The attempt to reach all classes of corporations by the same methods of taxation soon caused dissatisfaction. It was found that assessments could not all be made in the same manner, that much inequality was resulting, and that much potential revenue was escaping. It was, furthermore, being driven home with in-creasing evidence that the general laws in application were not securing justice between the public and certain classes of corporations. It has gradually developed, therefore, that some of these classes have been relieved from the application of the general corporation tax law, and are taxed in a special manner.

An outstanding example of this situation is the taxing of public utility companies. More difficulties have arisen in seeking a satisfactory scheme for taxing this class of corporations, perhaps, than for any other. The problems which have arisen, and the methods which have been used to reach the taxable value of these companies, apply in degree to all classes of corporations. A discussion of some of these problems and methods, then, will have a greater significance than that of its application to corporations of this particular nature.

Problem of Valuation. - The outstanding problem, in the case of public utility taxation, as in the case of other corporate taxation, is to ascertain the proper value upon which taxes should be levied. This is a local as well as a state problem, for generally these utilities are taxed locally, even though special state laws formulate the methods of taxation for other purposes. This problem of local valuation is often somewhat different from the larger valuation of the state, because of the limited extent of the jurisdiction of local officials. Assessors are confronted with placing a valuation on a small portion of a railroad, pipe line, telegraph or telephone company, and the difficulties encountered are at once obvious. Many schemes have been tried, and many attempts have been made by the courts to aid in arriving at some satisfactory solution of the problem of local assessments. Methods and suggestions have included such bases as the original cost of the plant; the cost of reproducing the plant; the cost of reproducing the service; the value of the part of a plant in a particular district as a proportionate part of the whole; and the value of the plant as determined from its earnings. A detailed discussion of each of these processes of valuation, with its inherent difficulties, would take us too far afield. A discussion of some of the more general methods of levying taxes upon public service corporations, however, will be useful. These either involve earnings or some form of valuation.