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June 30, 1899, as $44,564,956.54, and in December, 1897, $41,326,131.81, while the money rendered for taxation in 1898 by individuals in the entire State was only $5,864,416. This does not take into consideration the deposits with the 167 private banks and bankers in the State, so that “it is safe to say that not one dollar of money out of ten in Texas is listed for taxation."

The resources of some of the national banks in some of the cities of the State exceed the total valuation for taxes of personal property in the counties where such cities are located.

There are instances, it is said, of the rendition of money for taxation at 50 cents on the dollar which have been accepted and approved by the commissioners' court after due discussion of the question. This is referred to by the tax commission as strongly illustrating the inequalities of valuation for taxation in the State.

The commissioners proposed laws providing for discovery and valuation of such property for taxation, and said:

“If those who have money and wealth and good dividend-paying securities can be reached for taxation, there will be no trouble about the other property holders coming up with their share of the debt of highest obligation.”

They also cite the phillipic of ex-President Harrison against the evasions and frauds of holders of intangible securities. The commission, however, seem to fail to grasp the fact that the defects referred to and remedial difficulties are inherent in the general property tax system.


Every domestic corporation chartered before the passage of the recent franchise act is required to pay to the Secretary of State an annual franchise tax of $10, and every such corporation chartered after the passage of this act is required to pay $10 on incorporation, and in each succeeding year an amount graduating as follows: When capital stock isBetween $50,000 and $100,000

$20 Between $100,000 and $200,000

30 Over $200,000...

50 Foreign corporations authorized to do business prior to the passage of a recent act are annually required to pay $25 when their capital stock is $25,000 or less, and $100 when their capital stock is between $25,000 and $100,000. All foreign corporations authorized to do business in the State after the passage of this act are required to pay an annual franchise tax of $50 when that capital stock does not exceed $100,000, and in addition thereto a tax of $1 on every $10,000 of capital stock in excess of $100,000, but not exceeding $1,000,000.



TAXATION OF CORPORATIONS IN MICHIGAN. [Prepared under the direction of the Industrial Commission by GEORGE CLAP

PERTON, expert agent.

Since the report on taxation in Michigan was prepared there have been some important developments in the experience of that State which are of special interest wherever taxation reform commands attention.

Michigan may be said to be passing through a transition period in taxation, or, as it has been designated, “ an epidemic of equal taxation."

The work of the State board of tax commissioners during the year 1900, in increasing the valuations of real and personal property taxed under the general law of the State, has been referred to. The total increase in such property valuations in 1900 over 1899 was $349,260,941, the increase of realty valuation being $180,594,302, and of personalty $168,666,639. The increase in property valuations both real and personal in 1900 over those of 1896 was $212,450,028. This increase is in property coming under the general property tax, and assessed and valued by the usual methods.

According to the report of the State board of tax commissioners for 1900, just issued, the total assessed valuation of property, real and personal, under the general law, was $1,317,450,028, divided as follows: Real estate..

$1,006, 453, 013 Personalty.

310, 997, 015 The manner in which this materially increased assessment was distributed is shown by the following table:

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An examination of the assessed valuation of property in the cities of the State for the years 1899 and 1900 discloses the fact that the increase in the value of real estate in such cities for 1900 over 1899 was $45,347,232, while the increase in personalty was $87,309,936, making a total increase of valuation in the 78 cities of the State of $132,657, 168. A further comparison shows that for the year 1900 the percentage of increase in the assessed valuations of real estate in 1900 over that of 1899 was 22, while that of personal property was 119.

The total taxes for 1900 upon these property valuations under the general law were $20,380,532.86, or $111,503.31 less than in 1899; the sum of $15,380,063.88 being derived from real estate, and $5,000,468.98 from personalty. The percentage of this total tax derived from real estate was 75.465, and from personalty 24.536, and the average rate of taxation per $1,000 of assessed valuations was substantially $15.47.

The percentages of total taxes derived from real estate are shown to be 85.336 in 1899, and 75,465 in 1900, and from personal property 14.664 in 1899, and 24.536 in 1900. The rate of taxation is shown to be $21.165 in 1899, and $15.47 in 1900 on each $1,000 of valuation, presumably ascertained by the same methods of computation. It will be remembered that it was shown in the original report for this State that the rate of taxation ascertained by the method of computation employed in the auditor-general's office in 1896 was substantially $17.60 per $1,000 of valuation.

