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SUMMARY OF EXISTING LEGISLATION.
A. RAILROAD COMPANIES.
Of the 48 States and Territories, the tax systems of which have been outlined in the foregoing statements, 34 levy taxes on the basis of a cash valuation' of property, or of property and franchise, as determined by a State board of assessment. In three cases (Ohio, Mississippi, and Virginia) this tax is supplemented by taxes on receipts, and in one case (Vermont) it is alternative with a tax on receipts.
Twelve States levy taxes determined on the basis of gross receipts. In six of these States this tax is only supplementary to a tax levied on some other basis, and in one (Vermont) it is alternative with a tax on the cash valuation of property and franchise. In the remaining five States the tax on gross receipts is the main feature of the system. It might be added that in Vermont, where this tax is alternative with another system, railroad companies actually pay the tax on the basis of gross receipts.
New York levies a tax on capital stock according to dividends, supplemented by a tax on gross receipts.
Massachusetts levies a tax on capital stock at its market value, with deductions for property locally taxed.
Pennsylvania levies a tax on capital stock and bonded debt, supplemented by a tax on gross receipts.
Connecticut levies a tax on capital stock and total indebtedness.
Delaware levies a tax on capital stock, supplemented by a net earnings tax, a tax on passengers, and a specific tax on cars and locomotives.
The net earnings tax, as applied to railroads, is to be found in but a single State (Delaware), and there only as a feature of a wider system.
Three States and one Territory (Oregon, Rhode Island, Texas, and New Mexico) still cling to the primitive system of the general property tax, as applied to the taxation of individuals. In Texas, however, there is an additional State tax on gross receipts.
In those cases where franchises are taxed, capital stock, earnings, and indebtedness are considered, in different States according to different rules, in arriving at a cash valuation upon which to assess the tax.
All of the more progressive States have abandoned mere property valuation as the basis for the taxation of their transportation companies.
Generally, railroad property not used for railroad purposes or not situated on the main stem is locally taxed in the same manner and at the same rate as the property of individuals.
Where railroad property is equalized or assessed by State officials and the tax is computed and collected locally, the average value per mile of road is determined for each company. The value of the railroad property in any particular tax district is then determined on a pro rata mileage basis, and the tax is levied at the usual rate for State and local purposes.
Where taxes are levied on capital stock, debt, earnings, or rolling stock, and usually where levied on cash valuation of property, railroads partly within and partly outside of a State are assessed on the portion determined by the ratio of inileage of line within the State to total mileage of line.
B. TELEGRAPH COMPANIES.
Of those States where express provision is made for the taxation of these companies by State authorities, 27 levy a tax on cash valuation of line. Of these, California, Connecticut, Delaware, North Dakota, and Wisconsin arrive at this valuation on the basis of a certain fixed value per mile of wire; Idaho, Kansas, Louisiana, Michigan, Nebraska, New Hampshire, North Carolina, Oklahoma, South Carolina, South Dakota, Washington, and Virginia levy the tax on property
1 Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington West Virginia, and Wyoming.
2 Maine, Maryland, Michigan, Minnesota, Mississippi, New York, Ohio, Pennsylvania, Texas, Vermont, Virginia, and Wisconsin.
3 Mississippi, New York, Ohio, Pennsylvania, Texas, and Virginia.
valuation, generally determined on the mileage basis; Colorado, Florida, Iowa, Mississippi, Missouri, Tennessee, Utah, Vermont, and Wyoming levy the tax on a valuation of property and franchise. In Vermont this is alternative with a tax on gross receipts. Ohio levies a tax on cash valuation of line, which is virtually a capitalization of earning capacity (earnings are capitalized at 6 per cent).
In 13 States' these companies pay a tax on gross receipts. In Louisiana, New Jersey, and Virginia this is called a "license tax." In West Virginia it is applicable only to foreign corporations. In Texas the tax is on the proceeds of separate messages.
