35

The annual franchise tax due from foreign corporations is
based on the amount of the capital employed by such corporations
within the State. This method of using the capital employed in
Maryland as a basis upon which to calculate the annual charge does
not seem sound, and is not fair to domestic corporations.

A far better method would provide that the annual charge be
imposed on an estimated capital of such foreign corporations
credited to this State and bearing the same ratio to the entire
capitalization as the assets of the corporation in Maryland bear to
the entire assets of such company.

For instance, should a company have 12,000,000 of capital and
have $500,000 of assets in Maryland and $2,000,000 of assets outside
of Maryland, then one-fifth of the entire capital, or $400,000, should
be the estimated capital upon which the annual franchise tax is to be
charged. If all of the assets are in Maryland, then all of the capital
should be treated as estimated capital in Maryland.

In arriving at the amount of estimated capital no consideration
should be paid to debts or credits due to or from such corporations.

After the estimated capital is determined the same rates should
be imposable as are imposable upon the paid-in capital of domestic
corporations.

The real estate of domestic and foreign corporations is assessed
locally. The tangible personal property of domestic corporations
is assessed by central authority—that is, by the State Tax Com-
mission, while the tangible personal property of foreign corpora-
tions is assessed by local authorities. There should be no difference
in the agency for assessment.

Every consideration requires that the personal property of for-
eign corporations should be assessed by that agency. Too much
stress cannot be placed on this. Comparative information can be
compiled and the best results can be obtained as the work of the
State Tax Commission develops. Elsewhere is reference made to
the assessment of the property of firms and individuals and mention
made of the necessity of annual review by the State Tax Commission.

The Commission is strongly of the opinion that the entire juris-
diction of foreign corporations should be transferred to the State
Tax Commission, and that all foreign corporations should file their
request for licenses or permission to do business in Maryland with
it, and that the certificates for such privilege should be issued by it.