The increase in enrollment and assessment of intangible personalty, such as money, mortgages, bonds, stock, etc., by the State board in 1900 over previous years was very great, especially in the cities. These increased assessments were marked by great inequality. As a result of such increase there is general complaint and denunciation of the laws and methods employed by the commissioners on the part of the owners of such property, which had theretofore largely escaped taxation. It is contended on their part that there is great inequality and discrimination in the discovery and assessment of this class of property; that the portions of such property found and enrolled were, because of excessive valuations as compared with other property, and taxation at local rates, disproportionately and excessively taxed; and that in consequence capital and capitalists are removing from the State to an alarming extent, and that the course pursued by the commissioners under present laws in this regard, if continued, will seriously jeopardize the business and prosperity of the State.

On the other hand, it is claimed by the board that inasmuch as the year 1900 was the beginning of its work in this direction, it was necessarily imperfect and incomplete, resulting in more or less inequality; but that if it is permitted to continue its work in respect to assessment and valuation of property under the general law, it will be able with additional knowledge and experience to subject a much larger portion of property to assessment, and secure greater equality in valuations, so that there will eventually be such increased assessment and correct valuations as will so reduce the rates of taxation on all property that none will be excessively burdened.

There appears, however, to be a growing sentiment among the people, in view of this experience and more careful consideration of the subject, in favor of a greater restriction of the general property tax, and the adoption of special methods of taxation for intangible personalty and some other forms of property.

The theory and purpose of the State board of tax commissioners, according to the report for 1900, seems to be to "improve” the general property tax and subject all forms of property taxed under the general law to assessment at full cash value and uniform rates; and the board expresses considerable confidence in its ability to eventually perform that task.


The provisions and fate of the so-called Atkinson bill providing for the taxation of railroads and other quasi-public corporations have been referred to in detail. The act was practically declared unconstitutional, because in some of its provisions it was in violation of the principle of uniformity applicable to all property taxed under the general law. This bill was the favorite measure of Governor Pingree, whose conception of equal taxation, to which his administration was positively committed, appeared to be a universal property tax at uniform valuation and uniform rates; and he had, against bitter opposition, directed all the force and energy of his administration for years to secure its enactment. When the bill which had characterized his administration was thus held unconstitutional, he determined to legalize the method of taxation it provided by special constitutional provision. To this end he convened the State legislature in special session a few days before the general election of 1900, for the avowed purpose of submitting to a vote of the people amendments to the constitution permitting the “enactment of laws that will provide for the equal taxation of all property by an assessment of the same at its actual cash value." Convened at such a time, the legislature, in view of existing political exigencies and the general sentiment that had been created among the people of the State in favor of the abstract principle of “equal taxation," hastily and without due consideration submitted to popular vote the amendments embodying the demands of the governor, which were carried by a large majority of the votes cast upon them. These amendments maintain the legislature's authority to provide for specific taxes on corporations, and also vest in that body authority to provide for the assessment of the property of corporations at its true cash value by a State board and for levying taxes thereon, and expressly direct “ that the legislature shall provide a uniform rule of taxation for such property as shall be assessed by a State board of assessors, and the rate of taxation upon such property shall be the rate which the State board of assessors shall ascertain and determine is the average rate levied upon other property upon which ad valorem taxes are assessed for State, county, township, school, and municipal purposes." The governor, evidently construing the adoption of these amendments to be an expression of the popular will in favor of the abolition of the specific tax system in vogue, and the extension of the general property tax in modified form to corporations paying specific taxes, again convened the legislature in special session in December, 1900, and directed all the force and pressure of the executive toward the enactment of laws that should embody thë alternative method prescribed for the taxation of railroad, express, telegraph, and telephone companies. The legislature, however, not being in accord with the views of the governor and being averse to hasty legislation upon so important a subject, refused to enact such laws, deferring action upon the subject until the then incoming legislature should convene in regular session under a new administration.

Thus the administration of Governor Pingree, committed to the cause of “equal taxation” through one uniform tax on property values, ended without achieving any practical results in State legislation upon the subject. It succeeded, however, in securing the adoption of the restrictive constitutional amendments referred to, which give the legislature power to extend the general property tax to quasi-public corporations through “uniform valuation” and “average” rates of taxation; but these amendments are regarded by many intelligent people of the State as likely to impede modern and progressive legislation upon the subject of taxation and delay progress toward the attainment of “ equal taxation” in fact.

The legislature of 1901, in session at this writing, have under consideration several bills providing, through various methods, for the substitution of an ad valorem tax for the existing specific tax upon the earnings of railroads and other quasi-public corporations. While there is a strong popular sentiment throughout the State in favor of such ad valorem taxes, there is also positive and intelligent opposition to a change in the existing specific tax method.

Through years of agitation equal taxation has become a “paramount issue” in Michigan, the people of the State being divided thereon into 2 opposing forces, one contending for one rule and one method of taxation applied to all property as essential to equal and uniform taxation, the other contending for diversified methods adapted to special forms of wealth as essential to the attainment of the desired result, and insisting that the methods proposed for the extended application of the general property tax would be conducive to unequal taxation in practice. While there is no division upon the abstract principle of equal taxation, there is active conflict as to the methods for the attainment of the desired result.


