tlAWAII 
 EEPORT OF THE TftX COMMISSION 
 
QJnntpll ICaui ^rljonl ffiibraty 
 
, Cornell University Library 
 
 KFH 471.A87 
 
 Report of the Tax commission to the gove 
 
 3 1924 024 650 412 
 
 REPORT 
 
 OF THE 
 
 TAX COMMISSION 
 
 TO THE 
 
 GOVERNOR OF HAWAII 
 
 June 3P, 1908 
 
 HONOLULU : 
 
 BULLETIN PUBLISHING CO., LTD. 
 
 1908 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924024650412 
 
REPORT 
 
 OF THE 
 
 TAX COMMISSION 
 
 TO THE 
 
 GOVERNOR OF HAWAII 
 June 30, 1908 
 
 HONOLULU : 
 
 BULLETIN PUBLISHING CO,, LTD. 
 
 1908 
 
TABLE OF CONTENTS. 
 
 Page 
 
 Appeal, ( 'ertificate of 34 
 
 Appeals, to be heard by whom 8 
 
 Assessments, by whom to be made 8 
 
 Assessment real estate, every three years 7 
 
 Assessors, term of office 38 
 
 Automobiles 18 
 
 Cables, submarine 17 
 
 "Capital Issues Emitted" 22 
 
 Corporation, certain taxes and license fees 23 
 
 Corporations, fee for filing anniial exhibits 24 
 
 Corporations, i^ees and charges for disincorporating 24 
 
 ' Crops, tax on growing 14 
 
 District Magistrates 34 
 
 Eight jeHv rental rule 13 
 
 Enterprise for Profit Tax 21, 41 
 
 Equalization, Board of 10 
 
 Exemptions re partnerships, income tax 27 
 
 Exemptions, property tax 25 
 
 Fishing license 31 
 
 Government Assets, inventories of 36 
 
 Graduated land tax 15 
 
 Graduated license fees 31 
 
 Income Tax, depreciation 26 
 
 Income tax, exemption re partnerships 27 
 
 Inheritance tax 28 
 
 Insurance Companies 24 
 
 Introduction 3 
 
 Lands of equal productivity, tax on 16 
 
 Large holdings of land 15 
 
 Leasehold interests 12 
 
 Leasehold interests in public lands 13 
 
Page. 
 
 License fees graduated as to locality . . '^^ 
 
 License for fishing 31 
 
 Liens for taxes 32 
 
 Militia roll 35 
 
 Minor amendments 38 
 
 Oath on taxpayer's retnrn, fnrm of 35 
 
 Penalty and interest in delinquent taxes ■!:! 
 
 Personal taxes 2S 
 
 Publicity of tax returns, etc. . . ., 31 
 
 Peal estate, taxation of 7 
 
 Returns, failure to make 34 
 
 Summary sale for taxes 33 
 
 Valuation basis for property tax ._ 19 
 
 Forms of bills for legislature 53-78 
 
 Merchants' Association recommendation 78 
 
 Statistics, Cost of tax collection 82 
 
 Taxes collected, 1901-1907 83 
 
 " License fees, 190G-1908 84 
 
 " Comparative statement of disbursements of 
 
 the Territory, 1905-1907 85 
 
To THE HojT. W. F. Fkeak, 
 
 Governor of the Teriitory of Hawaii. 
 
 SiE : — Pursuant to the provisions of Joint Eesolution N\un- 
 ber One, passed by the Legislature of the Territory of Hawaii, 
 and approved March 21, 1907, the Governor appointed on May 
 1, 1907, as members of the Commission by that Eesolution pro- 
 vided for, the Hon. W. F. Frear, the Hon. A. A. Wilder and 
 Mr. A. F. Judd. On July 31 and August 15 of the same year 
 the Hon. W. F. Frear and the Hon. A. A. Wilder respectively 
 resigned their offices as members of the Commission and in their 
 stead the Governor in September following appointed Messrs. 
 Antonio Perry and L. T. Peck. 
 
 The Commission is required by the Resolution to "thor- 
 oughly examine and investigate the Tax Laws of this Territory 
 and consider their legal operation and effect, the manner of 
 their , enforcement and general adaptability with respect to 
 existing conditions and consider ways and means for the revi- 
 sion and improvement of said laws as they shall deem necessary 
 or advisable," and "make report of their work to the Governor 
 not later than July 1, 1908, with their recommendations per- 
 taining thereto, together with some bill or bills for the effectua- 
 tion of such recommendations." The Commission as first con- 
 stituted at once took steps to cause the acquisition of such a 
 library as would be helpful in its study of the subject and 
 reasonably available, and sent out circular letters to officers of 
 the Government and to other men throughout the Territory of 
 prominence, ability and experience, requesting a statement 
 from them of such defects in our tax laws as had come to their 
 notice and such suggestions as occurred to them for remedying 
 those defects and otherwise improving our tax system. 
 
 The Commission as at present constituted, after organizing 
 with Mr. Perry as Chairman and Mr. Judd as Secretary, con- 
 tinued the effort to obtain from tax payers complaints concern- 
 ing existing tax laws and their operation and administration 
 and suggestions for amendments, these efforts being made by 
 means of personal interviews, by items in the newspapers pub- 
 lished in Honolulu and by an advertised public session. 
 
 But few responses resulted from these efforts. Such com- 
 plaints as were communicated to the Commission were gener- 
 
ally of matters of administration and few were npon matters of 
 substance of the law and involving questions of policy. Inquiry 
 as to the particular causes leading up to the passage of the Reso- 
 lution failed to reveal a belief on the part of the Legislators 
 consulted or others directly concerned with the matter at that 
 time, that any radical amendment of the existing system or laws 
 was necessary or desirable. The Bar Association of the Terri- 
 tory appointed a committee charged with the duty of preparing 
 a suitable reply to the Commission's request for suggestions, but 
 the committee made no report and the Association took no 
 further action. The Honolulu Chamber of Commerce, likewise, 
 was asked for suggestions, but made no reply. The same is true 
 of the banks-, trust companies and plantation agencies (with 
 one exception only as to the last mentioned concerns). 
 
 The time which has elapsed since the organization of the 
 Commission has been too limited to permit of that extended 
 study of this technical and ordinarily difficult subject which 
 would seem to be desirable. The members of the Commission 
 have made the best possible use of the time available consist- 
 ently with the performance of their other dutes. They deem it 
 to be their duty to comply with the mandate of the Resolution 
 to report not later than July 1, 1908, and decline responsibility 
 for the fact that the time allotted them for investigation and 
 report has not been longer. The Commission believes after 
 study that the taxation system prevailing in this Territory is, 
 with perhaps one or two exceptions, modern and advanced in 
 character, and that for the present, at least, no changes other 
 than those hereinafter recommended ^re required or should be 
 made. This Territory, for example, has already adopted the 
 principle of the income tax (a workable income tax act has been 
 in operation since 1901) and that of the inheritance tax as parts 
 of its system, while in other jurisdictions the effort is still being 
 made to incorporate thesr in their tax system. Our present laws 
 ]'elaling to taxation have been the result of gradual growth dur- 
 ing a considerable period of years. Amendments in matters of 
 procedure as also with relation to sources and methods of taxa- 
 tion have been made from time to time as suggested by our own 
 needs and experience and by those of other jurisdictions. 
 
 Not as many problems arise or can arise under existing cir- 
 cumstances in this Territory as have confronted Tax Commis- 
 sions elsewhere. As examples may be stated the questions of 
 
the equitable taxation of the property of railroad companies 
 whose lines pass through different jurisdictions, whether states 
 or subdivisions of a state and of the equalization of valuations 
 of property as between different counties, the latter problem 
 ordinarily arising where the state seeks to raise a part of its 
 revenue by taxing property in various countries, each of which 
 counties in turn taxes the same property within its borders for 
 its own jDurposes. In this Territory the coimties do not possess, 
 and have not sought to exercise, the power of taxation. So, 
 too. Tax Commissions elsewhere have devoted much time and 
 study to the question of the tax on personal property, attacks 
 upon that method of taxation being general in and out of the 
 commissions upon the ground that the tax is easily evaded, is 
 productive of a great deal of injury, and for these reasons fails 
 to reach those whom it is intended to reach and' falls with 
 undue weight upon the honest. To some extent this Commis- 
 sion believes that these objections to the personal property tax 
 are founded ujion fact ; but after consultation with all of the 
 officers in this Territory charged with the duty of levying and 
 collecting such taxes, the Commission does not find that in this 
 Territory the evils just mentioned exist to such an extent as to 
 warrant the abolition of this tax. Hawaii is an agricultural 
 country. Industrial life is not complicated as yet. It is not 
 easy to evade taxes on personalty nor difficult to find the prop- 
 erty itself. Tt may be added that the tax is productive of a con- 
 siderable portion of the revenue of the Government and that it 
 aids, as the Commission believes, in measuring and reaching 
 that financial ability of tax payers which is recognized by the 
 best thinkers on the siibject as the true and just standard of 
 measurement of taxes as between the various members of the 
 community who are to contribute to the support of the Govern- 
 ment. 
 
 Again, in Hawaii credits are not taxed as such. Mortgages 
 as credits are not taxed. Money on deposit is taxed to the bank 
 as far as the same is on hand on the taxation date. Stocks and 
 bonds of private corporations, accounts receivable and promis- 
 sory notes are not taxable. Certain contracts only are taxable, 
 as for example, sugar agency contracts. The adoption of or con- 
 tinued adherence to the oT)r)osite course with ref5rence to each 
 of those matters has been the cause of much controversy in many 
 of the States. 
 
6. 
 
 A cause of complaint dwelt upon by some Commissions is 
 that assessors are not sufficiently diligent or zealous in the list- 
 ing of property, and perhaps, in particular, personal property 
 or in assessing property up to the full standard of measurement 
 prescribed by law. This Commission unhesitatingly finds and 
 reports that this charge cannot be truthfully made against any 
 of the assessors in this Territory. On the contrary, it believes 
 that for a few years last past our assessors have too often assessed 
 property at more than the prescribed standard, that is to say, 
 the full cash value, and this very fact, it further believes, is 
 responsible directly or indirectly for much of the feeling such 
 as it is, which exists and has been expressed in favor of amend- 
 ing the present laws in some respects. 
 
 Oftentimes tax commissions are called into existence because 
 of a necessity for increased revenues from taxation to meet the 
 ordinary current expenses of government. From no source 
 whatever has the view been expressed that any such necessity 
 for an increase exists in this Territory, nor has any suggestion 
 or request been made for such increase. In view of these facts 
 the Commission has not deemed it incumbent upon it to seek 
 evidence of such necessity. An increase of taxes is always, and 
 deservedly so, unpopular and should not be resorted to unless 
 the necessity for it is clear. It may be remarked that, owing to 
 the expiration of certain tax exemption periods, to the renewal 
 of leases of public lands at increased rentals and to the general 
 agricultural development of the Territi^rv, the revenue received 
 l)y the Territory under existing laws is increa.sing. 
 
 In passing it may be well to note that the Organic Act has 
 no provision declaring specifically what are the powers of our 
 Legislature on the subject of taxation. The only provision 
 applicable is that "the Legislative power of the Territory shall 
 extend to all rightful subjects of legislation not inconsistent with 
 the Constitution and laws of the Ignited States locally appli- 
 cable." — Section 55. Taxation is a rightful subject of legisla- 
 tion. See, for example, Peacock vs. Pratt, 1 Estee 294-298, 
 affirmed in 121 Fed. 770. The act of July 30, 1880, 24 Stat. 
 L. 170, 7 Fed. Stats. Ann. 204, sets forth certain limitations on 
 the power of the legislatures of the Territories to legislate con- 
 cerning the assessment and collection of taxes for territorial 
 county, township or road purposes. 
 
In the pages following reference will be made to most of the 
 subjects to which the attention of the Commission has been 
 called by those who have made complaints or suggestions, as 
 well as to other subjects which as a result of its study the Com- 
 mission thinks ought to be adverted to. 
 
 The Tax on Real Estate. 
 
 The Commission has found great unanimity of opinion on 
 the part of assessing officers as well as on the part of taxpayers 
 to the effect that it is desirable that as far as possible assess- 
 ments on property shall, when made, continue in force and not 
 be subject to change for a period of years, instead of for one year 
 only, as at present. In this view the Commission concurs, and 
 for several reasons. In the first place, certainty as to the amount 
 of the tax payable by a tax payer is desirable, as is also the 
 avoidance of the annoyance and the expenditure in time and 
 money consequent upon yearly assessments and adjustment of 
 objections thereto. Secondly, while ordinarily the encourage- 
 ment of litigation is something to be avoided, yet it is proper 
 and desirable that an opportunity be given to any tax payer who 
 feels aggrieved by the valuations of the assessor, to have such 
 valuations reviewed by an independent Court. In theory such 
 opportunity is afforded in all cases by the law as it now stands. 
 In practice, however, it cannot be denied that there is a large 
 class of cases where it is impracticable because of the large out- 
 lays necessary for attorney's fees and other expenses and because 
 of the smallness of the amount of taxes in controversy, to take 
 an appeal. The change by increasing the amount of taxes at 
 stake would tend to reduce very largely the number of cases in 
 the class just referred to and to remove the feeling of discontent 
 on the part of such smaller tax payers, whether the appeals be 
 in fact taken or not. Again, the work of the tax office would be 
 considerably lessened in consequence of the amendment and 
 would enable the officers to devote more time to other details 
 where it is needed. Further, if past experience can be relied 
 upon as a guide, it is safe to say that within the period for which 
 the assessments are to continue in force, no great changes in 
 value either for or against the Government pr the taxpayer are 
 probable. In the long run no unfairness will result to either 
 party. 
 
8 
 
 In those states in which this plan has been adopted the period 
 has N-aried from two years to ten years, presumably in aceora- 
 ance with the degree of fliictuation expected in the value of 
 property. The Commission recommends that in this Territory 
 it be fixed at three yeai's, which includes of course the assess- 
 ment year. Later the Legislature may see fit to either increase 
 or decrease the length of this jieriod in accordance with the 
 experience under the amendment now proposed. 
 
 It would be desirable to adopt this system with reference to 
 all ]iro])erty subject to the general property tax; but it would be 
 im])racticable to do this, for example as to personal property, 
 because of frequent changes in the amount, ownership and value 
 of the property sought to be taxed. So, too, the new method 
 should not be applied to p)roperty taxed as part of an enterprise 
 for profit, because of the constant changes in the amount and 
 l^roportions of the property which are used in combination iu 
 such enterprises. The recommendation here made is that the 
 change apply to real estate (other than that taxed as part of an 
 enterprise for profit), including in that term, in consonance 
 with the provision of Section 1214 of the Revised Laws all 
 im])r()venients ; that allowance be made in the non-assessment 
 years for all physical additions to or diminutions in improve- 
 ments ujion the property assessed under the tliree-year system, 
 sucli allowance consisting of the full cash value of such improv- 
 ments so added or lost, and when so found to be added to or sub- 
 tracted from the full cash value of the pro]ierty as it existed the 
 preceding year as fixed by the assessment in the last preceding 
 assf'ssment year. 
 
