Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-10-14
TAXES NOT

In a news article relating to the activities Of the
state industrial commission, mention is made Of the
Drake mill. Under league management the opera
ton of that mill cntailed constant loss on the state,
much OF that loss being due directly to a policy
which was so nekdlessly wasteful that it can Be ac-
counted for only on the basis Of plain stupidity.
Under the new management the mill is being oper-
ated in an economical way; and the figures show
that a small profit is being made when taxes are not
considered.
The reference. to taxes is pertinent, for this is
one of the items the treatment Of which gives rise
to many differences concerning the proftableness
|of publicly owned enterprise. *
The property of the state of course, is exempt
from taxation. And because no taxes arc collected
from public enterprises, in most cases no account
IS taken OF the: item Of taxes when their affairs are
|studied. Yet, in order to arrive at correct conclu-
|sions, it is necessary to take account of taxes when
the cost of operating a public industry is being COM
|puted.
In the specific case of the Drake mill, that prop
|erty was privately owned before the state acquired
possession. Like other private property, it was
taxed. The amounts which it paid in taxes went
into the funds of state and municipality and helped
to defray the cost Of conducting the public affairs Of
the several political divisions. The people received
certain revenues from that mill. When the state
the property that source Of revenue was
|cut off. The cost Of carrying on the public bust
ness was not lessened. 1t was necessary still to
raise the same sum for the same purposes. Money
|Wnicn nad been derived from this source was no
longer forthcoming, therefore it was necessary to
raise it elsewhere The moment the state became
the owner of the property it became necessary for
the people who had received public revenues from
the mill to pay out more money in the form Of in
|dividual taxation in order to make up the difference.
This is true in relation to all public business
enterprises. whether purchased by the public from
their private owners or established by the state IT.
self. 1t is true Of mills, elevators, waterworks, light
and power plants, and Of every other form of
business enterprise in which the state or its sub
divisions may engage:
In, order to arrive at the exact facts, and to de-
termine questions of profit and loss in the operation
|of publicly owned enterprises, it is necessary to
charge against the business not only interest on in
vested capital, depreciation and current operating
expenses, but the sums which the enterprise would
have been required to pay in taxes had il. been own
ed by a private individual, for those latter sums,
when not paid by the business in question, must in
evitably be contributed by the people in the form
|of additional taxes.
This fact, elementary though it is, is usually igr
nored. There is probably not one publicly owned
business enterprise in. ten in the accounting of which
any consideration is given to taxes, yet those taxes
must be paid, and they are paid in cash, either BY
the private owners of the business OF. by the tax
payers at large.