In five States, Alabama, Mississippi, Montana, Tennessee, and Virginia, specific privilege or license taxes are levied. In Alabama and Tennessee this is levied at a certain sum per mile of line. This is also the case in Mississippi, except that a fixed sum is levied when the length of the line is in excess of 1,000 miles. In Montana this is a local tax levied on instruments of transmission.
In Arkansas, Kentucky, and Illinois, these companies are taxed on capital stock, and in Indiana on the capitalized value of capital stock and bonded debt, with property deductions. In Massachusetts (so far as concerns domestic corporations), in New York, and in Pennsylvania the provisions of the general corporation tax law are applicable.
In those States where there is no express provision for the taxation of these companies the property tax as applied to individuals in force.
C. TELEPHONE COMPANIES.
The laws of 24 States provide for a tax based on cash valuation of property or of property and franchise. In California, Connecticut, and Delaware this valuation is determined upon a mileage basis. In Connecticut a valuation set on instruments is included. In Colorado, Kansas, Maine, Michigan, New Hampshire, South Dakota, and Virginia this valuation is a valuation of property generally determined upon a mileage basis. In Iowa, Tennessee, Utah, and Washington the tax is levied on the valuation of property and franchise. In Mississippi the valuation is graded according to the number of subscribers, and in Ohio it is a valuation determined upon the basis of earning capacity, as in the case of telegraph companies.
Thirteen States levy a tax on gross receipts. In Louisiana and New Jersey this is called a "license tax."
In Florida, Georgia, Montana, Tennessee, Texas, and Virginia license taxes are levied on these companies. In Florida this is a graded tax based on the amount of capital stock. In Montana and Virginia it is levied on instruments. In Texas it takes the form of a specific annual sum to the counties. In Georgia there is a tax on instruments in addition to the annual license tax.
In Indiana these companies are taxed on a capitalized value of stock and bonds, and in Illinois on the basis of capital stock.
In Massachusetts, New York, and Pennsylvania these companies are subject to the provisions of that tax. In those States where the taxation of these companies is not the subject of express provision the general property tax applies.
D. EXPRESS COMPANIES.
In 19 States these companies are taxed on their gross receipts. In Louisiana and New Jersey this is called a “ license tax." In West Virginia the tax applies only to foreign corporations. In New Mexico it amounts practically to a tax on net receipts. In a number of these States, also, the tax is supplemented by the usual property tax, general corporation tax, or franchise tax.
In eight States-Iowa, Louisiana, Missouri, North Carolina, Ohio, South Carolina, South Dakota, and Virginia-a tax on each cash valuation is provided for. In Missouri the valuation is upon property and franchise; in Ohio upon capitalized earnings; in South Dakota earnings are taken into consideration, and in Virginia the valuation is on property.
Florida, Mississippi, and Virginia levy specific license taxes, and North Dakota a license tax graded according to population. Tennessee levies a privilege tax based on the mileage over which business is done.
1 Delaware, Georgia, Louisiana, Maryland, New Jersey, New York, North Carolina, Ohio Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia.
2 Alabama, Delaware, Louisiana, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, and Wisconsin.
3 Connecticut, Delaware, Georgia, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri New Jersey, New Mexico, New York, North Carolina, Ohio, Rhode Island, Texas, Vermont, Virginia, and West Virginia.
Arkansas, Illinois, Nebraska, and Wisconsin tax these companies on capital stock, and Indiana and Iowa on the capitalized value of stock and bonds. In those States where there are general corporation tax laws these companies are taxed under the provisions of those laws.
In the other States and Territories these companies are taxed under the general property tax in the same manner as individuals.
E. SLEEPING, PARLOR, AND DINING CAR COMPANIES.
These companies are taxed in 10 States' on gross receipts. In New Jersey the tax is termed a "licensed tax."
Alabama, Arkansas, Georgia, Iowa, Louisiana, Missouri, Nebraska, North Carolina, South Carolina, South Dakota, Tennessee, Utah, and Wyoming levy a tax on cash valuation of cars employed within their boundaries. In South Dakota earnings are taken into consideration in determining the valuation.