 Pi'ovision should also be made for the assessment at any time 
 whatsoever of property not theretofore assessed from whatever 
 cause such omission may have resulted, the assessment so made 
 to continue in force until the next assessment year, and the 
 amendment should further name the assessment years. In the 
 (ixhibits which are attached to and made a part of this report, 
 are foi'ms of bills intended to express and effectuate the amend- 
 ments which are rccummended in this report. For the changes 
 thus far rcconnuended see Exhibit "A" Section 7, pages 
 56, .57. 
 
 Ev Whom A,sskssmk.\ts to he M.vde and Appeals Heard. 
 These twii subjects are so closely related that they will be con- 
 sidered togetlier. Various suggestions have been made for 
 
9 
 
 amendments in these respects. Some tax payers, and practical- 
 ly all the assessors, favor the creation of a board of assessors, 
 say of three members, who shall in place of the one assessor now 
 provided by law for such taxation division, fix the value of all 
 property subject to assessment. As to whether or not in that 
 event the Tax Appeal C'ourt should be abolished and to what ex- 
 tent and to what other Tribunals appeals should be permitted 
 from the assessments of the board, these taxpayers and assessors 
 are not so clear. Others favor the retention of the present sys- 
 tem, still others a board of assessors with an appeal to the Cir- 
 cuit Judge at Chambers and subsequently to the Supreme Court, 
 while some would evidently prefer the substitution of an appeal 
 from the one assessor to a Circuit Judge at Chambers, with the 
 abolition of the Tax Court, as the only change in the law. It 
 seems fairly certain and natural that it would be most satisfact- 
 ory to all concerned that at some point in the procedure prior to 
 tlie matter reaching the Supreme Court of the Territory moi'e 
 than one mind take part in fixing the valuation. Aside from 
 the question of expense, perhaps it would be desirable to have 
 the aid of the three minds in the very beginning, on the theory 
 that this would result in a greater percentage of correct valua- 
 tions and less cause for appeals. The question of expense must, 
 however, be considered. For the members of a board of three 
 assessors, whether such board be created with power to fix as- 
 sessments throughout the Territory or merely for each Taxation 
 Division, it would be necessary to provide substantial salaries 
 which would be real compensation to them for the time and lab- 
 or necessarily bestowed in the performance of their duties. 
 Much time and labor woiild unquestionably be required, and any 
 attempt to secure men at salaries measnred by any lower stand- 
 ard than that just referred to would necessarily result in eitiier 
 the employment of inferior assessors or in hasty and ill-consid- 
 ered assessments, neither of which, obviously, would be an im- 
 provement upon the present system. If substantial compensat- 
 ory salaries are to be paid, the additional expense would be so 
 great as to render it inadvisable to modify the system in this 
 manner. The Commission tipon this point recommends the re- 
 tention of the present system of assessment by one man wilh 
 the retention of Courts of Tax Appeals constittited as at 
 present of three members whose decisions shall as now be 
 subject to appeal to tlie Supreme Court. It may be added that 
 
10 
 
 one member of the Commission personally would prefer to have 
 tax appeals iu the first instance heard by a Circuit Judge in 
 place of a Tax (_'ourt because of the greater familiarity of Cir- 
 cuit Judges with the law and their greater ability to correctly 
 weigh evidence, but he, in conjunction with the remainder of 
 the Couinussion, realizes that the majority of taxpayers would 
 be better satisfied with the judgment of three men in the Tax 
 Court who as now are chosen because of their familiarity with 
 the values of the property upon which they are to pass and not 
 because of their experience or ability in matters of law. A fur- 
 ther consideration in favor of the retention of the Tax Appeal 
 Courts as against the substitution of an Appeal to the Circuit 
 Judges is, as to the First Circuit, that the three Judges wliose 
 appointment is now authorized by law have their time fully oc- 
 cupied with the matters which by law it is their duty to hear 
 and determine and, as to the First Circuit and to a lessor extent 
 as to the other Circuits, that a Court of Tax Appeals is likely 
 to render its decisions with greater expedition than the Circuit 
 Judges who have other cases to consider and decide. 
 
 In theory, at least, it would be preferable, too, that the mem- 
 bers of the Tax Appeal Courts should be appointed by the Su- 
 preme Court or one of its members rather than by the Governor 
 who is the head of the Executive Department, of which the Tax 
 Ofl"ice is a branch, and Avho in that sense is a jjartv in interest 
 in the controversies to come before the Tax Courts. The Or- 
 ganic Act, however, in Section 80 provides that the members of 
 all Boards of a 23ub]it' character shall be ajipointed by the Gover- 
 nor by and with the advice and consent of the Senate. This ap- 
 ]:)lies, in the opinion of the Commission, to the appointment of 
 the members of the tax appeal courts. In practice the Commis- 
 sion is not aware that the Governor has in the past in the slight- 
 est degree abused his power of apjiointment, and until sucn 
 cause or well-grounded apprehension of it arises, the Commis- 
 sion thinks that it would bo inadvisable to ask (\)ngress for the 
 necessary modilication of tiw Organic Act upon the point. 
 
 As tending to further ])erfect the system of assessment and 
 oliviate some of tlie objections whicli were sought to be obviated 
 l)y those suggesting an original board of assessors, the Commis- 
 sion recommends that a board of five, which for purposes of con- 
 venience may l)e called the Board' of Equalization, be created 
 one member to be eliosen from eacli Taxation Division and a 
 
u 
 
 fifth member from the Territory at large (l)Tit neither the 
 Treasurer of the Territory nor the treasurer of any County nor 
 any tax assessor or collector to be eligible), with authority to 
 frame rules and regulations not inconsistent with existing stat- 
 utes intended to secure uniformity in methods of assessment and 
 equality and fairness of valuations tliroughout the Territory, 
 to call the attention of any assessor to any dereliction of duty 
 on his part and to offer suggestion to any assessor concerning 
 the proper performance of his duties, and to prescribe forms of 
 the returns to be made by the taxpayers, both as to property and 
 as to income, with as detailed requirements for information as 
 it may deem proper, such returns and the requirements there- 
 of to be uniform to all within any given class, and with authori- 
 ty further in such board to revise, alter and repeal such rules, 
 regulations and forms from time to time as in their judgment 
 may seem proper ; further that it should be the duty of such 
 board to sit at least once a vear, say in the month of T^ovember, 
 to frame such rules and regulations and adopt such forms. The 
 month of ISTovember is here suggested because the board which 
 the Commission has in mind is one intended, not to take part in 
 the actual fixing of assessments, but to render aid, before each 
 period for returns or assessments is reached, to the assessors in 
 the imposition of equal and just assessments. The amendatory 
 act should further provide that all meetings of the proposed 
 board of equalization shall be public and shall be held only af- 
 ter dne advertisement thereof in the public press for a period 
 of at least one week : and require that in the month of June of 
 each year the Board make to the Gnvernor a written report of 
 such derelictions of duty as it has observed on the part of asses- 
 sors or collectors of taxes and of its recommendations for legis- 
 lation intended to improve the tax laws or the administration 
 thereof. 
 
 The statutes now provide for a Board of Equalization com- 
 posed of the treasurer and the four assessors, (Section 123fi of 
 the Revised Laws as amended by Chapter S9 of the laws of 
 1905) whose duty it is to "hold public meetings in Honolulu at 
 such times as mav be designated bv the treasurer when such 
 general rules regarding assessments and valuations shall be 
 adopted as may be deemed proper and equable, and not incon- 
 sistent with any existing laws. Such board of equalization shall 
 
12 
 
 publish their findings in all cases where valuations made are of 
 general application." 
 
 The commission's recommendation is, in short, to change the 
 constituency of this board, making it non-partisan as between 
 the government officials and the tax payers, and providing by it 
 Udt only regulation of tax assessments and collection, but also 
 means for rer'ording faults in oiir laws as observed by the Board 
 and by taxpayers, in such a way as to have the legislature regu- 
 larly advised of their condition. The board savors of a perma- 
 nent tax commission, an institution now being tried in several 
 states. Experience may show it to be wise to give the board 
 powers of assessment revision, but at the present time this com- 
 mission feels such a step would be premature and not advisable. 
 One member would make it the duty of the Board to sit also 
 Avith the assessors in Plonolulu in the months of February or 
 March and before the as'sessments are finally iixed to observe 
 the operation of the rules and regulations prescribed by said 
 Board and to equalize, if need be, the total valuations by assess- 
 ment divisions between the same. 
 
 For specific amendments proposed under this head see Sec- 
 tion 13, pages 59-61, Exhibit "A." 
 
 Leasehold Interests. 
 
 The suggestion has been made by some of the assessors and 
 also by some taxpayers that the present system of taxing lease- 
 liolcl interests separately from the interests of the lessors be 
 abolished, and that the whole tax to be collected from leased 
 jn'operty be assessed to the lessor. The main reasons assigned^ 
 in favor of this change are that ordinarily the ascertainment 
 of the value of a leasehold interest is a matter involving much 
 labor and difficulty and that, particularly from the taxpayer's 
 ]ioint of view, there is much uncertainty and confusion as to 
 such value. The Commission is not impressed with the neces- 
 ■ ity for or ^visdom of the proposed change and recommends that 
 it be not made. The best standard of measurement, as already 
 suggested, of the amounts to be contributed in taxes by separate 
 individuals is that of ability. Many leasehold interests have a 
 commercial and ascertainable value. To require of the owner 
 of 1he iT\'orsionary interest the payment of the taxes due not 
 only on the latter interest but also on the leasehold interest 
 would be to erroneously measure his financial ability and to im- 
 
13 
 
 pnte to him the ownership of that which elearly belongs to an- 
 other. This would he nnfaiv and resnlt in inequality. It is un- 
 doiibtedly trne that at times the ascertainment of the correct 
 valuation to be fixed upon a leasehold interest is a matter of 
 difficulty and involving more than ]ierhaps the average expendi- 
 true for assessment but that seems to the Commission to be in- 
 sufficient to justify the change. Moreover, the highest Court 
 of the Territory has already constnied the main provisions of 
 the law bearing upon this subject and the system is fairly well 
 understood now and will undoubtedly become increasingly 
 familiar to all concerned as time passes. 
 
 TiiK Eight Year Rental Eule. 
 
 The Commission recommends that the last paragraph of Sec- 
 tion 1216 of the Revised Taws reading, "And further provided 
 that when any real estate or house is leased or rented the sum 
 of eight years' rental thereof shall be the assessment value of 
 such real estate or house unless such valuation shall be mani- 
 festly unfair or unjust," be repealed. The Section was passed 
 several years ago at a time when a return of not less than 12-|'^° 
 on capital invested in real estate or houses was deemed to be 
 an ordinary and proper return. Conditions have changed since 
 that time and seldom, if ever, is the calculation of the value of 
 the principal of the property from the income based on that 
 ■rate. The exception stated in the paragraph just quoted is al- 
 most as broad as the rule itself. Tn practical application the 
 provision as it now stands is valueless. Tt serves no good pur- 
 pose and may in a few instances hinder the assessor in the appli- 
 cation of a more equitable rule of calculation. 'No such definite 
 statement of a percentage to be used is necessary. There is no 
 danger to a taxpaver or detriment to the Government in omit- 
 ting it. See Exhibit "A," Section S, pages r,7,. 58. 
 
 Taxation" of Leasehold Interests in Government Lands. 
 
 Section 2S3 of the Revised Laws provides as follows: "For 
 the purpose of taxation the value of general leases hereafter 
 executed shall be the value of the fee of the real estate de- 
 mised, and the lessees shall be assessed thereon acordingly ; such 
 leases shall be void upon default in the payment of taxes there- 
 on for sixty days after such taxes liave become delinquent." 
 From taxpayers the suggestion has come that this Section be 
 
14 
 
 repealed, presumably tm the ground that the rule there stated 
 prescribed an untrue standard of measurement o£ the value of 
 the leasehold interest in such lands. The Section is a part of 
 Chapter 22 of the Eevised Laws, which chapter deals with the 
 subject of public lands generally and in particular with the 
 sale, lease and other disposition of such lands. While the lan- 
 guage used in Section 283 is somewhat unfortunate, it seems 
 to be beyond doubt that the object of the Legislature in inserting 
 the Section was to provide that as a part of the consideration 
 for the use of the land under such leases the lessee should pay 
 the taxes on the whole value of the fee; and when a lessee ac- 
 cojits a lease imder the provisions of that chapter and with the 
 condition contemplated by Section 283 inserted he does so with 
 the knowledge and u])on the understanding that as a part of his 
 contract with the Government he is to pay certain taxes or addi- 
 tional rent, whichever it may be called, measured by the value 
 of the fee. There is no unfairness in asking the lessee after 
 the execution of the lease to pay taxes so measured. Moreover, 
 the Organic Act in Section 73 prescribes "that the laws of Ha- 
 waii relating to public lands shall continue in force until Con- 
 gress shall otherwise provide." Section 283 is a part of those 
 la-\vs and prescribes one of the conditions to be attached to leases 
 granted thereunder. It is not within the power of the Legisla- 
 ture to repeal the Section. For all of these reasons the Commis- 
 sion does not recommend its repeal. 
 
 One member believes that that portion of Section 283 which 
 prescribes a rule of assessment of "Government leases" is not 
 land legislation in the view of the Organic Act but is exclusive- 
 ly tax legislation, presenting a peculiar and artificial standard 
 of assessment not authorized with regard to any other leasehold 
 interests in the Territory, and setting at naught the cardinal 
 prijiciple of equality in taxation, and that if possibly it should 
 be repealed by the Legislature or else be referred for the same 
 purpose to the federal Congress. 
 
 Tax ow Gboaving Crops. 
 
 Certain farnievs have requested that the tax on growing crops 
 be iibolished on the ground that it is double taxation and that 
 it tends to discourage cultivation of the soil. The Commission 
 docs not sec its way clear to recommend the change. Theoreti- 
 cally any step whicli tends to discourage cultivation should be 
 
15 
 
 discoimtenaiiced. In ])ractice, however, a very large propor- 
 tion of the revenues from taxation in this Territory comes out 
 of the growing cro])s. This is an agricultural country. If the 
 tax on growing crops were to he abolished, it would become 
 necessary to substitute some other source of revenue or method 
 of taxation, capable of producing equal revenue. The prob- 
 ability is that that new method whatever it might be would meet 
 with at least as much <)p])osition as that whi'cli is offered aganist 
 the present tax. As to double taxation the objection is, the 
 (Commission thinks, not well founded. Even if it is in one 
 sense double taxation to tax the growing crops themselves and 
 to tax later under the income tax laws the net income derived 
 from those growing crops, still this is not objectionable double 
 taxation. Double taxation may or may not be objectionable 
 according as to whether or riot it affects equally all those within 
 a given class. If it does, as it does in this instance, it is no more 
 objectionable than if in place (if the rate now prescribed of 1'^° 
 the rate should be made 3%, and no more objectionable than it 
 would be to tax the livestock on a farm under the property tax 
 laMfS. and to tax, under the income tax laws, the proceeds derived 
 from the sale of the same livestock after deducting the cost 
 thereof. The result is the same in both instances. The tax ob- 
 jected to is neither unconstitutional nor unjust. 
 
 Taxatiox of Lakge Holdings of Land. 
 
