§ 194, Act 908, Mar. 27, 1896. There is no specific provision applying alone to transportation or transmission companies for failure of report under Act 908, 1896. Section 194 is general in its terms, providing a penalty the same for failure in all cases of such franchise taxes. 3. Determination of the Tax. The provisions for the determination of the amount of the tax will be found in the sections above relative to "Nature" and "Assessment." As the statute prescribes the rate, the basis, and provides that the tax shall be paid upon report, the company, etc., is of necessity called upon to compute its amount. (See provisions applicable under "Franchise Tax on Capital Stock.") 4. Payment of the Tax. As noted above under the provisions for returns (see "Assessment"), the tax must be paid August 1st when the report is made. (See provisions applicable under "Franchise Tax on Capital Stock.") $194, Act 908, Mar. 27, 1896. Act 908, 1896, section 194, contains a specific provision that this tax shall be paid into the state treasury on or before the 1st day of August in each year. (See provision applicable under "Franchise Tax on Capital Stock.") 5. Default of Payment. 1896; § 7, ibid. The same penalty is imposed for failure to pay as for failure to report, for P. 2499, R. S., which see Assessment," above. And see provisions applicable under "Franchise " Tax on Capital Stock.“ Act 908, Mar. 27, The provisions of section 194, etc., are generally applicable. 1896. VI. TAX IN SUPPORT OF THE BOARD OF RAILROAD COMMISSIONERS. Act 353, June 16, 1882, at section 13, provides that the total expenses of the Board of Railroad Commissioners, excepting office rent, shall not exceed $50,000, "and such expenses shall be borne by the several corporations owning or operating railroads according to their means, to be apportioned by the comptroller and state assessors, who, on or before the first day of July in each year, shall assess upon each of said corporations its just proportion of said expenses, one-half in proportion to its net income for the year next preceding that in which the assessment is made, and one-half in proportion to the length of main track or tracks on road, and such assessment shall be collected in the manner provided by law for the collection of taxes upon corporations.” § 170. Act 565, June 9, 1890. P. 1339, Revised Statutes, Act 565, June 9, 1890, provides the tax shall be apportioned by the comptroller only, that it shall be one-half according to net income and one-half according to the "length of its main line and branches," and with the exception that each corporation whose line of road lies. partly within and partly without the state, shall in respect to its net income be assessed on a part bearing the same proportion to its whole net income that the line of its road within the state bears to its whole length of road, and in respect of its main road and branches shall be assessed only on that part which lies within the state." Act 534, May 13, 1892, also excepts the cost of printing and bind1896: $5, Act 534, ing the annual reports from the expense limit. May 13, 1892. Act 454, May 9, 1896. Act 454, 1896, raises the expense limit to $60,000. Act 353, June 16, 1882. Constitution of North Carolina, Art. V. § 3. NORTH CAROLINA. A.-GENERAL CONSIDERATIONS. I. CONSTITUTIONAL LIMITATIONS. There is no special article concerning railroad taxation in the Constitution of North Carolina. The general revenue and taxation provisions alone control. Article V, section 3, provides: "Laws shall be passed taxing, by a uniform rule, all moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise; and also all real and personal property, according to its true value in money. The general assembly may also tax trades, professions, franchises, and incomes, provided that no income shall be taxed when the property from which the income is derived is taxed." II. GENERAL STATEMENT: SYSTEM AND DEVELOPMENT FROM 1890 TO 1900. Railroads, as a rule, are taxed upon the valuation of their general property. At the beginning of the decade and for some years after, those for any reason not taxed upon the value of their general property were subject to a tax of one per cent upon their gross receipts. In case a railroad was exempt from taxation on its real estate held for right of way, station places, and workshop locations, but liable to a tax upon the shares of its capital stock and personal property, it was subject, in addition to such latter tax, to a tax of one-half of one per cent upon it gross receipts.1 However, in the act of 1899 providing for revenue, these gross-earnings taxes on railroads were entirely omitted, leaving thus only the property taxes, and as section 67 of this act provides that "All laws imposing taxes, the subjects of which are revised in this act, are hereby repealed," the gross-earnings tax on railroads is thus rendered null and void. The assessment for the general property tax