An important change in the administration of occupation taxes was made in 1879. Until 1879 collectors were charged on the books of the comptroller's office with only such taxes as they reported collected, and there was considerable laxity in reporting collections. By the system adopted in 1879 the collector was charged on the comptroller's books with an allotment of occupation tax receipts, on which the amounts of the taxes were printed, and he was responsible for the value of all not returned. Loopholes still existed, however, for defrauding the state.2 Certain of these taxes, namely, those on sewing machine canvassers and clock peddlers, were, without any apparent reason, made payable directly to the comptroller.

The description "special occupation taxes" is applied to those paid chiefly by corporations. At the beginning of this period, life, fire, and marine insurance companies were the only ones of the great modern corporations subject in this state to a special occupation tax. By the end of the period, however, and as a result of the tax measures adopted in 1879, not only were these companies, but gas, telegraph, express, sleeping and dining car, and railroad companies were so taxable. Complaints that the general property tax was not suited to reach the tax-paying ability of insurance, transmission and transportation companies were not heard to any extent during this period, and between 1873 and 1879 corporations were singularly free from the special taxation which had made its appearance in the preceding period.

In 1873 the occupation tax payable to the state by a life insurance company was $500, that payable to each county, $10; fire and marine companies each paid $200 to the state and $5 to the county. In 1876 the tax on the life companies was reduced to $200, but it was increased in 1879 to $300, and the county tax of fire and marine companies was doubled. In 1879 a state occupation tax of $50 was imposed on gas companies and one of $750 on express companies, but $250 of the latter amount was apportionable among the counties on the basis of the business done in each. On telegraph companies there was imposed in 1879 a tax of one cent for each full rate message sent and one-half cent for every message sent at less than full rate; and on the gross receipts derived within the state from passenger travel of railroads, steamboats, and stage coaches, a tax of one per cent was levied.1 Two different measures taxing sleeping and dining car companies were passed in 1879: the first taxed them at the rate of $2 per mile of railroad in the state over which their cars ran; the second imposed an ad valorem tax of one-half of one per cent on the value of cars owned or assigned for use in the state.2 All of these taxes were payable directly to the comptroller. The tax upon sleeping and dining car companies exempted them from all other taxes. No county or city could employ the occupation taxes imposed on telegraph, railroad, steamboat and stage coach companies. As compared with present day occupation taxes on such corporations, these taxes, with the exception of the tax on the gross receipts from passenger travel, were mere bagatelles.

1 Ex-parte Stockton, 33 Federal Reporter, 95 (1887). 2The practice was reported of collectors issuing memorandum receipts; Comptroller's Report, 1881-2.

A very marked extension of occupation taxes took place, as shown above, in 1879. Financial needs rendered some increase in taxation desirable, and the argument for the extension of the occupation taxes was chiefly that the ad valorem property tax did not reach the ability of those engaged and that this failure was to the prejudice of the interests of the agricultural class.3

Occupation taxes constituted 22.9 per cent of the assessed taxes in 1880, as compared with 16.8 per cent in 1875 and 17.1 per cent in 1879. The taxes on liquor amounted to 50.1 per cent of the total occupation taxes in 1880, and the special corporation taxes constituted only 4.3 per cent of the total. The receipts from corporation taxes would have been larger had not the Western Union Telegraph Company contested the law applying to it on the ground that it taxed interstate messages, and this contention was sustained by the Supreme Court of the United States.1

1 This tax was urged by Governor Roberts in a special financial message, January 29, 1879.

2 Laws of 1879, Spec. Sess., p. 39. Galveston News, June 15, 1879.

3 Inaugural address of Governor Roberts, January 21, 1879. The justification for the passenger tax urged by the governor was the theoretically unsound one that the state provided protection to travelers.