 The suggestion has been made that the Commission recom- 
 mend progressive taxation upon land, the method of graduation 
 of the tax to be such as to render it unprofitable for any one 
 person, partnership or corporation to hold many large tracts of 
 laud, and in that way to cause the owners of many or large 
 tracts to sell and place the property within reach of men of an 
 agricultural class and encourage the coming of such immigrants 
 to the Territory. The suggestion is not made, as we understand 
 it, in order to accomplish a distribution of the burdens of taxa- 
 tion which shall be more nearlv in accordance with ability and 
 therefore more nearlv just. Tu so far as the purpose of such 
 an amendment would be to produce the breaking up of large 
 landed estates, it involves a nuestion of broad policy concerning 
 land and immierants in nartieular and the wellfare of the Terri- 
 tory in general which the Commission deems tn be not within 
 its province, just as it would not be within its province to con- 
 
16 
 
 sidcr, for example, the question of whether <-)r not prohibitive 
 license fees should be iirescribed for the sale of liquor, at tlic 
 request of strict jirohibitionists. In so far, on the other hand, 
 as the proposed amendment would be justified or required as a 
 part of a general system uf ])rogrcssive taxation the Commission 
 is not prepared to recommend its adoption at this time. Pro- 
 gressive taxation in theurv and perhaps in practice under some 
 circumstances connnends itself favorably to the Commission, 
 but the Commission believes that for a time at least no such 
 radical departure from the present method of distribution of 
 taxes ought to be attempted. The income tax laws and the in- 
 heritance tax laws should be permitted to be applied for some 
 time longer before an additional innovation is attemjiteo. 
 Tliei'e h'ls been no demand for a reduction of the tax rate as to 
 any class of taxpayers, and it would be bad policy to voluntarily 
 reduce it under the circumstances. On the other hand, as al- 
 ready remarked, the indications are, from the silence on the s\ib- 
 ject, that there is no present necessity for an increase of the 
 rate as to all or any class of taxpayers. When either or both oi 
 these conditions shall arise and a greater familiarity on the 
 part of the taxpaying public shall have been had with the in- 
 come and inheritance taxes, it may be found advisable to adopt 
 |)rogressive taxation as to the property tax or as to the income 
 tax or as to the inheritance tax or as to all of them. 
 
 Tax on Lands of Equal Peoductivity. 
 
 Another request from farmers is that lands of equal producl- 
 ivity, whether cultivated or uncultivated, be taxed upon the 
 same valuation, the argument advanced being that unless this 
 course is followed there is in reality discrimination against 
 those who have cultivated the soil and encouragement to others 
 to hold for less useful purposes large tracts valuable for cultiva- 
 tion. The instance is cite<l in sup]iort of the argument of an 
 owner of a large unculti\'ated tract, used solely for the purposes 
 of a cattle ranch, whose land adjoins a large cultivated pine- 
 ap])le iDlantation, and the claim is advanced that in this instance 
 the first mentioned tract is valued for purposes of taxation 
 sihi])ly with reference to the availability of the land for cattle 
 raising ]uir])oscs and not with reference to its capacity to pro- 
 duce pineap]des or jother crops. If the fact is that in view of 
 the capacity of the rancher's land to pi-(jduce pineapples or other 
 
17 
 
 cnips that land can be sold upon tlif market fdr cash at the same 
 price that the cultivated piueap]de lands bring, then under our 
 projierty tax laws as they stand upon the books today the two 
 tracts are taxable at the same vainatit)ii, and any failnre to so 
 tax them is a mere error of administration which can be correct- 
 ed at any time. If, ho^vever, the contention gdes further and is 
 to the effect that the same valuation should be placed ujioii both 
 tracts, even where the uncultivated one is of a full cash value 
 less than that of the cnltivated portion, one sufficient reasoji 
 for niaking- the requested amendment is that in this Territory 
 conditions differ vn-y greatly ns between almost e\'ery two ]iieces 
 of land that could be ]>ointcd out, conditions as to water for 
 irrigation, rainfall, availability to market, etc. Tn other words, 
 but verv few |)ieces of land could be found situated under ex- 
 actly the same circumstances, and it would be im]n'acticable to 
 make any just rule cajiable of general application throughout 
 the Territory such as tlnit retpiested. For this reason, if for no 
 other, the Commission does not recommend the amendment. 
 
 Sltbjiaeine Cables. 
 
 One line of submarine cable at present lands on the Island 
 of Oahu and gives this Territory cable communication with the 
 remainder of the world. Our Statutes, as construed in a recent 
 decision of the Su]3reme Court of the Territory, impose a tax 
 of l'% upon the fidl cash value of as much of the cable as lies 
 M-ithin three miles of the shores of this Island, including of 
 course a considerable portion lying below low water mark. The 
 owners of this cable have requested that the Commission recom- 
 mend the exemption from taxation of all submarine cables lying 
 below low water mark, and serving the Government at Govern- 
 ment rates. 
 
 The Commission does not see its way clear to recommend 
 that this request be granted. We do not believe that the fact of 
 the cable comjiany having to ])ay a property tax on its submerg- 
 ed cable within three miles of the shore of Oahu is a burden- 
 some matter to the company, or that such fact would deter any 
 other cable com])any from landing additional cables on this 
 Island. AVe do not believe that a change in the law as construed 
 by the Supreme Court so as to declare that submerged cables 
 are without the Territory for the purposes of taxation, would be 
 any encouragement to other cable companies to hind their cables 
 
18 
 
 here. The property for which exemption is sought is within 
 the territory and we believe that like all other property in the 
 territory it should lie taxed. The evident theory of taxation 
 exemption except as to eleemosynary institutions, is that of pro- 
 tection and encouragement of infant industries. We believe the 
 cable company does not come in either of these two classes. It 
 may be ol)scr\-ed that the cable company makes no income tax 
 return, nor has the tax assessor of tins division been able as yet 
 to collect any income tax from the company. 
 
 The Conmiission understands that no net income is locally 
 shown because against local receipts the entire local expenses 
 are charged. As the bulk of the Company's business is in 
 through messages, relayed merely at Honolulu, the receipts for 
 which are credited to offices in other tax jurisdictions and to 
 care for which the entire local plant is practically necessary, 
 such deductions from local gross earnings would appear to be 
 incorrect in jirinciple. ]\lany cables land on the Coast of New 
 Jersey. That state measures the property of cable comi^anies 
 by their gross receipts, on which is imposed a tax of two per 
 cent. 
 
 At least until some fair results of taxation are obtained 
 through the income tax or a property tax imder the "Enterprise 
 for jirotit" method of assessment, based on .the actual earnings 
 and expenses of the Corporation, the Conmiission thinks that 
 no special exemption law' should be passed. 
 
 Automobiles. 
 
 The present law prescribes among the specific taxes. Section 
 1203 Revised Laws of Hawaii as amended by Chapter 89 of the 
 Session Laws of 190;"), a tax of Twenty Dollars annually 
 on all automobiles to be paid liy the owners thereof. This tax 
 is manifestly unfair as the owner of a light buckboard automo- 
 bile weighing five hundred pounds bears the same tax as the 
 owner of a heavy touring car weighing two tons. The evident 
 llieory of this specific tax is not that owners of automobiles 
 should res])ond in proportion to the value of their vehicles, but 
 should pay f<n' the special use of the roads by their machines 
 The Conmiission feels that the tax sliould bear a direct relation 
 to the extent of the use of the roads and to the expenses which 
 have to be borne by the Covernment by virtue of that use in 
 keeping the roads in repair. For this reason the Commission 
 
19 
 
 has studied the various ways of inaking the tax more equitable 
 and after considering as a basis of taxation such matters as in- 
 dicated horse power, length of wheel base, theoretical maximum 
 speed, inventory value at the factory, etc., uiianimously agreed 
 that the most equitable method is, one based on the weight, of the 
 car, and that a tax of a cent a pound based' on the w;eight of the 
 ear as that car is usually used by the taxpayer will come' close 
 to the desired equality which should exist amoiig automobile 
 owners. 
 
 As this Territory is becoming more and more freqiiented by 
 transients who bring with them automobiles, a development 
 which should not be retarded by excessive taxation, the Commis- 
 sion feels that transient owners of automobiles should be con- 
 sidered. To this end the Commission recommends that any 
 automobile which arrives within the Territory within' three 
 months. previous to the first day of January in each year shall 
 not be subjected to the tax for the year following the first day of 
 January (See Exhibiti'A," page 56, Section 6). 
 
 Basis of VAi.uATioiir Foe Peopeety Tax. 
 
 The Merchants' Association of Honolulu has asked of the 
 Commission that it recommend certain amendments in the mat- 
 ter of the standard of valuation of certain classes of property, 
 (he sections which that body has proposed for incorporation in 
 the law being set in Exhibit "I" hereto, attached and made a 
 part hereof. The essence of the proposed changes is to be found 
 in paragraphs marked 2 and 4 giving the proposed definition 
 of "cash value." The Commission is of the opinion that to 
 adopt the change thus suggested would be a step backward. The 
 definition proposed is too limited and will be found insufficient 
 in many cases.' In all cases where there are no "actua,i sales of 
 property of like value made during the previous twelve months 
 within the vicinity of property assessed" or "sales of property 
 of a similar character" the parties, assessor and assessed alike,, 
 M'ill be left without any prescribed standard of measurement of 
 the valuation to be fixed. Again, the definition supposes a fact- 
 jr as known which in truth is just as open to doubt as the value 
 of the particular property then under consideration. This it 
 does when it refers to property "of like value" the actual sales 
 of which may be considered in fixing the assessment in contro- 
 versy. Still further, actual sales are not necessarily a true 
 
fc 
 
 $0 
 
 guide. Such sales are sometimes influenced by extraordinary 
 circumstances, such as the present necessity of the seller or a 
 lack of advertising which could not be held to apply to the case 
 of any particxilar piece of property under consideration. The 
 standard now prescribed by the Statutes is, as it seems to the 
 Commission, more definite and more satisfactory. The exist- 
 ing provisions of the law in this respect have, moreover,- been 
 repeatedly construed by the Supreme Court of the Territory, 
 and there is now practically no excuse for not understanding 
 their meaning. To su.bstitute a new standard now such as that 
 proposed by the Association would, in addition to other objec- 
 tions stated, lead to confusion and uncertainty. Paragraph 4, 
 it might be added, and the paragraphs evidenty intended to be 
 in aid of paragraph 4, leave it too greatly in the power of the 
 taxpayer to fix his own valuation for purposes of taxation upon 
 the classes of property mentioned in paragraph 4. The "inven- 
 tory value" and the property "shown as assets in the merchan- 
 dise ledger and trading books of the bvisiness" would be matters 
 too easily arranged with unfairness by any taxpayer desirous 
 and willing to deprive the Government of a part of the taxes 
 due to it. 
 
 The object sought to be reached by paragraph 10 is substan- 
 tially covered by the present provisions of the income tax law 
 except in so far as it attempts to introduce the principle of a 
 tax graduated in accordance with the value of. the', property of 
 the taxpayer. The latter feature ought not to-be added iipon 
 this particular point unless the Territory is prepared to adopt 
 generally the principle of progressive taxation Avith reference to 
 the general property tax as a whole. Upon the subject last men- 
 tioned the Commission^ will touch hereafter. 
 
 While on this subject of the -basis of valuation, it may be well 
 to note that in Section 1217 of the Eevised Laws there is a cer- 
 tain inaccuracy of expression which should be remedied. The 
 section prescribes that the interest of every person in any prop- - 
 erty shall be assessed separately, and that such person shall be 
 liable to taxation in respect to the "full value" of his interest 
 in such property ; and that the interest of any person as occit- 
 pier of real property that is exempt from taxation shall be as- 
 sessed to such occupier in respect to the "value" of his interest 
 1 herein. For the sake of uniformity in the statutes the Com- 
 mission recommends that in both of these sentences the expres- 
 
21 
 
 sion "full cash vahie" be nsed. (See Exliibit "A," Section 9, , 
 page 58.) 
 
 The '^Enteepeise foe Peofit" Tax. 
 
 The taxation of various pieces of property when used in com 
 bination under the so-called "Enterprise for Profit" system pro- 
 vided for by our statutes, is a subject upon which undoubtedly 
 much may be written and upon which much learning may bo 
 found -in the books. The majority is willing to assume for the 
 purposes of this Eeport without expressing any opinion on the 
 point, that the system is, economically, not wholly sound. A 
 Special Joint Committee on Taxation of the General Court of 
 the State of Massachusetts of ' 1906, in its report well said: 
 "The Tax System of every state is the result of gradual growth 
 and no tax system in all its parts agrees with any system of 
 sound reasoning. Expediency has always been a factor of large 
 influence in the framing of tax laws ; has served to make those 
 laws in every, state far from ideal. To make over the laws- of 
 Massachusetts so that they should conform in all respects to 
 sound, economic principles would be a task requiring the study 
 ,of years." The same is true to a perhaps lesser degree of the 
 laws of Hawaii. The maiority does not see a.ny occasion to re- 
 commend the abolition of the provision in question. ISPd request'\ 
 or suggestion has reached the Commission from any taxpayer 
 that it be abolished. A few complaints have indeed been made 
 but these refer solely to the application of the law to specific 
 instances, in other words, to alleged errors of administration. 
 The provision has been a part of the statutes for about twelve 
 years. Its operation and enforcement have been, as fnr as the 
 majority is informed, attended with no greater difficulties than 
 usually attend the operation and enforcement of any tax law. 
 The taxpaying community is accustomed to it. The law is a 
 good revenue-producer, and as the majority believes, produces 
 the revenue out of those who are financially able to pay it and 
 in fair proportion to their ability. Whether it be called or 
 whether it be, in fact, a property tax or an income tax, it, to- 
 gether with the remaining provisions of our" tax laws, accomp- 
 lishes with about the ordinary degree of success what is usually 
 sought to, be accomplished in such matters, to-wit, a just dis- 
 tribution of the burdens of taxation. Tt may be that it can' be 
 improved upon. It may be that some other system can be devis- 
 
22 
 
 ed or introduced from other jurisdictions which will be as good 
 a revenue-producer and which will more justly distribute the 
 burden of su^jporting the Government, but in the absence of any 
 detailed suggestion as to what such substitute system ought to 
 be the majority cannot join in the recommendation to repeal 
 the provision. The views of the minority of the Commission on 
 the "Enterprise for Profits" tax are found on page 41, of this 
 I'eport. 
 
 "Capital Issues Emitted." 
 
 Act 88 of the LaM's of 1905, amending Section 1216 of the 
 Revised Laws, declares in Section 1 that "the combined proper- 
 ty of every corporation holding a public utility franchise and 
 occupying the public streets or highways of the Territory other 
 than any suck corporation that by the terms of its franchise is 
 required to pay a percentage of its gross income to the Terri- 
 tory, shall be valued and assessed at not less than the total 
 amount of the par valiie of the capital issues emitted by such 
 corporation." In 18 Hawaiian 15, the Supreme Court of the 
 Territory says that the phrase capital issues is of great "ambig- 
 uity and uncertainty" and one of the Justices adds that to him 
 "the phrase appears absolutely insensible. It is the. most elu- 
 sive phraseology that 1 have ever tried to interpret. Some peo- 
 ple seem to understand what it means but I think that is because 
 they know, but as I do not know what was intended by capital 
 issues emitted there seems to me to be an absolute confusion 
 of thought." The Commission, likewise, does not know what 
 the term means. The Court further remarked (18 Hawaiian 
 20) that there is "very grave doubt as to the constitutionality 
 of the Statute," presumably because it appears to constitute an 
 attempt to discriminate against a certain class of corporations 
 in the matter of valuations of property without any sufficient 
 groimd for the classification attempted, but whether the provi- 
 sion is constitutional or unconstitutional the Commission be- 
 lieves that it is unfair to the class of corporations sought to be 
 reached because it establishes as to them a standard of valuation 
 of property that in many instances will be higher than that per- 
 mitted to be used with other corporations and taxpayers. The 
 Commission recomiuends that Section 1 of Act 88 be amended 
 by striking out the proviso just quoted. (See Exhibit "A," 
 Section 8, pages 57, 58.) The franchises of public utility coi- 
 p(u-iitiouR wil] still remain taxable. 
 
