TAXATION 
 
 OP 
 
 Kailroads and Railroad Securities. 
 
 REPORT OF A COMMITTEE 
 
 TO A 
 
 CONVENTION^OF RAILROAD COMMISSIONERS 
 
 Held at Saratoga Springs, June 10, 1879^ 
 
 TOGETHER WITH A 
 
 SUMMARY OF LAWS IN RELATION TO RAILROAD TAXATION IN 
 
 FORCE IN THE VARIOUS STATES OF THE UNION 
 
 AS WELL AS FOREIGN COUNTRIES. 
 
 MADISON, WIS.: 
 
 DAVID ATWOOD, STATE PEINTEB. 
 1880.
 
 3 -5 = 
 
 \
 
 STATE OF WISCONSIN. 
 
 Ui 
 
 m SENATE. 
 
 In the senate on the 23d of January, Senator Woodman offered 
 the following resolution : 
 
 Res. No. 16, S. I 
 
 Re.iolved, That the railroad commisgioner is requested to furnish 
 the senate with the report of the committee of the national con- 
 vention of railroad commissioners on the subject of the taxation of 
 railroads and railroad securities, togeiher with the abstract of the 
 laws of various states and nations on the same subject, which is ' 
 embodied therewith, and that the clerk of the senate, on receipt of 
 said report, is hereby directed to cause twelve hundred copies 
 thereof to be printed, %ne thousand of which shall be for the use 
 of the legislature, and the remainder for the official use of the 
 railroad commissioner. 
 
 The resolution was laid over, under the rules, and on the 26th 
 was taken up in its order and adopted. 
 
 ^ ,, Madison, Janwary 27, 1880. 
 
 Hon. J. M. Bingham, 
 
 Lt. Governor and President of the Senate: 
 Sir : I have the honor to transmit herewith for the use of the 
 senate, the inclosed report of committee of railroad commissioners 
 on taxation of railroads and railroad securities made under date 
 of December 1, 1879, with the accompanying compendium of laws 
 of different states and nations on the subject of railroad taxation, in 
 obedience to Res. No. 16, S., and respectfully request that the 
 same be printed. 
 
 Very respectfully, 
 
 A. J. TURNER, 
 
 Bailroid Commissioner. 
 
 ^ ■S'~\^ ^ "^
 
 REPORT OX TAXATION OF RAILROADS 
 
 AND RAILROAD SECURITIES. 
 
 The committee appointed at the last (Columbus) convention of 
 railroad commissioners to examine into and report the methods 
 of taxation as respects railroads and railroad securities, now in use 
 in the various states of the Union, as well as in foreign countries, 
 and, further, to report a plan for an equitable and uniform system 
 for such taxation, present the following 
 
 REPORT. 
 
 Shortly after the last convention of commissioners, your com- 
 mittee issued a circular and accompanying interrogatories in rela- 
 tion to the matter referred to them for investigation, which were 
 sent to all the state executives, and to a large number of the 
 leading railroad corporations of the country. Through the court- 
 esy of the State Department at Washington, the representatives 
 of the national government at the principal capitals in Europe 
 were also called upon for information on the railway tax systems 
 there in use. As a result, some sixty answers were, in all, re- 
 ceived, covering the various states of the Union, Canada, Eng- 
 land, France, Belgium, Holland, Germany, Russia, Switzerland 
 and Austro-Hungary. The information contained in these an- 
 swers is much of it of great value, especially in the case of the 
 
 documents relating to the sj'stems of taxation in use in foreign 
 
 » 
 
 countries. These the committee have printed in full as part of 
 the present report, as the facts and statements contained in them 
 are not elsewhere to be found in any easily accessible shape. A 
 compendium of the systems in use in all the states of the Union 
 has been prepared, and likewise forms a part of this report. 
 
 On examining this compendium of state systems in present use 
 in this country, it will at once be observed that they are much
 
 more varied than would naturally be supposed, or, perhaps, than 
 would have been thought possible. Generally, it may be said, 
 there is no one principle running through the various systems de- 
 scribed ; and further, that there is no method of taxation possible 
 to be devised which is not at this time applied to railroad prop- 
 erty in some part of this country. So far as those now well recog- 
 nized principles which should be at the basis of all systems of 
 taxation are concerned, they would as a rule seem to have been 
 utterly ignored. 
 
 In two adjoining states, for instance, with roads belonging to 
 one company operating in both, will be found on one side of the 
 line a system, simple, direct, equitable, imposing a moderate 
 and fixed burden from which there is no escape, while on the 
 other side of the line will be met a system which can be said to 
 be based on nothing more reliable than arbitrary guess-work. In"^ 
 certain states, the railroads are apparently looked upon as a species 
 of wind-fall from which everything which can be exacted in the 
 way of taxation is so much pure gain. In other states they es- 
 cape with very slight and wholly disproportionate burdens. The 
 franchise tax, the gross and net earnings tax, the personal property 
 tax, the realty tax, are all met with indiscriminately ; applied 
 sometimes by local boards, sometimes by boards of state equali* 
 zation, but almost invariably in utter disregard of any principle. 
 
 A more striking, and in some respects discouraging, example 
 of general confusion, as regards an important matter of fiscal legis- 
 lation could hardly be imagined. 
 
 The conclusion reached by the committee as the result of their 
 investigations can be very briefly stated. The requisites of a cor- 
 rect system of railroad, as of other taxation, are that it should, in 
 so far as it is possible, be simple, fixed, proportionate, easily ascer- 
 tainable and susceptible of ready levy. Very few of the systems 
 now in use in this country were found to possess any of these 
 requisites. So far from being fixed, they are most of them ex- 
 tremel}'- arbitrary and fluctuating. -Neither are they proportionate, 
 as in some cases the measure of valuation is the market price of 
 securities ; in others, the arbitrary estimates of appraisers ; in yet 
 other?, gross receipts ; and in others, local assessment. That the 
 tax should be almost impossible of ascertainment under these
 
 circumstances does not need to be said. As to being susceptible 
 of ready levy, any tax assessed on and paid by a railroad corpo- 
 ration is that ; but it would appear that a large portion of ihe 
 taxes now nominally levied must either be evaded, or else are in 
 the nature of double taxation, for the securities on which they 
 are assessed are in the eye of the law personal property, accessi- 
 ble at the residence of the owner. 
 
 If, therefore, these securities, whether bonds or stock, are taxed 
 to the corporation in the state where its road is situate 1, they are 
 as personal property subject to a further tax in the place of the 
 holders residence, if he happens to reside in another state ; if 
 such securities are not taxed to the corporations, then, whether 
 they are taxed at all must depend upon the honesty of the holder 
 wherever he lives, or the astuteness of the local tax-gatherer. 
 The utmost inducement to fraud and evasions is thus systematic- 
 ally held out. For the conscientious holder of stock or bonds 
 there may be no escape from double taxation of the most oppres- 
 sive kind, while for the unscrupulous the door for evasion is wide 
 open. 
 
 The conclusion at which your committee arrived was, that all 
 the requisites of a sound system were found in taxes on real prop- 
 erty and on gross receipts, and in no others — in fact, that when 
 these were propsrly imposed, n3 other taxes were or could be 
 necessary, as nothing would escape untaxed. Under this system, 
 the real estate of the railroad corporations, held for corporate use 
 outside of their right of way, would be locally assessed exactly in 
 the same way as the real estate of private parsons or of other cor- 
 porations adjoining it was assessed. There would be no distinc- 
 tion made in regard to it. It is the ordinary tax on real property. 
 Beyond that a certain fixed percentage, established by law and of 
 general applicition, should be assessed on the entire gross earn- 
 ings of the corporations, and this should be in lieu of all forms of 
 taxation on what is known as personal property. Under this 
 system th3 rolling stock of th3 corporation would not be assess- 
 able; nor its securities, whether sto3k or bonds, either indirectly 
 through the corporation or directly in the hands of those owning 
 them. The entire burden, be the same more or less, would be 
 imposed in one lump on the corporation and levied directl3^ It
 
 does not need to be pointed out that this system is perfectly sini-' 
 pie ; that under it taxation is fixed by a general law and not by 
 local valuations; that it is thoroughly proportionate, inasmuch as 
 the amount levied depends on the volume of gross receipts ; finally, 
 it can be ascertained by any one, and can by no possibility be 
 evaded. 
 
 The apportionment of a levy on gross receipts among the sev- 
 eral states through which a single railroad may run is in this 
 country undoubtedly attended with much difficulty, and the com- 
 mittee have given careful consideration to the subject. The con^ 
 elusion at which they have arrived is that it should be made a 
 matter of mutual understanding among the states, and that, as the- 
 levies must be independent, they should be apportioned according 
 to mileage. That is, real estate owned by each corporation, out- 
 side of its right of way, should be locally assessed where it is sit- 
 uated, without regard to the fact that it belongs to a corporation 
 and is used for railroad purposes. The vast and costly terminal 
 grounds in New York, Chicago and all the other great trade-cen- 
 tvei would thus be locally taxed at thosQ centres, and on the basis 
 of valuation for similar adjoining land there in use. Eeal estate 
 in the country, on the other hand, would be taxed at the country 
 or agricultural valuation. The realty outside of the right of way 
 being thus disposed of for purposes of taxation on fixed princi- 
 ples easily understood, the entire gross earnings of the corpora- 
 tions should be subject to assessment by each state through which 
 its road might run, in the proportion which the miles of the road 
 in that state bear to its whole number of miles. The percentage 
 of the levy would then be greater or smaller according to the law 
 of the state, but the proportion of the whole amount upon which 
 the levy was to be made would be fixed and always easy of ascer- 
 tainment. 
 
 The disposition to be made of the tax thus levied when paid 
 into the hands of the state authorities — whether it should be re- 
 tained in the state treasury or distributed among localities, either 
 those through which the road might run, or those in which the 
 holders of its securities reside — would be matter for adjustment 
 by legislation. It could either be retained in the state treasury or 
 paid back into the local treasuries of the counties or towns in which
 
 the roads are located on mileage proportions, or ratably distributed 
 among all the municipalities of the state. It is a tax on trans- 
 portation, whether of persons or property. It is very possibly as 
 equitable a method of raising money by taxation as can be de- 
 vised. If it could, therefore, once be uniformly and properly ad- 
 justed, the distribution of the results of the tax would present 
 very few difficulties. All communities and every part of each 
 community are dependent more or less directly on railroad trans- 
 portation. A general tax upon it, if properly imposed, would be 
 felt not unequally by all, and might perhaps not unjustly be 
 shared by all. Where the tax on railroads is now levied as au 
 entirety by the state government, the most usual method of dis- 
 tribution is to divide it among th« counties and municipalities 
 through which each road runs in proportion to the length of it 
 therein. In Massachusetts the tax is paid over to the place of 
 residence of the individual stockholder, and any undistributed 
 'balance is paid into the treasury of the state. In Michigan the 
 ■whole amount of the tax is paid to and retained by the state, be- 
 ing devoted to special purp:)ses. In Mississippi, where there is a 
 franchise tax, one-half of it goes to the counties through which 
 the road runs, the balance to the state. In New Hampshire, 
 again, one-fourth of the tax is paid to the towns through which 
 the road passes, in proportion to the amount expended in each 
 town for right of way and taxes. The other three-quarters is di- 
 vided among the towns in proportion to the stock owned therein. 
 In this respect, therefore, as in all others, the existing state sys- 
 tems aflfi)rd every variety of precedent. The disposition to be 
 made of a tax after it is collected, in no way, however, affects the 
 question of the proper method of collecting it. It must so largely 
 depend on local exigencies that no general rule regulating it 
 would seem to be possible. 
 
 Finally, the committee will say that, of all the systems of taxa- 
 tion examined by them, those in use in England, among the coun- 
 tries of Europe, and in Michigan and Wisconsin among the states 
 of the Union, seem to them most intelligent, and in con- 
 formity with correct principles. The Michigan and Wisconsin 
 systems would seem to be especially commendable. The sys- 
 tems in use io many of the older states, on the contrary, and nota-
 
 bly in the states of Massachusetts, New York, Pennsylvania and 
 Ohio, are very cumbersome, and present hardly any features 
 worthy of study or imitation. 
 
