Gambar halaman
PDF
ePub
[blocks in formation]

Mr. MAGNUSON, from the Committee on Commerce,
submitted the following

REPORT

[To accompany S. 2289]

The Committee on Commerce, to which was referred the bill (S. 2289) to amend the Interstate Commerce Act, as amended, in order to make unlawful, as unreasonable and unjust discrimination against and an undue burden upon interstate commerce, certain property tax assessments of common and contract carrier property, and for other purposes, having considered the same, reports favorably thereon with amendments and recommends that the bill as amended do pass.

PURPOSE

The purpose of S. 2289 is to eliminate the long-standing burden on interstate commerce resulting from discriminatory State and local taxation of common and contract carrier transportation property. S. 2289 has both a substantive and a procedural aspect. Substantively, it would amend the Interstate Commerce Act to declare unlawful, as an unreasonable and unjust discrimination against and an undue burden upon interstate commerce, a State or local tax rate, assessment, or collection upon the transportation property of a common or contract carrier at a higher level than upon property in the same taxing district. Procedurally, it would provide a remedy in the Federal courts for common and contract carriers against the collection of the excessive portion of any tax based upon such unlawful assessment or

rate.

37-010-69- 1

NEED FOR LEGISLATION

In his March 2, 1966, message proposing the establishment of a Department of Transportation, President Johnson said:

We must promote the efforts of private industry to give the American consumer more and better service for his transportation dollar.

On August 24, 1967, the new Department of Transportation advised the committee of its opinion that the time has come for favorable consideration of legislation to eliminate discriminatory taxation. The Department commented:

The Department of Transportation believes that common carrier property should not face discrimination in property tax assessments and collection. Such discriminations are neither fair, equitable, nor justifiable. Moreover, they have been a concern of the transportation industry for many

years.

***

* * * reform in these aspects of property tax administration which affect interstate commerce should be accelerated. The present system, in addition to its discriminatory aspect, results in the added burden of increased transportation costs to the consumer.

On July 29, 1969 the Interstate Commerce Commission in expressing its full support for S. 2289 made the following comment:

In essence, the provisions of section 1 are designed to put an end to the widespread practice of treating for tax purposes the property of common and contract carriers on a different basis than other property in the same taxing district. In describing the extent of discriminatory tax treatment by State and local governments, the Doyle report states that "despite State laws requiring uniform tax treatment, railroads and pipelines are discriminated against as compared to other property taxpayers in the same jurisdiction, due in large measure to outdated procedures (which are sometimes deliberately retained) for assessment of property," and went on to state that [the committee] had information "showing the extent of overpayment of railroad ad valorem taxes resulting from the assessment of railroad property at a percent of its value that is higher than the percent for the assessment of other taxpayer property is to the value of such other property"; and that "This confirmed the findings of this committee that there is a studied and deliberate practice of assessing railroad property at a proportion of full value substantially higher than other property subject to the same tax rates." The Commission itself has had occasion to note in its report in the Railroad Passenger Train Deficit proceeding, 306 I.C.C. 417, that the existence of inequitable State and local property assessments and tax policies has served to jeopardize the continued existence of essential rail passenger service and recommended that State and local governments

take steps to effect a greater degree of equity with respect to
the tax burdens imposed on railroad properties as compared
to that borne by taxpayers generally.

In the last 9 years, the railroads alone have been assessed more than $900 million in discriminatory taxes. If discriminatory State and local taxation of transportation property of other carriers oil pipelines, common and contract motor carriers, motor bus companies, water carriers, and freight forwarders-were added, the total sum for the last 9 years could be more than $1 billion.

Ultimately, the shipper and consumer pay the bill for discriminatory taxation. Not only are such taxes reflected in the transportation costs of goods purchased by the consumer, but also the consumers of States which do not discriminate are forced to share the cost of these burdensome tolls.

The committee joins the Interstate Commerce Commission in recommending enactment of this legislation to eliminate the discriminatory tax practices weakening our national transporation system and burdening the Nation's consumers.

BACKGROUND

Unfortunately, interstate carriers, especially railroads, are easy prey for State and local tax assessors. Railroads, oil pipelines, and other interstate carriers are nonvoting, often nonresident, targets for local taxation, and cannot easily remove their right-of-way and terminals. While all interstate common and contract carriers are subject to discriminatory tax practices, and included in S. 2289, there is no doubt that the railroad industry suffers most from the burdens which this bill would remove. Railroads are subject to State and local property taxes on right-of-way and rails, locomotive, cars, and other equipment, and stations, buildings, shops, et cetera.

