Sec. 14. #Special taxes on transportation.# Another great group of businesses whose taxation has been especially complex, because they are distributed throughout different taxing districts, are agencies of transportation and communication, especially railroad, sleeping car, express, telegraph, and telephone companies.  A state tax on railroad tonnage (Pennsylvania, 1860) was declared unconstitutional by the United States Supreme Court.  But many other plans have been tried to compel the railroads to contribute, the chief being by taxes on dividends, gross earnings, equipment, and valuation of capital stock, taxed either to the company or to the stock-holders, (Connecticut since 1849).  About a third of the states no longer make the physical plant the basis of taxation, except that in most of them some part or kinds of real estate are taxed locally.[10]

Telegraph companies are still locally assessed in most states, but in over a third of the states are taxed either on gross receipts, or on mileage of wire.  Telephone companies are similarly taxed, but sometimes on the number of transmitters, or of subscribers, or on each plant, or otherwise.  In a similar manner, express and sleeping car companies are taxed, in the same group of states, on mileage, or on capital stock proportional to mileage, or by license and privilege taxes.

In the case of these corporations, and also of various other miscellaneous kinds of companies, no clear-cut principles serve to guide.  The result is “a chaos in practice—­a complete absence of principle."[11]

Sec. 15. #Alternative policies as to corporate taxation.# If the taxation of corporations is not to continue to be treated in a mere hit-or-miss manner, with every possible kind of inconsistency among the various states, some general principles must be recognized and some clear policy be formulated.  But there is no general agreement to-day among jurists and economists upon a definite and consistent plan in this matter.

Two alternative policies appear.  The first is to make the scheme for taxing corporations quite different in principle and plan from that for taxing natural persons.  The assumption in this is that the “general property tax” is an irremediable failure, and is particularly inapplicable to corporations.  This plan goes along with the separation of state and local taxation.[12] An unfortunate result of this is to relieve the great mass of taxpayers of the state from, any apparent and measurable part of the tax burden for state purposes and thus to separate responsibility and power in state government.  This policy nevertheless is favored by some of the leading authorities on finance.

The other policy is to tax the wealth and business of corporations (excepting those enjoying special privileges) in essentially the same way as other wealth and business.  The improvement of corporate taxation would thus be but a part of the transformation of the “general property tax” into a general tax on tangible wealth.[13] If first there is recognized the error of assessing the equitable ownership interests in addition to the body of wealth, and secondly there is created an efficient agency of assessment, the taxation of corporations can be logically and easily brought into accord with a harmonious system of state and local taxation.[14]