23 
 
 Oeetain Taxes and License Fees A(iAiNST Coepobation's. 
 
 ConiiDlairit has been made to the Cfjmmission that Act 74 of 
 the Session Laws of 1907, amending Section 2566i\. of Chapter 
 157 of the Kevised Laws is unduly severe in its requirement 
 that corporations pay upon the filing of a certificate of incor- 
 i)oration twenty cents for each thousand dollars of the total 
 amount of capital stock authorized, and in support of the com- 
 plaint an instance is cited where a foreign corporation seeking 
 to do business in Hawaii was met at the threshold with the ad- 
 vice of counsel that a fee was required by law for the filing of 
 its certificate of the fact of its incorporation amounting to $S,- 
 000., the capital stock of the corporation being forty million 
 flollars. Chapter 157 of the Eevised Laws, of which Act 74 is 
 amendatory, relates solely to domestic corporations, and so does 
 Act 74 except in so far as express provision is therein made to 
 the contrary. As the Conuiiission reads that portion of Act 74 
 which imposes the filing fee just referred t(j, the provision does 
 not apply to such an instance, of a foreign corporation, as that 
 cited b\Tt merely to corporations formed in this Territory. Fur-' 
 ther, the Comniisaion does not regard the provision as being un- 
 duly severe in its practical operation. In the very great ma- 
 jority of cases of corporations formed in this Territory, the 
 capital stock does not exceed one million dollars. The highest 
 local capitalization thus far is about five million dollars. The 
 fee for a corporation of one million dollars capital is $200. and 
 that amount certainly such a corporation can afford to pay at 
 its formation or at any subsequent increase, for a similar 
 amount , of capital stock. JSTo amendment is recommended. 
 
 Under Act 98 of the Session Laws of 1905, an annual license 
 fee of three hundred dollars is sought to be imposed upon 
 foreign corporations doing business in Hawaii. The provision 
 is practically a dead letter. During the current fiscal year but 
 six corporations have paid the license fee. The remainder, it 
 is said, have found methods, presumably within the law, of do- 
 ing business in Llawaii and yet "not complying with the require- 
 ments of the statute in question. One or more of the six cor- 
 porations referred to have considerable property in Hawaii and 
 pay a considerable amount to the Territory by way of property 
 and income tax. To the latter corporations, certainly, the three 
 hundred dollars license fee seems unduly severe. The Commis- 
 sion recommends tliat in place of the words "Three Hundred" 
 
24. 
 
 in the Section in question the words "Twenty-live" be. inserted'. 
 Sec Exhibit "D," ^pages 71, 72. 
 
 Fees and Ci-iakges fob Disincorpokatijstg Cokpoeations 
 
 AND FOR Filing Annual Exhibits of Same. 
 
 The;' statutes now in force exact a fee of ten dollars to be paid 
 upon the filing of each annual exhibit of domestic' and foreign 
 corporations. This is scarcely in keeping with the modern poli- 
 cy of requiring the greatest possible publicity concerning the 
 internal affairs of corporations. The filing of exhibits, annual 
 or otherwise, should . be encouraged and not madfi burdensome 
 in any way. It is therefore recommended that Section 256GA 
 of the Revised Laws Joe amended by omitting from the schedule 
 of fees the item relating to the filing of annual exhibits. 
 
 Under existing statutory provisions disincorporating is made 
 somewhat costly. Experience has shown that in the great ma- 
 jority of instances corporations disincorporate for the reason 
 that the business which they have been conducting has been a 
 "failure financially and that at the time when they are desirous 
 of disincorporating, the corporation has no funds or other prop- 
 erty with which to pay the expenses of disincorporation. Ex7 
 perience under the present statutes has further shown that in 
 rare instances only has any stockholder been found willing to 
 pay the necessary expense of the procedure prescribed. That 
 expense consists of a twenty-five dollar fee payable into the 
 Treasury as prescribed by Section 2566A of the Revised Laws 
 of the Territory, and the cost of the publication of notice re- 
 quired by Section 2468 of the Revised Laws. The result of 
 these provisions is that a large number of corporations which 
 have ceased to do business and are defunct save as to the form 
 of disincorporating, have not disincorporated and that their re- 
 cords still encumber the office of the Treasurer of the Territory. 
 Tt is recommended thnt Section 2566A be further amended by 
 omitting the words "dissolution. of corporation" from the sched- 
 ule of fees in that section contained. See Exhibit "E ," pages 
 72,73. 
 
 Insurance Companies. ■ 
 
 The taxation of insurance companies is provided for in Sec- 
 liou 2621 of the Revised Laws as amended by Chapter 77 of 
 the Session Laws of 1905. All insurance companies, except 
 life insurance companies, are required to pay an annual tax of 
 
25 
 
 two per cent "on the gross premiums received from all risks lo- 
 cated in, and from all marine business done within this Terri- 
 tory during the year ending on the preceding thirty-first day of 
 J3ecember" less certain dedjictions. This language, as it ap- 
 pears to the Commission, is infelicitous in that an apparent dis- 
 tinction is made between fire and marine insurance, the phrase 
 "all risks located in" qualifying fire insurance, and "all busi- 
 ness done" qualifying marine insurance. The Commission be- 
 lieves that the ambiguity should be removed, and therefore re- 
 commends that the word "marine" be deleted from this section. 
 The same section provides that life insurance companies in 
 their returns may deduct, in addition to the items allowed other 
 companies, their "actual operating and business expenses."' 
 This discrimination in favor of life insurance companies, the 
 Commission feels, should not be permitted. There is no reason, 
 as far as the Commission can ascertain, why all insurance com- 
 panies should not be allowed the same deduction. The Com- 
 mission also feels that actual operating and business expenses 
 ia a phrase capable of much elasticity, and that instead of at- 
 1em]iting to define it more exactly, the phrase had better be 
 eliminated from the statute. (See Exhibit "TT," |)ages 77, 78.) 
 
 ExE^rPTioNS. 
 
 The (.'onmiission believes it to be in the best interests of the 
 public that all property entitled to exemption be returned by 
 the owner in the same manner as if taxes were to be paid on it, 
 and that the exemption be claimed in the return. Recent legis- 
 lation has exem]ite(l from taxation certain agricultural indusl- 
 ries and also certain railroads and ditch companies. The theo- 
 ry of such exemption apparently is that infant indiistries need 
 the protection of the government until such time as they nia\ 
 have become established. The tax office should be empowered 
 to collect information concerning the value of the property eu- 
 titk-vd to exemption, more particularly of the iudnstries and 
 companies instituted for profit. If such data is annually col- 
 lated, the legislature can inform itself from time to time as to 
 the advisability of ending or extending any period of exemp- 
 tion. Host of the eleemosynary institutions exempted from 
 taxation are referred to in Section 1221 of the Revised Laws. 
 The Commission recommends that the words "the Kapiolani 
 "Alaternitv ITonie," ap]iearing in that section, be placed in log' 
 
26 
 
 cal order after the words "the Queen's Hospital;" and also 
 that propert)' beloiii^ing to tlie counties be expressly exempted 
 from taxation. It is further recommended that all institutions 
 other than the Territory, (;(iunties,,and the Department of Pub- 
 lic Instruction, be compelled to return their property in order 
 to avail themselves (if the exemption. (See Exhibit "A," pages 
 r),s, .J!), Sections 10, 11.) 
 
 Income Tax. — Estimated Depeeciation oit Replacement. 
 
 In recent decisions the Supreme Court of the Territory (18 
 Hawaiian 530), construing our present income tax laws has 
 held that under those statutes no deductions from income are 
 allowable for estimated depreciation of machinery or other 
 property, and that the only deductions allowable in that or re- 
 lated matters are for moneys actually paid during the year pre- 
 ceding the date of assessment for replacements of property worn 
 out or destroyed. The controversy as to the respective merits 
 of these two methods of deduction, the one perhaps generally 
 called "the estimated depreciation method" and the other "the 
 replacement method" is not a new one. The modern tendency, 
 it wfiuld seem, is towards the substitution of the replacement 
 method for the other. It would seem further that in practical 
 results extending over a long period of time there is no very 
 great difference between the methods. If this is so, it is cer- 
 tainly a very strong reason in favor of adhering to the method 
 now prescribed by law against the adoption of a substitute. The 
 present law has the great advantage that it has been already, to 
 some extent, construed by the Courts, xs^ew acts require new 
 constructions and a further period of uncertainty as to what 
 they mean. Again, while theoretically and as a matter of book- 
 keeping in the offices of well conducted corporations, the esti- 
 mated depreciations method is an attractive one and seems to be 
 liascMl on sound reason, still in practical operation if it were to 
 he made to apply in favor of all taxjiayers it would seems to re- 
 sult in a vi'ry great diminution of the revenue from the income 
 tax and to render the income tax act practically unavailing as a 
 source of revenue. Buildings in which any given business is 
 being conducted deteriorate in value as do sugar mills or other 
 machinei'v, and it would become necessary to allow for such 
 deterioration. If the substituted method were to be made to 
 iqiply to a limited class of cases only, as, for example, the mann- 
 
27- 
 
 facturing corporations, the rpiiiaiiiiiiii' taxjiaycrs not thus favor- 
 ed woiihl have good ground for complaint of unfairness. 
 
 The present system, in this respect, is perhaps not perfet;!:. 
 Xo method of taxation yet devised is perfect, hut the imperfec- 
 tions of the present system appear to be not much, if any, great- 
 er than M'ould he those of the estimated depreciation method. 
 On the whole, the Commission recommends that no amendment 
 be made upon this point. 
 
 Income Tax, ExEJiPTioisi ke PAitTNEBSi-iiPs. 
 
 The income tax law exempts from taxation in cases of indi- 
 viduals the tirst one thousand dollars of annual income. It has 
 been suggested by sduie of the assessors and others familiar with 
 the details of tax office business that the provision be modified 
 so as to allow partnerships but one total exemption of one thou- 
 sand dollars instead of an exemption of one thousand dollars to 
 each member of the partnership, the reason urged being that 
 there are many partnerships each composed of many partners 
 many of ■whom own but a small amount of property, say, one 
 hundred dollars, and yet are entitled to an exemption of one 
 thousand dollars eacli, and that the result is the loss of the Terri-, 
 tory of taxes which would be otherwise collectible. The Com- 
 mission does not see its way clear to recommend this amend- 
 ment. A partnership is not ordinarily regarded for legal pur- 
 poses as a separate entity, as is a corporation. It is merely a 
 somewhat loose condiination of two or more individuals for the 
 purpose of conducting business. The income tax laws do not 
 regard partnerships as separate entities and do not seek to tax 
 them as such. They contemplate that the tax shall fall simply 
 u])on individuals and ui)on corporations. So also the present 
 laws allow the $1000. exemption to each niemlier of a partner- 
 ship out of that member's interest in the partnership income 
 and do not allow the total of the exemptions of all the members 
 to be deducted from the total income of the partnership. The 
 exemption, therefore, is no greater in the case of persons who 
 are partners than it is in the case of those wlio are not partners. 
 If financial ability is to he adhered to as the true and fair stand- 
 ard of lueasuremenl for the adjustment of taxes as between 
 memhers of the community, the exemption allowed to individ- 
 uals who arc not members of a partnership should, likewise, be 
 allowed to those who are members of a partnership. -IN'one of 
 
28 
 
 the latter class individuals are any the more able financially by 
 reason of their ownership ol an interest in the partnership than 
 tlian they would be if they owned the same amount of property 
 outside of a partnership. 
 
 Personal Taxes. 
 
 These consist of $1. poll tax, $2. school tax and $2. road tax. 
 (Revised Laws, Sections 1199, 1201.) 
 
 Their abolition is suggested by some of the tax oificials and 
 would imdoubtedly meet the approval of many of those directly 
 benefited by the change. The Commission does not, however, 
 deem it wise or necessary that the change be made. The small 
 amount required now by the law under the name of personal 
 taxes is certainly not an undue burden, measured by the stand- 
 ard of ability, upon those against whom it is assessed. All resi- 
 dents, even though not owners of any property, should as a mat- 
 ter of fairness contribute something to the support of the Gov- 
 ernment which affords them protection in their lives and liberty. 
 It may be added that in the aggregate the personal taxes collect- 
 ed (the total revenue annually received from this source is 
 about $250,000.) is a sum not to be despised in this Territory, 
 and aids substantially in the maintenance of the Groverument. 
 
 Inheeitance Tax. 
 
 The first section of the laws providing for an inheritance 
 tax (Act 102 of the Session Laws of 1905) is so worded as to 
 make it possible that property in this territory which may pass 
 on-the death of a decedent by virtue of the law of some other 
 jurisdiction is not amenable to the tax. One circuit judge at 
 least has construed the section to this affect. The Commission 
 feels that all property of a decedent which is within this Terri- 
 tory at the time- of the decedent's death should be subject to the 
 inheritance tax law. Section one of Exhibit "B," 
 pages 67-69, sets forth an amendment which is intended to 
 accomplish this purpose. 
 
 The first section of our inheritance tax law also provides an 
 exemption of One Thousand Dollars for the inheritance ^ecei^'- 
 ed by the widow and direct heirs. The Commission is inform- 
 ed that the exemption was fixed at One Thousand Dollars in 
 ordcT to coincide with the exemption in the income tax law. 
 (Section 1278 of the Revised Laws of Hawaii as amended.) 
 
on 
 
 The Commission finds that thirty-four states have inheritance 
 tax laws! and that of these states fourteen do not tax direct in- 
 heritances. In the twenty states that do tax direct inheritances 
 the exemptions are as follows : Two states $20,000 ; ten sta,tes 
 $10,000; one state $7,500 ; two states $5,000; two states $i,- 
 000; three states $2,000. The Commission believes that the 
 provisions of our law in this regard are unduly harsh, failing, 
 as it has to fall in many cases, on the widow and children to 
 ■ whom an inheritance tax of two per cent is unduly burdensome. 
 The Commission does not sympathise with the argument that the 
 right of inheritance is a privilege granted by the state, and that 
 such privilege should be equally taxed. Within a certain limita- 
 tion there should be no tax upon the right of the widow and 
 children to receive the fund which every man should lay up for 
 the care and maintenance of his family after his death. It is 
 more important to the Territory that no hindrance even by way 
 of an inheritance tax be placed on the making of a home and 
 the providing for the family, than that revenue accure to the 
 government from this source. The Commission recommendB 
 that the exemption of direct heirs be raised from one tliousand 
 dollars to five thousand dollars. 
 
