Capitalizing on the basis of net earnings at 6 per cent, as is sometimes done, to obtain a rough estimate of the actual value of such property, the value of Iowa roads would be $259,449,382.

The total assessed value of sleeping-car lines taxed by the method above described in 1899 was $183,183, these lines being taxed at local rates upon that aggregate valuation.

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Formerly, from 1862 to 1872, Iowa taxed railroads on 'gross earnings," levying a flat rate thereon. The legislature changed the plan adopting the present method of assessment at "actual value." This has apparently had a demoralizing effect and resulted in grave discriminations and injustice in the taxation of railroad property, and charges of favoritism and corruption are freely made against those in whom from time to time is vested the "discretionary power" to fix railroad

valuations for taxation.

The present State treasurer in a pamphlet recently published vigorously sets forth the evils of the present system and the injustice resulting to both railways and the public.

..

He says in substance that there is neither sense nor system in the assessment of railroads in Iowa, chaos" being the only "descriptive in Webster applicable;" that by reason of the discretionary power" lodged in the executive council railroad assessments in Iowa have become a serious danger to the public welfare; that because of its perversion, corruption of the most serious character has crept into party politics; that railroads are compelled to take part in politics and seek to control the taxation machinery. He cites numerous instances of grievous discrimination in the assessment of railroads in favor of the great lines that are influential in politics. For instance, the Crooked Creek Railway is compelled by the executive council to pay on $233 for every $100 of gross earnings, while the Northwestern pays on only $72. "In other words, the weaker road is assessed 3 times higher than the richest and most powerful trunk line in the State." Again, in actual taxes the Great Western has been compelled to pay $21.50 for every $100 of its net earnings, while its great competitor, the Northwestern, has been required to pay only $8.40 of each $100 of its net income.

Other glaring instances of favoritism and inequalities in railroad assessments are set forth, showing the utter lack of plan and uniform procedure in that regard. The treasurer declares the only remedy to be a definite rule fixed by legislation for assessing railroads from which there can be no deviation. "If the council is to have charge, its discretionary power' should be reduced to a minimum or abolished." The same yardstick should be applied to all roads.

The writer then says that the easiest method for securing equality of assessment is the flat rate or the fixed charge on earnings or income, or on the property of railroads.

“For obvious reasons the flat rate on gross earnings, business, or property can be most readily assessed. There is no trouble about deductions or debts, and it can not be evaded. Material objections can be made because this method ignores the expense account of roads or their varying earning capacities. But the certainty and uniformity of the taxable basis make this method decidedly preferable to the present Iowa practice. There would be no abuse of discretionary power— no favoritism under this method."

He also views with some favor the taxation of such corporations on the basis of the market value of stock and bonds, as in Connecticut, regarding it as an improvement upon the existing system.

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He clearly sets forth the inherent weakness of a method that seeks to adapt the general property tax to this class of property, viz: The necessity of vesting in officials discretionary power" with respect to adjustment of property valuation or rate of taxation in order to secure "equal" and "uniform" taxation, invariably resulting in actual practice in unequal taxation.

WATER AND GAS WORKS, ELECTRIC PLANTS, STREET RAILWAYS.

The real and personal property of these companies is listed and assessed in the assessment districts where the same is located. Where such property, except the capital stock, is situated partly within and partly without the limits of a city or town, such portions are assessed separately, the portion within the said city or town being assessed there and the other portion assessed in the districts where located. The actual value of capital stock over and above that of the property listed and taxed as above described is assessed and taxed to the owners thereof at the place where the principal business is located, as other shares of corporation stock herein before referred to.

EXPRESS COMPANIES.

Up to 1900 the tangible property of these companies was assessed and taxed in like manner as other tangible property was assessed and taxed in the local districts where the same was located.

An additional tax was imposed upon the receipts of these companies, each company being required to deliver to the auditor of State annual verified statements showing the entire receipts for business done within the State, of each agent doing business in the State, including its proportion of gross receipts for business done in connection with other companies, such statement to contain an abstract of the amount received in each county and the total amount for all the counties, a penalty of $100 for each day delay after a fixed date in rendering such accurate statement being imposed and such delinquent companies being prohibited from carrying on business until such statement is made. Each company was required to pay into the State treasury at the time of making such statement the sum of $1 on each $100 of such receipts. The yield of this special State tax was as follows:

Year.

Receipts. Tax.

1898 1899

$392, 579.84 $3,925.80 412, 693.91 8, 253.91

A new method for the assessment and taxation of express companies was enacted by the legislature of the State in April, 1900, and is now in force, although no results are as yet obtainable. Each company is now required to file with the State auditor an annual verified statement showing—

First. The name and character of the company.