 That of Massachusetts, for instance, is based upon no recog- 
 nized principle, would admit of e.asions in a most obvious way, 
 and is impossible of any general application. The fundamental 
 idea with it is, that the capital stock represents the property, and 
 that its market value will, therefore, approximately measure it for 
 purposes of taxation. A heavily bonded road, under this system, 
 practically escapes taxation ; and, again, where the stock is owned 
 outside of the state in which the road is situated, the tax levied 
 on it inures not to the state of the owner's residence but to that 
 in which the property is located. Under such a system it hardly 
 needs to be said that the taxation fluctuates widely in amount, 
 and that the amount of debt behind the capital stock being dis- 
 regarded, the burden bears little or no necessary relation to actual 
 earning capacity, whether net or gross. Clumsy and devoid of 
 scientidc merit as it unquestionably is, however, tiie Massachu- 
 setts {system would seem to be preferable to that still in use in 
 New Yoik, concerning which the state assessors in their annual 
 report for 1873 expressed the opinion that under it there was " no 
 uniform rule for any road, in any county, each assessor being 
 governed entirely by his own views." In certain towns the rail- 
 roads appear to pay about one-third of the entire taxes, while the 
 assessed valuation now (1878) varies from $iOO par mile to j5lOO 
 per rod. 
 
 "The difference in the assessment of the New York Central & 
 Hudson River Road, where, for all the purposes that the road 
 can be used, it is of the same value to the company, is $2i,000 
 per mile. In short, it is scarcely an exaggeration to say that the 
 assessments are as unlike as the complexion, temperament and 
 dispositions of the assessors." It does not need to be pointed out 
 that a system such as this — and it is the system in most general 
 use — compels the corporations, in self-defense, to an ajtive par- 
 ticipation in local politics. Indeed, it is not too much to say, 
 that, as a system, it is open to almost every conceivable objection. 
 
 It does not seem necessary to proceed in the enumeration of 
 states, as the objections to which the system of each is open will
 
 readily sagg3st themselves to any one at all familiar with the 
 principles of correct taxation on reference to the accompanying 
 abstract of these systems. It is very, very apparent that the sub- 
 ject of railroad taxation is one which in this country has as yet 
 received very little mature consideration. With a view to afford- 
 ing some basis for better legislation, the committee submit with 
 the accompanying documants the following form of law in which 
 the phraseology of the Michigan statute has been very closely 
 
 followed. 
 
 C. F. Adams. Jr., of Massachusetts. 
 
 W. B. Williams, of Michigan. 
 
 J. H. Oberly, of Illinois. 
 December 1, 1879. Committee. 
 
 DRAFT OF LAW. 
 
 Sec. I. Every corporation, person or association owjiing or 
 operating any railroad or any portion thereof in this state, shall 
 
 on or before the day of in each year pay to the state 
 
 treasurer an annual tax upon the gross receipts of said railroad, 
 computed in the following manner, viz : Upon all gross receipts 
 
 not exceeding thousand dollars in amount per mile of road 
 
 actually operated, per cent, of such gross earnings ; upon such 
 
 gross receipts in excess of thousand dollars per mile so oper- 
 ated, per cent, thereof, which shall be in lieu of all other taxes 
 
 upon the property, capital stock or evidences of indebtedness of 
 such corporations, except such real estate as lies outside of the 
 location for a right of way exclusively, not exceeding — rods in 
 width. 
 
 Sec. II. The real estate lying outside of such location, shall 
 be liable to taxation in the same manner as other real estate in 
 the same place. 
 
 Sec. III. When a railroad lies partly within and partly with- 
 out this state, there shall be paid into the state treasury such pro- 
 portion of the tax imposed by the first se3tion of this act, as the 
 length of its operated road in this state bears to the whole length 
 thereof.
 
 11 
 
 APPENDIX. 
 
 Eeports on the systems of railroad taxation in use in the follow- 
 
 ing c 
 
 oun1 
 
 tries : 
 
 
 
 
 
 1. 
 
 Austria. 
 
 
 6. 
 
 Germany. 
 
 
 2. 
 
 British America. 
 
 
 7. 
 
 Holland. 
 
 
 3. 
 
 4. 
 
 Belgium. 
 England. 
 
 
 8. 
 9. 
 
 Hungary. 
 Kussia. 
 
 
 5. 
 
 France. 
 
 AUSTRIA. 
 
 10. 
 
 Switzerland. 
 
 , Legation of the United States^ 
 
 ViENN-A, March 15, 1879. 
 
 Sir: In obedience to your instructions under date of Feb. 18, 
 1879, requesting information touching the system of taxation of 
 railroads in this empire, I have now the honor to make the fol- 
 lowing report. The system of the two halves of the empire be- 
 ing established independently, as of two independent states, I give 
 first that of Austria. 
 
 I. " On what general, recognized principle, if any, is the rail- 
 road taxation of Austria-Hungary based?" 
 
 A. On that of absolute assimilation to the system of taxation 
 applied to individuals. The corporation is treated as if it were 
 an individual owning the same property. 
 
 II. " In how far are the railroads taxed as owners of realty?" 
 A. All their realty is taxed. Their laud, which is taken for 
 
 the line from the adjoining agricultural lands, continues to be 
 taxed as land at the same rate as the lands adjoining it. Their 
 town real estate is taxed in the same m inner as the neighboring 
 private real estate is taxed. There is for all owners of realty a 
 ground tax, distinguishing between the value of the land and of 
 the buildings erected thereon. The same rule and rate apply to 
 railroad real property in the town. 
 
 III. " In how far as holders of personalty?" 
 
 A. They are considered as having no personalty which is not 
 either produced or rep^'esented by franchise or income, or net earn- 
 ings of some sort. And all these are taxed on the same principle 
 as those of individuals. In Austria all enterprises [Ei'werbe, busi- 
 ness undertakings] are taxed, whether undertiken by an indi-
 
 12 
 
 viJual. or a share company, from that of a shoemaker to that of 
 coastruction of a great railroad. All are regarded in a certain 
 sense as franchises and so are annually taxed, but usually to a 
 very small amount. 
 
 IV. " In how far are they subject to a franchise tax ? " 
 
 A. They are subject to no franchise tax differing in principle 
 from that appliei, as above stated, to individuals {Erwerbsteuer). 
 The amount of the original concession, or franchise tax, in the 
 case of share railroads is 15.75-100 florins, or about $7.55 per 
 annum, a tr.fl ng amount of little significance, except as main- 
 taining the principle of a franchise tax. But there is also by law 
 an additional annual tax on the enterprise {Eriuerbsteuer), regu- 
 lated according to its capital and extent, and reaching at the highest 
 1,575 florins in the case of the largest enterprises, and as the 
 ordinary tax. 
 
 V. " In how far is their stock taxed as personalty to its own- 
 ers?" 
 
 A. Eich share usually represents the nominal value of two 
 hundred florins, with the exception (E believe of the NordhaJut), 
 where they are issued at the rate of one thousand florins per 
 share. The issue of shares and of provisional certiflcatss is subject 
 to a stamp duty of fl. 1.25100 for each fl. 200 of nominal value. 
 At the same rate is taxed the issue of priority bonds issued bj' the 
 company to their purchasers ; except that when the bonds are tem- 
 porary, having less than ten years to run, and are issued in a partic- 
 ular name, the rate of tax is reduced to fl. 1.25-100 for each 
 fl. 400 of nominal value ; that is to say, is reluced one half, 
 
 When the bonds or shares bear coupons calling for tweni}- flor- 
 ins or less, each coupon bears a stamp-tax of seven Kreuzers (8^ 
 cents). When the coupon calls for larger sum^, their stamp duty 
 amounts to about 3|- per mile. These stamp duties properly 
 affect the owner of the coupon, but are in fact usually assumed 
 and paid by the company. 
 
 There appears to be no annual tax upon shares, as such ; but 
 income from them is fully taxed to the owner, at the income rate 
 fixed by law. 
 
 YI. " What taxes are levied on the receipts of the companies, 
 whether net or gross ? "
 
 13 
 
 A. Net receipts are ascertained as follows : All collections of 
 money for transport, whether of passengers, baggage, freight, ex- 
 press goods, or other transport charges, and all sums derived 
 from the letting, or rent, or other usnfract, of property which is 
 not subject to other taxation —as to the land and house tax, for 
 example — constitutes the gross receipts. From this aggregate 
 may be deducted the sums disbursed — 
 
 (a) for expenses of the administration of the company ; 
 {b) for current running expenses ; 
 
 (c) for maintenance of the road, including repairs, replacement 
 of perishable property, of rails, bridges ; 
 
 {d) all stamps and taxes paid in the course of their business, 
 and generally all expenses incurred in conducting their enterprise, 
 and for maintaining an efficient condition of all its parts. 
 
 On the other hand, these may not be deducted from the gross 
 income — 
 
 a) their payments of interest ; 
 
 (6) the annual quotas paid for the liquidation of the capital, or 
 of the bonded debt of the enterprise, nor any requirement of 
 capital ; 
 
 (c) the fees paid to the directors for their services ; 
 {d) the contributions made by the company to the pension fund 
 for their employees. 
 
 The balance thus ascertained constitutes the net income of the 
 enterprise. The average of these Jiet sums for three years is taken 
 as the net annual taxable income of the enterprise. From this 
 the franchise taxes {Enoerhsteaer) are deducted. Upon the residue 
 an income tax of five per cent, is fixed as the regular tax for the 
 next tax period of three years. 
 
 The taxes above mentioned are the regular legal rates, the ordi- 
 narium. But in late years the necessities of the treasury have 
 increased. The annual finance law now establishes the additional 
 levy to be made on this property ; so that, in fact, the present 
 taxes are the double of the ordinarium, on income and franchise ; 
 that is to say, amount to 10 per cent, on the net income, and in the 
 case of the higher franchise to 3,150 florins (Erwerbsteuer). 
 
 N. B. The foregoing system is applied to the established and 
 prosperous roads. Exceptions are made by law in favor of young
 
 14 
 
 and unprofitable enterprises, which are sometimes relieved from 
 some of these burdens by special enactments. * * * 
 
 * I have, etc., 
 
 John A. Kasson. 
 
 BRITISH AMERICA. 
 
 St. Thomas, Ont., March 17, 1879. 
 C. F. Adams, Jr., Esq., Boston, Mass.: 
 
 Sir : In the first place, I beg leave to state that the taxation 
 of railroads, railroad property, securities and personalty is at what 
 might be called its minimum in Canada, and complaints of rail- 
 way corporations of excessive taxation are of rare occurrence. 
 
 •In every case where an over-assessment occurs, there is a 
 municipal court of revision to which appeal may be made, and, if 
 such appeal be overruled therein, application for relief may be 
 made to the county court judge of the county in which the tax is 
 levied, who is empowered to examine on oath all parties interested ; 
 and after hearing evidence as to value, his decision as to the proper 
 assessment shall be final. 
 
 The ra'lway interests of the country are zealously protected by 
 the legislature. 
 
 In reply to your questions, I shall answer them seriatim. 
 
 First Question. — '^ Upon what general recognized principle, if 
 any, is the railway taxation of the state in question based? " 
 
 Answer. — There are no definite rules relating to taxation, ex- 
 cept those laid down in the Assessment of Property Act of the Prov- 
 ince oj Ontario, 32 Yicioria, Chapter 36. Section 7 of this act 
 reads as follows: 
 
 " The real estate of all railway companies is to be considered 
 as lands of residents, although the company may not have an 
 office in the municipality, except in cases where a company ceases 
 to exercise its corporate powers through insolvency or otherwise." 
 
