THE LAW OF APRIL 10TH, 1884. The laws of the several States in the Union providing for taxation of railroad property are as various as the States themselves, no two being alike; and it would seem there is no method of taxation possible to be devised which is not applied to railroad property in some part of the country. Some of the State laws are so complex and illdefined as to be well nigh an insolvable problem; some of them are so loose and inharmonious as to admit of striking inequalities, and it may be added that in some of the States these laws take their color from the condition of public sentiment prevailing in regard to railroad corporations, whether it be friendly or unfriendly. In some States the power of the corporations is so great and their political influence so potential as to well-nigh control legislation, and thereby enable them to escape the just contribution that such property should pay for the benefit it receives at the hands of government; while in others, where what is termed the Granger sentiment is paramount, prejudice against these corporations is so marked that the tendency is towards excessive exactions and unfriendly legislation. In our report of last year, after speaking of the beneficent results to the State and country resulting from these great enterprises, we said, "they should be recognized as friends and not as enemies, and as the greatest material factor in our civilization and progress they are to be gratefully recognized and should be fairly dealt with." It is in this spirit that this Board has endeavored to perform its duty with fidelity to the State, but without a shade of hostility to this important interest. It is to be regretted that some simple uniform law for the taxation of this class of property, based on the fundamental principle of equal taxation, has not been devised, which, in its underlying principle, would be adapted to all the States, with only such modifications as the varied conditions might manifestly require; a law so plain that it could neither be evaded by the cupidity of the corporations, or so administered, even in unfriendly hands, as to oppress them. The Board has taken some pains to be informed as to the laws of taxation on this class of property in the various States, and after a careful examination of them all, has arrived at the conclusion, strengthened by two years of experience in its application, that the law of New Jersey-the act of April 10th, 1884-approximates the correct principle more nearly than the laws of any other State. Its foundation stone is taxation on true value, and this principle cannot be escaped or departed from in New Jersey, because it is a constitutional requirement. Article IV., Sec. 7, paragraph 12: "Property shall be assessed for taxes under general laws and by uniform rules, according to its true value." It is held by many writers of reputation, and scholarly theorists, that the correct principle of railroad taxation is not upon the value of the real and personal property but upon gross receipts, or, in other words, that receipts or productiveness should constitute the measure of value. But it is worthy of remark, that the basis of taxation in most of the States is upon the ascertained value of the property-not its productiveness—the variation in the systems being in what is to be included in making up the value, and the methods or rules for its ascertainment. For instance, in some States franchise is not taxable at all. In others it is included in and goes to make up the value, and in others it is separately valued and taxed. In some States value is ascertained by tax boards or boards of equalization or railroad commissioners, in others it is done by the State Comptroller or other State officers, and in others altogether by the local assessors. From such various agencies, and conflicting rules and methods, uniformity is simply impossible. Four of the States (Maryland, Michigan, Minnesota and Wisconsin) have adopted the system of taxation wholly on gross receipts, and in four others (Pennsylvania, Mississippi, Missouri and Louisiana) taxation is based on a mixed factor, the chief element, perhaps, being gross receipts. It has already been stated that the act of April 10th, 1884, in obedience to the constitutional provision, provides for taxation on true value, and, so far as the underlying principle is concerned, is in accord with twenty-eight other States. It proposes to tax corporations, so nearly as may be, as natural persons are taxed for the property they own, on its true value, and specifies as one of the elements of value, the franchise. For the ascertainment of this true value it provides for a State Board of Assessors, that shall be non-partisan, composed of four citizens of the State, two from each of the great political parties, to be appointed by the Governor, subject to the approval of the Senate, who shall not, during their term of office, be interested in any railroad or canal company; and, further, that "each Assessor before entering on his duties shall file with the Secretary of State an oath taken before a Justice of the Supreme Court, that he will faithfully discharge the duties of his office, and that he is not interested in any railroad or canal company." It directs in many particulars the methods to be pursued in obtaining the necessary information for arriving at true value; prescribes the general principles which shall govern the Board; names the dates at which the valuations shall be made, and the time when it shall be completed, and fixes the rate of tax to be assessed thereon. And it gives the amplest opportunity for the corporations to be heard in their own behalf, by providing First. Sec. 7. That on the first Monday of July the Board shall meet at the State House in Trenton and shall give a hearing to all companies interested touching the valuation and assessment of their property. Second. That after the first day of December, the day for the delivery of the assessments to the Comptroller, a copy of the valuation in detail of the property of each corporation, and of the tax assessed against the same, under the provisions of the act, shall be served upon the treasurer of such corporation, or left at his office within ten days after the said first day of December. * * * Third. Sec. 15. That the said State Board of Assessors shall meet on the third Monday in December, at Trenton, for the purpose of reviewing their assessments. Upon the written complaint of any company or person considering itself or himself aggrieved, and specifying the grievance, they shall review the said. assessment and correct the same as shall appear just. And the rights of these companies are still further guarded in the sixteenth section of the law, which provides "that if any company shall desire to contest the validity or amount of any tax levied uponproperty under the provisions of this act, such contest shall be made by certiorari on such terms as the Justice or Court granting the writ may impose. Thus the entire work of the Board may be subjected to the review of the highest judicial tribunal of the State, of which privilege many of the companies, as heretofore stated, have availed themselves. The Board has entered upon these statements for the purpose of maintaining their conclusions, that after a careful examination of the methods in other States, and comparing them with those of our own, they believe the law of April 10th, 1884, approaches nearer the correct standard of railroad taxation than that of any other State, and we beg to add in dismissing this branch of the subject that we have endeavored to discharge our duty under the law with fidelity to the State and without prejudice or partiality toward the corporations ; and we rejoice in knowing that if we have erred in either the rules we have adopted or in our methods of procedure, we shall be enlightened by the decision of the highest tribunal of the State. A copy of the law as amended at the last session will be found in the Appendix, marked Exhibit A. CONCLUSION. The Board submit their work of this year to the Legislature and the people of the State with confidence that the experience of a second year, and the ampler time at their disposal, will show a greater degree of accuracy in their work than did that of the previous year. They are hopeful that when the adjustments are made to meet any mistakes they may have made, either in principles or methods, which the court may point out, that all the corporations of the State, and especially the railroad corporations, will be able to see that the assessments made against them under this law are at least approximately just. We beg, in this connection, to refer to the tables of comparative taxation given in the report of last year, which the Board think show conclusively that the railroads of the State under the law of 1884 are paying less than their just proportion of the burden of taxation; and in one State, where the conditions are very similar (the State of Massachusetts) the taxation of the railroad property is much higher. It may just as well be recognized that there is all over the country the growing apprehension that power is being consolidated by the railway corporations to such an extent as to endanger the prosperity of all other of the great industries of the nation, and to jeopardize the rights of the people; and the only way to meet and dispel this apprehension is by a wise and skillful administration of the great powers granted to these corporations by the government, and the cheerful payment of "the just contribution that such property should pay for the benefits which, more than property generally, it receives at the hands of government." Very respectfully, EDWARD BETTLE, ALEX. G. CATTELL, ALLAN L. MCDERMOTT, State Board of Assessors. |