Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-02-18
GRADUATED TAX
Continued from Page One)


trail Railroad Co, conducted the
case Of the proponents at hearing
before the committee on taxation,
Tuesday afternoon, in favor of a bill
introduced by Rep. Martin of Angus
ia. which provides for a different
method of computing the annual eX-
else tax upon steam railroads in the
State.
Mr.. Wheeler said that the bill is
an amendment to Section 81, Chap
ter %, of the revised statutes. I'm
der the present law the tax is as
sessed on fthe gross transportation
receipts according to the mileage
| within the State at rates varying
frcm one half of one percent to five
and half percent of such receipts.
Under the proposed amendments the
tax would be assessed upon total
revenues as at present but at rates
varying from three to five and one
half percent according to ratio be-
tween gross receipts and net rail-
way operating income.
, Mr.. Wheeler then passed on to
explain the present general method
of taxing railways of Maine. They
are required to pay taxes to the
comes and capital stock; then they
alc required to pay taxes to the sew
eral towns and cities in which their
property is located and thirdly they
are required to pay the afore4aid
which is declared in the statutes 10
be for the privilege of exercising
their franchises in the State
c ;,, h.
eral cities and towns upon the build
ings and upon the lands which they
own exactly as does every other
property at the same rate and in the
same manner. The proposed bill
makes no change in that respect.
{ Mr.. Wheeler contended that the
remaining property of a railroad,
that is, its track or right of way
cannot properly be classed with pri-
vate property for the purpose of
taxation. 1t can be used only as a
railroad and then under the regula-
ton and control of the public. He
went on to describe the proceedings
to construct a railroad and said that
the expenditures for land damages
and construction form a part of the
investment and If the road can get
reasonable return on the invest
ment, the road is worth it's cost but
that if it cannot do SO, it is not
worth its cost, and the investment is
lost because there is very little SAL
wage in an abandoned railway. When
abandoned. the right of way returns
to the original owner. The railroad
company merely has the use of the
land in this particular purpose. The
railroad company merely owns the
use of the land and it is this use
Which is the subject of the State tax.
Mr.. Wheeler cited law and prece-
dence as proof.
lie then gave the history of the
present tax which began in the term
of Gov. Plaisted. The first tax ever
paid the State of Maine for franchise
was $1,000. Under the law as orig
inally enacted, the tax was 3l& 20 on
gross transportation. This was in
creased to 4E6 in 1901, 412Co in 1907,
see in 1909 and $50 in 1911. These
increases were not opposed. Condi-
tons We're such that railroads felt
they could pay them but the situa-
ton has changed within the last s
Or 10 years. The value of the fran
chise has been impaired by motor
competition. encouraged and subsi-
died by the State itself, through
lavish expenditures for highways
and it has been impaired by increas-
ell federal legislation of regulation.
In spite OF these damaging compet-
Tive losses, the law has operated
more than to double the tax within
the last few years in spite of these
adverse conditions. The purpose of
this new law is to bring this present
ll Int "a. l:4.
and make it SO that 1T will automat-
1cally adjust the tax to the varying
values and taXability of the railroads.
Mr.. Wheeler discussed the increase
of more than 1909 in these State
taxes within the last 10 years. lie
said 1t mad not come about with in
creased prosperity of the roads but
with mechanical operation of an I'M
fair law. This part of his speech
discussed the entire subject OF in
creased expenses of operation, in
creased revenues to meet those en-
penseS, falling off of business in con-
sequence of increased rates, and the
increased tax in consequence Of this
the roads have been showing a de-
felt and getting poorer and poorer
with their stock selling at depressed
prices.
lie said. alphabetically, the rail-
road labor board grants an advance
of approximately 100000 in wages
of a Maine railroad; then an
other board, the interstate COM
mercc commission, which controls
rates for freight and passengers.
prescribes an advance of freight
rates TO provide revenue to meet the
increased payroll. The road is no
better off. Revenues and expenses
have been increased in like amount,
but the State which taxes on the
revenue at Il fixed rate. would take
100000 more money away from the
railroad because it received $4,000
600 more revenue and vet these
revenues were demanded by the in
creased wages. Repeat this several
times and one can see where the
railroads are going, concluded Mr..
Wheeler.
The first year following the estab-
Eshment of the present rate. the
Maine Central including the Somer-
set and Washington County rail-
roads was required to pay $422, 367.9l
as an excise tax. In 1924, under the
same law. it was required to pay
S963,050. In 1911 when the road paid
the smallest sum, it was earning
profits. In 1921 it failed to pay its
operating expenses by more than
$2,000,000 such result was never
compensated The Legislature! if
starting anew, would not enact
law which would take this money in
this way from the Maine Central
Railroad.
Mr.. Wheeler spoke of the tax in
other States saying that no other
State except California. whose rail-
roads are very prosperous, has ever
attempted to fix SO large an excise
tax. In Rhode Island the tax is 1f6
gross and fees; in Connecticut it is
312 70 with no otker taxes: in Yer
Ii l.. l. q. e tl,a