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THE ATLANTJAN
:: .*
99
HERE’S TO LABOR
May you live long and pros
per. Your cause is right
We Handle the
BOSTONIAN SHOE
STRICTLY UNION MADE
We will appreciate a portion
of your liberal patronage
Bell Phone Main 271
Home of Good Shoes
Successors to Knott & Awtry Shoe Co.
TAXING THE CORPORA
TIONS.
Systems Now in Use in Eastern
States—Wisconsin Gets 71 Per
Cent, of Total Revenue—Rail
road Valuation is Made Year
ly—Very Small Call is Made on
General Property.
Commissioner of Corporations
Herbert Knox Smith, submitting
his report on the taxation of
corporations in the Eastern States,
in which are classed Ohio, Indiana,
Illinois, Michigan, and Wisconsin, says
that this group differs from the Mid
dle Atlantic group in using much more
extensively the general property tax
for State revenue. Wisconsin alone
approaches a separation of sources of
revenue for ordinary State expenses.
Ohio applies special taxes and the
general property tax to the same cor
porations for State purposes. Indiana
and Illinois levy practically no special
taxes on corporations. Michigan and
Wisconsin make elaborate physical
valuation of steam and street rail
way property, which, with earning ca
pacity, forms the basis of State-ad
ministered ad valorem taxes. Revers
ing the tendency Almost universal
elsewhere, these two States have,
with respect to the taxation of rail
roads, gone from the modern gross
earnings method to the ad valorem
tax. They also use extensively the
“average rate” method, i. e., applying
to certain public-service corporations
a rate which is the average of the
State and various local rates. All of
this group exempt shares of stock in
■the hands of holders, when the cor
porate property is taxed.
Wisconsin derives about 71 per cent,
of its total State taxes from corpora
tions; Ohio, 52 per cent.; Indiana, 19
per cent.; Illinois, 34 per cent. In
Michigan, revenue from special cor
poration taxes is applied entirely to
the school fund, and equals about 45
per cent: of the total taxes collected
by the State. The entire real and
personal property of Wisconsin is an
nually valued for State purposes by
a State commission. The constitu
tions of three States in this group,
namely, Ohio, Indiana, and Illinois,
prohibit the exemption of corporate
property from the general property
tax. Railroad and insurance compan
ies are among the heaviest taxpayers
in this group.
In Ohio the total State revenue from
taxation in 1909 was a little more
than $10,000,000. Of this amount, over
5? per cent, was from corporations.
State and local taxation of corpora
tions is by the ad valorem method,
supplemented by special methods of
Slate taxation. Thus, in addition to
the State tax on property, railroads
pay on gross earnings; express, tele
graph, and telephone companies on
gross rceipts; and mercantile, manu
facturing, and miscellaneous corpora-
j tions on capital stock. While the rate
of the capital stock tax is compara
tively low, • it yields about $1,200,000
annually. It is levied on the par
value of issued capital stock of do
mestic corporations and on that por
tion of authorized capital stock of
foreign corporations which is repre
sented by property within the State.
The new law of 1910 provides for the
most highly centralized administra
tion found in any of the States thus
far studied. The State Tax Commis
sion has wide administrative powers.
It assesses the property of practically
all public-service coporations and ap
portions its value among counties and
local districts. It fixes the amount
upon which the State collects taxes
on corporate earnings and capital
stock and has supervisory and ad
ministrative authority over local of
ficials, with additional power to
change local assessments upon its
own initiative. The largest items of
revenue from taxation in 1909 were
from general property tax, other than
corporations, $2,687,000; liquor tax,
$2,000,000; gross earnings on steam
railroads, $1,300,000; capital stock
tax, $1,200,000, and insurance compan
ies, $1,100,000. The acount received
from inheritances is comparatively
small, $45,000.
The total Indiana revenue from tax
ation in 1910 was a little more than
$7,500,000. Of this amount, approxi
mately 19 per cent, was from corpo
rations assessed by the State. Taxes
paid by important classes of corpo
rations assessed by country boards
can not be estimated. State and local
taxation of corporations is almost
wholly by the general property tax,
or ad valorem method. Special cor
porate taxation is applicable to cer
tain financial, insurance, navigation
and car companies only. Administra
tion is centralized to the extent that
the more important classes of public-
service corporations (such as railroad,
express, telegraph companies, etc.)
whose property usually derives addi
tional value from State-wide and in
terstate operations, are assessed by
a central State board. Other corpo
rations are assessed by county boards.
Shares of stock in domestic corpora
tions (except banks) are not taxable
when the property of the corporation
is taxed. Shares in foreign corpora
tions are taxable to the holder. The
largest single item of revenue from
State taxes in 1910 was from steam
railroads, something more than $650,-
000; the next was from insurance com
panies, $474,000, and the third from
incorporation fees, $111,000.
In Illinois, the total State tax re- •
ceipts in 1910 were about $8,000,000.
Of this amount corporations paid ap
proximately 34 per cent., general prop
erty in the State 58 per cent., and
inheritances 6 per cent. The Illinois
system applies special taxation to no
corporations except to the Illinois
Central Railroad and to certain kinds
of insurance companies. All other
corporations pay the general property
tax locally for State and local pur
poses. Property is assessed at one-
SAM H. SMITH.
President Guarantee Trust & Banking Co. A Staunch Friend of
Organized Labor. *