Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-02-18

cording 10 the ratio between gross
anu net, This method has received
me endorsement Of the United
states Chamber OF Commerce, the
Natlonal Tax Assn, of the United
S.a.es ana Canada, professors of
ECONOMICS OF the leading univer-
sues. The closing portion of Mr..
reading of the proposed meas sure and
lurther explanation of its provisions.
Boston and Maine Counsel Speaks
Inc request of the Boston and
Maine Railroad, in common with
ctisr railroads. ting in Maine,
that the state modify its method of
determining the railroad tax so. that
rot earnings shall be used as factors
IN qualifying gross receipts as the
basis was presented to the commit
Tee by thornton Alexander, counsel
Tor me Boston and Maine. Mr..
Alexander said that a tax more
nearly in line with the theory of
AFFINITY to pay would result from the
Introduction of the net earnings
factor, and that present injustices
would be corrected.
Under the gross receipts system.
the Boston and Maine spokesman
SAID, "a railroad may he penalized
even when straining itself to the ut
most to handle u large amount of
business II conditions happen to be
such that business is handled at a
loss This has been the case with
the Boston and Maine in several
years of the last decade, he added.
The proposed use of a net earn
lLsS factor is a natural evolution in
the gross receipts form, he contend
cd, adding that gross receipts tax
does ,;rr
is an anomaly, and is an arbitrary
form under which one railroad auto
maucally may pay a large tax, al
though having a deficit Of net in
come, While another road which
actually has large amount of net
income pays a smaller tax. 1t is on
grounds of justice and equity that the
change is sought, he said.
The net income result of the Bos-
ton and Names operations in the
ten years from 1913 to 1923 was a
deficit of Sl,967,255 it was pointed
out, and this would have been a
deficit of over $32,500,000 if it were
rot for the government guarantee
and standard return. Yet. during
this time the tax was paid at the
maximum rate of $40.
The Maine tax has been increased
iioiii or ~ III 1901 W TIE present
maximum of 5isTo as result of
governmental exigencies. he eXjlain-
ed, the increases being made by
legislative action in reducing the
amount of average receipts per mile
by which the rate is graded at the
same time that the rates applicable
to such average receipts were being
increased.
The result, it has been shown. has
been to make the Boston and Maine
Railroad pay taxes at the rate of
$2,052 per mile, which compares with
an average rate of $1411 for the
Glass I railroads of the country. or
total Maine State tax of about $780,
600 per year for 1923. when the road
showed an operating deficit of 3d.
l,070.
The change in the form Of de-
termining the tax, as proposed in the
bill introduced by Representative
Martin of Augusta. would auto
matically modulate the rate as the
proportion of net earnings to gross
earnings increased or diminished.
The minimum rate would be fixed at
go to insure the State a fair return
from the railroads. and the maxi
mum of 51a 20 would be retained.
THE financial situation of the rail-
roads generally has progressed from
bad to worse, and particularly here
in New England. where many roads
were originally carried at loss. out
of profits made by other parts Of the
system; where the distances for
hauling freight are short; where
the roads for the most part are
terminal rather than trunk line:
where the cost Of operation is nee
q
other parts of the country, and
where the competition of the motor
vehicle. individual and common car
rier. is the keenest Of any section of
the United States, owing to the
great density of population.
The Boston and Maine Railroad,
in the past decade. has felt very
severely these economic conditions
this trend of the times.
1T is true that in the last ten
years operating revenues upon the
Boston and Maine Railroad have in
creased 500. but also. it is true that
operating expenses have increased
approximately 94G6. Someone had to
lose and it is evident that it was the
stockholders"
r. L Curtis Of Norway
Roger ]. Curtis of the Norway
Savings Bank, speaking as the rep
resentative of the Maine Savings
Bank association. said that at
meeting held October %. that assoc
citation adopted a resolution support
ing this reduction of taxes upon the
railroads. lie had talked with saw
ings bank and trust company Off
Gals throughout the State and they
all favored it. Pres. Mcdonald was
not the railroad, he said, but the peo-
pie. the stockholders were. They
were entitled ITO return on their in
vestment.
Josiah S. Maxcy Of Gardiner
Josiah S. MaXcy of Gardiner made
a plea for the narrow guage rail-
roads, which were especially provid-
ed for by the act with a rate Of one
per cent. when their net income is
from 10 to 20 per cent. OF their
revenues, one-half per cent. when
the net income does not exceed 10
per cent. of the operating revenue
and no tax at all when there is not
operating income.
Pre- sident State Chamber Commerce
George L. West of Portland, presi-
dent of the State Chamber of Com
mcrce, asserted that the railroads
were entitled to some such relief as
that proposed by Mr. Wheeler. He
asserted that no business man was
paying as high proLortionate tax
as the Maine Central Railroad and
that the S22S.000 which the railroad
was paying more than it should pay
might mean the difference between
solyenry ami insolvency.
Judge B. F. CIeaves
Benjamin L. Cleaves of Portland,
executive secretary of the Associa ted
Industries. asserted that the existing
method of levying the excise tax was
neither Scientific nor fair" He
added that the members of the assoc
citation anil the directors had ex-
Y,roCcpI s'wi11i0p