Second. The principal place of business, locality of principal office, and names and address of principal officers.

Third. The total capital stock (a) authorized; (b) issued.

Fourth. The number of shares of stock issued and outstanding.

Fifth. The market value of shares on January 1 preceding, and if no market value, then the actual value, and in case no shares of stock have been issued the market or actual value of the capital thereof.

Sixth. The real estate and personal property owned and subject to local taxation within the State, and location and actual value thereof in the county, township, or district where the same is assessed for local taxation.

Seventh. The specific real estate, with improvements thereon, and all bonds, mortgages, and other personal property owned and situated outside the State and used exclusively outside the conduct of the business, with a specific description of all bonds, mortgages, and other personal property and the cash value thereof, the purposes for which used and where kept, and each piece of real estate, where focated, the purposes for which used, and actual value thereof in the locality

where situated.

Eighth. All mortgages upon the whole or any part of its property, with dates and amounts thereof.

Ninth. Total length of lines or routes over which it transports; the total length of such lines outside the State; the length within each of the counties, townships, and assessment districts in the State.

Also to make such further statement as the auditor may require. Such statement and other information is placed before the members of the executive council, who value and assess the property from such statements and such other information as they may obtain, being empowered to bring before them the agents or officers of such company, with such books, papers, or statements as they may require, and compel the attendance of witnesses.

Any company may, upon written application, appear before such council and be heard in the matter of valuation of its property for taxation.

The executive council ascertains the actual value of the entire property owned by such company, taking the aggregate market value of its shares of stock, and in case the property is encumbered by mortgage, adding to the market value of stock or capital the market or cash value of such mortgages. The council then proceeds to determine the value of the property within the State by deducting proportionate values of property without the State, and from the entire actual value of property within the State so ascertained deducts the actual value of real estate and of personalty not used exclusively in the conduct of business within the State and which is subject to local taxation.

The value per mile is then determined by dividing the whole value as above obtained by the number of miles within the State. One-fourth of the actual value thus determined is the assessed or taxable value, in the same ratio as the property of individuals.

This assessed valuation is apportioned among the several counties in proportion to the mileage and certified to the county auditors. This is in turn apportioned to and taxes collected by the various local taxing districts "at the same rates, by the same officers, and for the same purposes as the property of individuals within such counties, townships, or assessment districts," and the property so included and the shares of stock are not otherwise taxed.

COLLATERAL INHERITANCE TAX.

All property of every kind within the jurisdiction of the State, passing by will or the statutes of inheritance of any State, or by deed, grant, sale, or gift made or intended to take effect after the death of the grantor or donor, to any person in trust or otherwise, other than the father, mother, husband, wife, or lineal descendants of a decedent, or charitable, educational, or religious societies within the State, is subjected to a tax of 5 per cent of its value in excess of $1,000 after payment of debts. This tax is for the use of the State.

Yield of the tax.

1898. 1899.

$22, 650.75 28, 264.99

TEXAS.

The distinguishing features of the taxation system in this comparatively new State are the general property tax applied to the property of individuals and corporations, the general law providing for an ad valorem tax on all real and personal property in the State; a poll tax, an occupation tax, and special taxes on gross receipts of certain classes of corporations.

The constitution of this State provides that taxation shall be equal and uniform. All property in the State except that which is exempt, whether owned by natural persons or corporations, shall be taxed in proportion to its value, to be ascertained as provided by law; the legislature may impose a poll tax, occupation taxes both upon natural persons and corporations, and may tax incomes. Limitations are by law placed upon the amounts that can be levied for State and various local purposes.

The legislature levies the tax for general State and school purposes, the commissioners' court of each county levies the county tax, and the city or town council that for cities and towns.

The assessment of all taxable property is made by elective county assessors required to seek out the owners of taxable property in their respective counties and obtain lists of the taxable property, the taxpayer being required to sign an affidavit that he has rendered a complete, full, and true list of all his property subject to taxation, but not to make oath to its value. The valuation, therefore, is in practice fixed by the assessors, with the usual results that property, instead of being valued as required by law, at its "full and true value," is unequally valued and undervalued. There is no systematic plan in use for the valuation and equalization of property for taxation, and in this respect" inequality is the rule and equality and uniformity the exception. The wealthy and influential property owner pays the least in proportion to what he possesses, and the small holder of property pays the most."

The tendency there as elsewhere is for assessors and taxpayers to connive in various ways to secure assessments at a portion of the true value of property, in order that the local district may avoid payment of a just proportion of the State tax.

Common control or supervision of State taxation is impossible under the present constitution, which commits to the commissioners' courts of the respective counties the supervision of values for taxation. There being no central or supervisory power for the enforcement of uniform valuations, the result is a distinct valuation of the same classes of property in each county in the State and inevitable inequality and undervaluation.