 The statute now provides that a discount of five per cent shall 
 be allowed and deducted from the tax if the tax is jjaid within 
 six months from the acctiring thereof (Section 5, Act J 02, Ses- 
 sion Laws of 1905). In the settlement of many estates ad- 
 ministrators are not justified in paying the debts of the decedent 
 until six months have expired after the first publication of the 
 notice to creditors. (Section 1851, Revised Laws of Hawaii). 
 The six months now provided for in the inheritance tax law runs 
 from the death of the decedent. As a practical matter the sta- 
 tute as it now reads cannot encourage early payment of the tax. 
 As the discount was undoubtedly provided for in order to en- 
 courage early payment, the Commission recommends that for 
 the above reasons the time within which the discount may be 
 obtained be extended to twelve months. (See Exhibit "B," Sec- 
 tion 2, page 69.) 
 
 In Section 12 of the inheritance tax law it is provided that 
 in the computation of the value of future and contingent or 
 limited estates, income or interest, contain standard tables be 
 used "save that the rates of interest to be assessed in computing 
 the present vahie of all future interests and contingencies shall 
 
30 
 
 be t^ix ])oi- cL'iitnni per aimuiu." No such tables as those refer- 
 ved to in the statute are readily available, while tables do exist 
 in published form figured at a rate of five per centum per an- 
 num. This rate uf interest is more nearly that of the actual 
 average earning capacity of trust funds in Hawaii than is the 
 rate of six per centum. For this reason and also because the 
 five per cent rate is not inequitable, the Commission recom- 
 mends that a change be made in the present statute. (See Ex- 
 hibit "B," Section's, pages 69, 70.) 
 
 Section 25 of the inheritance tax laws provides for the bring- 
 ing of actions to quiet title against the claim of lien of any tax 
 under this Act and provides that "all actions under this action 
 shall be triable before the ('ircuit Judge of the judicial circuit 
 which has or which had jurisdiction of the administration of the 
 estate of the decedent mentioned herein." (Paragraph "B," 
 Section 2"), Chapter 102 of the Session Laws of 190,5). It has 
 been stated to the Conmiission that the above paragraph as word- 
 ed was intended to take this limited class of actions to quiet 
 title away from the jury. In view of our judicial system the 
 (Commission does not consider the present provision of the para- 
 grajih advisable and therefore recommends the amendment set 
 forth in Exhibit "B," Section 4, page 70, as more in conso- 
 nence with our local systems of jurisprudence. 
 ( Vrtain other suga-estions for mere verbal chanii'es in the various 
 sections of the inheritance tax law above commented on are 
 made in Exhibit ''B," but in no case do the changes vary the 
 meaning of the law. 
 
 The Commission recommends the striking out in paragraph 
 12, of Chajitcr 102 of the Session Laws of lt)05, the provision 
 which relates to the duties of tlie insurance commissioner in 
 prescribing that he shall determine on the application of the 
 Circuit Judge all "such future or contingent or limited estates, 
 income or interest" upon the facts contained in the report of 
 the a]ipraiser and shall thereafter cert'ify the same to the Cir- 
 cuit Judge, and that such certificate shall be conclusive evidence 
 that the method of computation ado]ited therein is correct. This 
 ju'ovisiou is unnecessary in view of the rest of the law. Its aid 
 has never yet been invoked in any determinations of the inheri- 
 tance tax as far as the commission is advised. There is no 
 reason why any such certificate should be made conchtsive evi- 
 dence of anything. Se<' Exhibit "B," Section 3, page 70. 
 
31 
 
 License Fek.s Geaduated as to Locality. 
 
 Certain license fees are by onr statutes graduated according 
 to locality. They are as follows: banks, Act 2.5, Session Laws 
 of ]907; awa, Act 90, Session Laws of 190Y; livery stables. 
 Act 52, Session Laws of H)()7 ; auctioneers, Eevised LaM's Sec- 
 tion 1343 ; beef and pork butchers, Revised Laws Sections 1366.. 
 L369, 1370, 1371. This method of graduation is alleged to be 
 invalid as discriminating improperly between certain districts 
 and towns in the territory, and a case is now in the courts which 
 involves this question in so far at least as it concerns the banking 
 license fee. It is by no means clear that our present statutes in 
 this regard are invarlid, and as it is probable that the matter will 
 be judicially determined before the next legislature meets, the 
 commission feels it wiser at this time to make no recommenda- 
 tion of change in the present law. The courts will either sus- 
 tain the princi]-)le or else point out wherein the law is imperfect. 
 
 License eoe Fishing. 
 
 Section 1 of Act 06 of the Laws of 1907 in sub-section marked 
 "Section 141 8D" Drovidcs infer alia that "the annual fee for a 
 license for a fi^hiuff boat shall be $5.00." What was intended 
 evidently was that the license fee referred to should be required 
 of those enaraging in the business of fishine: but the language is 
 at least ambiguous and unsatisfactory. The Commission rec- 
 ommends that the sub-section be amended so as to read as is 
 sot forth in Exhibit C on page 71. 
 
 Publicity of Tax Retuens. 
 
 The Commission i-ecommends that Section 1241 of the Re- 
 vised Laws be amended by including therein a more specific 
 enumeration of the documents and records which are to be open 
 to the inspection of the public. See Exhibit A, Section 14, 
 page 61. 
 
 It would seem to have been the purpose of the Legislature in 
 enacting Section 1241 to make all records of the tax offices open 
 to such inspection, but in practice the section has been construed 
 by some at least of the assessors as not authorizing or requiring 
 the tax officials to permit inspection of the returns filed by tax- 
 payers and of perhaps other documents. The purpose of the 
 amendment is, as readily apjiears on its face, to make it entirely 
 clear that the law does permit any and all taxpayers at all 
 
32 
 
 reasonable times to learn by personal inspection of any of the 
 records, inclndiug returns, what property or income has been 
 returned by and assessed to any other taxpayer, and what valua- 
 tions have been so returned and assessed. It has been the ex- 
 ])erienee of the past that oftentimes taxpayers beliexe, whether 
 justifiable or not, that discrimination is being made in the valua- 
 tion or assessment of their jn'operty as compared with similar 
 ]U"opertv of others. The section as aniended will afford a safety- 
 valve for the allying of such suspicion where it is ill founded and 
 for the correction of the error of discrimination if such has been 
 permitted, and whether intentionally or unintentionally. It 
 will further place it within the power of any taxpayer who has 
 knowledge or reason to believe that some taxpayer is concealing 
 property or income from taxation to render assistance to the tax 
 assessor in that respect after ascertaining from the returns what 
 property or income has been listed and should to the same extent 
 make it increasingly dangerous to any taxpayer to present a re- 
 turn false in any respect. 
 
 PeiNalty, Ixteeksts axd Liens. 
 
 The law as it now stands (E. L. Section 12(i5) imposes a pen- 
 alty of lOVr upon all delinquent taxes from date of delinquency 
 and 10% interest from fifteen days after delinquency. It con- 
 stitutes every tax a lien for five years upon the property upon 
 which it accrues. From various sources the suggestion is made 
 that all these jorovisions be stricken out, the argimient advanced 
 being that they constitute an undue burden upon the poorer tax- 
 payers, and, as to the lien, imjiede transfers of real estate, be- 
 cause intending purchasers and uKirtgagecs are always subject 
 to the danger of subsequently discovering that there are unpaid 
 and enforceable claims for as much as five years' taxes. To the 
 Conimission it seems wise to haA^e severe penalties for the non- 
 payment of taxes. It is not as though the claims for taxes, 
 whether on ^lay 15 or Xoveniber l.i, were to come in the nature 
 of suri)rises to the debtor, f(u- every taxpayer has notice for 
 months and even years in advance that on tlmse days of each 
 year his taxes must be paid. To remove the penalty wholly or 
 to lessen it in severity Avould be calculated to result in increas- 
 ing laxity in the iiayment of taxes. As to the period during 
 which tax liens shall continue effective, there are considerations 
 which weigh in each direction. The possibility of five vears' 
 
as 
 
 accumulations of claims enforceable out of the property itself 
 certainly tends to some extent to restrict the free alienation of 
 land, and, on the other hand, to shorten the period deprives the 
 assessor to that extent of the power to give a tax debtor in poor 
 circumstances extensions of time within which to pay the taxes 
 due and save his ])roperty from enforced sale. The Conmiission 
 recommends that the period be changed to three years and that 
 the provisions concerning penalty and interest be not amended. 
 (See Exhibit "A," pages do, (i-f, Section 17. 
 
 It may be added in this connection that it seems desirable, to 
 a\'oid ])ossible questions of law and to facilitate foreclosure of 
 liens, that specific provision be made in the law for substituted 
 herviee of summons by publication or otherwise upon taxpayers 
 who ai-e non-resident or otherwise out of the jurisdiction. The 
 certainty of tax collection should be as nearly absolute as possi- 
 ble and to this end it is recommended that all taxes, of whatever 
 nature and from whatever source accruing, and whether due 
 froin residents or from non-residents, be made a lien upon the 
 real property of the tax debtor (this in addition to and not as a 
 substitute for the liens otherwise provided by statute) and that, 
 when a lien is foreclosed or enforced in any nf the various meth- 
 ods prescribed by statute, satisfaction be had out of the proceeds 
 of such sale for all taxes due at the time of such sale from the 
 tax debtor. (For such proposed amendments see Exhibit "A." 
 page 64, Section 17.) 
 
 Si'.Mii.vRv Sale jfor Delinquent Taxes. 
 
 The present methods <if tax collecting are to a certain extent 
 cumbersome. To obtain a judgment at law for impaid taxes or 
 to foreclose the tax lien in ecpiity involves labor not only on the 
 ])art of the tax assessor, but also on the part of a deputy of the 
 Attorney General. 
 
 To simplify the procedure of collection and to prevent the ac- 
 cumulation of delin(|uent taxes the C^ommission recommends 
 that after two years all lands on which tax liens may have at- 
 tached from any source whatsoever, be summarily sold by the 
 tax assessor upon due advertisement. The exjiediency of this 
 method of tax collecting is shown bv the fact that the delinquent 
 taxes annually amount to a sum approximately JliSO,000. True 
 equality of taxation can exist only when the certainty of tax 
 
34 
 
 colJcction is absolnte. (See Exhibit "A," Section 18, pages 
 (;4:-65.) 
 
 Failure to Make a Retukn. 
 
 A gvin-e doubt has arisen whether or not the provision of our 
 laws is \-alid which jirescribes that any person who fails or neg- 
 lects to niai'ie a return or who shall decline to take oath to the 
 a'ccuracv thereof, shall be denied the right of appeal. (Section 
 lL'-'!5, Hevised Laws of Hawaii). This doubt is based upon re- 
 cent eases decided by the Supreme Court of the United States, 
 the last of which is that of the Central of Georgia Railroad vs. 
 Wright, 29 Supreme Court Reporter, 47. As yet no attack has 
 been made in the courts of this Terrifory on this phrase of the 
 tax laws. The Commission recommends an amendment intend- 
 ed to do away with the present objection that our laws deprive 
 a tax])ayer not making a retnrn of the guaranty of due process 
 (if law under the United States constitution. (See Exhibit "A," 
 page 59, Section 12.) 
 
 Certificates of Appeal. 
 
 Twe ^'erbal changes are recommended in the statute which 
 ]5rescribes the form of certificate of appeal to the Tax Appeal 
 Court. The form of certificate is set forth in Section 1247 of 
 the Re^'isetl Laws as amended by Clia]iter S9 of the Laws of 
 1905. The expression "real estate" appearing twice in the 
 schedule should be changed to "real property'" to conform to tlie 
 language used in the remainder of the Chapter on the Property 
 Tax and more particularly in Section 1215 of the Revised Laws. 
 ( See Exhibit "A," Section 1(), pages ()2, 63.) 
 
 DiSTiticT Magistrates. 
 
 In order to avoid, in so far as the tax laws are concerned the 
 technical question of whether or not there is a district court 
 se])arate and ajiart from the district magistrate who presides 
 o\'er it, the Cmnmissioii reeommends that in the second para- 
 grajih of Section 12(ii) as amended by Chapter S9 of the Session 
 Laws of 1905, the phrase "in any district court" be stricken out 
 and that there be sul)stitnt(xl therefor the expression "before any 
 district magistrate." This change will make the language of the 
 above section of the Revised Laws conform to that of Section 
 1275 -thereof. (See Exhibit "A," page 67.) 
 
FoEM OF Oath on Taxpayer's KuTUEis;. 
 
 It has been forcibly called to the attention of the (Jomniission 
 that the form of the oath now prescribed by the Treasurer to be 
 made by the taxpayer to his return is unsatisfactory. The Com- 
 mission sees no reason for amending Section 1227 of the Revised 
 Laws, which directs that the return be sworn to. The form now 
 in use may be changed either by the Treasurer, if the present 
 system is continued, or by the Board of Equalization, should 
 the Commission's recommendation in that regard be adopted. 
 The Commission believes strongly that the taxjjayer should be 
 required to make o;ith of his own knowledge that he has returned 
 all of the various items of property owned by him, and to the 
 best of his knowledge and belief that, the full cash value return- 
 ed by him to eacli of those items is correct. If the assessor 
 raises any valuation stated in a return so sworn to, the taxpayer, 
 however highly he may value his oath and however conscien- 
 tiously he may have })repared his return, will have no ground 
 for regai*ding such action of the assessor as an affront to him. 
 the taxpayer. 
 
 j\llLITIA KoLi,. - 
 
 An Act of Congress of Jan. 21, 1903, (Chapter lOCi, 32 Stat. 
 L. 775; 10 Fed. Stats. Ann. page 227) provides in Section 1: 
 ''That the militia roll shall consist of every able-bodied male 
 citizen of the respective States, Territories, and the District of 
 Columbia, and every able-bodied male of foreign birth who has 
 declared his intention to become a citizen, who is more than 
 eighteen and less than forty-five years of age, and shall be divid- 
 ed into two classes — the organized militin, to be known as the 
 National Guard of the State, Territory, or District of ( 'olumbia, 
 or by such other designations as may be given them by the laws 
 of the respective States, or Territories, and the remainded to be 
 known as the Reserve Militia.'' 
 
 After enumerating in Section 2 certain persons as being ex- 
 empt from military duty the Act requires in Section 12 : "That 
 there shall be appointed in such State, Territory and District of 
 Columbia, an Adjutant-General, who shall perform such duties 
 as may be prescribed by the laws of such State, Territory, and 
 District, respectively, and make returns to the Secretary of War, 
 at such times and in such form as he shall from time to time 
 prescribe, of the strength of the organized militia, and also make 
 
36 
 
 such rt'iiorts as may from time to time be required by the Sec- 
 retary of War. I'iiat the Secretary of War shall, with his an- 
 nual'' report of each year, transmit to Congress an abstract of 
 the returns and reports of the adjutant-generals of the State, 
 Tci'ritories, and the District of Columbia, with such observa- 
 tions thereon as he may deem necessary for the information of 
 C(nigTess." 
 
 In aid of the provisions of that Act, statutes have been passed 
 by various States and Territories setting forth what persons 
 shall compose the militia of the State or Territory, as the case 
 may be, and iiroviding amongst other things that it shall be the 
 duty of the assessors of taxes and other officers named to prepare 
 and revise a roll of the persons available in the State or Terri- 
 tory for military duty in accordance with the provisions of the 
 Act of Congi-ess. It is the obvious duty of this Territory to 
 adopt similar provisions and to make it obligatory upon some 
 officer in a reasonable position to do so to provide the Adjutant- 
 General of the National Guard of the Territory with a roll of 
 persons subject to militia duty. The Commission recommends 
 the passage of an act requiring of the tax assessor the jDrepara- 
 tion of the militia roll. (See Exhibit "F," pages 73, 74.) 
 