is by two authorities: first, a central or state authority; second, the local assessors. Under the law as operative at the beginning of the decade, property of a general state character and difficult of localization, belonging to the railroad, was assessed by a board made up of the chairmen of the boards of county commissioners of the counties in which any part of the track or roadway was located. By Act 320, 1891, however, this provision was abrogated through the creation of a State Board of Railroad Commissioners, and such board was declared by Act 326, 1891, to be the board of appraisers and assessors for railroad companies. A State Board of Equalization was created by Act 510, 1897, by making over this State Board of Railroad Commissioners and increasing its 1This provision was intended to reach the excess value of the capital stock of the North Carolina Railroad, a road two hundred and twenty miles in length, three-fourths of the capital stock of which belonged to the state and one-fourth to individuals, the charter of this road providing that the real estate, personal property, etc., should be exempt from taxation until the dividends or profits exceeded six per cent. In the year 1895 the dividends reached this excess, and an arrangement was made by which the stockholders agreed with the state to surrender all chartered exemptions and allow the property to be placed upon the tax list. 2 Act 9, March 15, 1901, introduces an innovation in providing for "privilege" taxes on railroad companies generally. Section 88 provides that railroad companies shall, on or before July 10th of each year, return to the state treasurer a statement of gross earnings for the preceding year ending June 30th, the number of miles of road operated, the number of miles in the state, and the gross earnings per mile per annum during each year. Section 89 provides that the annual license for operating the roads within the state shall be as follows: When gross earnings per mile are one thousand dollars, or less, per year, two dollars per mile; when over one thousand but not exceeding two thousand dollars per mile, three dollars per mile; when over two thousand but not exceeding three thousand dollars, four dollars per mile; when in excess of three thousand dollars per year per mile, a tax of five dollars per mile. The tax imposed by this section is payable to the state treasurer at the time of making the report, provided in the preceding section, and no county, city, or town is allowed to collect any tax under this section. duties. By Act 506, March 6, 1899, conditions were again altered, Act 320 of 1891 and all acts amendatory thereof and supplementary thereto being repealed by this law. But Act 164, March 6, 1899, fills the gap thus caused by providing for the creation of the North Carolina corporation commission, with the same powers and duties.1 The other property, including practically all without as well as much within the right of way and depot grounds, is listed with the list takers of the counties in which it is situated, in the manner provided by law for the listing and valuation of personal property. This provision has remained the same throughout the decade. There was specific provision for the return of the value of the franchise in the law as it stood at the beginning of the period considered, Act 218, March 11, 1889, but in the next and subsequent acts this was entirely omitted, though the franchise value was estimated in assessments thereafter. The gross-receipts or "privilege" tax cited above is self assessing, it being determined by the amount of the gross receipts as returned to the treasurer of the state. It will be seen from the above survey that the alteration and amendment during the period 1890-1900 was marked. It made some important general changes and many less significant alterations in detail. The basis of the law as herein set forth is found in Act 216 and Act 218, both of March 11, 1889. The first of these two acts, providing for the gross-receipts tax, was amended in some of its details by Act 323, March 9, 1891, and Act 294, March 6, 1893. Act 116, March 12, 1895, and Act 168, March 9, 1897, were of the same purport and title, each of these several acts being styled An Act to raise revenue," but making no advance upon the law as set forth in Act 294, March 6, 1893. Act 11, March 8, 1899, of the same general purport and title, omits the provision for a gross-receipts or privilege tax, the only specific mention of railroads under the schedule and sections corresponding to those of antecedent laws providing for such tax being: **Sec. 60. That for the purpose of raising revenue and equalizing taxation the railroad commission, or any body succeeding to their powers, are hereby required and directed, as soon as practicable and in time for the levy of 1899, to revise the assessments for taxation of the entire railroad property of the state, and in doing so they should