 And section 33 reads : 
 
 " Every railway company shall annually transmit on or before 
 the first day of February, to the clerk of every municipality in 
 which any part of the roadway or other real property of the 
 company is situated, a statement showing, first, the quantity
 
 15 
 
 of land occupied by the roadway, and the actual value thereof, 
 according to the average value of land in the locality, as rated on 
 the assessment roll of the previous year; secondly, the real prop- 
 erty, other than the roadway, in actual use and 03cupation by the 
 company, and its value ; and thirdly, the vacant land not in actual 
 use by the company, and the value thereof, as if held for farm- 
 ing or gardening purposes ; and the clerk of the municipality shall 
 communicate such statement to the assessor, who shall deliver at, 
 or transmit by post, to any station or office of the company, a 
 notice addressed to the company of the total amount at which he 
 has assessed the real i:>voperty of the company in his municipality 
 or ward, showing the amount for each description of property 
 mentioned in the above statement of the company." 
 
 Second Quastion.— " In how far are the corporations taxed as 
 holders of realty ?" 
 
 Answer.— Real estate consist?, under the act, of the right of 
 way and other lands acquired by the corporation for station 
 grounds, shops and borrow-pits, and any lands requisite for the 
 use and convenience of the railway proper. These lands are 
 taxed pro rata with those adjoining, both in town and country, the 
 assessor basing his estimate of value on the land itself, irrespective 
 of the improvements on adjoining property. 
 
 Superstructure, excepting buildings, is exempt from taxation; 
 as are also rolling stock, engines, machinery, rails, sleepers, etc., 
 etc., etc. 
 
 I may here add, that it is provided by Act of Parliament that 
 municipalities may, at their discretion, exempt railway properly 
 from taxaiion of every kind. This is accomplished by a simple 
 resolution in the municipal council of the town or township in 
 which the property in question is situated. 
 
 Third Question. — '' In how far as holders of personalty?" 
 
 Answer. — Personalty is not ratable. 
 
 Fourth Question. — " In how far are they subject to franchise 
 tax ?" 
 
 Answer. — There is no franchise tax. 
 
 Fifth Question. — " In how far is their stock taxed as personalty 
 to the owners thereof ?" 
 
 Answer. — Their stock is not taxed, being exempted by clause
 
 16 
 
 17, section 9, Assessment Act of Ontario, 32 Victoria, Chapter 86, 
 which reads as follows : 
 
 '■'■Exemptions. — The stock held by any person in any railway 
 company." 
 
 S-ixth Question. — " What taxes are levied on the receipts of the 
 company, whether gross or net?" 
 
 Answer. — No taxes are levied on the receipts of the company. 
 
 Seventh Question. — "Where and how is rolling stock taxed ?" 
 
 Answer. — Rolling stock is not taxed. 
 
 Eighth Question. — " How are the local taxes levied?" 
 
 Answer. — Each municipality and school-section collects its own 
 taxes. County and township rates and statutory road labor are 
 payable to the collector or township clerk, according to con- 
 venience. If paid to the latter, he remits the county rates to the 
 treasurer of the county. 
 
 Ninth Question. — "What process of appeal is provided in cases 
 of excessive assessment?" 
 
 Answer. — Court of revision, composed of members of the mu- 
 nicipal council, and a further appeal to the judge of the county 
 court. 
 
 I have the honor to be, sir, 
 
 Very respectfully your obedient servant, 
 
 R F. Harris, 
 Claim Agent Canada Southern Railway. 
 
 BELGIUM. 
 
 Legation of the United St lies, ) 
 Brussels, May 7, 1879. ) 
 
 Sir: * * * Referring to your No. 31, asking for par- 
 ticulars of railroad taxation in Belgium. * * * 
 
 The minister now proceeds to answer in detail the questions 
 propounded. 1st and 6th. " On what generally recognized prin- 
 ciple, if any, is the taxation of the railroads in Belgium based ? " 
 *'What taxes are levied upon the receipts of the companies, 
 whether net or gross? " 
 
 The first article of the law of the 21st of May, 1819, upon the 
 license duty, sanctions the following principle: No one can prac- 
 tice for himself, or any one in another's name, without having a
 
 17 
 
 license. An industry, or trade or shop is not exempted by 
 Article 3 of this law. The license is based upon the propor- 
 tionate amount of profit which each industry may realize, taking 
 into account its usefulness, more or less great. 
 
 The workers of railroads are not by name indicated in the law 
 of license duties. However, they are taxed by assimilation with 
 contractors for transports. 
 
 The minimum duty is six francs, the maximum is 425 francs, 
 in principal. The state collects besides 20 additional centimes 
 upon this duty. The provinces and the parishes are authorized 
 to add also some additional centimes, of which the amount varies 
 according to their budget necessities. 
 
 Such is the system of imposing the license duty on railroad 
 workers, in so far as they are not constituted into joint stock com- 
 panies or into companies with limited liability by shares. 
 
 But in Belgium, the grantee railroad companies, all having a 
 joint stock form, are taxed exclusively upon the annual profits. 
 
 It is understood by profits the interest of capital employed, 
 the dividends, and generally all amounts divided in any titles 
 whatsoever, including those which are affected by the increase of 
 the social capital, and the reserve fund. 
 
 The duty is two per cent, upon these profits, independently of 
 twenty additional centimes. 
 
 jSTo taxation is due, when the joint-stock company closes its 
 balance with a loss. 
 
 Second Question. — " In how far are railroads taxed, as holders 
 of realty?" 
 
 The land necessary for the construction of conceded railroads 
 for a service of public usefulness being acquired in the name of 
 the state, which is the proprietor, the companies are only usufruc- 
 tuaries until the expiration of their grants of railroads. 
 
 The surface of land occupied by the railroads, being assimi- 
 lated to the highways, is exempt from land tax. 
 
 The buildings wtiich are inherent to the works are also exoner- 
 ated from taxation, to wit : the squares and stations, warehouses, 
 workshops, guard-houses, and buildings usel for lodgings for 
 station-masters. 
 2
 
 18 
 
 Tn short, the only landed property on which the land tax is ex- 
 acted is the surplus land, etc., which remains the property of the 
 grantees outside of the railway. 
 
 Third Question. — " In how far as holders of personalty ? " 
 In Belgium there is, properly speaking, no tax upon personalty. 
 However, the assessed taxes include a tax upon the furniture of 
 habitations. 
 
 The law which rules this tax is applicable to railroad companies, 
 as to all private persons, excepting for the furniture of offices and 
 buildings which serve exclusively for the working. 
 
 Fourth Question.— " In how far are they subject to a franchise 
 tax?" 
 
 Such a tax does not exist in Belgium. 
 
 Fifth Question. — " In how far is their stock taxed as personalty 
 to its owners ?" 
 
 The stock and bonds of railroad companies are not subject to 
 any such special tax, but these " titles " [securities] fall under the 
 general application of articles 1 and 2. No. 2 of the stamp law of 
 the 21stot March, 1839, is thus worded : 
 
 " The stamp duty upon stocks and bonds, and all other deeds 
 for unlimited periods, ia payable after five years of their issue. It 
 is fixed for those of 500 francs and under at fr. 0.50, for those 
 above 1,000 francs to 2,000 francs at fr. 2.00, and so on at fr. 1.00 
 per 1,000 francs without fractions." 
 
 Article 10 of the law of the 2^th of March, 1873, exempts the 
 registering of shares issued by companies ivhose business is estab- 
 lished in the Kingdom. ***** ^ 
 Very respectfully, 
 
 Your obedient servant, 
 
 WM. CASSINO GOODLOYK 
 
 great britain. 
 
 Inland Ekvenue, Somerset House, W. C. 
 
 March 27, 1879. 
 
 May it please your Lordships : 
 
 We have the honor to return the papers referred to us by your 
 lordships on the iSth instant, wherein the minister of the United 
 States seeks information as to the taxation of railways in this
 
 19 
 
 country ; and we beg to submit the following replies to the ques- 
 tions put, as we understand them : 
 
 1. The taxation of railroads in Great Britain appears to have 
 been based on the previous taxa'ion of stage carriages, which had 
 been in existence from the year 1779. The railroad tax does not 
 extend to Ireland. When the tax was first imposed, in 1832, the 
 charge was one half penny per mile for every four passengers, the 
 proprietors being required to keep accounts and pay duty monthly. 
 The development of railway traveling soon rendered necessary 
 a simple mode of assessing the duty, and, in 1842, the charge 
 was made five per cent on the gross receipts from all passengera 
 
 In 1844 a concession was made on behalf of the poorer class 
 of travelers, and all fares not exceeding a penny per mile by 
 trains stopping at every station were allowed exemption from 
 duty. 
 
 The duty on stage carriages was repealed in 1869, but railroads 
 having now obtained a practical monopoly in conveying pas- 
 sengers, and the tax having become an important branch of reve- 
 nue, it is still maintained. 
 
 2 and 3. Railways are only subject to the usual stamp duties 
 in dealing either with real or personal property. 
 
 4. A franchise tax is not known in this country, 
 
 5. Railroad stock or debentures bear no tax as such. 
 
 6. Railroad proprietors, like other trading persons or companies, 
 are liable to income tax on their net annual profits, and such tax 
 is paid before any dividend is paid. 
 
 We have, etc., 
 
 C. J. Herries, 
 
 Algernon West, 
 w. s. northcote. 
 To the Lords Commissioners of Her Majesty's Tieasury. 
 
 FRANCE. 
 
 [Translation.~\ 
 
 Paris, August 30, 1879. 
 General : In your letter of March 4 last, you requested de- 
 tailed information in regard to the system of taxation applicable 
 to French railroads.
 
 20 
 
 The three following notes from the different bureaus having 
 this matter in charge contain the information called for in the 
 questions submitted by jou. 
 
 Accept the assurances, etc., 
 
 (Signed) Waddington. 
 
 General Noyes, Envoy Extraordinary, etc. 
 
 BUREAU OF LANDS AND STAMPS. 
 
 So far as the Bareau of Land and Stamps are concerned, the 
 railway companies are subject to the following imposts: 
 
 I. Railway concessions to private companies are subject simply 
 to the regular registration duty, all the ofiTiaial tariffs contiining 
 a formal clause to that effect. The sale of a concession to a third 
 party, however, is subject to the impost of 2 per cent, on all sales 
 of personal property. 
 
 II. Deeds of conveyance of real estate necessary to the con- 
 struction of railroads are examined for the stamp and registered 
 without any charges whenever the land is taken directly from the 
 government, or whenever, as is usually the case, it is taken for a 
 private company under the law of May 3, 1861, for public uses. 
 
 The assignment or awards for construction or equipment ap- 
 proved for railroads not chartered and not operated are subject 
 only to the regular fixed duty. 
 
 The similar assignments or awards in the case of chartered 
 roads are subject to the ordinary imposts. They accordingly are 
 charged 1 or 2 per cent, on their capital, as the case may be, 
 depending on whether they are or are not conversances of per- 
 sonal property ; unless the case falls under the laws of June 11, 
 1859, permitting the provisional registration at a fixed charge of 
 contracts of a purely commercial character. 
 ' III. As respects their operation, railways are likewise subject 
 to the regular impost. Accordingly tickets and baggage slips are 
 subject, like individual receipts, to the stamp duty of 10 centimes 
 (two cents) where the sum paid exceeds 10 francs ($2). 
 
 IV. The stock and bonds of railway companies are subject to 
 the same imposts as those of other companies, to wit : A stamp 
 duty which is fixed for stock certificates at 50 centimes (10 cents)
 
 21 
 
 or one fraac (20 cents) according to the duration of the company's 
 charter, and at one per cent, iii variably in the case of bonds. 
 This duty may be converted by legislation into an annual tax of 
 one twentieth of one per cent 
 
 The certificates of stock and the bonds are further subject to a 
 transfer tax of 50 centimes (10 cents), or, in the case of certifi- 
 cates payable to bearer, a regular annual tax of 20 centimes 
 (five cents). 
 
 Finally, the stock, bonds and notes of railway companies are 
 charged with a tax of three per cent, on their dividends or interest 
 
 paid on them. 
 Y * * * 
 
 YI. Kail roads operated by the state, so far as imports are con- 
 cerned, are subject to the same taxes and contributions of every 
 description as private railways. 
 
