The history of special corporation taxation in Texas reveals that until 1893 only railroads, steamboats, and stage coaches were taxed by the gross receipts method, while other corporations were taxed lightly by fixed annual payments. The period 1893-1897 was one of deep commercial and financial depression. The populist party, which was strong and aggressive, advocated the heavier taxation of corporations, and the feeling was general that the taxation of insurance, express, and sleeping car companies was extraordinarily light. Governors Hogg and Culberson favored an increase of corporate taxation, and the result was the extension of the gross receipts method and the introduction of franchise taxation.1 A period of quiet followed until 1905-1907, when the gross receipts method was further extended and the rates carried by it as well as those of the franchise tax were increased. The extension and increases in these taxes which occurred in 1895-7 and 1905-7 were coincident with a condition of deficiency in the general revenues.

1 Western U. Tel. Co. v. The State, 103 Tex., 306 (1910). A company shipping its manufactured goods into the state, whether sold before or after arrival in the state, is engaged in interstate commerce, and needs no permit to do business in the state; Miller v. Goodman, 91 Tex., 41 (1897). A foreign manufacturing corporation whose products are sold merely on commission by local merchants is engaged in interstate commerce and does not need to secure a permit to do business in the state; Allen v. Tyson-Jones Buggy Co., 91 Tex., 22 (1897).

2 Crane Co. v. Looney, 218 Fed. Rep., 260 (1914).

The financial significance of special occupation taxes has steadily grown. Their amount and per cent of total tax receipts at selected dates were :2

The constitution directs that not less than one-fourth of the proceeds of the special occupation taxes shall accrue to the available school fund for the benefit of the public free schools.3 One-fourth is the share customarily set aside.4 The ease of administration of this method of taxation commends it, though considerable unfairness may result unless the various rates are carefully devised so as to impose equal taxation.5 The financial significance of the franchise tax also has increased. The amount and per cent of total taxes at selected dates were:6

1 Message of Governor Hogg, January 12, 1893. Galveston News, January 13, 1893. Houston Post, February 27, and March 6, 7 and 15, 1895, and March 24, 1897. Messages of Governor Culberson, April 29 and March 5, 1895, and June 18, 1897.

2 See Appendix, table 10. The percentages are slightly greater than here stated, because ad valorem, poll, and general occupation taxes are given in gross, not net, amounts.

3 Art. VII, sec. 3.

4 Rev. Civil Stats., 1911, art. 2725.

5 Evasion of the tax was charged in 1908; Report of the State Tax Commissioner, 1908, p. 16.

6 See Appendix, table 10. The percentages which franchise taxes are of total tax receipts are, as in the case of the special occupation taxes, greater than here given, because the ad valorem, poll, and general occupation tax amounts are gross amounts, while the special occupation and franchise tax amounts are net amounts.

The franchise tax is a state tax exclusively and the proceeds accrue wholly to the general revenue account.

There has been an important growth not only in the revenue derived from corporations by means of occupation and franchise taxes, but also in the receipts from corporation fees and from the property tax. The proportion which receipts from corporations are of total state revenue can not be exactly stated, but as well as can be ascertained, the proportion was 3.6 per cent in 1882, 8.5 per cent in 1895, and 21.5 per cent in 1915.1 The percentage which corporation taxes were of all tax receipts was 4.7 in 1882, 10.5 in 1895, and 24.6 in 1915. Does this growth represent a tendency to put the weight of taxation on corporations, or does it represent the growing importance of the corporation as a form of business organization? The answer probably lies between. On account of the special taxes applying to corporations, it is likely true that they are more nearly taxed in accordance with their ability to pay than are individuals.

1 No assessments of banks or bank stock are given in the comptroller's reports for 1882 and 1895, so taxes on them can not be included among corporate taxes. They are included in the statement for 1915, but if they are excluded, the percentage is 19.7 instead of 21.5. The United States Bureau of Corporations found that in 1912 the proportion of corporate receipts to total receipts in Texas was 20.3 per cent; Report of the Commissioner of Corporations on the Taxation of Corporations in the Southern and Southwestern States, pp. 313-314 (1915). See also the Report of the Texas Welfare Commission, 1912, p. 46 et seq.