REAL ESTATE.

Under the system that has grown up under the present constitution, adopted when nearly all property consisted of land, that class of property is still the principal object of taxation and is said to bear an unjust proportion of tax burdens. Aside from the great inequalities in the taxation of land in local districts, it is shown that a much larger proportion of its total value is assessed for taxation for State and local puposes than in the case of personal property.

A comparison is made by the tax commission of 1899 in its distinguished report, illustrating this discrimination according to the census of 1890. The value of real estate in Texas was then $1,220.417,771, and that of personal property $885,158,995, a total of $2,105,576,776. The taxable value of land assessed for that year was $378,752,713, to which is added the value of town lots, $145,524,497, to give the total taxable value, $524,277,210.

The assessed value of all other property in that year, including railroads, was $257,834,673, or a total assessed value of all property of $782,111,883, against the real valuation as shown.

This leads the commission to say that "Land has borne and is bearing the burden of taxation in Texas, as it probably is throughout the country. It bears about double as much in this State on the dollar of its real value as personal

property." And again: "But as all prosperity depends, primarily, on the successful cultivation of the soil and the harvesting of its productions, it ought to be the purpose to relieve it from a greater tax burden than that which other property, equally or more productive, bears. With this end in view, we have formulated provisions which it is believed will compel other property in the State to contribute its fair proportion of taxes. If light taxes be conducive to the acquirement of any particular kind of property, then Texas, above all other things, should by this policy encourage every citizen to own a home. The ownership of a home gives stability and permanency to our citizenship; encourages a love and pride of State and country; is a bulwark of safety and protection to our institutions and to all the people, and the surest and safest way to lasting prosperity."

PERSONAL PROPERTY.

The system of taxation, framed with a view to making land the principal source of revenue, seems to be, under the conditions that have developed, especially conducive to inadequate taxation of personal property. The tax commission of 1899, in the discussion of this subject, contrasts the energy with which the Federal revenue laws are enforced by the revenue collectors, and in the courts when need be, with the universal laxity in the enforcement of State revenue laws in Texas, describing the method in vogue in that State as follows: "In our State the assessment and collection of the revenue is confided to officers who are chosen every 2 years, and the owner of personal property is not always pressed to know if he has any he has not listed. He signs the affidavit in a perfunctory manner and that ends the inquiry. The law taxes the property that has been sent beyond the State or county for the evasion of taxation, but such property is rarely reached. The man with thousands of dollars in the bank sends his clerk to render his property and tells him to render $5,000 in money when he may have 50 and probably 100,000. Or maybe he will ask for a draft on New York for his deposit with the bank a few days before the 1st of January. This he will put info his pocket and keep there until January 1 has passed, and thus this particular property, though subject to taxation under the law, is not listed."

It is shown that the tax levied against personal property in 1898 was only 24.39 per cent of the ad valorem State tax assessed for general revenue and school purposes, and including railroad, telegraph, telephone, and street railroads was only 32 per cent, or less than one-third the whole amount, and that real estate, including in the term "acres and town lots," paid 68 per cent. "It is an admitted fact," the commission says, "that money at interest, stock, mortgages, as well as other forms of personal property, escape taxation in this State to an extent that is alarming."

The commission urges that more stringent laws be enacted and energetically enforced compelling such property to yield to taxation, and says that "if a time should come when it is admitted that this can not be done, the State should evolve another system, and look in another direction for revenue for the carrying on of the machinery of the State government." As indicating the low tax rates in Texas, even under present conditions, we note the suggestion of the commission that if equality in values and full rendition of property for taxation could be obtained, the tax rate for State purposes would be lowered, even under the present system, to such a sum as to be almost unnoticeable. That if all property were to respond to its full value, a tax rate of 2 cents on the $100 would be ample for all the needs of the State for general State and school purposes.

Money at interest and other credits over and above the amount which a taxpayer pays interest for, and all other debts due over and above his own indebtedness, are taxable.

The tax commission recommended to the legislature the omission of this right of deduction on the ground that it is a convenient loophole for escape from payment of just taxes, operates unfairly against those who have no credits from which to deduct their debts, the condition of most taxpayers, and is the "unfairest provision in our tax laws."

To the money lender it is said to amount almost to exemption from taxation. The commission says that the amount of real estate and chattel mortgages in the State will probably reach $250,000,000, and the amount of credits rendered for taxation will not exceed 6 per cent of that amount, being in 1898 $13,318,920.

MORTGAGES.

The taxation of credits, and especially those secured by real-estate mortgages in Texas as in other States, is a subject of commanding interest and importance. Under the laws of Texas, credits in whatever form are subject to taxation as other property in general, but no special provision is made by law for the