DETAILED DESCRIPTION OF STATE RAILROAD TAXATION.

ALABAMA.

A. GENERAL CONSIDERATIONS.

I. CONSTITUTIONAL LIMITATIONS.

Constitution of

"The property of private corporations, associations, and individuals of this state Art. XI, § 6. shall forever be taxed at the same rate; provided this section shall not apply to Alabama. institutions or enterprises devoted exclusively to religious, educational, or charitable purposes."

II. GENERAL STATEMENT: SYSTEM AND DEVELOPMENT FROM 1890 TO 1900.

Railroads are taxed for general purposes, state and local, upon the valuation of their general property. The assessment is by two authorities, the State Board of Assessment assessing that part of the property which is of a general state character and difficult of localization, the local assessors the remainder.

Railroads must also pay an annual "license tax," based on gross earnings according to miles of line in the state. This tax is for the purpose of defraying the expenses of the railroad commission authorized by law.

Railroad taxation was affected by legislation but once in the period 1890-1900. By Act 235, February 9, 1891, the time of meeting of the State Board of Assessment was changed from the first Wednesday in May to the second Wednesday in April.

At the beginning of the decade it was provided that sleeping-car companies, corporations or associations doing business, or running or causing their cars to be run in the state, should be assessed at the rate of two per cent on their gross earnings exclusively for the use of the state.

By Act 271, February 16, 1893, they were subjected to an annual privilege tax, at a stated sum plus a definite rate per mile for each mile of railroad in the state over which the cars are run, and any company paying such privilege tax was not to pay any other privilege tax, but was taxable on local property.1

B. THE RAILROAD TAXES.

1. TAX ON GENERAL PROPERTY OF RAILROADS.

1. Nature and Application.

The tax is a general property tax, based on valuation of the "roadbed, track and other property, real and personal." The law applies directly to railroads. The same section extends to tramroads, canals, pole roads, etc., in the Code of 1896, by act of January 30, 1891.

1 See footnote 1, page 172.

$498,

Civil Code, 1886; § 3968, C. C., 1896.

2. Assessment.

The State Board of Assessment assesses the property returned to the state auditor, i. e., the railroad track, right of way, and rolling stock, and the "average amount of merchandise and supplies kept or carried on trains for sale, or other disposition for a profit by such company to employees or other persons in this state, $3964 $3976, C. for the year next preceding the return." The tax assessors of the counties where the other property is located assess the same as other property of like kind is assessed.

$509, C. C., 1886; C., 1896.

Railroad companies are required to send returns to the auditor of state on or before the 1st day of February, the same to be made by and to be under oath of the president, secretary, auditor, or receiver of the company, and to contain a statement showing the lengths of railroad track, the number of rolling stock, and the average amount of merchandise and supplies kept or carried on trains for sale or other disposition for profit by said company to employees or others in the state for the year next preceding the return. The auditor must lay the return before the State Board of Assess§ 3965, C. C., 1896. ment at its next meeting. In case there is a failure to make the return as required, the auditor must ascertain the items and values as above "from the best information he can obtain." And in case of such failure the State Board of Assessment may add fifty per cent to the value as assessed by it.

$495, C. C., 1886;

$498, C. C., 1886; §3968, C. C., 1896.

$496, C. C., 1886; $3966, C. C., 1896.

The State Board of Assessment is composed of the governor, secretary of state, auditor, and treasurer. It meets at the office of the auditor annually on the first Wed§ 497, C. C., 1886. nesday in May. In case a quorum is not present the auditor advises the governor, who appoints another day.

$3967, C.C.,1896.

$498, C. C., 1886;

$3968, C. C., 1896.

$3969, C. C., 1896.

Act 235, Feb. 9,

1891.

§3967, C.C., 1896.

The time of the meeting was changed by Act 235, February 9, 1891, to the second Wednesday in April.

On the adoption of the Code of 1896 the time of the meeting of the board was changed to the first Wednesday in February.

The board is required to examine the reports, determine the valuation, and assess. $499. C. C., 1886; It may call upon any officer, agent, or receiver of the road for records, or documents or answers to interrogatories, and may require the presence of the officer of the road or third persons to give testimony. When data are unsatisfactory it may adjourn for a time sufficient to obtain further information.

$500, C. C., 1886; $3970, C. C., 1896.

$502, C. C., 1886; §3972, C. C., 1896.

$503, C. C., 1886;

The attorney-general must be present at every meeting of the board. He must advise the board, and his absence is sufficient cause for adjournment.

In case of an even division, the attorney-general has the deciding vote. The board must keep a record of its proceedings, which shall show what members were present.

The railroad property is to be valued the same as "every other species of property," that is, on consideration of what a clear fee simple title thereto would sell for under the conditions under which that character of property is usually sold.