 Bureau of Direct Taxation. 
 
 The first three questions alone affect the Bureau of Direct Tax- 
 ation. 
 
 1st. " On what principle, if any, is the taxation of railroads 
 based ? " 
 
 Eailways are subject to severe direct tMxes, and share in their 
 degree in the public burdens, according to their estimated reve- 
 nues, in conformity with the principle of proportions, which is the 
 fundamental idea of direct taxation in France. 
 
 21. " In what degree are the companies taxed as holders of real 
 estate ? " 
 
 The companies are subject to the land tax — a tax imposed on 
 unimproved real estate in proportion to the net revenue derived 
 from it. The right of way is assessed on the same basis as the 
 best arable land of the town in which it is situated. The stations, 
 buildings, etc., are assessed on the same basis as other improved 
 property in the same town. 
 
 The companies further pay a tax, similar in character to the 
 legacy tax, of 0.25 per cent, on all real estate held by them, which 
 is neither included in their right of way nor used in their business 
 as common carriers. 
 
 The companies further pay the window and door taxes on all
 
 n 
 
 baildiQgs occiipiel by themselves or their employes. * * * 
 
 3d. " Wnat license tax do they pay? " 
 
 Each company is assessed at a fixed charge of 240 francs ($48) 
 primarily, over and above a gradaated tax of 2i francs ($i. 80) 
 for each myridmeter (6 miles), and a proportional duty estimated 
 on the basis of a twentieth of the local valuation of the dwell- 
 ings and offices and of a fortieth of the buildings of the company, 
 necessary to the regular operation of its road. Certain permitted 
 looal taxation is additional to the above. 
 
 The state is subject to the same piyments as private companies. 
 
 Bureau of Indirect Taxation. 
 
 The first and sixth questions above relate to the Bureau of In- 
 direct Taxation. 
 
 The law of Ojtobar I, 1798, fixed in a general way an indirect 
 tax on all conveyances, whether by land or water, proportioned to 
 the fare paid by the traveler. Tae law of February 24, 1805, has 
 extended this tax to the land carriage of merchandise. These 
 laws, though established prior to the inventioa of railways, have 
 been construed as applicable to them. Later the railways have 
 been specially designated in the laws of 1855 and 1871. 
 
 Under the laws of 1798 and 1805, the indirect tax amounted to 
 10 centimes (two cents) for each traveler and the same amount for 
 the carriage of all merchandise. A law of 1799 added to this as 
 a war tax an additional tenth. The law of 1855 added a second 
 tenth, which increased the tax to 12 per cent. Finally the law of 
 1871 fixed a further tax of 10 per cent, on the fares of railway 
 and steamboat passengers, as well as on the charges for the car- 
 riage; of baggage and express matter, by the same means of con- 
 veyance. Men while, this law does not aff jct any charge less than 
 fifty centimes. 
 
 The principle which has prevailed in establishing the taxes on 
 railways is that this tax ought not to affect the official tariff fares, 
 and the total thus forms the sum paid by the traveler. Of this 
 total the companies retain the regular tariff fare and pay over to 
 the government, whose agents for this purpose they become, the tax 
 they have collected on its account.
 
 To sum up, on a net receipt of 100 francs, ciUected by the rail- 
 road companies on their own account, and made up of fares of 50 
 centimes (10 cents) or more, the additional imposts on acoount of 
 the government and the total sum taken from the public are as 
 follows : 
 
 Net receipt from regular tariff fares 100. OOf. = $30.00 
 
 Old imposts (Laws 1798 and 1805) : 
 
 Principal 10 . OOf. 
 
 Two-tenths 2.00= 12.00 = 2.40 
 
 Additional tax (Law 1871) 11.20 11.20 = 2.24 
 
 Total tax 23.20f. = |4.80 
 
 Total sum paid by public 123. 20f. = $24.64 
 
 Where the fare is less than 50 centimes (10 cents), the addi- 
 tional tax fixed by the law of 1871 is not levied. The figures 
 then stand as follows: 
 
 Net receipts from regular tariff fares not exceeding 50 cen- 
 times lOOf. 
 
 Old taxes (Laws 1798 and 1805) | Ten°hs^*^ ." * * ' '^2^ 1 ^^^- ^^ 
 
 Totaltaxes 12f. or 112f. 
 
 taken from the public. 
 
 The tax actually collected by the Bureau of Indirect Taxation 
 on carriage by railways amounts therefore to 23.5 per cent, of the 
 net receipts, and to 18.83 per cent of the gross receipts on fares of 
 •50 centimes (10 cents) or more, and of 12 per cent, of the net re- 
 ceipts of 10.71 per cent, of the gross receipts for fares less than 
 50 centimes (10 cents). 
 
 The calculation is based not on the carrying capacity but on 
 the actual receipts of the companies from passengers and merchan- 
 dise carried. It is payable every ten days, and is ascertained at 
 the expiration of each tenth day from an inspection of the com- 
 panies' registers by a superior official of the treasury. 
 
 The above described tariffs are applicable to the great railroad 
 companies which carry on an extended traffic. But the merely 
 local roads, the service of which is confined to the interior of cer- 
 tain large cities or within narrow limits about these cities, have 
 the power, if they find the proportional impost as above calculated 
 too onerous, to demand the privilege conceded by a law of 1833 , 
 modified by a law of 1839, under which a fixed impost is substi- 
 tuted for the proportionate impost in certain prescribed cases.
 
 24 
 
 Under this law the following taxes are prices on carriages of 
 
 lto2 seats SO.OOf. = 110.00 per annum. 
 
 3 " 75.00 — 15.00 
 
 4 " 100.00 = 20.00 
 
 5 " 120.00 = 24.00 
 
 6 " 137.50 = 27.40 " 
 
 Above 6 cents, for each additional seat with 
 
 less than 50 seats in all 12.50 = 2.50 " 
 
 For each seat above 50 and less than 150 in- 
 clusive 6.25 = 1.25 " 
 
 Ppr each seat above 150 seats 6.121— 0.625 " 
 
 The imposts thus fixed are collectible monthly in adv^noe. A 
 law of the 21st of March, 1871, imposed an extraordinary and 
 temporary tax of 5 per cent on the cost of carriage of all goods 
 sent by regular freight trains. This tax has been deemed ob- 
 structive to industrial development and abandoned from the 1st 
 of July, 1878. 
 
 It may be interesting to know the result of the indirect taxation 
 of railways in Franca They are given below for the years 1875, 
 1876, 1877, 1878 : 
 
 Indirect. 
 
 1875 
 1876 
 
 1877 
 1878 
 
 55,566,210 
 57,902,008 
 57,457,166 
 67,143,357 
 
 Direct. 
 
 13,495,783 
 13.994,242 
 14,045,332 
 14, 065, 643 
 
 Total. 
 
 69,061,992 =$13,808,398 
 71,896,250 = 14,379,230 
 71,502,488 =14,300,293 
 81,209,000 = 16,241,800 
 
 During the four years in which it was in operation (March, 1874, 
 to July, 1878), the 5 per cent tax on transportation of merchan- 
 dise in regular trains returned on the average from 23,000,000 to 
 24,000,000 francs, annually. 
 
 GERMANY. 
 
 Berlin, April 28, 1879. 
 
 The undersigned has the honor to srate, in reply to the re- 
 spected note of Mr. H. Sidney Sverett, Charged'' Affaires of the 
 United States of America, that the taxation of railroads and rail- 
 road bonds has as yet not been uniformly regulated in Grermany, 
 but that, on the contrary, it varies in the different German states. 
 
 Since, of all the states in question, Prussia alone possesses 
 private railroads of considerable extent, the undersigned, in trans-
 
 25 
 
 mitting the desired informadon, thought proper to confine himself 
 to the regulations in force in Prussia. 
 
 A more detailed review of the above will be found in the 
 memorial inclosed and respectfully placed at the disposal of Mr. 
 Everett by the undersigned, who also takes this occasion, etc 
 (Signed) Von Bulow. 
 
 To the Charge d' Affaires of the United States of America, 
 n. Sidney Everett. 
 
 Memorial concerning the Taxation of Railroads in Southern Prussia. 
 
 I. State Taxes. — It was already prescribed by law of November 
 3, 1838, concerning railroad enterprises (§ 88), that railroads were 
 to pay a tax, the regulation of which was, however, reserved for 
 a later period. 
 
 The law at the same time provided " tlmt railroad companies 
 should remain free from license taxes (Gerwerbesteuer)." § 38. 
 
 The introduction of the tax provided for, ensued through the 
 law of May 30, 1853, concerning the tax to be paid by railroads. 
 Pursuant to the same, railroads are required to pay to the state a 
 percentage of their annual net receipts. 
 
 Oq March 16, 1867, a law was passed concerning the taxation 
 of all railroads not owned by the state, or by home stock com- 
 panies, the provisions of which are in union with those of May 
 80, 1853. 
 
 Eailroad bonds are not taxed as such by the state, but are sub- 
 ject, like all other evidences of indebtedness, to a single stamp 
 tax, the proceeds of which flow into the treasury. 
 
 n. Other than State Taxes. — The question as to whether and 
 to what extent railroads and railroad bonds may be taxed by 
 municipalities, circuits and other communal associations, is not 
 settled in Prussia by any legislative provisions. 
 
 The answer to this question depends rather, as railroads belong 
 either to the state or to stock companies, upon the provisions 
 
 which obtain as regards communal taxation of the fisc ■ 
 
 and of stock companies, which are different in different parts of 
 the country. 
 
 To the six questions contained in the esteemed note of the 3d
 
 26 
 
 •ult., an answer applying uniformly to the whole state can only be 
 given with reference to the following points : 
 
 In so far as the realty of railroads is subject to the state realty 
 or building-3 tax, which is not the case as regards the roadbeds, 
 the same are required to pay the taxes on realty imposed on the 
 municipal and other communal associations, in particular with 
 additions to the state realty aod buildings tax. 
 
 As, in Prussia, municipal and circuit taxes are nowhere levied 
 in the form of a property tax, there is no distinct taxation of 
 railroads as owners of personalty. 
 
 Eailroads are only entitled to immunity from taxation as re- 
 gards roadbeds in so far as it is a question of the levying of com- 
 munal real estate taxes. 
 
 The stock belonging, as well as the dividends accruing, to hold- 
 ers are everywhere subject as their personalty to the income tax 
 of municipalities, circuits, etc. The right of deduction is also 
 not at present conceded to holders in those municipalities in which 
 a railroad as such is subjected to an income tax. 
 
 The interest accruing to owners of railroad bonds is taxed as 
 their personal property in the same manner as the dividends of 
 stockholders. A tax upon the bonds as such is nowhere im- 
 posed. 
 
 Communal and district taxes are nowhere imposed on gross re- 
 ceipts. In cases in which income taxation is imposed on railroada 
 at all, the net receipts alone are regarded as subject to taxation. 
 The surplus of the annual revenue over and above the annual 
 expenditure, is considered the net receipts ; as expenditures are 
 regarded also the customary annual loss b\'' use of buildings, 
 ■utensils, etc.; further, the necessary addition to the renewal fund, 
 as well as the amounts expended to pay interest on debts, and 
 commissions to officers, and members of the supervision and min- 
 isterial councils ; but not the amounts added to the capital 
 ifcserve fund, or used for improvements to or enlargements of 
 buildings. 
 
 Such taxation of the net receipts of railroads, however, only 
 takes place on the basis of the special provisions contained in the 
 regulations of the respective city and rural communities, in the 
 city communities of the provinces of East and West Prussia,
 
 a? 
 
 Brandenberg, Pommerania, Silesia, Saxony, Slevic, Holsatia, 
 Westphalia and Rliineland, in the city of Frankfort on-Main ; and 
 as regards private railways, in the city communities of the pro- 
 vince of Hanover, then in the rural communities of the provinces 
 of Westphalia and Rhineland, and further on the basis of § 14 
 of the circuit regulations of Dacember 13, 1872, as regards the 
 private railroads in the circuits in the provinces East and West 
 Prussia, Brandenberg, Pommerania, Silesia and Saxony. 
 