 GOVER.Y.MENT A.SSETS^ InVENTOEIES OF. 
 
 It has been suggested to the Commission that a new duty be 
 im])ose(l on the tax assessors, namely that of listing and placing 
 a value, but not for taxation ])urposes, on all government proper- 
 ty, whether actually in iise by the Territory or not, and whether 
 used by a connty or any other political subdivision. While this 
 matter may not come particularly within the jurisdiction of 
 this Connnission as it does not strictly refer to the revenues, it 
 does relate to the duties of the assessors. It concerns the tax- 
 payer because at the ju-esent time there is no machinery for list- 
 ing and valuing the property owned by the Government. The 
 information whicli would be furnished by such a listing and 
 record is sought for by the purchasers of gnavernment bonds. If 
 it were annually com])iled and the territory or political subdivi- 
 sion desired to place bonds on the market the data would show 
 not only the tangil)ie assets of the government, but also that the 
 Territory oi' County was running its affairs in a business like 
 fnsliiou. Another reason v.-hy the information should be made 
 avnilable is tliis. 'I'he people of tliis Territory have provided in 
 
37 
 
 the laws sti-ict accountability of their servants for the care and 
 expenditure of money. There is no such acconrutability requir- 
 ed of them by the law or by public opinion as to the other gov- 
 ernment property in their charge. It is not reasonable to expect 
 that the ideas of the i)eo]ilc' will change in this regard without a 
 ])rocess of education. The iirst step in this education undoubt- 
 edly is to ascertain what the people own, then, and only then can 
 the publif officers in whose charge the property rests be asked 
 questions concerning their trusteeship. _Xumerou8 instances 
 might be mentioiied where property of the government has not 
 been used or has been lost, dissipated or forgotten, all unneces- 
 sarily and to the detriment of the taxpayer. 
 
 For the above reasons the Commission recommends that the 
 heads of the various departments of the Territory be required 
 to annually make return to the various assessors of the Govern- 
 ment property in their charge, at its full cash value, and that 
 the valuation placed on each item be subject to alteration by the ' 
 tax assessor for the pttrpose of such inventories and that these 
 inventories be forwarded by the various assessors to the trea- 
 surer. 
 
 Because of the delicate relation between the Territory and the 
 various Counties, and the fact that the counties are many of 
 then in the possession of and enjoying the use of territorial 
 projiertv, tlie Connnission recommends that this same duty of 
 preparing a return M'ith valuations, be placed on the chairman 
 of ihe Board of Supervisors in each county. As the Territory 
 is accountable to the United States for the public lands, the pub- 
 lic buildings and other real property used by the counties should 
 be listed and their value ascertained, lest this accountability be 
 forgotten. The taxpayer ought to know what the value is of 
 the roads and other public works Avhich his money is construct- 
 ing. There has been no in\-entory made of the ])ublic lands 
 since annexation. It is believed that the adoption of the above 
 suggestion will cure the present lack of information about the 
 lands and their capacity and their value. Other reasons might 
 be advanced by the Commission why this suggestion should be 
 adopted, but the Commission feels that the above are sufficient, 
 and therefore recommends the form of hill to be found in Exhi- 
 bit "G," pages 75, 76. 
 
38 
 
 Tkkm of Office of Assessors. 
 
 Our statutes <l(i not ])rescribe the length of the term of office 
 of the iissessoi-s. There is no good reason wliy assessors in this 
 respect should stand on any more favorable footing than other 
 and more im})ortant otiieers of the Government. The Commis- 
 sion recommends that Section 11S4 of .the Revised Laws, which 
 places the power of appointment of assessors with the Treasurer, 
 suliject to the a]ipi'o\'al of the Governor, be amended by insert- 
 ing after the word '"assessors" where it first occurs in line 4, the 
 wiirds, "and who shall serve for fo\ir years unless sooner remov- 
 ed as by law ]ir(i\'ideil." See Exhibit "A," Section 2, page 5.5. 
 
 ^fl X OR A .M E X DM K XTS. 
 
 Section llSo should be further amended as to the paragraph 
 rnext before the last so that the same shall read as appears in 
 Exhibit "A," pages 54, 55, Section 1. The paragraph in ques- 
 tion relates to the publication of delinquent tax lists, and the 
 amendment is designed to facilitate the duties of the assessors. 
 
 Sections 11 S4, llsn aud 11,^8 should be amended in minor 
 particulars so as to read as appears in Exhibit A pages 55, 5(i, 
 Section 2, ;5, 4. 
 
 Act 11 of the Laws of 1907 provides that "eight hours of 
 actual service on anv working day except Saturday, on which 
 day only five hours of actual service, shall constitute a day's 
 labor" on any public work whether the work is done by contract 
 or otherwise. The Commission recommends that Section 1202 
 of the Revised Laws which ])rcscribes that taxes due from poll 
 taxes, school taxes, and road tax may be worked out on the pub- 
 lic roads at the rate of fifty cents a dny, of at least ten hoiirs' 
 work, be amendi-d to do away with the conflict between the two 
 laws; and further for the s:ike of conformity with the present 
 laws relating to the construction and maintenance of roads, that 
 the \vords "road authorities" be substituted for the words "road 
 board" "l>ut in the district of Kona, Island of Oahu, imder the 
 direction of the road su]u>rvisor,'" in lines 5 and 6. See Exhi- 
 bit ''A," Section 5, jiage 5fi. 
 
 Revised Laws, Section 124o, slionld be amended by substitut- 
 ing A]>ril 10 for .Vju-il 1 as the date in each year on or before 
 which assessors shall give to jiarties assessed notice of raises in 
 valuation or of disallowance of exemptions claimed. The asses- 
 
39 
 
 «ors are niiaiiiiiious in the \'iew that the cliange is required so as 
 to enable them the better to perforin their dnties of assessment 
 and no good reason appears to the contrary. Likewise, Section 
 11 S3 should be amended by inserting after paragraph four a 
 new paragraph referring to the same date and the same duty of 
 a'^scHsovs. See Exhibit '"A," pages 61, 62, Section 15. 
 
 So also of Revised Laws, Section 1267, the amendments in 
 the last sentence or paragraph 2 of that section being deemed 
 necessary by the assessors to facilitate the prompt and reason- 
 ably convenient publication of the lists by that Section provided 
 for. See Exhibit "A," pages 6.5, 66, Section 19. 
 
 Section 126S ("f the Revised Laws should be amended by add- 
 ing the words ''or listed for publication" after the words "as- 
 sessed and published," in the last sentence of that section. The 
 reason for the amendment is that as the law now stands the ex- 
 pence of i)ublicatif)n of a delinquent's name in the delinquenC 
 list has in some instances been already incurred when the delin- 
 quent appears to pay his taxes, and yet the Grovernment is un- 
 able to recoup itself for such expenditure because the delinquent 
 list has not at the time been actually published. It is but fair 
 that in all such cases the delinquent should be required to pay 
 the outlay incurred. See Exhibit "A," Section 20, pages 66, 67. 
 
 Attention is called to the fact that there are within the Terri- 
 tory certain charitable societies and hospitals rendering aid to 
 orphans and to the sick and existing for no other purpose, and 
 performing valuable ]niblic functions i7,i assuming a burden 
 which otherwise would be borne by the Grovernment, which are 
 deserving of exemption from taxation, — as much "so, perhaps, 
 as the two hospitals and the societies exempted under Section 
 1221 of the Revised La^\-s. The Commission makes no specific 
 recommendation on this subject but leaves it with this brief 
 mention. 
 
 In the course of the efforts to reduce the number of objection- 
 able sign boards and bill boards, it has been suggested in other 
 jurisdictions that the revenue from all such boards not dealing 
 with the sale of merchandise or the property on which such 
 boards stand be considered by assessors in determining the valua- 
 tion, for taxation ])urposes, of the land whereon such boards 
 stand. All that need be here said on the point is that under our 
 present laws it is tlie duty of assessors in fixing the valuations 
 of real estate to consider all revenue from the source mentioned. 
 
40 
 
 Attached to this report and marked Exhibit J will be found 
 a statement, prepared by the Treasurer of the Territory, show- 
 inf>- the cost to the Territory of the assessment and collection of 
 taxes fur each of the seven years last past. In the column en- 
 titled "Actual amount paid" are included all payments for 
 salaries, commissions, advertising, expenses of litigation and all 
 other outlays of wliatever nature incurred in such assessment 
 and collection. 
 
 Resjicetfully submitted, 
 
 AXTOXTO PEERY, 
 L. TENNEY PECK, 
 ALBERT F.-.JUDD, 
 
 Commissioners. 
 TTonolulu, Hawaii, June 30, 1908. 
 
41 
 
 MINORITY REPORT 
 
 ON THE 
 
 ENTERPRISE FOR PROFIT TAX 
 
 The member of the Commission to whom was assigned the 
 subject of certain s])ecial methods of assessments under the gen- 
 eral property tax submits the following criticisms and sugges- 
 tions based on his experiences, as a taxpayer, with the practical 
 workings of the so called "Enterprise for Profit Tax," supple- 
 mented by desultory study, as a Commissioner, of its economic 
 sig7iificance in our taxation system. 
 
 The shortness of time granted to the Commission in which to 
 file its report considered with respect to the date of its perma- 
 nent organization, has precluded that detailed analysis of the 
 actual and comparative results of its operation which can only 
 be based on extensive data which the tax office, in the stress of 
 other business, has not been able to furnish on the short notice 
 necessarily given. What follows is, therefore, general in char- 
 acter, but the member believes that a patient and comprehen- 
 sive study of all the property and income assessments of the 
 territory with reference to the nature of the properties and in- 
 comes assessed woi^ld bear out the contention fur the abandon- 
 ment in Hawaii of the unit method of assessment of business 
 enterprises. 
 
 The importance of the sid)ject is apparent, for the law in ef- 
 fect ])rovides that every business undertaking, whether a planta- 
 tion, a ranch, a factory, a store, a hotel, a boarding house, a play- 
 house, a railroad, a cable concern, a cannery, a photograph gal- 
 'er-\-, or, if incorporated with other pursuits in connection with 
 visible ]n'o]ierty, even an agency, shall be assessed as an enter- 
 prise for profit. 
 
 That it has not been applied during twelve years past to all 
 the above and other classes of business enterprises is, apparent- 
 ly, not because of any indefiniteness in the law itself, but be- 
 cause its administration presents so many difficulties that it of- 
 
42 
 
 1('ii saves time and trouble for tax officials to use what is claim- 
 ed to be the alternative ordinary method of assessment. 
 
 When, in hsi)(i, the government of the Republic of Hawaii 
 feared a deficienev of revenue, the legislature was called upon 
 to amend the tax laws. Its attention was directed to the fact 
 ihat certain industries, notal)ly the sugar industry, were not as- 
 sessed in any fair pro])ortion to their financial ability, relative 
 to other sources of public revenue. It was thoiight that real 
 estate was relatividy fairly \'alued, but that values of property 
 (■(miniercially used should, for taxation purposes, bear a more 
 direct relation to the ]u-ofits flowing from that use. 
 
 The government seemed to be tacitly committed, then as now, 
 to a maximum property tax rate of one per cent, and evident- 
 ly also assumed that planters and merchants were not prepared 
 to submit to a direct income tax at the high rate which would of 
 necessity be fixed to produce the desired revenue, nor to welcome 
 other untried forms of direct taxation such as "corporation," 
 "privilege," or "occupation" taxes. Accordingly the provisions 
 <jf the existing laM- which related to the modes of assessment of 
 real and personal property were ingeniously amended so as to 
 reach indirectly, though drastically, the income of every busi- 
 ness enterprise in the islands. Thus, as Turgot, the great Phy- 
 sioeratie statesman, once said of a new revenue law in France, 
 "it achieved a brilliant success, as a new way had been found to 
 pluck the goose without making it squeal." The law, as then 
 amended, reads as follows : 
 
 ".VII real and personal property and the interest of any per- 
 son in any real or personal property shall be assessed separately 
 iis to each item thereof for -its full cash value," the special 
 amendment being: 
 
 "Provided, however, that in all cases where real and personal 
 property or several classes or kinds or parcels of real or personal 
 projierty res])ectively, are combined and made the basis of an 
 enter])rise for profit, the combined property forming such basis 
 of siicli enterjirise for profit shall be assessed as a whole on its 
 fair and reasonalde aggregate value." 
 
 If the amplification had stopped at this point the efPect of 
 the amendment would probably have been to diminish rather 
 than to increase tlie public revenues for as the basis of valuation 
 of all ju'operty assessed by se]iarate items was the full cash value, 
 the basis of tlie new unit method of valuation was declared to be 
 
43 
 
 the fair luid reasoiuible aggregate value. But the term "prop- 
 erty" was to have a uew and peculiar significance to tax assessors 
 and taxpayers in Hawaii. This was a necessary part of the plan 
 if the revenues were to be materially increased. Business enter- 
 prises were hereafter to be valued, not on the basis alone of their 
 real and personal property as formerly understood, but to all 
 practical if not technical intents and purposes, as enterprises 
 or goiiuj concerns. The statute continues: 
 
 "In estimating the aggregate value of each such enterprise 
 for profit, there shall be takeu into consideration the net profits 
 made by the same, also the gross receipts and actual running ex- 
 penses ; and where it is a company being a corporation whose 
 ^ stock is quoted in the market, the market price thereof, as well 
 as all other facts and considerations which reasonably and fair- 
 ly bear upon such valuation, and further provided, that when 
 any real estate or house is leased or routed, the sum of eight 
 years rental thereof shall be the assessment value of such real 
 estate or house, unless such" vahiatiou shall be manifestly un- 
 fair or unjust. " 
 
 Xaturally such a radical statutory change in the generally ac- 
 cepted basic definition of property value for taxation piTrposes 
 could secure aftirmative judicial construction, only of delicate 
 balance and shading. This came in due course, and from the re- 
 ports of cases tried and appealed under the new law the follow- 
 ing extracts from supreme court decisions are gathered: 
 
 "The property only of an enterprise for profit Avas intended 
 to be taxed, and not the enterprise, as such, itself." 
 
 "Where, by reason of the skill, experience, and inlegrity of 
 the officers and servants of a corjwration, its good will and tlie 
 unity of ownershi]),, and the unity of use of its various items of 
 property, the value of the tangible pro])orty of such corporation 
 is increased, such increase of x'alue is nevertheless the value of 
 such tangible property and the latter is taxable undcj' our sta- 
 tute at such increased value." 
 
 "Property combined and made the basis of an enter] irise for 
 profit may as a Avhole be of much greater value than the sum of 
 tlie values of its several parts regarded separately." 
 
 "The market value of the shares re])resents the value of the 
 property of the corporation, subject to its debts, whether se- 
 cured bv note or otherwise." 
 
44 
 
 "In ascertaining tlie aggregate value of all the property own- 
 ed l>y a f(jrporation, the amount of the debts, if any, of the cor- 
 poration should be added to the selling price of the shares of 
 its capital stock.'' 
 
 '"The value at which property is to be assessed under the tax 
 law is the value for purjjoses of sale and not the value to the 
 owner." 
 
