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). CHAPTER V. 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. ALABAMA. CONSTITUTIONAL PROVISIONS. 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.) Railroad companies. STATUTE PROVISIONS. 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.' Local taxation.—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. Telegraph companies.3 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. Telephone Companies. 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. 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. Sleeping-car companies.' These companies pay the State a privilege tax of $1,250, and are taxed in addition on property in the usual way. Other corporations.8 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. Telegraph companies.11 These companies are assessed and taxed in the counties at a certain rate per mile of line. ARKANSAS. CONSTITUTIONAL PROVISIONS. 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.) 1 Code of 1896, sec. 3489. 2 Ibid., secs. 3964-3973. 3 Laws of 1898-99, p. 169. 4 Ibid., p. 50. 7 Ibid., p. 165. 8 Ibid., p. 178. Revised Statutes of Arizona (1887), par. 2649. 10 Laws of 1899, p. 79. 11 Ibid., par. 2647. Except as herein provided, the State shall never be interested in the stock of any corporation or association. (Art. XII, sec. 7.) The State shall never loan its credit for any purpose whatever. (Art. XVI, sec. 1.) Taxes on property.-All property shall be taxed according to its value. (Art. XVI, sec. 5.) Rolling stock shall be considered and taxed as personalty. (Art. XVII, sec. 11.) Reports of railroad companies.-Railroads shall make annual reports of their acts and doings to the auditor of public accounts. (Art. XVII, sec. 13.) Local aid. No local division shall take stock in, obtain, or grant money for, or loan its credit to any corporation, association, or individual. (Art. XII, sec. 5. See also Art. XVI, sec. 1.) Railroad companies. STATUTE PROVISIONS. Listing, valuation, etc.'-Railroad companies are required to return to the secretary of State sworn schedules of property on the right of way and of rolling stock (both hired and leased), including a statement of the actual aggregate value of the various elements of railroad property. On the basis of these returns, the State board of railroad commissioners fix a valuation, which is apportioned among the local districts for the computation and collection of the usual property taxes. Rolling stock is valued upon a pro rata mileage basis. In case of failure to list, witnesses may be summoned and books, records, etc., examined. Local taxation.-Real estate and personalty not in the right of way are assessed and taxed locally. A local tax is levied also on the valuation apportioned by the State. Telegraph, express, and sleeping-car companies.3 These companies make annual returns to the State. They are taxed upon their capital stock (i. e., on a pro rata mileage proportion thereof employed within the State). The real and personal property of these companies is taxed where situated, as is the similar property of telephone companies. CALIFORNIA. CONSTITUTIONAL PROVISIONS. State aid.-No grant of money or property shall ever be made by the State for the benefit of any corporation not exclusively under State control. (Art. IV, sec. 22.) The State shall neither give nor lend, nor authorize the giving or lending of the credit of the State to any person, corporation, or association; nor shall the State subscribe to stock in a corporation. (Art. IV. sec. 31. See also Art. XII, sec. 13.) Taxes on property and franchises.-All property in the State shall be taxed according to its value-franchises, moneys, credits, bonds, stocks, dues, and all other property included. (Art. 13, sec. 1.) Lands and improvements thereon shall be separately assessed. (Art. 13, sec. 2.) The legislature shall have power to provide for the payment of all taxes on real property by installments. (Art. XIII, sec. 7.) The franchise, roadway, roadbed, rails, and rolling stock of all railroads shall be assessed at their actual value by the State board of equalization (provided for in sec. 9); which valuation shall be apportioned among the local districts on a pro rata mileage basis. (Art. XIII, sec. 10.) Every obligation by which a debt is secured, except as to railroads and quasipublic corporations, shall be taxed at its value, and the collateral property shall be taxed at its value less the value of the obligation. Art. XIII, sec. 4.) Incomes.-Incomes may be taxed as prescribed by law. (Art. XIII, sec. 11.) Railway reports and accounts.-The State railroad commissioners shall have power to summon persons and papers, and shall prescribe a uniform system of railway accounting. (Art. XII, sec. 22.) Local aid.-The State shall not authorize the giving or lending of the credit of any county, city, township, etc., to any person, corporation, or association; nor shall any local district subscribe to stock in a corporation. (Art. IV, sec. 31.) Railroad companies. STATUTE PROVISIONS. Listing, valuation, etc.1-Railroad companies are required to furnish full sworn statements of property, stock, and business. On the basis of this information the State board of equalization assesses franchise, roadway, roadbed, rails, and rolling stock in the State on a pro rata mileage basis. Franchises derived from the United States are exempted from taxation. Upon the valuation arrived at by the board of equalization the taxes are levied and collected by the State at the average rate of taxes on property in the State. To aid in arriving at valuations, provision is made for the summoning of witnesses, corporation records, books, etc., by the State board of equalization. Local taxation.'