Some years since-a good many years ago, an important cause was heard and determined by the Supreme Court of this State with regard to the power of the Legislature to tax incorporated property. It was the celebrated case of Mott vs. the Pennsylvania railroad company, sometimes referred to as the case of the canal com:nissioners vs. the Pennsylvania railroad company, and it arose out of the legislation for the sale of the main line of the public works. That act provided that the works should be sold at a minimum price of $7,500,000; that any organized incorporation might bid, under the terms of the act, for those works, or that any voluntary associations combined together might bid, and, if they purchased the works, provision was made for their organization as an incorporation; and it was further provided that the purchasers of the works should hold their property ferever exempt from taxation by the State. That was the extraordinary act which was carried into the Supreme Court of this Commonwealth; and on behalf of the State, the President of this Comvention, now venerable in years, but then in the full possession of physical vigor, was heard before the court, and with him were associated other counsel, myself among the number. When that great case was argued, the court said, and said properly, that it was not competent for the Legislature of the State, by contract, to surrender its power which had been conferred upon it by the people; that it was a power necessary to the existence of government, and having been granted by the people and lodged with the Legislature, their agents could not surrender it by any absolute agreement for all future time. But they said that the Legislature would be competent, by contract, to suspend for a temporary period the exercise of this power; that they might, upon due consideration of a pecuniary character, or of any other character involving value, agree with an individual or a corporation, that property, more or less in amount, should be exempted from the exercise of this authority. In other words, they might, in this sort of way, commute the tax and relieve the party from the ordinary yearly contribution. And that opinion was expressed in view of many decisions of the Supreme Court of the United States, which were then produced in the argument. I do not know, sir, in the course of subsequent judicial experience, what views the Supreme Court of the United

States, or of our own, or any other State, may have taken on this subject; but I cite the case as it then stood, when this great question was heard, and thoroughly and fairly heard, in the highest court known to the Constitution and laws of this Commonwealth.

Mr. CUYLER. Mr. Chairman: I beg the gentleman's pardon for interrupting him. In the argument of that case I was concerned on the other side, opposed to my friend from Columbia. The very question had been decided in Ohio and New Jersey opposite to the conclusion arrived at in our own courts; and since then the Ohio and New Jersey doctrine has been held in many of the States of the Union and in the Supreme Court of the United States.

Mr. BUCKALEW. In order, then, to settle this question of power within our State, and for our own State alone can we act, I think it will be eminently proper to incorporate a provision in this, or in some other article, preventing the Legislatiue from bartering away the taxing power under any circumstances whatever; the entire power, with all or any of the incorporated companies of this State now existing or hereafter to be formed.

A word on another point, sir, and I will conclude. The fallacy pervading this debate on the part of gentlemen who have argued in favor of this section in its original form is this: They appear to assume that it is necessary that this Convention should give to the Legislature power to tax corporations, completely and exhaustively, and that there is some limitation upon them at present, which this Convention can remove. I have already spoken on that point and given my reply to it. But consider that no matter what provis ions you put in this article, you must leave to the Legislature, first, the selection of the objects of taxation and revenue; and next, the fixing of the particular rate of contribution in any case upon any common species of property. Now, suppose, as some gentlemen desire, that you can get a provision shaped so that you can subject these corporations to local taxation without limit, in each and every part of the Commonwealth, where their works or property may be located; suppose you may increase the amount of contribution by them to local objects by constitutional amendment, what will be the result? It does not follow that you will increase the sum total of the taxation which these corporations

will pay. Not at all. Gentlemen will not secure that object. They will only secure the re-distribution of the contributions which these corporations make to tax purposes without adding to the aggregate sum contributed.

Suppose, for instance, you can increase their contributions in the aggregate in this Commonwealth to the extent of two millions of dollars to local objects. Do you not see that, in the same degree to which you will tax them locally, it will follow, almost of necessity, that they will be liberated, discharged, or relieved from contributions generally; I mean of the whole or a part of these several taxes which hitherto they have paid directly into the Treasury of the State? If you, by a constitutional provision, compel the Legislature to tax these corporations locally to the extent of two millions of dollars, you would have an almost irresistible argument furnished to them for appealing to the Legislature to reduce those taxes which they pay to the State in the form of stock tax; or if it should be desired to renew such a tax, the tax on gross receipts, or the tax on net earnings, or any other form of taxation for general purposes, or State purposes, to which corporations have been heretofore subject.