 "Under the term 'combined property' nothing is taxable 
 which is not included within the definition of the terms "real 
 proi)ei'ty' and 'personal projjerty'." 
 
 The statutory dellnition of personal property is as follows: 
 
 yection 1215. "Pebisoa'al FitoPEitXY" Defxjned. The 
 term "personal property" for the purposes of this chapter, 
 shall mean and iuclude all household furniture and effects, 
 jewelry, watches, goods, chattels, wares and merchandise, ma- 
 chinery, shi])s or vessels, whether at home, all moneys in hand, 
 leasehold and chattel interests in land and real property, fran- 
 chises, patents, contracts, growing crops, public stocks and 
 bonds not exempted by law from taxation, and all animals not 
 in this chapter specifically taxed." 
 
 The point which the writer wishes to make in discussing the 
 workings of the unit method of assessment, as abo\'e described 
 and construed, is, that the economic value of human skill and 
 personality although properly reached by an income tax, can- 
 not without specific legislation be transferred from person 
 to property and made a basis of value for a purely proper- 
 ty assessment for taxation purposes, and that no occasion exists 
 ill Hawaii for such a law, which is elsewhere applied to particu- 
 hir classes of corp(n'ations whose extraordinary economic facul- 
 ty or ability cannot for various constitutional and other diffi- 
 culties be even ap])roxiinatcly reached in any other way. 
 
 It is to be observed that this jiortion of our general property 
 tax law is not directed against corporations as such. It is 
 to the credit of our jjolitical leaders and unr business 
 men that tlie aiiti-c(a-])<ivation spirit which has been so pronounc- 
 ed elsewhere has found no foothold here. "Corjioration abuses" 
 as a local phrase for local application is unknown. 
 
 Hawaii long since recognized the necessity of the corporate 
 jdaii of industrial organization to the adequate development of 
 its agricultural I'csources, and adojited liberal statutes to en- 
 courage and protect incorjiorated companies. No attempt has 
 
45 
 
 ever been made to tax their general corporate ]jo\vc'rs, as sub- 
 stantial grants or privileges or as property, requiring special 
 forms of taxation not imposed on individuals or unincorporated 
 associations, provision being made merely for the payment of 
 reasonable fees for service in connection with the administra- 
 tion of the laws relating thereto. Nevertheless, the unit method 
 of assessment as embodied in our tax laws and established in its 
 mode of ojjeration by our courts, extends to all our agricultural, 
 manufacturing and mercantile enterjjrises that principle of 
 assessment which elsewhere, if used at all, seems to be exclu- 
 sively applied as a "corporation" or "^uo^i-corporation" tax in 
 order to reach certain inta-ngible elements of value possessed, 
 especially, by interstate railroad, telegraph and express com- 
 panies of a monopolistic character, and in long-time possession 
 of untaxed but valuable franchises, grants, and privileges. 
 Generally these have been originally given without providing 
 for renumeration to the granting authority or to other jurisdic- 
 tions into or through which their operations have been extended. 
 To get at these intangible values of franchises, good will, etc., 
 some states now tax such comjoanies and corporations umler 
 sjiecial tax laws, measuring the value of their combined tangible 
 and intangible property by their annual earnings or the propor- 
 tion thereof assumed to be earned within the respective states 
 that levy the tax, which is usually a fixed percentage on gross 
 earnings. To copy and adopt this special form of a corporation 
 tax and apply it to farms, plantations, and mercantile establish- 
 ments engaged in simple forms of entevjirises which are sub- 
 ject to the full sweep of competitive connnercial forces world- 
 wide in their scope, marks an extreme de])arture from the other- 
 wise conservative statutes which make up the balance of Ha- 
 waiian tax legislation. 
 
 Our enterprise for profit tax, however illogical have been its 
 modes of operation, has succeeded in yielding much re\'enns. 
 The secret of its ]iroductive capacity is simple, though not al- 
 ways appreciated by the taxjjayer who finds his "])r()])evty" tax- 
 es raised at times when market values of realty have percept- 
 ibly declined. For if his business enterprise combines in use 
 real estate and personalty or several kinds of personalty the 
 A'alne of his "property" may be measured in toto by the ]irofits 
 of his industry, by the market value of the certificates of stock 
 of the business, if incorporated, or by the value of his lands and 
 
46 
 
 |iersoualty assessed by separate items. If he were a mere land- 
 lord his property could be valued only at eight times his yearly 
 income from it (unless the resulting figure were obviously un- 
 fair or unjust) but if a planter or merchant he might have his 
 annua] business income increased eight times, ten times, or a 
 dozen times, the basis adopted depending upon the mental acu- 
 men of the local assessor making the assessment. The problem 
 which confronts an assessor under the "unit method" of valua- 
 tion as compared with the former exclusive ad valorem method, 
 is of ever increasing complexity, charged as he is with the duty 
 of considering the significance of stock values, of debts, of gross 
 and net earnings, and of "all other matters" bearing on the ag- 
 gregate value of the property assessed. 
 
 To attempt to reach approximate justice and equality of taxa- 
 tion under these complex conditions of law and fact, when a 
 simple, direct assessment of land and personalty, coupled with 
 our income tax, is always feasible, seems to the writer un- 
 necessary and futile. Bvit it is urged that the assessments of 
 our incorporated enterprises are apt to be more exact than those 
 of individuals or associations, because their stock and bond quo- 
 tations on the Honolulu market are reliable indices of the sell- 
 ing value of their property. But the "stock and bond" method 
 of valuation is as unreliable as the "capitalization of earnings" 
 plan and generally fails of its 'purpose. This is because the 
 quotations of any corporation stock are generally dependent on 
 a variety of conditions other than the selling value of the prop- 
 erty or even its estimated "value in use to its owner," as mea- 
 sured by its net profits or otherwise, though the latter value, it 
 seems, may not lawfully be adopted by the assessor. Thus dur- 
 ing the past half year the quotations of the common stock of 
 the Union Pacific Railroad Company have advanced over forty 
 ]3er cent, while in the same period its net earnings have largely 
 decreased. It is well known that the market price of the capital 
 stock of any corporation does not Tmiformly represent the aggre- 
 gate value of its property in the ordinary meaning of that word. 
 It represents not only e\-ery kind of tangible property it possess- 
 es but especially every force or influence connected with it, 
 whether personal or impersonal, direct or indirect, near or re- 
 mote, whicli tends to make the enterprise either disastrous or suc- 
 ces&ful. Eut more than this, stocks have a status for trading pur- 
 poses which in a sense, is independent of the intrinsic value of 
 
47 
 
 the enterprise wliieli tliuy represent. Solid property value is 
 dependent upon actualities, stock prices as often reflect good 
 prospects or hopes deferred. 
 
 In Hawaii, plantation, mercantile, and railroad stocks ad- 
 vance or recede in price, partly in nnision with the trend of the 
 aggregate value of the enterprises they represent, but often for 
 other reasons which bear no relation thereto, such as the con- 
 dition of the money market, the manipulation of cliques, or 
 the individual buying or selling of shares by one with motives 
 entirely personal and ulterior to the question of their possible 
 future value. 
 
 In one respect, ho\ve\-er, the "stock and bond" method of 
 valuation if consistently used tends t(j a just assessment, for 
 it takes into account losses as well as gains, and may yield n 
 net assessment below the full cash valne of all the separate 
 items of physical property involved therein. But it is generally 
 understood that in such cases it is here usuallj' abandoned, the 
 assessor being privileged by the attitude of the courts, and ex- 
 pected by the government to adopt that method which is produc- 
 tive of the largest tax, just as sea-going freight carriers under 
 their "ship's option" charge either by weight or by measurement 
 so as to get the largest possible revenue. What is apparently 
 mandatory under the law, which states that enterprises for prof- 
 it shall be assessed by the unit method, should not be an option- 
 al matter with the assessor. But in any event it cannot be ex- 
 pected that the "stock and bond" valuation, possibly, in prac- 
 tice adopted offhand by assessors as the sole basis seriously con- 
 sidered, for determining the fair and reasonable aggregate val- 
 uation required l)y law, will coincide with a valuation measured 
 by the capitalization of net earnings according to current rates 
 of interest or adopted by patiently and exhaustively considering 
 all other facts which reasonably and fairly bear upon such val- 
 uation. Though current rates of interest should determine 
 what coefficient of exjiansion should be used from year to year 
 in fixing capital valuations from net jDrofits, the writer finds 
 that arbitrary rates have generally been used which in any par- 
 ticular year have not been uniform nor even consistent with 
 respect to the work of a single assessor. If capital values be 
 based on net earnings it is evident that a closer approximation 
 to proper relative valuations will be obtained if the expansion 
 be first made by a common coefficient determined by current 
 
48 
 
 interest rates, subject to subsequent adjustments because of 
 special conditions affecting the pro]>erty under consideration, 
 than if under peculiar minor conditions the coefficient be arbit- 
 rarily selected or changed in proceeding from one assessment to 
 others. The operations of so manv Hawaiian enterprises are so 
 great that ovei-sights in these matters lead to wide variations 
 from fair and reasonable assessments. 
 
 Hut apart from the imperfections of this law and the monu- 
 mental ditiiculties in administering it so as to approximate 
 equality in assessments, the writer believes it to be economicall;y 
 unsound and especially unsuited to conditions in Plawaii. It 
 docs not argue that a revenue law is economically sound be- 
 cause it has been judicially declared valid. The courts must 
 uphold statutes however burdensome, if they do not contravene 
 fundamental law, and this statute is a burden and falls un- 
 equally on industry. Can power be rightly placed which com- 
 pels A to pay double the property taxes (and the enterprise tax 
 is, legally and exclusively a property tax) that are paid on the 
 same kind of property belonging to B, simply because of super- 
 ior management and other- circumstances pertaining to A's con- 
 duct of his affairs, A's jarofit from his business is double that 
 of B's ? A's personality and its actual and potential income- 
 prodiTcing jjower is not ])roperty under the law. But this sta- 
 tute taxes, as though property, the capitalization of income 
 from brains, skill, personality and the good will it creates that 
 is acquired in any business enterprise. It begs the question to 
 assert that in Hawaii the selling value of property only is reach- 
 ed by this method of assessment and that profits and stock 
 ■\'alues are merely factors hearing more or less on such value, 
 for most of us know that they are used as measures of value Lo 
 determine assessments. 
 
 It is true that the econoniie value of all property is especially 
 dependent upon its capacity to produce income but human power 
 and brain power and personality or spiritual power are not prop- 
 erty in the purview of the law ; they may determine the value of 
 personal energy and service A\duch have their economic value 
 but that value is not ])ro])erty in a free country. To capitalize 
 the earning power of managers and servants and add the pro- 
 duct to tax lists as prf)i)erty is to call back from the buried past 
 the discarded theories of slavery days when every bondman 
 was lawfully listed as a chattel. 
 
s 
 
 49 
 
 But the earning ])o\vcr of our citizens may be reached by 
 taxation and is arrived at through dur income tax which is cap- 
 able of reaching all intangible wealth-producing agencies which, 
 of themselves, do not fall into the category of property. 
 
 Tor example, the owner of a fleet horse engages a jockey by 
 whose special skill and judgment added to the qualities of the 
 animal certain prizes are won. For taxation purposes the earn- 
 ings, less the wages of the jockey, may be capitalized by the 
 assessor, and the result is assumed to be the value of the horse. 
 As a matter of fact they may measure in part the preponderating 
 
 kill of the rider which is thus regarded as property and taxed Lo 
 the owner as such. It is not difficult to apply this illuartration to 
 any agricultural (ir commercial enterprise which is assessed as 
 a unit on the basis of its earning capacity which is always de- 
 |ienilent largely on the skill and other purely personal qualities 
 of its owners, managers and ser\'ants. The manager of a busi- 
 ness enterprise should not have his skill taxed as part of its 
 property. Pie is the pilot, not the rudder of the ship. 
 
 Again as to the assessment, as property, of good will, let it be 
 supposed that two merchants engage in the same line of business 
 with equal cajntal and equally good locations. The one is ac- 
 tive, genial, and popular and turns over his stock say, four 
 times a year. The other is plodding, reserved, and unpopular 
 and turns over his stock but once a year. On assessment day 
 the stock of each is of like value, but the one has profits four 
 times as large as the other. As assessments go generally else- 
 where, both would be taxed alike on their biisiness property ; 
 in Hawaii one would in-obably be taxed four times as much as 
 the other. Tn such an event is not the "good will" of the pros- 
 perous merchant being taxed as pro]iertv ? To the writer's 
 mind it is dodging the question to say that the good will alluded 
 to is not taxed, nor the enterprise taxed, but that the tangible 
 property of the successful merchant has had an intangible quali- 
 ty mingled with it which gives it additional value as property 
 and subject to tlie general ]n'0]ierty tax ; but the good will of the 
 
 store" we all know, dc]»arts with its owner and is not property 
 nor an attribute of property, but of person. 
 
 A careful reading of several modern standard works on taxa- 
 tion and finance, especially those by the well known authorities 
 T)r. Edwin E. Seligman of A"ew York, and Dr. PTenry C. 
 Adams, head of the department of finance, University of Michl- 
 
 «, 
 
50 
 
 eaii, and statistician of the Intci'-state C'ljiumerce Commission 
 of tiie United States, and of various reports of tax .commissions 
 in other jurisdictions, reveals no system of assessment under the 
 general property tax which corresponds to that under discus- 
 sion, nor any justification for such a plan. As to extreme theo- 
 ries which partly underlie our enterprise tax, Dr. Adams has 
 this to say : 
 
 (a) ''The certain relation which the theory of the general 
 property tax assumes to exist between income and the value of 
 personal property incident to the securing of income is a pure 
 assumption." 
 
 (b) "iVhere industry is organi/A'd in the form of corpora- 
 tions many considerations determine value besides the ability 
 of stocks to secure dividends. In many cases property is valu- 
 able for the industrial power which it brings to its owner. In- 
 directly the ownership of such property, as for example, of 
 stocks that never pay dividends, may be the source of income 
 because it gives commercial advantage of some sort; but in no 
 such way that such stocks can be said to have a value dependent 
 on the annual return accruing from them." 
 
 A study of the iiscal systems of the various states of the 
 union indicates that the methods embodied in our enter- 
 ])rise tax, such as fixing values by capitalization of carning-s 
 and market prices of stocks, as applicable to all business enter- 
 prises in Ilawaii, are there confined as already indicated to 
 special corporation tax laws, designed to reach the profits of rail- 
 road, telegraph, express companies and other public-service cor- 
 porations. 
 
 Again, to quote from Adams: ''It would be a mistake to in- 
 clude all corporations within the scope of the coporation tax 
 and the legislator is obliged to rely for the purpose of selection 
 upon an economic analysis of industries, and to set aside for 
 s])ecial taxation those industries only which are monopolistic 
 in their character, or, which for some other reason, bear a public 
 or (7(/«..vt-public character, * * * * those industries that are 
 superior to the normal control of commercial forces." We thus 
 see that the mainland special corporation tax which seems to be 
 the only counter])art extant of our peculiar "enterprise" tax is a 
 device to reach the intangible but commercial value of old time 
 special grants, privileges, and franchises which in former years 
 have not been taxed. The report of the Michigan Tax Commis- 
 
51 
 
 sion for 1S9!) says, in connection with the assessment of railroad 
 properties, "It is well known that with many roads an intangi- 
 ble value exists beyond that found in the ])liysical properties. 
 The legislature ought to enact laws by which franchises may be 
 reached by taxation. To the physical valuation, in some cases, 
 may be added the franchise or intangible values. If such roads 
 have no intangible values, then only the physical values would 
 or need. be taxed. P>y such method the property of no company 
 need be assessed beyond its whole value, though such value be 
 divided into two parts, the tangible and the intangible, or the 
 ph}sical and franchise elements." 
 