-Railroad property other than that of operation is locally assessed and taxed. Local districts receive also a share of the tax on the values determined by the State board of equalization. Telegraph and Telephone companies.' The property of these companies is locally assessed and taxed as personalty at a certain rate per mile of line, fixed by local assessors. COLORADO. CONSTITUTIONAL PROVISIONS. State aid. The State shall not pledge its credit or become responsible in any way for the debts of any person, company, or corporation. (Art. XI, sec. 1.) The State shall not make any donation to nor subscribe to stock in any corporation. (Art. XI, sec. 2.) No obligation of any person, association, or corporation to the State shall ever be exchanged, released, postponed, or diminished. (Art. V, sec. 38.) Uniform property tax.-Taxes shall be uniform upon the same class of subjects within the same jurisdiction. All property shall be taxed at its just value. (Art. X, sec. 3.) Corporation taxes.-The power to tax corporations and corporate property shall never be relinquished nor suspended. (Art. X, sec. 9.) All corporations shall be subject to taxation for State and local purposes. (Art. X, sec. 10.) Local aid.-No local division shall pledge its credit or become responsible in any way for the debts of any person, association, or corporation. (Art. XI, sec. 1.) No local division shall make any donation to or subscribe to stock in any corporation. (Art. XI, sec. 2.) Railroad companies. STATUTE PROVISIONS. Listing, valuation, etc.3-These companies are required to make returns to the State board of equalization, upon the basis of which the franchise, roadbed, track, and rolling stock are valued upon a pro rata mileage basis, and said value apportioned among the counties for the computation and collection of the usually general property taxes. Local taxation. Real estate (including stations and other buildings, but not track) and personalty are locally assessed and taxed. There is also a local tax on the basis of the values apportioned by the State. Telegraph, telephone, and car companies." These companies are subject to provisions similar to those which apply to railroads. CONNECTICUT. CONSTITUTIONAL PROVISIONS. Local aid.-No local division shall subscribe to stock in a railroad corporation, nor purchase its bonds, nor aid it in any way. (Amendment of Oct., 1877.) STATUTE PROVISIONS. Railroad companies.' State taxation.-Railroad companies are required to make annual reports to the State controller, setting forth their capital stock and indebtedness. They then pay the State, as a franchise tax, one per cent on the market value of their capital stock, in addition to one per cent on the par value of their funded and floating debt, or on actual value if below par. In determining the valuation, deduction is made for any part of the indebtedness which is held in trust as part of a sinking fund, as well as for the amount of local taxes on real estate. As the valuation represents only that portion of the capital stock and debt assignable to Connecticut, the valuation is determined on a pro rata mileage basis as compared with the total mileage. Local taxation.-Railroads are locally taxed on their real estate not directly used for purposes of operation. Telegraph and telephone companies.2 Telegraph companies pay the State a tax of 25 cents per mile of wire. They also pay local taxes on their real estate. Telephone companies pay the State a tax of 70 cents per instrument in addition to 25 cents per mile of wire. They also pay local taxes on real estate. Express companies.3 These companies pay the State a tax of 5 per cent on their gross receipts from business done in the State. DELAWARE. CONSTITUTIONAL PROVISIONS. Nothing specific. Railroad companies.1 STATUTE PROVISIONS. Tax on net earnings.-Railroad companies, as well as canals, make annual returns of business to the State, as by law required. They then pay to the State a tax of 10 per cent on their net earnings in the State, as determined by the proportion of mileage within the State to total mileage; besides a tax of one-half of one per cent on a pro rata mileage portion of capital stock. Passenger and locomotive taxes.-Railroad and navigation companies pay the State a tax of 10 cents on each passenger carried by steam power on land or water in the State. The law grants permission to raise the rate of fare to the extent of the tax. Railroad companies (excepting the P., W. & B. R. R. Co., which is otherwise provided for) may pay in lieu of the passenger tax a sum which bears the same proportion to the gross receipts from passenger business between points in the State as the sum of $13,000 bears to the like business of the P., W. & B. R. R. Co. In addition, there is a special tax of $100 on each locomotive, $25 on each passenger car, and $10 on each freight car and truck used within the State. The Philadelphia, Wilmington and Baltimore Railroad Company pays to the State annually the sum of $27,000 in lieu of all taxes but the passenger tax, and this latter may be commuted by the annual payment of the specific sum of $13,000.5 The Delaware Railroad Company may pay $3,000 annually in lieu of all other taxes." Local taxation.—Railroad real estate, including buildings on the right of way, is locally assessed and taxed. Telegraph and telephone companies.1 These companies annually pay to the State a tax of 60 cents per mile on the longest wire in the State: 30 cents per mile on the next longest wire, and 20 cents per mile on all other wires. Express companies.8 These companies pay a tax of five per cent on their gross earnings from business done within the State. 1 General Statutes of Connecticut (1888), 3919-3927. Also Laws of 1899, pp. 1001, 1087. |