 As entitled to tax are regarded only those communities and cir- 
 cuits in which there is a station ; and not those communities 
 through which the road mere^ lies. 
 
 The apportionment of the entire net receipts of the railroad 
 among the individual communities and circuits entitled to tax is 
 based on the proportion of the gross receipts of the individual 
 stations (internal business) to the entire gross receipts. 
 
 HOLLAND. 
 
 [Translation of Memorandum from the office of Minister of 
 Finance.] 
 
 There are no special taxes on railway works ; the railway com- 
 panies are subjected to the same rates as other companies, except 
 that the grants for the right-of-way, and an act of 9th of April, 
 1875, regulating the operating of railways by private companies 
 stipulate some immunities in favor of the realm, viz: 
 
 1. Transport of soldiers and munitions, including horses, for 
 half pay. 
 
 2. Free passage to policemen traveling on duty. 
 
 8. Free passage to people traveling under direction of the pub- 
 lic authority. 
 
 4. Free passage to the mail. 
 
 5. Free passage to custom-house officers traveling on duty. 
 
 6. Offices free of rental for custom-house officials, and suffi- 
 cient space for the erection of government buildings, for the 
 state telegraph. 
 
 Answers to the six queries : 
 
 1. As above stated, there are no special railway taxes. 
 
 2. The railway companies pay for the ground they hold, 
 the same rate of tax on realty as was paid for it before said
 
 28 
 
 ground became its property; for the buildings on the ground 
 the same tax is paid as would bs for other buildings of a simi- 
 lar kind. 
 
 3. There is no tax on personalty, except a tax named personal 
 rate, which is raised according to six bases, viz.: the rental, the 
 value of the buildings occupied, the number of doors and win- 
 dows in the buildings, the number of chimneys, the market value 
 of their furnishings, the number of domestics and horses. 
 
 To this tax railway companies are liable. Their warehouses, 
 like the warehouses of other kinds of business, are exempt. 
 
 4. They are not subjected to a tax on their shares or capital. 
 They piy a license fee to an amount of two per cent, of their 
 dividends, all bu5iness being liable for a license tax; their em- 
 ployes pay the same as all other clerks in trade. 
 
 5. Their shares and bonds are, at their issue, and when passing 
 to inheritors, subjectei to the same stamp duties and taxes as all 
 other shares and bonds. 
 
 6. There is no tax on their net or gross receipts. 
 
 HUNGARY. 
 
 Legation of the United States, ] 
 
 Vienna, March 30, 1879. j 
 
 Sir: Referring to my dispatch No. 171, giving the informitioa 
 respecting Austrian railroad taxation, as desired by your dispatch 
 No. 87, I now submit the following report touching the system 
 adopted by the government ot Hangar// : 
 
 I. "On what general, recognized principle, if any, is the rail- 
 road taxation of Hungary based ? " 
 
 A. On the principle that the transportation, should pay the 
 taxes, these being levied upon the passengers, and owners of the 
 property transported. The particulars appear in the analysis of 
 the Hungarian law here appended. (Enclosed I.) 
 
 II. " In how far are the railroad companies taxed as holders of 
 realty ? " 
 
 A. All the realty is exempt from taxation. 
 
 III. " In how far as holders of personalty ? " 
 
 A. The personalty is also exempt from taxation. 
 
 IV. " In how far are thej subject to a franchise tax ? "
 
 39 
 
 A. There is no tax on the franohise. 
 
 V. "In how far is their stock taxed as personal ty to its 
 
 " 
 
 owners : 
 A. The shares are not subject to taxation. 
 
 VI. " What taxes are levied on the receipts of the companies, 
 whether gross or net? " 
 
 A. There is no tax upon either gross or net receipts in Hun- 
 gary. 
 
 JBcplanati on 
 
 With one or two exceptions, in both Austria and Hungary, the 
 plan was early adopted of providing for the ultimate acquisition 
 of the railroads by the government. To this end the concessions 
 ■were granted for 90 years, with the condition that at the end of 
 that period the whole franchise and property, with an equipment 
 equal to the original amount, should revert absolutely to thestate. 
 To save the builders and owners from loss, a system of amortisa- 
 tion was established, in pursuance of which a certain portion of 
 the capital in shares and bonds was to be refunded in each year, 
 bv which the reimbursement would be completed in ninety j'-ears. 
 In principle it is a sinking fund. In Hungary the government 
 guarantees the amortisation fund, and an interest of five per cent, 
 on capiial and bonded debts, in silver; and if the net earnings 
 are not sufficient, the deficiency is made good out of the national 
 treasury — but to be refunded if subsequent net receipts are 
 sufficient. In point of fact, in the aggregate there is each year 
 a deficiency of several millions charged upon the State Treasury 
 of Hungary. Under such circumstances it is evident that tares 
 upon the corporation would involve the paying in of money with 
 one hand only to be paid back by the other. 
 
 Hence the state levies its revenue upon passengers and freight- 
 ers as a surtax upon the regular tariff charges of the railroads, 
 these latter being the agents to collect it, and to account to the 
 government 
 
 In effect it is a tax on the gross receipts, while in law it is a tax 
 on private business. 
 
 This explanation, together with the summary of the legal pro- 
 visions hereto appended, will fully answer the inquiries so far as 
 they relate to Hungary.
 
 30 
 
 Some further elucidation of the railroad system is reserved for 
 a subsequent dispatch, when some expected documents shall have 
 been received at the Legation, showing more completely the 
 legal provisions for Austrian railroads. 
 
 I have the honor to be, sir, 
 
 Your most obedient servant, 
 
 John A. Kasson. 
 
 RUSSIA. 
 
 Legation of the United States, ) 
 
 St. Petersburg, Eussia, March 20, 1879. j 
 
 To the Honorable W. M. Evarts^ Secretary of State, Washington : 
 
 Sir : Referring to your dispatch No. 39, addressed to Mr» 
 Stoughton, relative to methods of taxation as respects railroads 
 and railroad securities in use in Russia, 1 have the honor to re- 
 port: 
 
 1st. That the railroad companies are free from taxation as hold- 
 ers of property, real or personal. 
 
 2d. The stock is free from taxation to its owners. 
 
 3d. On the 1st day of January, 1879, the government levied a 
 tax of 25 per cent on all passenger tickets of the 1st class, 20 
 per cent on 2d class and 15 per cent on 3d class. With the 
 above exception, there is no direct tax on the receipts of the com- 
 panies, net or gross. 
 
 4th. The railroad companies of Russia are under the control 
 and exercise of the government, and by their respective statutes 
 subject to a general franchise tax. 
 
 But before the usual conditions of a franchise can be satisfac- 
 torily stated, an explanation must be given of the method fol- 
 lowed to obtain it 
 
 The founders of the company must, in accordance with the 
 form instituted for that purpose in the empire, present to the 
 minister of ways and communication an outline of the en- 
 terprise. 
 
 By direction of the minister, the matter is then intrusted to a 
 board of engineers belonging to the ministry, with instructions to 
 examine and report as to the feasibility of the project, and to pre- 
 pare plans and estimates of construction. If, after examination,
 
 31 
 
 it be deemed beneficial to give effect to the enterprise, the plans 
 and estimates are placed by the minister before the committee of 
 ministers for their consideration and action, and, if approved, are 
 submitted for the inspection of his majesty the emperor. 
 
 After the imperial sanction has been obtained for the organiza- 
 tion of the company, the ministers of ways and communication 
 and of finance elaborate the conditions of the concession and the 
 statutes of the company. 
 
 The concession, with the statutes elaborated and recommended 
 by the ministers of ways and communication and of finance, is 
 submitted to the committee of ministers, and, if approved, is 
 presented for the inspection and sanction of his majesty the 
 emperor. 
 
 The concession usually defines: 
 
 1st. The name, object and extent of the undertaking. 
 2d. The duty of the founders of the company, including the 
 amount of caution money to be deposited by the founders in a 
 government depo-jitory, in order to guarantee the establishment of 
 the company within a specified time. 
 
 The statutes of the companies are the laws to be observed by 
 the companies, and are invariably, after the sanction ot the em- 
 peror, printed and filed among the collection of laws for the 
 empire. 
 
 The following appear to me to be the principal provisions of the 
 statutes of the various companies : 
 
 1st They fix the duration of the franchises, usually from sev- 
 enty-five to eighty one years, at the expiration of which period 
 the exclusive ownership of the entire line, with all the real estate 
 and rolling stock of the company, is vested in the government 
 without any payment therefor. 
 
 2d. They specify the amount of the capital of the company, 
 which is usually one-third in shares and two thirds in bonds. 
 
 3d. Tbey define the number and dimensions of the postal cars 
 to be furnished by each company for the gratuitous transportation 
 of post officials, mails, packages, etc., etc. 
 
 4th. They exact the gratuitous use by the government of the 
 company's telegraph.
 
 ■ 5th. They define the quantity of rails, rolling stock, bridges, 
 etc., which must be bought in Eussia, 
 
 6th. They determine the percentage of reduction, usually from 
 40 to 75 per cent of the tariff, by which soldiers under arms are 
 to be transported. 
 
 7th. They determine the psrcentage of the net receipts to be 
 paid to the reserve fund and as dividends to shareholders. 
 
 8th. They concede to the companies, free of cost, all govern- 
 ment land, stone or other material within certain specified limits, 
 and which ma^ be required for the legitimate use of the com- 
 pany in the construction or improvement of their lioes. 
 
 9th. They declare the property, shares and bonds of the com- 
 panies exempt from taxation. 
 
 10th. They guarantee to the companies an annual net revenue 
 of (5) five per cent, on the share and bonded capital. 
 
 I am trustworthily informed that with the exception of three 
 companies the government pays annually to the various companies 
 from 1^ to 4 per cent, of this guarantee. 
 
 The companies are all under the control of the minister of ways 
 and communication, who, among other things, determines the 
 tariffs for passengers and freights. 
 
 It will be seen from the statements here presented that the 
 government takes away from the founders, substantially, the 
 control and exercise of the roads. The above answers are there- 
 fore as complete as circumstances will admit of their being made, 
 and I trust they will be found satisfactory. 
 
 I have the honor to be, sir, your obedient servant, 
 
 W. BL Edwards. 
 
 SWITZERLAND. 
 
 Mr. Hammer to Mr. Fish, 
 
 Berne, March 25, 1879. 
 
 In answer to the note of the Charge d'Affaires of the United 
 States of the 10th inst, the Federal Council has the honor to fur- 
 nish him with the following information : 
 
 L The Swiss Confederation does not impose direct taxes ; 
 consequently the railway companies pay no contribution to the 
 federal treasury. On the other hand, the companies are bound as
 
 33 
 
 regards the Confederation, by virtue of Article 19 of the law of 
 Dea 23, 1872, concerning rail ways : 
 
 a. To carry free of charge iho letters and parcels, concerning 
 which the prerogative of the state has reserved the right of trans- 
 portation to the postal administration. 
 
 For the other parcels {de messagerie) expressed, the postal ad- 
 rainistrat'oa pays to the railway company a compensation calcu- 
 lated on the basis of the general express tariff {tan'f general de 
 grande vitesse) by calculating the weight of the parcels for one 
 month, and, also, taking into account the diminution of lhe{pres- 
 tations) contributions occasioned the companies by such transpor- 
 tations. If the Confed-i^rition and the companies cannot agree, 
 the Federal Tribunal decides. The conductor attached to this 
 service is carried fre?. 
 
 h. To carry free of chai-gs the postal cars as well as their em- 
 ployees, and the persons charged with the inspection. 
 
 c. To pay an annual tax oi concession of fl^'ty francs for each 
 section of one kilometre in operation, when the revenue of the 
 operating attains four pjr cent aft^r deducting the amouijt for 
 lo3s by wear and tear, or that, assigne 1 to the reserve fund. la 
 the event of this revena?, thus calculated, attaining five per cent., 
 the tax of concession may be raised to fr. 100, and to fr. 200, if 
 this revenue is six per cenr. or over, 
 
 TI. Moreover, the cantons have the right to tax the railway 
 companies in conformity with their legislation respecting taxation. 
 Nevertheless according to ih.e circumstances, not only have cer- 
 tain companies obtained from the cantons a complete exemption 
 from taxation, while other railway enterprises have been called 
 on to pay contributions t) the cantons or ti the communes, but 
 there exists such a variety of provisions th it it is not possible to 
 fix a general principle applicable to the colleclion of the^e taxes. 
 