Arkansas, Illinois, Kentucky, Ohio, Texas, Virginia, and Wisconsin tax these companies on their capital stock; Indiana at the capitalized value of stock and bonds, and New York, Pennsylvania, and Massachusetts (so far as concerns domestic corporations) under the general corporation tax laws of those States. Delaware levies a license tax on the Pullman Company; Mississippi, a specific privilege tax in addition to a privilege tax on a mileage basis; and Tennessee, a specific privilege tax.
In the other States and Territories these companies, when taxed at all, are taxed on their property in the same manner as individuals.
F. FREIGHT LINE AND EQUIPMENT COMPANIES.
In Maryland, Michigan, New York, Pennsylvania, and Vermont these companies are taxed on gross receipts. In Vermont the tax is alternative with a tax on property and franchise.
Minnesota, Ohio, and Wisconsin tax these companies on capital stock. In Massachusetts (so far as concerns domestic corporations), New York, and Pennsylvania the general corporation tax laws have application.
In New Jersey these companies are taxed on a cash valuation of their property, including rolling stock, and in Vermont a tax on property and franchise is alternative with the tax on gross receipts.
In the other States and Territories these companies, when taxed at all, are taxed on their property in the same manner as individuals.
G. NAVIGATION COMPANIES.
These companies are in general taxed on the value of their water craft and other property. In certain States, however, specific provision is made for their taxation, either complementary to or as a substitute for the tax on property.
In Virginia these companies are taxed on their net earnings. In Delaware canal companies are taxed on their net earnings, and all navigation companies are subject to the provisions of the passenger tax law. In Rhode Island vessels engaged in foreign trade are subject to a net earnings tax, as are vessels in general in Connecticut. In Kentucky navigation companies are subject to the usual corporate franchise tax. In Georgia a license tax is levied on steamboat companies, and in Florida a license tax on tonnage of vessels. Maine and Minnesota also levy taxes on tonnage. In Illinois navigation companies, and in Virginia and New Jersey canal companies, are taxed in the same manner as railroad companies are taxed in those States. Maryland, New York, Pennsylvania, and Vermont tax navigation companies on gross receipts. In Vermont this tax is alternative with a tax on property and franchise, and in New York and Pennsylvania it is supplementary to the general corporation tax. In Massachusetts domestic companies are taxed under the corporation tax law.
North Carolina levies a tax on capital stock, West Virginia on property and capital stock, and Missouri varied wharfage taxes in the towns and cities of the State.
1 Florida, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, Pennsylvania, Texas, and Vermont.
H. TAX ON CORPORATE CHARTERS.
In 27 Commonwealths' various taxes, under a variety of names, are levied upon the incorporation, organization, consolidation, and reorganization of corporations and upon the increase or decrease of their capital stock. Properly speaking, these charges are not taxes, but fees paid in return for privileges granted by the State. This fact has been recognized in the legislation of Pennsylvania and Rhode Island upon the subject, where the fee is termed a bonus on charters," and in several other States, where it is termed "charter fees," "license fees," or "organization fees." In Connecticut, Michigan, and Texas statute terminology confuses it with the tax on franchises, though it is very obviously not a franchise tax.
In several States this levy takes the form of an annual license charge (e. g., Alabama, Vermont, Washington). In Connecticut it applies only to domestic corporations doing their main business outside of the State, and in Texas, New York, and Vermont to foreign corporations as well as to those of domestic origin. In certain States certain specified forms of corporate industry are not subject to the general regulations of this character (e. g., bridge, canal, and railroad companies in Pennsylvania and railroad companies in Rhode Island).
CONSTITUTIONAL AND STATUTORY PROVISIONS, BY STATES.
The constitutional provisions which are summarized in this chapter do not include all which apply to State and local fiscal relations, but only such as appear to have a particular bearing on the making and administration of State laws for the aiding of and taxation of transportation companies. These summarized provisions may or may not apply to other classes of persons and property; but neither alternative may be inferred to hold unless express statement is made to that effect.