take into consideration the value of the franchise, the gross earnings, and the net income of each road. "Sec. 61. That said assessors shall so increase the assessments, where such increase is justified, as will make each part and parcel of railroad property bear its fair proportion of the burden of taxation." Act 218, the second of the two acts of March 11, 1889, and the one providing for the general property tax, was affected by Act 320, March 5, 1891; Act 326, March 9, 1891; Act 121, February 14, 1893; Act 297, March 6, 1893; Act 119, March 12, 1895; Act 169, March 9, 1897, and Act 15, March 8, 1899. Of these several acts, all except Act 320, 1891, and Act 121, 1893, are of the same purport and general 1 There would seem to be some conflict between Acts 506 and 164 and Act 15, all of 1899, as Act 15 provides that the board created by Act 320, 1891, which Act 506, 1899, abolishes, shall constitute a board of appraisers and assessors for railroads. This apparent conflict is overcome by Act 10, June 14, 1900, which provides that the “North Carolina Corporation Commission" shall constitute such board of appraisers and assessors. Act 7, March 15, 1901, at § 47, etc., makes further and more detailed provision to the same general effect. 3 It adds some changes in 2 Act 9, March 15, 1901, is of the same title and general effect as these several acts. detail, an addition of special importance being that of a privilege tax on railroads, under Schedule "C" at section 89. Act 7, March 15, 1901, is of the same title and general effect as these several acts. There are some changes in detail, those attendant upon the formal statutory recognition of the North Carolina corporation commission as a board of appraisers, etc., being particularly important. § 22, Act 218, Mar. 11, 1889. title, the title being in each case, "An Act to provide for the assessment of property and the collection of taxes." Act 320, March 5, 1891, had but an indirect effect upon this series of laws. It provided for the supervision of railroads by a board of railroad commissioners, Act 326 of the same year defining and describing the board's duty as a board of assessment of railroads. Act 121, February 14, 1893, was, however, in direct amendment of Act 326, March 9, 1891, with respect to the assessment by the Board of Railroad Commissioners, though not of the same title. The whole question of assessment of railroad property by the state authority is gone over anew in Act 510, March 9, 1897, wherein a State Board of Equalization is created, by increasing the powers of the Board of Railroad Commissioners. And again, railroad taxation is affected in some minor details by Act 11, March 8, 1899, entitled "An Act to raise revenue," and Act 15, of the same date, entitled "An Act to provide for the assessment of property and collection of taxes." The former is noteworthy for its provisions for the taxation of sleeping-car and similar car and transportation companies. The only important change or addition made by the second of the two acts is in the provision that railroad commissioners shall have the same power as boards of county commissioners to list unlisted property. A conspicuous and considerable change is made by Act 506, March 6, 1899. This act, as suggested above, provides that Act 320, 1891, “and all acts amendatory thereof or supplementary thereto, be and they are hereby repealed." Said act so repealed is "An Act to provide for the general supervision of railroads, steamboat or canal, express, and telegraph companies doing business in North Carolina by a board of three commissioners, and prescribing the duties of such board." Sleeping-car and parlor-car companies were required to pay an annual tax of five hundred dollars by Act 210, March 11, 1889. By Act 323, March 9, 1891, this was altered, these companies and individuals being required to pay fifty dollars on each sleeping and parlor car run in the state. In subsequent acts of 1893, 1895, and 1897, of the same title ("An Act to raise revenue"), the provisions for sleeping-car taxation were entirely omitted, but in Act 11, March 8, 1899, it was resumed, in that a tax on property based on capital stock was established, and the method of assess ment and taxation provided for in great detail and the tax extended to the owners of freight and refrigerator cars. B. THE RAILROAD TAXES. I. THE RAILROAD GENERAL PROPERTY TAX. 1. Nature. The basis of the general railroad tax is the valuation of the general property. This law applies to all railroad companies whose property or a part thereof lies in the state, whether incorporated by any law of the state or not. 2. Assessment. The assessment is by two authorities. This is true as a general statement, but for a brief period, from 1889 to 1891, there was a third authority, or board, made up of the treasurer of state, auditor of state, and governor, which assessed the franchise 1 The main and indeed the only rightful