3. Apportionment of Valuation.

The auditor is required, on completion of the assessment by the board, to send a § 3973, C. C., 1896. notice of assessment to the assessor of each county through which the railroad runs, showing the number of miles of track in the county, the value of the same, and the proportional value of the other property of such company assessed by the State Board of Assessment and taxable in his county.

$453, subd. 11,

4. Determination of the Tax.

The assessment, together with the statutory provision that an annual tax of fiftySubd. 12, 189811, five (C. C., 1886–60) cents for general purposes and one mill each for pension fund and school purposes, on each hundred dollars in value upon "roadbed, track, and

Code, 1886; § 3973,

other property, real and personal, of railroads," shall be imposed, determines the 5503, Civil tax. The county assessor is required to enter the facts, as returned to him by the C. C., 1896. state auditor, in a book of assessments, "in addition to the assessment of other real estate, fixtures, machinery, tools, and other property of such company, to be assessed as other property of like kind owned by private citizens of his county." A copy of the notice sent to the county assessor must be sent to the superintendent of the railroad company involved.

5. Payment, Default of Payment, and Remedies.

§ 1128, C. C.,

1896.

There are no specific provisions for payment, default of payment, or remedies. The general revenue laws alone control with respect to these elements of the taxation. II. "LICENSE TAX" ON GROSS EARNINGS, FOR SUPPORT OF RAILROAD COMMISSION. The provision for this tax is brief, hence is quoted in its entirety without analysis: "Every person or corporation operating a railroad in this state must annually, at the time of returning its property for taxation, make return of the gross earnings 1886: 3489, C. C., of such railroad during the preceding year; and if such railroad is partly in another state, the gross earnings shall be apportioned to each mile of main track on the entire line, and the sum thus apportioned to each mile, multiplied by the number of miles in this state, shall be considered the gross earnings of such railroad in this state; and should any such person or corporation fail to make such return of the gross earnings of such railroad, the auditor shall ascertain and assess the same from information. The auditor must then ascertain what percentage of the aggregate of gross earnings thus returned or assessed will be sufficient to pay the expenses of the railroad commission authorized by law, and assess a license tax against every such railroad for the amount of such percentage of its gross earnings; and the person or corporation operating any such railroad shall pay the tax so assessed against it to the treasurer on or before the first day of June of each year. Upon the production of the treasurer's receipt for such tax, and satisfactory evidence that the person or corporation paying the same is prepared to transport freight and passengers with reasonable safety over such railroad, the auditor shall issue to such person or corporation a license to operate such railroad for one year; and any person or corporation operating a railroad in this state without such license shall forfeit one hundred dollars for each day while so engaged, one-half to any person suing for the same and the other half to the state."

C.-PRIVILEGE TAX AND LOCAL TAXES ON SLEEPING-CAR

COMPANIES.

*

*

Sleeping-car companies at the beginning of the decade were taxed under the following provision: "There shall also be assessed by the assessor in each county for taxation the following subjects at the following rates: On the gross income of sleeping-car companies, corporations, or associations, doing business, or running or causing their cars to be run, in this state, at the rate of two per cent, exclusively for the use of the state." This is additional to the general taxes on real and personal property of such companies, to which the general provisions of the law alone apply.

Act 271, Feb. 16. 1893.

1896.

Each sleeping-car company doing business between points wholly 3915, c. C., within the state, without reference to its interstate business, must pay in advance, on January 1st yearly, to the state treasurer a privilege tax of five hundred dollars, together with one dollar for each mile of railroad run by the cars of such company within the state. But such privilege tax may in no case exceed one thousand dollars, and when it amounts to that sum, no report of mileage is required. Companies

The section reference through

paying this tax are not liable to pay any other privilege tax in the state, but their real estate, fixtures, and other local property are subject to taxation as other property in this state.

The privilege tax when paid to the state treasurer is to be accompanied by a sworn report to the auditor, showing the number of miles of railroad run by the cars of such company within the state.

In default of payment of such tax or making of such report for sixty days after January 1st, a penalty of double the amount of the tax is to be imposed upon and collected from the company.1

ARIZONA.

A. GENERAL CONSIDERATIONS.

I. CONSTITUTIONAL LIMITATIONS.

No special or peculiar limitation is imposed upon the taxation of railroads. The out is 2649 of general constitutional provisions alone apply.

the Revised Statutes of 1887.2

II. GENERAL STATEMENT: SYSTEM AND DEVELOPMENT FROM 1890 To 1900. Railroads are taxed upon the valuation of their general property which includes the franchise. The assessment of property used in the operation of the railroad is made by a Territorial Board of Equalization; other property and lots and real estate are assessed by the local assessors as the property of individuals is assessed.