I suppose the better plan would be to leave this subject to the discretion of the Legislature entirely, without touching it at all. Gentlemen do not know where they are striking. They do not know what results they will produce. They cannot tell what embarrassment to the finances of this State will result from the action here proposed. I would leave this tax power in the hands of the Legislature without any limits whatever, except those which have been heretofore imposed upon it by constitutional provisions, subject always to the fundamental condition that taxes shall be equal and uniform upon the same species of property, whether held by individuals or corporations, and that we have here in the article on revenue, taxation and finance.

Consider, Mr. Chairman, what is the result at which you aim. At present, as has been said here, over sixty per cent. of the State revenue is derived from corporations. That is of common advantage to the whole State. That relieves all the people of the State equally. That is a relief and an advantage to every man who owns an acre in this Commonwealth, because in consideration of these large corporation contributions to the State taxes you have

been able to relieve land altogether from State taxation. As it is now, land pays county taxes and other local taxes, but it pays no State tax. On the other hand, the corporations pay the State taxes, and the major part of them by general contributions to the Treasury of the State. Now, suppose you should dry up all this source of revenue, or reduce it largely, then you must look to some other source of revenue for State purposes. You must go back to the land, or to some other object which now escapes, and observe what the advantage would be as among the people themselves. Suppose you could get increased revenue locally in the city of Philadelphia, where capital is aggregated, and at other points in the State where corporate capital is aggregated. Suppose you get rich, fluent streams of revenue tapped for these local purposes in Philadelphia and other leading points where corporations are located; all the advantages of corporation taxation would be enjoyed by those localities where the improvements are located, where property has been increased in value by the making of these improvements-where men are best able to pay them. By this section all the taxation that you shift from the State will be transferred to these localities. It will be lost to the State generally, and it will be left to the localities where the corporate property is located, and the people will be called upon in some other way to pay that portion of the State taxes which has hitherto been paid by these corporations. You will only succeed, therefore, in shifting this burden from one class of people to another.

Mr. CORSON. Mr. Chairman: If I understand the gentleman from Columbia (Mr. Buckalew) correctly, and I defer very much to his opinion in matters of this kind, he admits that we ought not to allow it to be in the power of the Legislɛ ture, at any time, to surrender the right of taxation. Now, it occurs to me that if we desire to preserve that power in the Commonwealth, it would be better to assert it in the Constitution. And it appears to me that, notwithstanding all these amendments, the report of the committee comes right square up to the work. If the amendment proposed by the gentleman from Philadelphia (Mr. J. Price Wetherill) is to be adopted, then it ought to be adopted with the amendment of the gentleman from Cumberland (Mr. Wherry.)

Now, let us see where we stand. The committee say, "all property, real and

personal, of railroad, canal, and other joint stock corporations shall be subject to taxation for all purposes." That is very good. I am willing to admit, with the distinguished gentleman from Philadelphia, (Mr. Woodward,) that we ought to except the roadway, and will vote for that; and, I understand, in due time an amendment will be prepared and offered to accomplish that. Then the gentleman from Philadelphia, to my right, (Mr. J. Price Wetherill,) offers, what I understand to be, the clause adopted in the Constitution of Ohio, with a few words which the gentleman from Cumberland proposes to strike out. He offers this:

"The property of railroad and canal corporations and other joint stock companies, now existing or hereafter created, shall forever be subject to taxation, the same as the property of individuals, and not otherwise."

The amendment of the gentleman from Cumberland proposes to strike out the words "the same as the property of individuals, and not otherwise. The question now pending is on his amendment to strike out these words. We ought not to lose sight of the question immediately before the House, which is on that motion to strike out. If that should be agreed to, then the amendment proposed by the gentleman from Philadelphia would read: "The property of railroad and canal corporations and other joint stock companies, now existing or hereafter created, shall forever be subject to taxation."

Certainly the Legislature then cannot barter it away; certainly then there can be no surrender, because there is a direct assertion of the power. I rose not to make a speech, but merely to favor the amendment of the gentleman from Cumberland to strike out the last sentence, "the same as the property of individuals, and not otherwise." We all seem to be agreed that corporations, like individuals, should be taxed, and, as was said this morning by a distinguished gentleman to my right, if there is one question upon which the people of Pennsylvania above all others are agreed, it is upon this, that we shall make these corporations pay their just proportion of the taxation which the people of Pennsylvania have to pay to carry on their government.