 The Federal Council regrets that consequently it is impossible 
 
 to reply categorically to the questions specially presented by the 
 
 Charge d'Atfuires of the United Stites, and it avails itself of the 
 
 occasion to renew to him the assurances of its high consideration. 
 
 In the name of the Federal Council, 
 The President of the Confederation, Hammer. 
 
 The Chancellor of the Confederation, Schiess.
 
 34: 
 
 SUMMARY OF LAWS IN RELATION TO RAILROAD TAXATION IN 
 FORCE IN THE VARIOUS STATES OF THE UNION. 
 
 {The States are in alphabetical order.] 
 
 ALABAMA. 
 
 Returns are made to a state board of the whole length of track, 
 and of the length in each county and town ; also of the value of 
 the road and of all real estate used for operating it, and of the 
 rolling stock. The board finds the value of each mile of road, 
 and notifie-j the assessors of counties and towns of the amount as- 
 sessable by them, dep3nding on the number of miles in their 
 limits. They add the value of other real estate and of tools and 
 machinery, and assess on the aggregate as on the estate of an 
 individual. 
 
 The value of real estate is to b3 assessed as if owned in fee 
 simple, without any deductions for mortgages or other cause. And 
 the value of the whole road is never to be estimated as less than 
 a principal sum, which, at 8 per cent., would produce the net 
 earnings, meaning thereby the gross earnings leis the running 
 expenses. 
 
 There is no tax on receipts and none on individual holders of 
 stock. From the state board there is no appeal. The penalty for 
 not making returns is double taxation, obtained by adding one 
 hundred per cent, to the assessable value as found. 
 
 ARKANSAS. 
 
 The county clerks of the several counties through which a rail- 
 road runs are constituted a board to annually " ascertain the value 
 of all personal property, moneys and credits of such company, 
 and appraise the same at its true value in money." 
 
 They may require detailed state iients under oath, and in ascer- 
 taining values, road-bed, stations and other realty necessary to 
 the daily running operations of the road are to be estimated as 
 personal property. 
 
 The value thus ascertained is then apportioned by this board 
 among the several counties through which the road runs, so that 
 " to each county, and to each city, incorporated village, township
 
 35 
 
 and district, or part thereof therein, shall be so apportioned as 
 shall equalize the relative value of the real estate, structures and 
 stationary personal property of such company therein in propor- 
 tion to the whole value of the real estate, structures and sta- 
 tionary personal property of such railroad company in this 
 state; and so that the rolling stock of such company shall be ap- 
 portioned in the same proportion that the length of such road in 
 said county bears to the entire length thereof in all said counties 
 or county, and to each city, incorporated village, township and 
 district, or any part thereof therein interestel, the amount appor- 
 tioned to each county ; and it is hereby made the duty of the 
 county clerk to apportion the amount so found for his county to 
 the cities, in3orporated villaga^, township?, districts or parts 
 thereof." 
 
 Where only a part of a railroad is in Arkansas, its entire value 
 is appraised and divided in the proportion the length of road in 
 Arkansas bears to it3 entire length, and " the principal sum for 
 the use of the " road in Arkansas is determined accordingly. 
 
 In case of an alleged overvaluation, an appeal lies tD the Board 
 of Railroad Commissioners, which is authorized to reduce the 
 valuation. 
 
 Neither the securit'es of the corpjrations in the hands of the 
 holders thereof nor their gross or net receipts are taxed. 
 
 The right to levy additional tax on realty is in litigation. 
 
 The fundamental principle is that of a property tax levied upon 
 an arbitrary valuation and paid directly by the corporation. 
 
 CALIFORXT \. 
 
 In this stite before the adoption of the new constitution (1870), 
 only material and visible property was taxed, excluding all fran- 
 chises, stocks, bonds, etc. It was also assessed at full cash value. 
 
 Railroad corporations were taxed as holders of realty on the 
 land occupied as right of way, with the track and all structures 
 thereon as a whole, at a certain sum per mile. On land Bot used 
 as track, railroads were taxed, like other property holders, on " the 
 cash value of real estate," and separately on the " cash value of 
 improvements" thereon. The personal property was assessed 
 wherever it was found, except the rolling stock, which was as-
 
 ,00 
 
 sessed in each county through which the road ran in proportion 
 to the length of road in each county. As above stated, no tax 
 was laid on franchise or receipts, or on the stock of individuals. 
 The assessment of each county was sent to the board of super- 
 visors, acting as a board of equalization, hearing complaints and 
 making valuations conform to actual cash value. Thence it went 
 through the county auditor to the state boar J of equalization, con- 
 sisting of the g)vernor and two other officials, who levied a suffi- 
 cient rate to raise the amount directed by legislation. 
 
 E'lch county board having received the state rate, coUectel the 
 state tax, and both fixed the county rate and collected it. Munic- 
 ipal authorities assessed and collected tax3s on property found 
 within each town or city. 
 
 Under the new constitution the property to be taxed includes 
 credits, bonds, stocks, dues and franchises. A state board of 
 equalization and county boirds are provided for. The state 
 boird is to assess the franchises, roadway, roadbed, rails and roll- 
 ing stock of all railroads running through more than one county 
 at their actual value, and apportion it to each county and munici- 
 pality in proportion to the lengt'h of road therein. 
 
 All other property is assessed in the place in which it is situated. 
 
 COLORADO. 
 
 The state board finds the value of all property, real and per- 
 sonal, used for railroad purposes, considering all the circumstances 
 of the road; and transmits to the county board of assessment the 
 amount assessable by them in proportion to the number of miles 
 of main track in each county. 
 
 CONNECTICUT. 
 
 Railroad companies are assessed one per cent, on such propor- 
 tion of their stock and debt at market value less cash assets as the 
 length of the road in the state bears to the whole length thereof, 
 deducting the amount of local taxes paid on land not used for 
 railroad purposes. The amount of municipal railroad bonds, of 
 which the avails have been used for the road, is included as part 
 of the debt on which taxes are assessed. 
 
 This is paid to the state treasurer, and is in lieu of all taxes on 
 the property or rights of the company.
 
 si 
 
 Individuals are not taxed either on the stock or securities of 
 the railroad company held by them. No taxes are levied on the 
 rolling stock nor on the receipts. The only local taxation is on 
 land not used for railroad purposes. The state tax of one (I) per 
 cent is assessed on the amount as returned by the railroads and 
 as corrected hy the state board of equalization, whose decision 
 is final. 
 
 DELAWARE. 
 
 Eailroad corporations are taxed on land just as other owners of 
 land are taxed, unless exempt by charter. They are not taxed on 
 personal property. Nor are they taxed on their franchise, unless 
 by charter provisions. A yearly tax of ^ of 1 per cent, is laid on 
 the actual cash, value. A tax is laid of 10 per cent, on net 
 income, and when the road extends to other states, both these 
 taxes are laid in proportion to the length within Delaware to the 
 whole length of the road. 
 
 There is also a tax of 10 cents on eacli passenger carried wiihin 
 the state. Such a tax, as applied to persons brought into the 
 stale, or carried through it, or out of it, has been held to be uncon- 
 stitutional by the Supreme Court of Delaware and of the United 
 States, The law remains on the statute book, and is apparently 
 enforced as to passengers only carried within the state. 
 
 An annual tax was laid of $100 on each engine, $25 on each 
 passenger car, and $10 on each freight car or truck nserZ during, 
 the year by any railroad company incorporated by or doing busi- 
 ness in the state. But the act was declared t > be unconstitutional 
 by Justice Strong, of the Supreme Court of the United States, 
 and an appeal which was taken was not prosecuted. 
 
 The Philadelphia, Wilmington & Baltimore Eiilroad Company 
 pays, by statute authority, a commutation of $13,000, in lieu of 
 the 10-cent tax on passengers ; and other roads are permitted to 
 commute in like manner. All the taxes, except that on land; are 
 state taxes laid on amount returneJ by the company to the state 
 treasurer, or in case of failure to return, computed by him. The 
 tax on land is laid by local officers, with an appeal to the levy 
 court.
 
 3S 
 
 FLORIDA. 
 
 Each road returns to the state comptroller the length and value 
 of the road, including the right of way and rolling stock. The 
 comptroller apportions the amount to each mile, and informs the 
 county officers, who add to their county's share the other property 
 in said county, and levy a tax on the aggregate as on the property 
 of an individual, 
 
 GEORGIA. 
 
 When there is no charter exemption confining taxation to one- 
 half percent, of net income, the railroad companies are taxed, 
 like individuals, on the value of roadbed, track, stations, rolling 
 stock and all other property, real and personal. The rate has 
 been ^ per cent. No tax is laid on franchiss or on stock in the 
 hands of owners. 
 
 The question of charter exemption has long been in litigation ; 
 and the state has made many attempts to evade the constitutional 
 protection given to roads by these contracts. 
 
 County taxes are levied at a per cent, on the state tax ; and on 
 the sime valuation. In case of alleged excess in valuation, the 
 parties select arbitrators, who agree on an umpire. 
 
 ILLINOIS. 
 
 Taxes are levied on railroad corporations as on other corpora- 
 tions, and on individuals according to the value of their property. 
 
 The right of way, all tra';k^, stations and improvements on 
 the right of way, are asse-sed by the siate board of equalization. 
 
 All other real estate is assessed as the land of individuals is. 
 All personal property, except rolling stock, is assessed wherever 
 it. is found on May 1. If the value of the capital stock exceeds 
 the value of the real and personal estate, the increase is assessed 
 as capital stock. There is no franchise tax, and no tax on stock 
 to the holders thereof, nor is there any tax on receipts. The 
 value of rolling stock is fixed by the state board, and distributed 
 for taxition among the counties and municipalities, in proportion 
 to the length of road therein. 
 
 The value of right of way, after being assessed by the state 
 board, is d stributed in like manner, except that side and second
 
 39 
 
 tracks and buildings on the right of way are taxed where they are 
 situated. 
 
 There is no appeal from the state board. Bat the valuation 
 fixed by local assessors may be revised by the town, and then by 
 the county board, whose decision is final. 
 
 INDIANA. 
 
 The law of taxation is the same as in Illinois, except in three 
 particulars : 
 
 (1) The whole capital stock is liable by law to be valued by 
 the state boarJ, and distributed for taxation to the cDunties and 
 towns in proportion to the length of road in each. But this is not 
 done, and this part of the law is obsolete. 
 
 (2) Railroad stock in the hands of individuals is taxed to them, 
 as other stocks are. 
 
 '^ (3) There is no appeal from excessive valuation. 
 
 IOWA. 
 
 The general principle is equality of taxation for all property. 
 Assessments are made on the value of the entire railroad at the 
 estimated value of each mile, including in the estimate right of 
 way, bridges, rolling stock, stations and all other property exclu- 
 sively used for railroad purposes. 
 
 There is no franchise tax nor tax on receipts ; and shares ara 
 taxed at their market value to the holders thereof. 
 
 KANSAS. 
 
 The general principle of taxation is assessment on all property 
 at its value in money. " Eailroad property" is assessed by a 
 state board, who estimate the value of the real estate connected 
 with the right of way, and used in the daily operation of the 
 road, including rails, ties, "franchises" and buildings. To this 
 is added all moneys, credits and profits, all rolling stock, owned 
 or used by the company. And the taxable value as ascertained 
 by this addition is apportioned among the counties and munici- 
 palities in proportion to the length of road therein. 
 
 Real estate, not included in the above description, i. e., real 
 estate not used in the daily operation of the road, is taxed like 
 the land of individuals, in the locality where it lies.
 