purpose of this act was to extend the power of the Board of Railroad Commissioners, making it a Board of Equalization. The latter part of this act, that touching upon the assessment, was unconstitutional and in conflict with Act 169, March 9, 1897, which latter act constituted the Railroad Commissioners a Board of Appraisers for Railroads. It was this latter act that was observed during the years 1897 and 1898 for the machinery for the taxation of railroads, while only that part of Act 510, 1897, relating to the equalization was given force and effect. In this way the conflict was overcome. In the text following the provisions of Act 510, 1897, relating to assessment, apportionment, etc., are set forth, following the general policy of these digests of giving all the law of the decade, whether the same be inoperative or not, but it should be borne in mind that the provisions of the said law, in so far as they related to the assessment and taxation of railroads, were never allowed to operate. value of the road and apportioned the same to the several counties in which the road was located. In general it may be said that the railroad track and rolling stock and other property of a general state character appertaining to the railroad is assessed by a central board, the local realty and personalty, including machine and repair shops, etc., by the local assessors. The qualifications upon this general statement will be found later. Mar. 11, 1889. Excluding from consideration the board for assessment of the franchise, above 46, Act 218, considered, the central assessing authority at the beginning of the decade was a board of appraisers made up of the chairmen of the boards of county commissioners of the several counties in which the railroad had its track or roadway, or any part thereof. In case the railroad was located in but one county, the board of county commissioners of such county made up the board of appraisers. Thus each railroad had its distinct board of assessors. § 44, Act 326, Mar. 9, 1891. Mar. 6, 1893. Act 326, 1891, provided that "The commissioners elected from time 542. Act 297, to time under the authority of chapter 320, Laws of 1891, shall constitute a board of appraisers and assessors for railroad companies," thus giving over to the three railroad commissioners the duty of the board of chairmen of county boards. Act 510, March 9, 1897, extended the Act 510, Mar. 9, powers of the Board of Railroad Commissioners, making it a State Board of Equalization, but as to railroad assessment left it practically the same as in preceding acts. 1897. Act 506, Mar. 6, 1899. Act 506, March 6, 1899, declared Act 320, 1891, creating the Board of Railroad Commissioners, and all acts amendatory thereof and supplementary thereto, null and void, though Act 15, March 8, 1899, provided that the assessment should continue to be by the Board of Railroad Commissioners. For further explanation of this difficulty, see footnote, p. 351. 218, Mar. 11, 1889. $45, 46, Aet 43, 44, Act 297. 326, Mar. 9, 1891; Mar. 6, 1893; §§ Returns to the board of appraisers must be made by the several roads through§§ 48. 49, Act the president, secretary, superintendent, or other principal accounting officer of the road within the state, in June annually, under oath or affirmation. Schedules of the rolling stock and capital stock, a statement of values, and of railroad track and roadbed must be contained in these returns. The returns are made with reference to 43, 44, Act 119, the conditions, amounts, and value on June 1st of the year for which the return is 43, 44, Act 169. made, and it is specifically required in the case of schedules of rolling stock and per- 43, 44, Act 15, sonal property that they shall be in conformity to such instructions and forms as may be prescribed by the auditor of state. The return was in 1889 to be made only by these companies, any portion of whose property was situated in more than one county. Mar. 8, 1899. Mar. 11, 1889. In addition to the returns above considered there was a provision that the 22, Act 218, value of the franchise of every such company shall be given in by the president or other chief officer on the day fixed by this act for the giving in of the taxable property to the treasurer of the state. The changes in the law concerning the returns have been slight, the most important being that the provision for the return of the value of the franchise is omitted from the law of 1891 and all succeeding. The $45, Act 326, provision that the return should be made only by companies having property in more than one county was omitted in Act 326, 1891. Mar. 9, 1891. Act 297, 1893, provided that the railroads should also return "all Pullman or sleeping cars owned by them or operated over their lines," and added the precautionary clause that "all the information heretofore required to be annually reported by section 1959 of the Code " (1884) must be returned. 9563-PT V-04- -23 |