The item of taxes is usually included under fixed charges. For the year ending June 30, 1904, the total amount paid in taxes by the railroads of the United States amounted to $61,658,373. Of this amount $1,324,-808 was paid upon property owned by railroad corporations but not used in operation. If we deduct this from the total, we have, as the amount of this expense assigned to operation, $60,333,565. The commercial valuation of railroad property as given by the Bureau of the Census for the same year, was $11,244,852,000. Upon this basis the average rate of taxation would amount to about $5.37 per thousand. The basis of the assessment of these taxes is somewhat variable, although over 70% is assessed on what is considered to be "the value and of real personal property." About 10% more of the tax was computed on the basis of the market value of the stocks and bonds or on a valuation of the road, which is based on the actual earnings, dividends, or other results of operation. In all States and Territories of the Union the first system is used, but in some States a second system is employed to supplement the first. In addition to the above systems, which may be called ad-valorem taxes, about 18% of the taxes collected were based on some special system of taxation, such as a tax on the gross or net earnings, revenue, or dividends. Sometimes a tax is paid on the amount of traffic, or on some physical property of the road operated, or on some special privilege which has been granted. Sometimes there is a special taxation on stocks, bonds, loans, etc.

The amount of these taxes per mile of line of course depends chiefly upon the actual valuation of the road per mile, but it also depends upon the system of taxation in the various States and Territories. In the State of Massachusetts, where the valuation of the railroad per mile of line is very high, we would expect a high tax-rate per mile, but it is apparently far higher on the basis of actual valuation than in other States, since it amounts to $1426 per mile. Connecticut comes next with $1114 per mile. In the State of New Jersey, where the actual valuation of the railroads is nearly, if not quite, as high as in any other State, the amount of taxes per mile of line is $798, while in New York and Pennsylvania it is $581 and $482 respectively. In some of the Southern States, where the valuation of the railroads per mile of line is comparatively low, we find, as might be expected, a low tax-rate per mile, that in Florida being $150 and in Alabama $182. In Texas the rate is only $110, and in Indian Territory it amounts to only $19. The average for the whole United States is $301 per mile.

The corresponding figures for June 30, 1910, show the very great change made in six years, not only in the average amount of taxes per mile for the whole United States ($301 to $431) but also in the average amounts per mile collected in each State. A small part of this increase was of course due to actual increase in real value, and Taxes per Mile of Line op the Railways op the United States, by States and Territories, for the Fiscal Years Ending June 30, 1904, to 1910. this merely illustrates the truth of the statement made in §1 that the intrinsic value of the roads per mile has increased, in spite of an almost stationary capitalization per mile. Nevertheless the bulk of the increase in taxation per mile has evidently been due to a flat intention to increase the assessments, perhaps in the belief that railroads have not hitherto paid their due proportion of taxes.

State.

1904.

1905.

1906.

1907.

1908.

1909.

1910.

Alabama........

$182

$186

$190

$218

$295

$298

$297

Arkansas

168

208

224

224

241

234

277

California.......

317

319

325

390

494

498

508

Colorado........

278

286

295

287

289

300

306

Connecticut.....

1114

1259

1220

1339

1593

1686

1867

Delaware........

336

303

310

391

340

421

482

Florida.........

153

140

170

176

187

198

208

Georgia ..................

152

139

158

166

196

194

206

Idaho ...................

237

256

244

233

312

288

345

Illinois ...................

418

441

453

472

441

463

501

Indiana.........

458

455

451

481

490

518

521

Iowa ...................

208

212

217

233

230

242

253

Kansas.........

277

272

305

296

343

309

344

Kentucky ............

333

373

333

366

333

369

312

Louisiana ................

239

239

241

218

245

253

250

Maine .................

219

251

262

292

314

314

301

Maryland.......

384

430

597

620

675

711

742

Massachusetts...

1426

1472

1083

1525

1394

1500

1484

Michigan ...........

316

333

554

398

396

424

469

Minnesota ................

262

285

389

429

388

381

461

Mississippi .............

195

201

197

214

214

242

250

Missouri .............

201

204

209

206

187

196

230

Montana ...................

221

232

240

271

298

289

356

Nebraska.......

223

224

240

429

309

311

335

Nevada ....................

381

242

235

265

283

291

388

New Hampshire..

326

318

333

358

379

402

629

New Jersey ....................

798

848

1047

2047

1926

2166

2290

New York .................

581

617

671

686

672

800

877

North Carolina...

185

171

176

177

211

213

220

North Dakota ...

223

251

264

265

265

297

341

Ohio...........

468

478

519

569

576

599.

611

Oklahoma.......

• • • •

• • • •

• • • •

• • • •

187

460

499

Oregon .................

272

248

211

228

297

• 446

444

Pennsylvania....

482

336

645

510

554

552

587

Rhode Island....

937

1049

1128

1100

1204

1243

1302

South Carolina. ..

156

159

167

176

224

226

233

South Dakota....

103

107

107

101

153

182

211

Tennessee.......

254

244

263

267

298

301

326

Texas..........

110

109

118

153

243

189

196

Utah...........

216

264

313

320

381

375

383

Vermont ...................

148

149

161

172

205

189

251

Virginia.........

301

322

334

376

385

369

400

Washington.....

236

256

354

415

549

507

685

West Virginia___

230

224

214

413

471

467

463

Wisconsin.......

285

331

387

414

409

440

440

Wyoming.......

164

162

165

141

216

230

384

Arizona.........

135

135

130

142

148

157

158

Dist. of Columbia.

979

1349

1459

1480

944

1036

1562

New Mexico ....................

116

112

147

139

154

180

254

United States

$301

$303

$349

$367

$382

$401

$4311

The chief interest of the engineer in this subject is to make a prediction as to the probable tax on some road yet to be constructed. A glance at the table shows two things: (a) The tax assessments in many States are very uncertain. For example, the drop from $1472 in 1905 to $1083 in 1906, followed immediately by the increase to $1525 in 1907, in Massachusetts, was the result of radical changes in the system of taxation and unquestionably not due to any corresponding changes in real valuation. (b) Although a few States, such as Colorado, Kentucky, Nevada and Arizona, have made comparatively slight changes in the taxes per mile, nearly all of the States have not only greatly increased the taxes but even multiplied them by two or three, as in the cases of Maryland, New Jersey, Washington and West Virginia. Therefore, in attempting to predict the future taxes on a railroad, the tendency of the State to increase the taxes per mile, as shown by the yearly changes in the table, should be considered. Fortunately the reports of the Interstate Commerce Commission now state the amount of taxes actually paid by nearly every railroad in the United States. The general table regarding taxes also shows the gross amounts paid in each State on each of several bases of taxation. The great bulk of the taxation is an ad-valorem tax on the value of real and personal property, although in some States, notably Minnesota, the taxes are specific on gross or net earnings, revenue or dividends. Although a definite knowledge of the tax laws for the particular State would facilitate a closer prediction, a study of the taxes paid by some road of the same State which corresponds closely with the proposed road, considering also the method of taxation indicated by the general table, should enable an engineer to predict the taxes as closely as necessary.