White Bluffs spokesman. [volume] (White Bluffs, Wash.) 1907-1938, 1924-09-05
Increase in Auto Transportation
Stiff Competition for Railroads

Auto transportation is raising
havoc with transportation conditions
in the state" says Charles A. Murray,
railroad tax attorney, "and as result
most of the branch line passenger
trains in Washington are being oper-
ated at an actual loss and revenues
are declining at such rate that 1t
will only be short time until the OPP
Grafton will be at an actual loss"
A recent report of the state equal
ization board showed that the assess
ed valuation of taxable property In
the state would be $17,000,000 less
than the previous year. That meant
that higher taxes would result as the
lower the valuation the higher the
level. Three million dollars Of the
shrinkage was accounted for by the
decrease in valuation of steam and
electric railways.
Commenting on the situation, the
Spokesman-Review said: 1T is plain
that steam and electric transpofta-
ton has become so formidable a COM
petitor that railroad properties are
worth less and pay less taxes. Motor
transportation lines operate in various
ways to make higher taxes. They use
paved highways that taxpayers pay
for, and by fast travel with heavy
loads shorten the life of these roads
and increase maintenance charges.
Steam and electric lines have to buy
rights-of-way and lay tracks, after
wards paying taxes on this property
Motor transportation lines get free
rights-of-way and free upkeep Of
roadbed, and pay only such taxes as
are common to all automobile own
ers.
There are counties in this state
where the railroads in this state pay
nearly all the taxes. The people
ought to let their enthusiasm for this
newer mode Of travel be tempered by
realization of the extra tax burden
that will be added to the small prop
erty owner if the value of the rail
roads continue to depreciate."
Valuation for rate making purposes
should be based chiefly on the legiti-
mate investment going into the prop
erty, says Mr.. Murray. Rates should
be adequate for meeting upkeep costs
and enough Of return upon the in
vestment to encourage the necessary
capital for extensions and improve
ments. This rate-making valuation
is more nearly fixed and permanent.
On the other hand, valuation for
taxation purposes should be based on
market value which is essentially
largely determined by what the prop
erty is earning, or can earn. To illus
trate, Mr.. Murray compares two
branch lines out of Spokane-one
southwark to Lewiston, Idaho, and the
other extending into Central Wash.
ington. The Lewiston branch passes
through particularly rich territory
and has always made good earnings.
There, one valuation might be fair
IOr DOCn purposes.
But the Washington Central branch,
which had to be built to serve large
wheat district with just one crop to
be transported once year, has al
ways been losing proposition. Is i.
fair to tax these two lines on the
same basis of valuation? he asks. 1t
foiv To fhnr oil 1xo
SO far as rates are concerned, as they
cost about the same to build. 1t
would be unjust to charge travellers
and shippers on the Washington Cen
trail high enough rates to make that
line pay.
He cites the valuation of one rail.
road in this state, based upon figures
worked out in 1908, as inflicting a
upon the railway when ap-
piled to subsequent years. The Rail-
road Commission of Washington in
that year figured replacing the system
would cost approximately $98,000.000.
To this $12,0O0,OOO was arbitrarily
added for good WILL" and all through
the years to follow the railroad paid
taxes on this additional $12,000.009.
At first the valuation was not notice
ably out of line, for conditions were
prosperous and earnings ran up above
8 per cent. But in the lean years that
came earnings dropped to Eli per
cent, 2.S9 per cent and 3.13 per cent
at times insufficient even to pay the
taxes. AS rates could not be raised,
the basis of valuation for taxation
purposes should have been lowered,
he argues, in accordance with the
greatly reduced market value Of the
In recent years the annual
tax burden Of the five transcontinent-
al railways has Appropriated Is per
cent of their gross revenues from
Groun InciIrance