 40 
 
 Railroads are not subject to a franchise tax, whatever the word 
 " franchises " in the law quoted above m »y mean. Nor are they 
 taxed on receipts, except as they swell the amount of money or 
 profits on hand in March, when the valuation is made. Stock is 
 not taxed to its holders. Local taxes are levied by local authori- 
 ties on " railroad property," as returned to them by the state board 
 of assessors. State taxea are apportioned by the state board, and 
 collected by the county treasurers. R.-al estate, not "railroad 
 property," is assessed by the local authorities, with an appeal to 
 the state board, whose decision is finjl. Payment of taxes may 
 be made by semi-annual installments. Toi-s method of assess- 
 ment is said to have increased the amount on which taxes are 
 levied by three million dollars over the old method of local 
 assessment 
 
 LOUISIAN.\. 
 
 In this state, the capital of all corporations is taxed, and 
 properly "over the capital'' and property held in trust for busi- 
 ness purposes for non-residents. Otherwise, there is no special 
 provision. 
 
 MAINE. 
 
 No recognized general principle seems to govern the railroad 
 taxation of this state. Railroad corporations are taxed for real 
 estate in each town just as individuals are taxed for town pur- 
 poses, but the track is not deemed to be real estate. They are 
 not taxed for personal property. They are subject to a franchise 
 tax of one and a half per cent, on the value of the franchise. This 
 ralue is found by ascertaining the market value of the stock of 
 each road, and deducting the value of the property subject to local 
 taxation. When roads extend beyond the state, the value is pro- 
 portioned to the length of line within the state. This is done by 
 the governor and council. 
 
 The state treasurer credits each town according to the shares" 
 held therein ; and the remainder is retained by the state. 
 
 Stock is not taxed to the owners thereof. No taxes are levied 
 on receipts, nor on rolling stock. 
 
 Local taxes are laid by each town on real estate outside of the 
 location, with an appeal to county commissioners in case of exces- 
 sive valuation.
 
 il 
 
 In case of overvaluation by the governor and council, there is 
 no appeal. 
 
 MARYLAND. 
 
 In this state, all taxation of railroads for state purposes is on 
 gross receipts. County and municipal taxes are laid on property, 
 as the declaration of rights requires all taxes to be. Real estate 
 is taxed for county and municipal purposes where it lies. Per- 
 sonal propirty is taxed where the home office is established, 
 when the railroad company has not a capital divided into shares 
 or has shares wholly or in part exempt from taxation. If there 
 is no home office in the state their personalty is not taxed. 
 
 Holders of stock are taxed thereon ; but in computinf^ the value 
 thereof, the assessed value of the real estate is deducted from the 
 whole value of the capital stock, which is computed by the state 
 tax commission. And an allowance is made on each shareholder's 
 stock in proportion to this amount. The corporation pays the 
 tax for each stockholder, and charges him with the amount. 
 
 The tax on gross receipts is one-half of one per cent., piid di- 
 rectly to the stats treasurer.* Rolling stock is taxed at the home 
 office, if that is within the state. Otherwise it is not taxed. 
 
 The appeal tax-court, in Baltimore, and the county commis- 
 sioners in the several counties, correct valuations, and, under 
 direction of the state tax commission and attorney general, strike 
 off such property as is not subject to taxation. 
 
 The law as above stated is modilied in regard to some railroad 
 companies by their charters, which are irrepealable except by can- 
 sent. 
 
 MASSACHUSETTS. 
 
 The assessors of each place annually report to the tax commis- 
 sioner the names of corporations, except banks, established or 
 owning real estate therein, with an accjunt of the real estate and 
 machinery in said place, and its value and the amount at which 
 it is assessed, and also the amount of taxes laid for the year in 
 said place. Each corporation returns a list of stockholders, with 
 the number of shares held by each, the amount of capital stock, 
 
 • Where a road lies partly in another state, it is taxed on gross receipts on the number of 
 miles in the state, if the company returns the same ; otherwise on such proportion of gross 
 receipts as the aamber of miles within the state bears to iu whole.lcngth.
 
 42 
 
 the par value and market value thereof; and also the real estate 
 structures and machinery. Railroad companies, in addition, 
 return the whole length of their lines, and the length lying with- 
 out the slate. Guardians, executors, etc., also make returns. 
 
 The tax commissioner ascertains the market value of the shares 
 on May 1, preceding, and this is the taxable value of the franchise- 
 The rate is determined by an apportionment of the whole amount 
 to be raised by property taxes iu the state during the year, as 
 returned by the assessors upon the aggregate valuation of all the 
 towns and cities for the preceding year. From the valuation for 
 railroad companies is deducted (1) an amount proportionate to 
 that portion of their length lying beyond the state limits, (2) the 
 value of real estate and machinery located and subject to local 
 taxation within the state. An appeal is given, if the tax com- 
 missioner estimates the value of real estate and machinery at a 
 less amount than the assessors have done. 
 
 Taxes are paid by the railroad corporations to the state treas- 
 urer, who is nominally tax commissioner, and who, with the 
 auditor and one member of the council, constitute a board of 
 appeal for correction of all errors, and their decision is final. 
 Stock is not taxed in the hands of the holders thereof ; nor is there 
 any franclise tax, except as above stated, nor any tax on receipts. 
 The proportion of tax received correspon^hg with the amount of 
 stock owned in each city or town is credited to that place. 
 
 Land to the width of five rods taken for the railroad, is exempt 
 from taxation ; and so are all buildings for railroad purposes 
 erected on such strip of land. 
 
 MICHIGAN. 
 
 Id lieu of all taxes, except those on real estate not used for 
 railroad purposes, a tax is laid of (2) two percent, on gross earnings 
 not exceeding $2,000 per mile, and of (3) three per cent on gross 
 earnings exceeding that sum. There is, also, a tax of three per 
 cent, on receipts from passengers carried in any palace or sleeping 
 car, or any car for which an extra price is paid ; and a tax of two 
 per cent, on gross receipts derived from the leasing or hiring of 
 cars by any " special," " fast," " colored," or other freight line. 
 
 Real estate not used for railroad purposes is subject to local
 
 43 
 
 taxes where it lies. There is no tax on the personal property o 
 railroad companies, nor on franchise, nor on rolling stock. Nor 
 is stock taxed in the hands of its owners. There is no apportion- 
 ment of tax among counties or municipalities, the whole amount 
 being paid to the state and devoted to special purposes. 
 
 The railroads incorporated before 1850 were subject to an 
 annual tax of f of one per cent on their capital stock and all 
 loans used in construction. The Lake Shore and the Michigan 
 Central are still taxed in this way. 
 
 MINNESOTA. 
 
 A tax of three (3) per cent, on gross earnings is laid in lieu of 
 all other taxes, but by special legislation the amount of tax has 
 been reduced for some roads for a term of years, including the 
 Northern Pacific. 
 
 Taxes for ea-^h year are assessed on the earnings for the year 
 preceding. 
 
 MISSISSIPPI. 
 
 A franchise tax of $80 per mile, and of $40 per mile for narrow- 
 gauge roai], is laid, in full of all state, county and municipal 
 taxes on railroad property. 
 
 Eeal estate not used for railroad purposes is taxed locally, like 
 the land of individuals. And the same is true of personal property 
 not used for railroad purposes. Stock is taxed to its holder at its 
 market value. No tax is laid on receipts, nor on rolling stock. 
 
 One-half of the franchise tax goes to the counties through 
 which the road runs; the balance to the state. Towns are pro- 
 hibited from taxing the roads running through them. There is 
 no appeal, nor any occasion for it, 
 
 MISSOURI. 
 
 The constitution of Missouri provides that all railroad corpora- 
 tions in the state, or doing business therein, shall be subject to 
 taxation on all propsrty owned or used by them, and on gross or 
 net earnings, and on franchises and capital stock. 
 
 The law provides that, for purposes of taxation, each road shall 
 furnish the state auditor a statement of the length of the road, and 
 of extra tracks, with depots, water-tanks and turn-tables ; the 
 length in each county and municipality ; the number of engines
 
 4^ 
 
 and cars and all other movable property owned or used by them, 
 and the value thereof. Like statements are sent to each county 
 court. 
 
 The statement may be revised by said court, and all property 
 omitted is taxed at double its cash value. The state board of 
 assessment and equalization revises the estimates. When a road 
 extends into another state, where rolling stock is taxed, such a 
 proportion of the value of such stock as the length of the road 
 in Missouri bears to the whole length thereof is taxed. [Thus if 
 a road was taxed on rolling stock in one other state, and extended 
 into half a dozen other states where rolling stock was not taxed 
 still the tax on such stock would only be proportionate to the 
 •whole length of the road.] 
 
 The state board apportions the value of the property above 
 named to each county and municipality in proportion as the ratio 
 of miles of each road therein to the whole length of the road in 
 the state. And taxes are assessed on such apportionment 
 
 Local taxes are assessed on all property not specified above, 
 including lands, work-shops, round-houses and other buildings» 
 furniture and other personal property, by local assessors in the 
 county or municipality where such property is. The assessment 
 is certified to the county court, with the rate of levy, and that 
 court levies the tax on railroad property as on other estates, ex- 
 cept the school tax. The average rate of this tax is ascertamed 
 by adding the local rates of all the school districts, and dividing 
 the sum by the number of districts. Then taxes are levied on the 
 railroad company on the proportionate value of said railroad prop- 
 erty. [The distribution of the amount depends upon the fact 
 whether counties and municipalities have subscribed to aid rail- 
 roads, and also upon the number of children in each school dis- 
 trict] Lands and other property, not taxed under the general 
 provisions for railroad property, are taxed in the school districts 
 where they are situated. 
 
 No appeal lies from the decisions of the state board. 
 
 NEBRASKA. 
 
 Kailroad officials list the road-bed, right of way, rolling-stock, 
 fixtures and personal property, stating, also, the whole number of 
 miles in the state and in each county.
 
 .45 
 
 This list is sent to the state auditor. The state board of equal- 
 ization assess the propel ty of a corporation at the cash value for 
 each mile, and divides the whole amount by the number of miles, 
 to get the value of each. In doing this, they use the report aud 
 any other information they can get. The board does not assess 
 the value of any machine shop or any buildings or grounds or of 
 any other real estate; but the assessors of "each city or ward or 
 precinct" assess these. The auditor certifies to the county clerks 
 in the counties where the railroad property lies, the amount per 
 mile on the number of miles assessed, and the amount in each 
 county. The count}' commissioners adjust the number of miles 
 and amount among the various municipalities, adding 50 per cent, 
 when a report has not been mnde by the rai'road company. 
 
 There is no tax on receipts or on franchise. 
 
 NEVADA. 
 
 Railroad taxes are assessed on the cash value of the property 
 in each county by the county assessors, both of real and personal 
 estate. No franchise tax is laid, nor any tax on receipts ; nor is 
 stock taxed to the holders thereof. Rolling stock is taxed in each 
 county in proportion to the length o^ road therein. Appeals lis 
 to the county board of equalization. 
 
 NEW HAMreHIRE. 
 
 Railroads are taxed on all their property, including road-bed, 
 buildings, rolling stock and equipments, at the average rate of 
 taxation in all the towns and cities of the state. 
 
 There is no tax on franchise, nor on receipts, nor la stock taxed 
 to the holders thereof. The state board of equalization having 
 found the value of the road, and assessed the tax thereon, divide 
 one-fourth (i) of it among the towns through which the road 
 passes, in proportion to the amount expended in each town for 
 risjht of wav and taxes. The other three-fourths is divided amone 
 the towns in proportion to the stock owned therein, and the state 
 keeps the tax on shares owned by non-residents or persons un- 
 known. 
 
 NEW JERSEY. 
 
 All railroad companies, unless exempt by charter, are taxed 
 one-half per cent, on the true value of the road used by them,
 
 46 
 
 equipments and appendages. The company makes returns of this 
 value; the railroad tax commissioners have power to revise it 
 and an appeal lies to a justice of the supreme court, who hears 
 it summarily. 
 
