'26 REPORT OF THE

may either be situated beyond the limits of the State, or be owned by
another company, and thus the basis of State taxation be reduced to

the bed of the road, the iron rails, the crossties and a few insignificant
way station-houses. The taxation of these, as an equivalent for an
important franchise granted by the State, would be a mere bagatelle.
The franchise granted and secured by the power of the State is the
proper subject of State taxation, and this can be best readied through
the gross receipts. A tax upon net receipts would not answer,

because it would involve questions of bookkeeping and homologation,
which would result in constant trouble and litigation, beside being
wrong in principle; from the fact that it would be giving aggregations

of capital an unwarrantable advantage over individual possessions,
which are liable to taxation whether producing profit or not. These
remarks apply to all other corporations not purely and entirely of a
monetary nature.

I therefore recommend the repeal of the second section of the Act
of 1870, chapter 862, so far as the same relates to State taxation, and
the imposition by law of a tax of one-half of one per centum on the
gross receipts of all Rail Road and Canal Companies in tins State, to
be paid by said Companies into the State Treasury, and that provision
for its prompt collection be made by law, said tax when duly paid to
be in full of all State taxes not specifically laid in tho acts of incor-
poration of said Companies.

I also recommend that a tax be laid on tho gross receipts of all in-
corporated institutions chartered by this State, except Banks and Sav-
ings Institutions, and that the tax so laid be in lieu of all other State
taxation

It may be objected, perhaps, that some of these Companies have

small clear profits and possibly some no net revenue at all; and that

such Companies should be exonerated from State taxation In answer
to this objection, it is only necessary to state that investments in ordin-
ary property are taxed in proportion to their value and possible pro-
ductiveness, and not according to their actual income, and if individual
enterprise, in the purchase of property and its employment, turns out
to be unremunerative, freedom from taxation does not by any means
ensue in consequence As long as the property employed bas value

and capability, it cannot escape its share of public burdens ; capital,
therefore, employed in any enterprise, should contribute, to some ex-
tent, to the same purpose. Although the tax on the gross receipts of
many of our railroads will be very small, and not very sensibly felt by

any, the aggregate from all will be a very material relief to the Trea-