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.

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.