The tax laws proper, as they relate to railroads, were not altered in the period 1890-1900, but by acts of the years 1891, 1893, 1895, 1897, and 1899, new railroads have been exempted from taxation.*

There is no specific provision for the taxation of sleeping-car and similar car and transportation companies."

B. THE RAILROAD TAX.

1. Nature and Application.

The tax is on the valuation of the general property of the railroad, and applies to any corporation operating a railroad in the state, with certain exceptions. By acts of 1891, 1893, 1895, 1897, and 1899 railroads have been declared exempt as follows:

1Section 3915 of the Code of 1896 is amended by Act 1151, March 5, 1901, section 9, to read as follows: "Each sleeping-car company doing business in this state for one or more passengers other than interstate, taken up at one point in this state and delivered at another point in this state, and transported wholly within this state, shall pay in advance on the first day of January of each year, to the state treasurer, a privilege tax, twelve hundred and fifty dollars, and no sleeping-car company which has paid the privilege tax hereby required shall be liable to pay any other privilege tax in this state, but its real estate, fixtures and other local property, shall be subject to taxation as other property in this state."

2 The above section is now known as paragraph 3858 of the Revised Statutes of 1901. No changes have been made, however.

3 But the term "franchise" is almost devoid of meaning and effect, as here employed, though it is stated that the earning capacity of the road largely governs the valuation placed upon it.

5

Provision for exemption was also made by an act of February 20, 1901. (See footnote to page 174.)

As stated, there is no specific law for such taxation. The Pullman Palace Car Company makes returns to the Territorial Board of Equalization of all sleeping cars used in the territory; the board fixes the valuation and the Pullman Company pays the tax. The railroads include in their returns to the board all cars owned or leased by them, and the tax is paid by the railroad company. Under the present revenue laws it is said to be almost impossible for the Territorial Board to assess foreign cars passing through or doing business in the territory, except when they are directly leased by the railroad company.

Act 41, Mar. 16, 1891.

1893.

Act 41, March 16, 1891, provides for the exemption, for twenty years from passage, of railroads operated for public purposes, thereafter constructed, provided they shall file their intention with the secretary of the territory within six months after passage of the act, setting forth the initial and terminal points and probable length of the proposed road, and the actual construction shall commence within six months from the filing of such notice of intention. As soon as any road is built and before it is open for business the owners shall notify the supervisors of the county through which it is built, who shall appoint a competent engineer to examine it and if he declares it is completed, it shall be exempted, as provided. It is provided, further, that such road must be built at the rate of fifty miles per annum, that it must afford first-class accommodations and must run one train each day along the line from and between the terminal points, for the accommodation of freight and passengers.

Act 56, Apr. 7, Act 56, April 7, 1893, exempts all railroads thereafter constructed till March 1, 1903, provided those wishing to avail themselves of the act file their intention with the secretary of the territory within one year after the passage of the act, setting forth the initial and terminal points of the railroad and probable length thereof, and commence their actual construction within six months from the filing of the notice of intention, and continue their construction at the rate of twenty miles. per annum until completed. Under certain conditions railroads may take advantage of Act 41 of 1891.

Act 43, Mar. 20, 1895.

Act 20, Mar. 16, 1897.

Act 43, March 20, 1895, exempts those constructing thereafter till March 1, 1905, provided the notice of intention be filed as above within one year, setting forth the items required by the above acts, and provided the road be constructed at the rate of twenty miles per annum. The act also provides for exemption of branches on roads now exempt, provided such roads be completed by July 1, 1896, and the branches be completed and trains run over them within four years. from the passage of this act. Delay on account of failure to secure consent of Indian tribes shall not operate to the detriment of the railroad under this or previous acts.

Act 20, March 16, 1897, exempts all railroads thereafter constructed, for a period of fifteen years after the passage of the act, provided they file their intentions as above, within six months after the passage of the act, setting forth the same items required by preceding acts; provided, also, that every such company shall commence the actual construction of the road within six months after the filing of such notice of intention, and continue construction at the rate of not less than twenty-five miles per annum until completed, or in lieu thereof, expend in the construction not less than two hundred and fifty thousand dollars per annum.

The act applies only to public carriers and roads built for a public use, supplied with first-class accommodations, and running not less than one train in each direction daily, Sundays excepted, from or between the terminal points. As soon as such a railroad is completed the owners or constructor must notify the supervisors of the counties. through which it runs, when the said supervisors must appoint a competent engineer, the railroad one, and they together a third. Said civil engineers must inspect the road in their respective counties and if they declare the same to be completed, the board of supervisors shall declare it open to the public and it shall be exempt, as provided.