 Upon all real estate owned or used for a road, except the main 
 track 100 feet in width, railroad companies pay county and town 
 taxes where it is situated, at one per cent on the value, except 
 that at the termini ; each road may have ten acres with the build- 
 ings thereon, free from all county and municipal taxes. 
 
 The only special tax on personalty seems to be the state tax on 
 "equipment and appendages;" and there is no other provision 
 as to the rolling stock. There is no franchise tax, nor any on 
 gro33 or net receipts. Stock is taxed in the hands of the owners 
 thereof. Valuation for county and municipal purposes is made 
 once in three years by the commissioner of railroad taxation. 
 Personal property not connected with the road is taxed as it is to 
 individuals. 
 
 Special provision is made, whereby tlie United New Jersey 
 Railroad and Canal Company may pay a fixed sum, $298,128.96, 
 in full of all state taxes on all its road?, on certain conditions. 
 
 NEW YORK. . 
 
 In this state there are no taxes except local ones, and these are 
 laid on the real and personal estate in each municipality accord- 
 ing to its value, as taxes are laid on individuals. There is no 
 franchise tax, nor any tax on receipts ; nor is stock taxed to its 
 holders. 
 
 And no special rule is followed as to the taxation of rollino- 
 stock. The valuation of the local assessors, if regularly made, 
 is final. 
 
 OHIO. 
 
 All property is taxed on a basis of its true value in monej-. 
 The real estate of each railroad in taxed in the place where it 
 lies; but personal property is held to include the roadbed, water 
 and wood stations, and all other such realty as is necessary for 
 ths daily running operation of the road. A board consisting of 
 county auditors of the counties through which any railroad runs, 
 estimates the value of all the personal property of the railroad
 
 47 
 
 company, including the above named items, and apportions it 
 among the counties and municipalities throuejh which it runs, so 
 that to each "shall be apportioned such part thereof as shall equal- 
 ize the relative value of the real estate, structures and stationary 
 personal property of such railroad company" in the state, and so 
 that the rolling stock (including that hired or run under control 
 of the company) shall be apportioned to each county and place 
 in proportion to its part of llie whole road in the state. And 
 when only part of the railroul is in the state, the principal sum 
 to be apportioned is the proportion of the road in Ohio to the 
 whole road. When the roaJ is wholly in one county the auditor 
 thereof acts as a board. 
 
 The county boards report to a state board of equalization, which 
 has power to raise or reduce the valuation of each road, provided 
 that the aggregate valuation cannot be reduced. No appeal is 
 provided. 
 
 There is no franchise tax, tax n'~'r on receipts; and stock in 
 the hands of individuals is taxed to them. 
 
 OREGON. 
 
 The only provision peculiar to railroads seems to be that rolling 
 stock is taxed in the county where the principal depot or business 
 is done, but if either terminus or any depot is in the county where 
 the principal office is, it shall be tixed there. 
 
 PENNSyLVANIA. 
 
 All railroad companies paying dividends of six per cent, or 
 more, pay a state tax of one-half mill on each dollar of capital 
 stock; when the dividend is less than six percent., the tax is 
 three mills upon each dollar of appraised value of capital stock. 
 
 In addition to this all railroad companies (and also telegraph, 
 palace car and sleeping-car cor.pjnies) pay a tix of -^^ per cent, 
 on gross receipts. Boiling stock is not separately taxed. No tax 
 is laid on franchises, and no tax is assessed on shares. 
 
 Railroads themselves anJ all real estate and structures essential 
 for operating the roads are exempt; bat real estate and structures 
 only incidentally useful for the trans ictioa of railroad business 
 are taxable locally. 
 
 A special act makes the real estate of r.iilroads in Philadelphia,
 
 48 
 
 except superstructure and water stations, liable to local taxes. A 
 similar act is in force in Pittsburgh. 
 
 If state officers are dissatisfied -with the valuation of capital, 
 another appra'sal may be made ; and an appeal may be had to the 
 court. E.xcessive appraisals for local taxation may be reviewed 
 by county c )mmis3ioners. And local acts give appeals, in vari- 
 ous places, to local courts. 
 
 r:-tode island. 
 
 Railroad corporations are taxed like other corporations and like 
 individuals on the value of their estates. Each town taxes the 
 roads running through it on ihe value of its tracks and other real 
 estate, but not apparently on personal property. No franchise 
 tax is levie:!. Holders of stock are taxed according to its value. 
 There is no apportionment nor any occasion for it. 
 
 Appeals may be made from the judgment of the assessors to 
 town councils, but this is rarely done, a-i public notice is given to 
 each person to state to the assessors his propsrty and its value. 
 
 SOUTH CAROLINA. 
 
 The constitution requires equal taxation of all propertv accord- 
 ing to its value. By law, the road-bed, right of way and stations 
 are regardel as personal property. An annual return is made of 
 the length of tracks, main and side; the value of all buildings, 
 stationary engines, implements, rolling-stock, moneys and credits; 
 also of the value of the whole road and equipments in and out of 
 the state, and the value of the part within the state. The return 
 al?o states how much of the track and of each item of property is 
 in each county and in each town. A state board finds the value 
 of the road-bed, right of way, rolling-stock, moneys and credits, 
 and apportions it to each mile of the main track in or out of 
 South Carolina. This valuation per mile is multiplied by the 
 number of miles in the sta'.e, and in each county and t3W0, and 
 the product is the taxable valuation therefor. To this is added 
 for the state the value of all the real estate, fixtures, stationary 
 engines, machinery and stationary property, and for each county 
 and town the value of such property situated therein. And on 
 this amount is asse"sed the rate provided by law for the three 
 classes of taxes.
 
 49 
 
 There is no tax on franchise or on receipts ; nor is stoctc caxed 
 to the holder thereof. There is no appeal, unless it should be 
 sought by injunction from the courts. 
 
 TE>'NESSEE. 
 
 In this state, the whole value of each railroad is taxed by asses- 
 sors chosen for that purpose, who take inio view the worth of the 
 property, the gross and net earnings, with all other facts bearing 
 on the true value. Real and personal estate is of course included, 
 and rolling stock as part of the personalty. No franchise tax is 
 laid, nor any tax on receipts as such. Holders of stock are not 
 taxed therefor. 
 
 When the valuation of each road has been fixed, the state tax 
 is laid thereon as on other property ; and the amount is divided 
 for local taxation according to the number of miles in each county 
 and municipality. An appeal lies to the three chief executive 
 officers of the state, who can appoint another board of assessors ; 
 and their action Is final. 
 
 Some railroad companies in this state are protected from taxa- 
 tion by charter exemption not yet expired ; and such exemption 
 has recently been held to be valid by the supreme court of Ten- 
 nessee. 
 
 TEXAS. 
 
 Real and personal property are taxed by each county and mu- 
 nicipality on the valuation of such property lying therein. The 
 road-bed and rolling stock are taxed in such localities according 
 to the mileage therein. There is no tax on receipts or on fran- 
 chise. The holders of stock are taxed thereon as on other personal 
 property. The companies make returns as to property and val- 
 ues; assessors have power to change the valuation, and an appeal 
 lies to a county board of equalization, whose decision seems to be 
 final. In practice, various portions of the road are assessed at 
 different values and withour reference to the value of the road as 
 a whole. 
 
 VERMONT. 
 
 Railroad companies are taxed on real and personal estate on the 
 same principle with individuals, except that the road-bed and real 
 estate used for railroad purposes are taxable in each town at their 
 4
 
 60 
 
 valuation, not exceeding $2,000 per mile of main line, but sucb 
 roads are exempt from taxation on their realty for five years from 
 the time when each begins to run regularly into or through any 
 town in the state ; and after eight years, it is subject to the general 
 laws of taxation. As owners of personalty, including rolling 
 stock, railroads are liable to the general law ; but part of that 
 law is, that debts may be off-set in reduction of perso.nalty; and 
 the result is, that railroad personalty is never taxed. There is 
 no tax on franchise or receipts. Holders of stock are taxed there- 
 for as for other jn-operty. As to the assessment of road-bed, no 
 appeal is allowed. Appeals from assessments on other real estate 
 are made to local boards. 
 
 VIRGINIA. 
 
 The constitution provides for equal taxation of all property 
 according to its value, and gives power to tax incomes in exegs of 
 $600 per year. Each road reports the value of all its real estate, 
 specifying road-bed, stations and shops, and of all its personal 
 property, specifying rolling stock and equipment, and also specify- 
 ing the value in each county. The amount of gross and net earn- 
 ings is also reported, and the amount of interest and dividends 
 paid, payable and declared, to residents and non-residents. The 
 whole length and the length of the road within the state are given, 
 and the earnings are apportioned. The company ,is made col- 
 lector of taxes on dividends and inljerest paid by it. 
 
 A tax of -J of 1 per cent, is laid on the real and personal prop- 
 erty of each road, one-fifth of which is applied to the public 
 schools. On the indebtedoess of each company, in lieu of the 
 property tax thereon, a tax of fifty cents on $100 of the market 
 value of the bonds is paid out of the interest due on such indebt- 
 edness. And this [tax is collected by the company on non-resi- 
 dents as well as on residents. 
 
 There is no franchise tax. Holders of stock pay taxes accord- 
 ing to its market value. Counties and towns receive the report 
 made by the companies through the state auditor, and levy taxes 
 on real and personal estate at the same valuation that is used by 
 the state. 
 
 In general, an appeal lies from the valuation of assessors to two 
 voters appointed by the parties, whose award is final.
 
 51 
 
 WEST VIRGINIA. 
 
 Each company reports all its property in the state and the pro- 
 portionate value of rolling stock, depending on the number of 
 miles in the state as compared with the whole length of the road. 
 This proportionate value and the value of all personal property, 
 money, credits and investments is added to the real estate and 
 apportioned to each county in proportion to the amount of real 
 estate and fixed property therein as a basis for assessment But 
 all property, real and personal, used for railroad purposes, and all 
 real estate which the company is allowed to hold, is to be assessed 
 at its actual value, without regard to cost 
 
 The board of works directs the auditor to assess for state and for 
 general free school purposes on this valuation, and for free school 
 purposes in town and school districts through which the road runs. 
 
 County supervisors apportion the amount to each town and dis- 
 trict through which the road runs, according to the value therein. 
 
 If the report is not filed, or is not satisfactory, a board of com- 
 missioners is appointed of one freeholder from each congressional 
 district, who assess as best they can. 
 
 The provisions for collecting are complicated. 
 
 Real estate used for any purpose not immediately connected 
 with the road, is taxed like the property of individuals. When 
 the capital of railroad (or other) companies is taxed, the stock- 
 holders are not taxed thereon. 
 
 WISCONSIN. 
 
 A state license tax takes the place of all state and local taxes 
 on all real and personal property used lor railroad purposes, ex- 
 cept special assessments for local improvements in town and vil- 
 lages. 
 
 The following is the text in full of the Wisconsin statute, which 
 imposes in fact a tax on gross receipts : 
 
 " The annual license fees for the Operation of such railroads 
 shall be as follows : 
 
 " 1. Four per centum of gross earnings of all railroads, except 
 those operated on pile and pontoon, or pontoon bridges, whose 
 gross earnings equal or exceed three thousand dollars per mile 
 per annum of operated railroad.
 
 52 
 
 "2. Five dollars per mile of operated railroad of all railroads 
 ■whose gross earnings exceed one thousand five hundred dollars 
 per mile per annum, and are less than three thousand dollars per 
 mile per annum of operated road, and in addition two per centum 
 of their gross earnings in excess of fifteen hundred dollars per 
 mile per annum. 
 
 " 3. Five dollars per mile of operated road by all companies 
 whose gross earnings are less than fifteen hundred dollars per 
 mile per annum. 
 
 " 4. Two per centum of the gross earnings of all railroads which 
 are operated upon pile or pontoon, or pontoon bridges, which 
 gross earnings shall be returned as to such parts thereof as are 
 within the state. 
 
 " One-half of such license fee shall be paid at the time the 
 license so issues, and one half on or before the tenth day of August 
 in each year."
 
 3 01 
 
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