The act creating a board of State tax commissioners declared one of the duties of that board to be “to inquire into and ascertain the valuation of the property of corporations paying specific taxes, and to ascertain the actual rate of taxation, as based upon the valuation of said properties, that is paid by said corporations,". in order to determine whether such property pays upon its true value a rate equal to the rate paid by property taxed under the general law. By virtue of this authority the board has undertaken to secure an accurate appraisement of the property of railroad, telephone, telegraph, and express companies in the State. Prof. M. E. Cooley, of the engineering faculty of the University of Michigan, was employed to supervise the work of valuing the “tangible property" of these corporations, and Prof. Henry C. Adams, of the same university, to determine the value of their “immaterial” or “ intangible” property. Each of these men was provided with an able corps of expert assistants, most of whom were civil engineers, graduated froin engineering colleges or technical schools, some 15 institutions being represented in this, perhaps, the most elaborate attempt to determine property values of railroads, etc., ever made. Prof. M. E. Cooley, M. Am. Soc. M. Ê., as appraiser, was the head of the entire force, and the principal other members of the staff were Henry E. Riggs, M. Am. Soc. C. E., of Toledo, Ohio, chief inspector in charge of civil engineeing; T. H. Hinchman, jr., M. Am. Soc. M. E., Detroit, chief inspector in charge of mechanical engineering; D. Farrand Henry, M. Am. Soc. C. E., Detroit, chief inspector of plank roads and river improvement companies; William S. Conant, M. Am. Soc. M. E., Detroit, chief inspector of telegraphs; William J. Rice, New York, chief inspector of telephones; Herbert C. Sadler, M. Inst. Nav. Arch. and Marine Engrs., chief inspector of vessel properties; F. G. Susimihl, of Michigan, architect.


The final settlernen of various questions and knotty points which arose in formulating the basis for the valuation of certain items, together with a review of the methods and final results, was entrusted to a special board of review, composed of Messrs. Octave Chanute, of Chicago; Charles Hansel, of New York; Prof. Charles E. Greene, of Ann Arbor, and Col. G. W. Vaughn, of Chicago, all of whom are members of the American Society of Civil Engineers, and, not having been engaged in the detail work, were presumably able to take a broad view of the matters submitted to them.

While the detailed report of these appraisements has not yet been published, we are able from information obtained to present the general result of the work with respect to railroad property. The work of appraisement covered a period of 5 months, being commenced in September, 1900, with 54 men. In October there were 88 men employed, in November 111, in December 98, and in January, 1901,51. The total cost of the appraisement was about $57,000.

The method adopted for determining the value of the physical property" of a railroad was to estimate by special “ field inspection" the value of the separate items of property composing it, which when combined were assumed to constitute the true value of its entire property. The appraisers first determined the “cost of reproduction” of the various constituent parts of the property of a railroad, such reproduction value representing what it would cost to build a road of entirely new materials and labor where the road exists, even to the extent of cov. ering the cost of surveys, right of way, legal expenses, interest, etc., as shown by the following summary form, and then by suitable reductions the “present value was determined, taking into consideration the depreciation of the elements due to wear:




Main line.

Spurs and sidinge

Value of physical properties

Railroad No.


Cost of repro



1. Engineering (4 per cent items 2 to 25, inclusive, and 33).
2. Right of way and station grounds.
3. Real estate
4. Grading
5. Tunnels
6. Bridges, trestles, and culverts
7. Ties (cross and switch ties)
8. Rails
9. Track fastenings
10. Frogs, switches, and crossings.
11. Ballast
12. Track laying and surfacing.
13. Fencing
14. Crossings, cattle guards, and signs.
15. Interlocking and signal apparatus.
16. Telegraph, (30) telephones,
17. Station buildings and fixtures
18. Shops, roundhouses, and turntables,
19. Shop machinery and tools
20. Water stations..
21. Fuel stations.
22. Grain elevators.
23. Warehouses
24. Docks and wharves
25. Miscellaneous structures.
26. Locomotives
27. Passenger equipment.
28. Freight equipment.
29. Miscellaneous equipment
31. Ferries and steamships.
32. Electric plant.
33. Terminals
34. Legal expenses (0.5 per cent items 2 to 25, inclusive, and 33)
35. Interest (3 per cent items 1 to 31, inclusive)..
86. Miscellaneous expenses, Organization, 1.5 per cent

'{Contingencies, 10 per cent..
Total cost of construction and equipment
87. Stores and supplies...

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