Mr. MACVEAGH. Mr. Chairman: I sincerely trust that this section will not be adopted, even to reach the very desirable end that the gentleman from Montgomery (Mr. Corson) has in view. It is quite

clear, I think, that this Convention would be ready to adopt a section forbidding the Legislature from contracting hereafter that certain property should not be taxed, to prevent the Legislature from parting with the right of taxation in any instance; but that provision certainly ought not to be limited to railroads or canals. That would be a general provision limiting the power of the Legislature, and should be either in the article upon legislation or in the article reported by the committee on this express subject of taxation. There is no more reason in the world why the Legislature should not barter with a railroad company to part with its right of taxation than with any municipality or any person or any other interest. There is nothing in the nature of a railroad or a canal, or of the corporation engaged in managing either, that makes it specially obnoxious to this objection. The Legisla ture ought not to be authorized to barter away the right of taxation. That is clear; but that will not be reached by this provision, and this provision, as I read it, if it have any effect whatever, can only have the effect of creating doubt as to the power of the Legislature to tax these companies. The real and personal property of the corporation is to be taxed for all purposes; but I submit that it would be very unwise to say that only, as this provision does say it, even as amended by either proposition.

I trust, therefore, the committee will vote down the amendments and vote down the section. Then where shall we stand? Then, either when we come to the second reading of this report at the next stage, or to the second reading of the report of the Committee on Taxation, if it is not found there, we can insert a section prohibiting the bartering away of the right of taxation, in any instance, by the Legislature; and when that is done, where then shall we stand? Then the franchises and the property of the corporations will be liable to taxation at the will of the law-making power, and that is where they ought to be. I trust that the gentleman from Columbia (Mr. Buckalew) does not mean what his words would seem to have us imply, that because the corporations pay certain State taxes, therefore the people do not pay them. My objection to making the franchises and the valuable property of corporations taxable for local purposes is on a totally different theory. I believe in making the railroad companies and the large corporations tax collectors for State

localities at all.

I grant you have a perfect right to tax their real estate; you have a perfect right to tax their tangible property within the locality; but it is not right for any municipality, for the city of Philadelphia or the county of Dauphin, because a great Commonwealth grants a franchise whereby a highway is created within her borders, to make the owner of the franchise the tax-collector for every local purpose. It does not seem to me that it would be wise to do so, that it would be economical to do so; but, on the other hand, I think it would work a great injustice to attempt anything of the kind. But that is a question which may safely be left to the legislative wisdom of the State; and I trust, therefore, that we shall leave the property of these corporations where it ought to be left, liable to taxation as all other property within the Commonwealth. Mr. NEWLIN. Mr. Chairman: I desire to say a single word. The amendment proposed by the gentleman from Philadelphia (Mr. J. Price Whetherill) is to a certain extent plausible in its phraseology, but I think it has an effect which he has not considered. The proposition is to limit corporation taxation to the same kinds of taxes as individual taxation. Now, the principal way of taxing corporations is by taxing their gross receipts or their net earnings, or their capital stock or dividends; and if this proposition was adopted the result would be simply this: That no tax could be levied on the gross receipts of a railroad company, unless, like

wise, a tax were imposed on the gross receipts of individuals. So also a tax could not be imposed upon the net earnings of a corporation unless an income tax, by the State, was imposed upon individuals. It seems to me that that is an objection of such a serious nature as renders it advisable to vote down the amendment.

Mr. MINOR. Mr. Chairman: Great difof many about the application of this tax ficulty seems to have arisen in the minds provision, because of the danger of roadbeds of railroads being cut up piece-meal, and sold out for taxes that may be a lien upon them. I refer to that in connection with the amendment which has been ofphia. That amendment is copied, I see, fered by the gentleman from Philadelfrom one of the articles of the Ohio Constitution. Now, sir, under that article, and another that I find in the same instrument, the Legislature of Ohio, perceiving this difficulty, obviated it by passing a statute declaring that the roadbed, used in connection with the regular runwater stations, and other appurtenances, ning of a railroad, should be regarded as personal property,and hence taxes on them are there now assessed against the railroad company, just as taxes on any property that is personal in its nature, without reference to its becoming such by virtue of an act of the Legislature. So the taxes there are not a lien on the roadbed, that are assessed on account of it; but they like a tax upon a car, upon money in its are simply a debt of the corporation, just treasury, or upon any other personal property that it may own, and is collected as such.

Now, sir, if it was competent for the Legislature of Ohio to do that—as was decided some time ago in an opinion delivered by Chief Justice Thurman, now in the Senate of the United States-it would be competent, under this same clause, for the Legislature of this State, it seems to me, to do the same thing, unless there are vested rights in the past beyond their reach.