Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-07-19
Bible Thought for Today
TAXATION

THE editor of The Tribune is II
receipt of a communication
signed Taxpayer" which chal,
lenges the truth of a statement re
Gently made in these columns to
the effect that railroad property
in Montana is taxed higher than
other forms of property. It de-
mands proof of the assertion and
declares that railroad property IN
the state is undertaxed. Generally
we pay no attention to communica-
tons that do not give the name and
address of the signer. But in this
case it serves our purpose to go In
to the subject Of railroad taxation
quite thoroughly because before
long it will be the duty Of the state
board of equalization to fix the
tax value of railroads in this state
All other forms of property in the
state have shrunk in value as
shown by the reports of the county
assessors. The railroads were ov-
ervalued to begin with, and they
have also shrunk in value along
with other forms of property
Their taxable value should IN talr
ness to them be reduced.
Ia what follows we are going to
take a single railroad in Montana
as an illustration because that sim
plif,es the argument. Moreover the
facts and figures may be found on
file at Helena as we'll as with the
interstate commerce commission
We are using the Great Northern
railroad for. this argument be-
cause it is the home railroad OF a
large number of The Tribune read
ers and pays a large amount OF
taxes in this section of the country,
While the figures would work out
somewhat differently the results
would not be very different If we
used the Northern Pacific or the
Milwaukee for illustration. There
are four different ways of finding
out what the value OF a railroad
system is for tax purposes. All OF
them are open to some reasonable
objection. Under the Wisconsin
law railroad property in that state
is figured on three of these plans
the totals added and then divided
by three. The fourth plan which
is Replacement value is not yet
Officially" available. Let US con-
slider the three plans.
The first of these is to take the
market price of the stock on a
given date and multiply it by the
number of shares outstanding
Then add the value Of the mortgage
bonds outstanding. and the total
represents the selling value Of the
whole property of the railroad sys-
tenn. The objection to this way Of
finding the selling value of a rail
road system is that it is fluctuat-
ing and is changed by factors that
have little to do with the real value
of the property. A good or bad
crop season will change the selling
price of railroad property. So will
a prospective strike, or a prospec-
tive division Of a cash reserve, or
tight or easy money in the market.
Another way to determine the
value Of a railroad is to find how
large a sum the net profits will pay
capital wages on-at say six per
cent. This is the net proceeds prin-
cipIe in substance. 1t is open to
the same objection as the first one.
II would make the value for taxa
ton fluctuate rather violently, go
ing up in good times and down in
bad times.
Another way to find the real
value of a railroad is to find its
book value-that is what the prop
erty cost the railroad, less depre-
citation. All railroads are COM
PEELED to carry such accounts and
keep them in accordance with the
rules laid down by the interstate
commerce commission. These
thu &c methods Of computing value
are used in Wisconsin. The totals
are added and divided by three. and
that sum is held to be the total val
ue for taxation purposes. Apply
ing that principle to the Great
Northern we get these results:
Stocks, and bonds value, $780,
4s7,o5z::'
Capitalization of operating in
come value, $246,555,400.
Book value, $3o1,760,554.
Average Of the three methods Of
finding value. $339.267,67o.
These figures refer to a period
of three vears ending December 3.