For the 7 years, 1960-66, the U.S. class I railroads made total tax payments for all State and local tax purposes per year of over onethird of a billion dollars on a total investment before depreciation of approximately $36 billion. Over 80 percent of these State and local taxpayments went to satisfy ad valorem tax liens:

In 1968, class I railroads paid an estimated $293 million in property taxes. This represented 31 percent of the railroads' total tax bill and the equivalent of 54 percent of their combined net income for 1968. Since local property taxes are calculated by multiplying tax assessments times the tax rates, discriminatory taxation can arise in two ways: First, railroad and other carrier transportation property may be assessed at a substantially higher proportion of true market value than the proportion of true market value at which other property is assessed. Second, railroad and other carrier transportation property may be subjected to a higher tax rate than the tax rate for the same purpose applied against other taxable property. For example, a State may assess railroad property for tax purposes at 100 percent of value, and other property at only 40 percent of such value; and, a State may subject railroad property at a rate of $1 per $1,000 of assessed valuation, and other property subject to the same tax purpose at a rate of $0.50 per $1,000 of assessed valuation. Either way, a railroad can be forced to pay higher discriminatory taxes than other taxpayers with similar property in the same taxing district.

As the Department of Transportation explained in its August 24, 1967, comments to the Committee:

State and local governments derive substantial revenues from taxes on property owned by common carriers. Despite State laws requiring uniform tax treatment, in many States transportation common carriers are discriminated against as compared to other property taxpayers in the jurisdiction, due in large measure to long-established procedures for assessment of property. Some States apply assessment by a single central agency, which permits a relatively accurate method of assignment of value. However, in other States local assessment permits considerable variation in the assignment of values.

The Department of Transportation reaffirmed this conclusion in its December 8, 1969, letter to the committee when it stated:

There is little question as to the existence of discriminatory property tax practices against the railroads and, to a lesser extent, other ICC-regulated carriers. Since, generally, they are only remotely related to the economic performance of the carrier, property taxes have a regressive effect on the carriers' financial posture and earnings which, because of intermodal competition, cannot always be passed along to the consumer. Even when allowance is made for the real prospect that the States will find other ways to raise revenue from the carriers to offset revenue losses, enactment of S. 2289 would seem to be of positive benefit to the regulated surface transportation industry. At the same time, the political issues in this legislation such as Federal involvement in matters of State and local concern, tax revenue loss, and the possible impairment of other valid State policies ought to be given weight.

The existence of discriminatory taxation of interstate common carrier transportation property has long been recognized. Nearly a quarter of a century ago, in House Document 160, dated September 19, 1944, in "Letter From Board of Investigation and Research Transmitting a Report on Carrier Taxation," it was said, (pp. 124, 125):

The officials of approximately half the States readily concede that railroads are being overtaxed because of inadequate equalization. *** If we accept the standards of equity set forth in present tax laws, this failure to equalize State and local assessments is probably the most significant of the railroad tax grievances.

Pursuant to Senate Resolutions 29, 151, and 244 of the 86th Congress, the special study group on transportation policies in the United States of this committee prepared and submitted a national transportation policy study report, including recommendations on means to eliminate State and local discriminatory taxation of carriers.

This study report, after a lengthy commendatory on State and local assessment procedures, stated (p. 458):

Pursuant to this analysis of State and local assessment procedures of carrier property for ad valorem tax purposes, the Association of American Railroads was requested to submit any pertinent information available on relative tax discrimination in the matter of State and local taxes. A table was submitted by the Association of American Railroads (contained in app. B, p. 475) showing the extent of overpayment of railroad ad valorem taxes resulting from the assessment of railroad property at a percent of its value that is higher than the percent which the assessment of other taxpayer property is to the value of such other property. This confirmed the findings of this committee that there is a studied and deliberate practice of assessing railroad property at a proportion of full value substantially higher than other property subject to the same tax rates. [Emphasis supplied.] Testimony was presented to the committee on the extent of discriminatory taxation in the most recent year available (1968) by a witness on behalf of the Association of American Railroads. This study, summarized in the following table, specifically lists 19 States as discriminating:

[blocks in formation]
« SebelumnyaLanjutkan »