that the circumstances of the several States vary; on the other hand, it can be contended that the experiments now made in the several States may be expected to show which system of corporate taxation is the best, and that at any rate uniformity is desirable in order to prevent capital from being excessively concentrated in a few States.'

(Taxation of corporations, Part II, page 10.)

TOTAL STATE TAXES, AND AMOUNTS AND PERCENTAGES CONTRIBUTED BY CERTAIN SPECIFIED SOURCES OF TAXATION: NEW ENGLAND AND MIDDLE ATLANTIC GROUPS.

[The figures for the first group are mainly for 1908; for the second, mainly for 1909.]

α Legacy and succession tax.

b

с

Receipts for five months only.

Includes some taxes other than those on liquor.

d Of this amount, $5,355,546.16 came from the stock transfer tax and $1,844,821.45 from mortgage tax.

e Certain public-service corporations paid $253,530 general property tax in addition to this amount, which is included under corporation tax. The total gen

eral property tax is $4,551,838, or about 79 per cent. of the District taxes.

f General property tax imposed by the Legislature of 1909 on the list of 1908, yielded $461,036.17.

TAXATION OF CORPORATIONS IN CONNECTICUT.

While the Connecticut theory and system of taxation in general seems to be one of the best in the country in its freedom from limitations and in the fairness of its possible application, nevertheless, there is an apparent inequality in the distribution of the burden of taxation which causes it to bear heavily on individuals particularly in the rural communities.

The Connecticut Constitution provides: "That all men, when they form a social compact, are equal in rights; and that no man or set of men are entitled to exclusive emoluments or privileges from the community." Any lifting of the weight of taxation from one class of property holders makes it rest more heavily on the others, and thus violates the spirit of justice and equality, which is the fundamental justification for all taxation.

On the theory, then, that just taxation "requires that the public burdens should be shared by all in proportion to their ability and that all of the wealth protected by the state should assist in the support of the state," and because "there is an element in the value of corporate property which is over and above the value of the tangible and physical property," it seems proper to call attention to the taxation of those corporations in this State organized under the general law.

The theory of the Connecticut statutes is that such corporations. are taxed locally, in the same manner as an individual, on their real estate, tangible and intangible personal property, including material and goods on hand, the credits and moneys at their actual valuation, as determined by the assessors of the towns where the property or principal place of business of the corporation is located, and the stockholders of such corporations are exempt from taxation for their stock therein.

In the actual application of the law, however, such a method results in a decidedly unequal taxation of property of such corporations throughout the State. This comes from the fact that the basis of valuation is lower than that of other similar property, and varies in the different towns from an admitted twenty-five per cent. of fair value, to an alleged one hundred per cent. In addition, the practice of including material, average amount of goods on hand, credits and moneys, varies with the custom and disposition of the assessors of the different localities.

This practice of undervaluation, contrary to the statutes, has prevailed for many years, brought about apparently by a desire to encourage the development of the business of such corporations.

Thus from the information available, it seems to be true that such corporations are not taxed even on their tangible property so nearly in accordance with their actual holdings, or with the proper basis of valuation as defined in the statutes, as are individuals engaged in similar business, farmers, and the small property holders. Remedy.

All this can be remedied without unreasonably burdening the corporations in any way, and a uniform condition secured by providing for a maximum tax payable to the State, from which the tax payable to the town on the local assessed valuations should be deducted. By requiring the total tax to be determined on the basis of the capital stock, then all corporations would be treated alike, and inasmuch as the total amount of their tax would be definitely fixed, there would be no incentive whatever for any reduction of local valuations by town assessors.

This would remove the unfair conditions between towns which now prevails where one town advertises to tax property of certain corporations on a low basis, while the neighboring town in its endeavor to conform to the statutory requirements, taxes such property on a basis of fair value.

An instance of such advertising is shown in the following, which is printed on the official letterheads of the selectmen and town clerk of a certain town in Connecticut:

"This town assumes and remits for a period of ten years town taxes on new manufacturing industries established within its limits having a capital of $30,000 or over, to the amount of ten mills."

