is one on net operating income making this too in
lieu OF all other taxes all property used solely
for street railway, or operating uses. 1t is said
that father told his son who was going to the
pioneer West, to make money, honestly if you can
but make money" 1t is useless to advise utilities
corporations to apply this advice to reducing their
taxes
But il utilities commission is but average
vigiiant, aRd that of this District has been more
than average up to this time, there is but
one way to reduce net operating income tax. That
IS by increasing operating expenses which quite in
evitaby results to the benefit of the public Just as
tax on gross income is apt to work to the con-
trary The tax on net income induces higher stand
ards OF maintenance, better pay to operating crews
better cars and more of then and better service in
every way. -.
1t is also more equable as between competitors
Applied in Washington to the two street railway
companies, it would be fair to FIX the rate at not
over that paid on other property either representing
also, the cent borne by the national Treasury
or even as low as the limited per cent District
rate Service and low intra-District TRANSPORTATION
rates are OF far greater value to the District and
its people than the difference in taxes on the street
railways in which every person, every business and
all property have vital interest, as we shall show