In summarizing statute provisions, attention is given chiefly to the taxation of railroad companies, with minor reference to telegraph, telephone, express, parlor, and sleeping car, freight line and navigation companies. Generally, where transportation companies are subject to direct taxes by the State, shares of stock are not assessed to individual holders, so that tax provisions on this subject are not digested.
State aid and internal improvement.-The State shall not engage in works of internal improvement, nor lend its money or credit in aid of such; nor shall the State be interested in any private or corporate enterprise, nor lend its money or credit to any individual, association, or corporation. (Art. IV, sec. 54.)
Taxes on property.-All taxes on property shall be levied in exact proportion to the value thereof. (Art. XI, sec. 1.)
The property of private corporations, associations, and individuals shall forever be taxed at the same rate. (Art. XI, sec. 6.)
Local aid.-The general assembly shall not have power to authorize any local division to lend its credit, grant money or property, or take stock in aid of anv corporation or company. (Art. IV, sec. 55.)
Listing, valuation, etc.2-Railroad companies are required to make annual returns to the State auditor of all property employed in operating their lines. Upon the basis of these schedules, the State board of assessment value the railroad property "upon the consideration of what a clear fee simple title thereto would sell for under the conditions under which that character of property is most usually sold for." This valuation is then apportioned among the counties upon a pro rata mileage basis, for the computation and collection of the tax.
1 Alabama, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsyl vania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and West Virginia. 2 Code of 1896, secs. 3961-3973.
License tax.-Railroad companies also pay a license tax on gross earnings to cover the expenses of the railroad commission.1
Local taxation.2-Railroad real estate and personalty not in the right of way are locally assessed and taxed. A local tax also is levied on the basis of the valuations apportioned by the State.
These companies pay to the State an annual when that line is 150 miles or less in length. same rate in addition to a specific tax of $500. usual local license and property taxes.
privilege tax of $1 per mile of line Lines of over 150 miles pay at the These taxes are in addition to the
These companies (as well as canal, bridge, and ferry companies) pay a tax on gross income at the usual property rate.1
They are, besides, required to make annual reports of property and receipts, upon the basis of which a property valuation is arrived at for purposes of taxation.5
A license tax in towns and cities is levied as follows: In places of 20,000 inhabitants or over, $25; less than 20,000 and more than 10,000, $10; other places, $5.6
Long-distance telephone companies report their property and receipts to the State auditor. The tax is further administered as in the case of railroads."
Long-distance telephone companies are also required to pay, to the State, 50 cents per mile of line when that line is 150 miles or less in length; and further, all lines of more than 100 miles in length pay the sum of $250.3
These companies pay the State a privilege tax of $1,250, and are taxed in addition on property in the usual way.
Other corporations pay a license tax, graduated according to the amount of paid up capital stock. The tax begins with a rate of $10 upon companies whose paid up capital stock is under $10,000, and rises gradually to a tax of $500 upon companies whosc capital stock amounts to $1,000,000 or over.
Exemption.1-Railroads hereafter constructed shall be exempt from taxation for a period of 10 years after the passage of this act.
Listing, valuation, etc.-Railroad companies are required to make full annual reports of property used in operation to the Territorial board of equalization, by whom a valuation is set on property and franchises. Rolling stock is valued on a pro rata mileage basis. The total valuation is apportioned among the counties for the computation and collection of the usual tax rates.
Local taxation.-Property other than that of operation is locally assessed and taxed.
These companies are assessed and taxed in the counties at a certain rate per mile of line.
1 Code of 1896, sec. 3489.
2 Ibid., secs. 3964-3973.
3 Laws of 1898-99, p. 169.
4 Ibid., p. 50.
The power to tax corporations and corporate property shall not be surrendered nor suspended. (Art. XVI, sec. 7.)
State aid.-The State shall never assume nor pay the indebtedness of any corporation, nor release any corporation from its liabilities to the State. (Art. XII, sec. 12.)
The liability of any railroad or other corporation to the State shall never be exchanged nor remitted. (Art. V, sec. 33.)