If such action is proper for one town, in the State, the statutes should make it possible for all towns to act in the same manner, and thus avoid the unfair competition which arises from the bidding of one town which does not act in accordance with the statutory provisions against others which endeavor to follow the spirit as well as the letter of the statutes.

EXPRESS COMPANIES.

The statute providing for the taxation of express companies permits the payment of ten thousand dollars to be made by any

such company or association in lieu of any sum that might be due, based on the percentage of the gross amount of the business done.

While the yearly payment made by one express company is considerably in excess of the above amount, apparently no attempt has yet been made by said company to take advantage of this provision of the statute. In view of the fact that the Board of Equalization, in the absence of a definite report, is authorized to determine the payment to be made, it would seem advisable to repeal Section 2434, and a portion of Section 2435 of the General Statutes, which authorizes a company to pay a fixed amount in lieu of a proper return.

INHERITANCE TAX LAWS.

The inheritance tax is being adopted more generally by the states as a method of securing revenue. In addition some radical changes have been made in existing laws for the purpose of increasing such revenue.

At present thirty-eight states and two territories in the Union. have laws which permit the taxation of successions or inheritances, as follows:

Arkansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, the territories of Hawaii and Porto Rico.

While as a rule the states avoid double taxation by including in the imposition of the inheritance tax only property of either residents or nonresidents, which is physically within the state, nevertheless, certain states maintain and uphold the practice of double taxation by taxing the shares of stock, and in some cases the registered bonds of corporations organized under their laws when owned by the estate of a nonresident decedent and physically without the state. The states following this procedure are Colorado, Connecticut, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, North Carolina, New Hampshire, New Jersey, New York, Oklahoma, Wisconsin, and Vermont.

A most flagrant offender in double taxation under the inheritance tax law is the State of New York. The act passed by the legislature

in 1909, permits double taxation to the extent of twenty-five per cent. of certain bequests in excess of $1,000,000.00, even if this same property may have been subject to a tax of fifteen per cent. in any of four other states which might have been the domicile of the decedent.

The inheritance tax law of Oklahoma under certain conditions, by means of a cumulative increase in the tax rate, apparently confiscates any testamentary gifts to strangers in excess of $100,000.00.

At the Fourth International Tax Association Conference held in Milwaukee, Wisconsin, August 30 to September 2, 1910, a special committee of that association, which had for two years been considering the subject of drafting an inheritance tax law, made its report. Inasmuch as changes have been made in the inheritance tax law of this State by every general assembly since 1901, and with the possibility that it may be used for a further increase in revenue, extracts from the report of the committee with a draft of the law ought to be of definite interest, and are given herewith: EXTRACT FROM REPORT OF THE COMMITTEE ON THE INHERITANCE TAX LAW.

INTERNATIONAL TAX ASSOCIATION CONFERENCE.

September 1, 1910, Milwaukee, Wis.

In the preparation of the draft of a bill submitted herewith the committee has aimed at the following: First, A reasonable tax which will provide a fair revenue; Second, One that is definitely fixed and easily computed; Third, A tax which, if possible, shall be uniform in the different states, especially in the imposition of a tax on intangible personal property when held by estates of nonresident decedents, and thus avoid double taxation.

The tax is graded as to relationship and progressive as to the amount of the bequest, and is based on the value of each bequest instead of on the total value of the estate. It is levied on the transfer of tangible property having an actual situs within the State, and of intangible property wherever located, following the principle that the intangible personal property of a resident decedent should be taxed at his domicile.

The bill prevents double taxation and gives a proper share of the taxable estate to any state enacting it. It follows where practicable the phraseology of the New York statute, which has been the subject of many judicial interpretations. The New York law, however, does not make a proper apportionment of property, and results in double taxation by taxing certain intangible property of nonresident decedents. Therefore its provisions cannot be followed verbatim.

The rates and grades suggested are tentative, but the Committee does not believe the maximum rates should be exceeded. The division between direct and collateral relatives is that of the New York law, except that in New York the exemption to parents, widow, or minor children is $5,000 and to other direct relatives $500.