 The above is a concise statement of the limitations of the 
 Michigan assessment law of 1899. It will doubtless be noted 
 that no claim is made that an "intangible" value is given to the 
 property because "in combination" it has an earning capacity 
 greater than that of the parts separately considered. The next 
 year the constitution of the state was amended that an ad valo- 
 rem system, as recommended by the Commission, might be used. 
 
 A survey of mainland taxation systems indicates that the 
 courts have had a hard struggle to uphold the unit method of 
 assessment even when applied to great public inter state service 
 corporations which alone, of all corporations, have, in some 
 states, been burdened with this kind of taxation. 
 
 A certain decision in an Ohio lawsuit tried in a federal dis- 
 trict court, which involved the legality of the unit assessment 
 method as a])plied under a special statute to the taxation of the 
 Adams Express Company, which was a joint stock association 
 operating in different states, under contracts and privileges, 
 iiiter aJi-a, from inter-state railroad companies, has been cited 
 in Hawaiian decisions to justify our aggregate value tax. But 
 when appealed to the U. S. Supreme Court, which by a majori- 
 ty of one affirmed the decision, the five concurring justices, up- 
 •on a rehearing, Hid not hold that good will and unity of use etc. 
 increased the value of the tangible property when combined in 
 use, but on the contrary held that intangible property as well 
 as tangible property may be taxed ; that where separate articles 
 of tangible property are joined in a unity of ownership and 
 use, an intangible property iiiai/ l>p developed which in value 
 may exceed the aggregate value of the separate pieces of tangi- 
 ble property; that the good will of an organized and established 
 industry may be a thiiig of value and taxable ; and that the 
 
52 
 
 capital stuck and shares of a conipaiiy rejiresent both its tangi- 
 ble and intangible propei-ty. (Hid U. S. ly5.) 
 
 It would thus seem that although in Ohio the value of a cer- 
 tain sort of pvoiierly for assessment purposes may, by close 
 legal construction, be its value in use, and good will an intangi- 
 ble but, in some instances, a taxable species of property, our en- 
 terprise law, on the contrary, as judicially construed, regards 
 the market or selling value of property as the sole criterion for 
 taxation purposes and good will, [Xir Kd, non-assessable. 
 
 If then our enterprise for proiit tax can only justify its meth- 
 ods on the theory that good will and the purely personal qualities 
 of energy and skill transfer themselves as it were from persons 
 over to inert things and give them a permanent actual value 
 which they woukl not otherwise possess, it would seem to the 
 writer that it were time to abandon it as a part of our revenue 
 system and rely for public revenue on rational ad valorem as- 
 sessments of real and j^ersonal property as defined in our stat- 
 utes, supplemented hy our income and inheritance taxes levied 
 on flexible rates to meet the varying fiscal needs of the govern- 
 ment. 
 
 A horse, a cart, a harness, are each worth what they will 
 bring, and their aggregate value, for purposes of sale, is not 
 changed by combining the three in unity of ownership and use 
 and under a skillful driver setting the outfit to work to produce 
 revenue. Economically considered, the value in use may be 
 greater than the value at rest, but whether for purposes of sale 
 or of taxation, the aggregate value is merely the sum of the 
 value of the horse, the cart and the harness separately consider- 
 ed . A local violin may be worth fifty dollars, yet in combina- 
 tion with a Kubelik it may serve to [jroduce in a concert of one 
 hour a revenue of a thousjind dollars. The artist departs after 
 adding to his personal income, but the selling value of the tan- 
 gible instrnnient is unchangecl. 
 
 A (California farm may be worth fifty dollars an acre. A 
 Burbank huys it, and after five years produces annually s]iccia]- 
 ized plants that sell for more than the value of the farm. He 
 ))asses on, but no value has accrued to any part of the farm, and 
 at all times its selling or taxable value remains the same. In 
 Hawaii a sugar plantation hithei"to tmprofitable, changes hands. 
 A new exjiert owner who understands soils, and seed, and ferti- 
 
53 
 
 iization and irrigation and animals and men, and business gen- 
 erally, works in a few years through masterful skill a wonder- 
 ful transformation. He may have paid one hundred thousand 
 dollars for the jjropertv, hut after five years is deriving an an- 
 nual net income of twenty thousand dollars from his invest- 
 ment. Pie may consider himself fortunate if after ])aying the 
 income tax on that amount, the whole income is not capitalized 
 say, at eight or ten per cent., and the estate assessed for two 
 hundred or two hundred and fifty thousand dollars. 
 
 We reach the income of corporations and individuals by our 
 income tax which taxes at its source every dollar of profit de- 
 rived by the owners of Hawaiian property and securities, wheth- 
 er living here or abroad — whether that profit be derived from 
 tangible or intangible sources. 
 
 It is possible to satisfy all the demands of government, econ- 
 omically administered, by taxing property itself' according to 
 the common sense methods of valuation, which without this 
 anomalous statute, are to be found in our body of taxation law. 
 
 L. TENNEY PECK, 
 
 Commissioner. 
 
 EXHIBIT A. 
 
 An Act 
 
 Rrt.atisg to Taxation Ai^fending Sections 1183, 1184, 
 1186, 1202, 1303, 1216, 1217, 1221, 1236, 1241, 1243, 
 1247, 1266, 1267, 1268, 1269 of the Revised Laws of 
 Hawaii, and Adding Three jSTew Sectioxs Thereto, 
 Sections 1213A, 1221 A, 1266A. 
 
 Be it Enacted by the Legislature of the Territory of Haimii : 
 
 Section 1. Section 1183 of the Revised Laws of the Terri- 
 tory of Hawaii is hereby amended so as to read as follows: 
 
 "Section 1183. Dates. January 1-31. All property shall be 
 assessed as of January 1 in each year, and the taxes thereon 
 shall be due and payable on and after January 31 in each yeai'. 
 
"Jaimarv 1. All personal taxes shall be assessed as of, and 
 1)6 due and payable on and aftov January 1 in each year. 
 
 "January l-'Sl. All taxpayers shall make returns of their 
 liroiierty and the value thereof between January 1 and Janu- 
 ary .'51, both inclusive, in each year. 
 
 "^larch 31. All personal taxes which shall remain unpaid 
 on March HI of each year shall thtn-eby and thereupon become 
 delinquent. 
 
 "April 10. Notice of raise or disallowance of exemption 
 shall be mailed by assessor to taxpayer affected, not later than 
 April 10. 
 
 "May 15. All the specific taxes and onedialf of all other 
 property taxes remaining unpaid on jMay 15 of each year shall 
 thereby and thereupon become delinquent. 
 
 "November 15. The balance of the projjcrty taxes remaining 
 unpaid on Xoveiuber 15 of each year shall thereby and thereup- 
 on become delinquent. 
 
 "May 1-15. The assessment books shall be made up on or be- 
 fore ilay 1, and shall be o]ien to inspection from ^lay 1 to ifay 
 15, of each year, both inclusive. Notice of which shall be given. 
 
 "April 10 to ]\Iay 10. In order to be entitled to appeal, any 
 person desirous and otherwise entitled to appeal from any assess- 
 ment, shall file a notice of appeal at any time from April 10 to 
 May 10, both inclusive, of the year in which the assessment is 
 nuide. 
 
 "June l-'2(i. The tax appeal court shall sit for the hearing 
 (if tax appeals between June 1 and June -0, both inclusive, of 
 each year. 
 
 "January ril-Xovember 15. From January 31 to November 
 15, both inclusive, of each year, assessors shall attend at an ad- 
 vertised place for collection of taxes, the advertisement to con- 
 tain notice that taxes will be delinquent after ]May 15 and No- 
 vember 15. 
 
 "Decend)er 1. As soon after December 1 of each year as 
 ])ossible the assessors shall prepare and advertise in some news 
 pa]ier or ]iost in not less than three public places in each district, 
 the names of all tax]iayers delinquent on December 1 and own- 
 inii' property in such district, and the amount due by each. 
 
55 
 
 "December 1-31. Duing DecemLer of each year each assessor 
 shall advertise for tax returns to be made during the following- 
 January." 
 
 Section 2. Section llS-1 of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1184. Assessors, appointment. The treasurer, with 
 the approval of the governor, shall, for each taxation division 
 of the Territory, appoint an assessor and collector of taxes, who 
 shall be called the "assessor" and who shall serve for four years 
 unless sooner removed as by law provided ; and in case of death 
 or removal of any assessor, or of any other vacancy in that office, 
 a new appointment shall be made in the same manner." 
 
 Section 3. Section 1 186 of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section llNG. Bond, oath. Each assessor shall, within iiX- 
 teen days of his appointment and before entering upon the 
 duties of his office, give to the Territory a good and sufficient 
 bond conditioned for the faithful and im])artial discharge of his 
 duties according to law, in a sum to be fixed by the Treasurer 
 with the approval of the Governor but not less than ten thous- 
 and dollars, with two or more sufficient sureties, who shall be 
 residents within the Territoi-y, and who shall each own within 
 the Territory unincumbei-ed real estate of the value of not less 
 than ten thousand dollars ; and each assessor shall take and sub- 
 scribe an oath before any person authorized to administer oaths, 
 that he will faithfully, honestly and impartially perform and 
 discharge the duties of his office to the best of his ability, which 
 oath shall be filed with the treasurer, ^o assessor shall enter 
 upon his duties until his bond and oath of office shall have been 
 filed with and accepted by the treasurer." 
 
 Section 4. Section 1188 of the Revised Laws of LTawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1188. Bond, Oath. Each assessor shall exact from 
 each of his deputies a bond with two or more sufficient sureties, 
 approved by the assessor, in a sum to be fixed by such assessor 
 but not less than two thousand dollars conditioned for the faith- 
 ful performance of his duties. Such sureties shall be resident 
 within the Territory and shall each own unincumbered deal 
 estate of the assessed value of not less than two thousand dollars. 
 Each of such de]iuties shall ta.ke and subscribe an oath befora 
 
5G 
 
 any person anthorized to administer oaths, that he will faith- 
 fully, honestly and impartially perform the duties of his olEce 
 to tJu' best of his ability. 
 
 "Xo dejnity assessor shall enter upon his duties until his bon{i 
 and oath of oftice shall have been filed with and accepted by the 
 assessor appointing him." 
 
 Section ."). Section 1202 of the Revised Laws of Hawaii is 
 liercby amended so as to read as follows : 
 
 "Section 1202: May be worked out. The taxes due from 
 poll taxes, school taxes, and road tax under this chapter may be 
 worked out by the person taxed (in the discretion of the tax 
 assessor) on the public roads of the district where he resides un- 
 der tlie direction of the road authorities of such district, at the 
 rate of one dollar a day for each legal day." 
 
 Section fi. Section 1203 of the Revised Laws of Hawaii, as 
 amended by Section 3 of Act S9 of the Session Laws of 1905, is 
 hereby further amended so as to read as follows : 
 
 "Section 1203. Brake, sulky, ox-cart and automobile tax. 
 All brakes and sulkies shall be subject to an annual tax of two 
 dollars each to be paid by the owners thereof, and all ox-carts 
 sjiall be subject to an annual tax of five dollars each to be paid 
 by the owners thereof. 
 
 "All automobiles shall be subject to an annual tax of one cent 
 for each pound in weight of such automobiles. The weight of 
 such automobiles shall be the weight of the vehicle when in or- 
 dinary use and with its customary accessories and fittings, and 
 shall not he the weight of the vehicle stripped of its accessories 
 and fittings and empty of fuel or water." 
 
 Section 7. The Revised Laws of Llawaii are hereby amend- 
 ed by inserting therein in Chapter 98 thereof a Section to be 
 known as Section 12L3A to read as follows: 
 
 "Section 121 3 A. All real property (other than that assessed, 
 \Adiether with or without other property, as part of an enterprise 
 for ]n-ofit under Section 1216 and any related Sections), shall 
 be valued and assessed for purposes of taxation as of January 1 
 of the year 1910 and of each third year thereafter, and the value 
 so ascertained in each such assessment year shall be deemed to 
 be and shall be for the purposes of taxation the value of such 
 l)roperty for each year of the two non-assessment years immedi- 
 ately following each assessment year. 
 
57 
 
 "Provided hdwever that all real property subject under the 
 provisions of the last prcfeiling paragraph to be valued and as- 
 sessed once only in each three years, which for any reason what- 
 soever shall not have been assessed, may at any time be added 
 by the assessor to the assessment or tax list as and in the manner 
 in Scetion V24'2 provided, and the value placed upon any such 
 property at any such assessment shall be deemed to be and shall 
 be its value for pur])oses of taxation until January 1 of the next 
 assessment 3'ear hereinabove provided for. 
 
 "And further provided that if subsequent to any valuation 
 and assessment year made as aforesaid there shall be any physi- 
 cal additions to or destruction or removal of any improvements 
 in the last preceding assessment year valued and assessed as a 
 part of real property, the full cash value of the im])rovements 
 so added', destroyed or removed shall, for the purposes of taxa- 
 tion for each succeeding year elapsing prior to the next assess- 
 ment year, be added to or subtracted from, as the case may be, 
 the valuation of such real property as ascertained in the last 
 preceding assessment year." 
 
 kSection !S. Section 1216 of the Revised Laws of Hawaii, as 
 amended liy Section 1 of Act S8 of the Sessioir Laws of liK),"), is 
 hereby further amended so as to read as follows : 
 
 "Section 121t;. Basis of value for Taxation. All real and 
 personal property and the interest of any person in any real or 
 personal property shall be assessed separately as to each item 
 thereof for its full cash value. 
 
 "Provided, however, that in all cases where real and personal 
 property, or several classes or kinds or parcels of real or personal 
 property respectively, are combined and made the basis of an 
 enterprise for ^irotit, the combined property forming such basis 
 of such enter])]'ise for ])rofit, shall be assessed as a whole on i(s 
 fair and reasonable aggregate valiie. 
 
 "In estimating the aggregate value of each such enterprise 
 for profit, there shall be taken into consideration the net profits 
 made by the same, also the gross seceipts and actual running 
 expenses ; and where it is a company being a corporation whose 
 stock is quoted in the market, the market price thereof, as well 
 as all other facts and considerations which reasonably and fair- 
 ly bear upon such valuation. 
 
 "In ascertaining the aggregate value of the property eonsti- 
 
58 
 
 tutiiig the basis of an enterprise for profit for the pnrpose indi- 
 cated hy this Scetion, there shall first be included all property 
 combined and forming the basis of such enterprise whether with- 
 in the defi'nition of real or personal property set forth in this 
 clia])tei' or not, and there then shall be deducted therefrom the 
 value of shares in other Hawaiian corporations, held or owned 
 1)V such enterprise, the value of all property on which specific 
 taxes are levied and the value of all i>roperty that would not be 
 taxable if not so combined and made the basis of an enterprise 
 i'lv profit." 
 
 Sectiiin '.I. Section 1217 of the Eevised Laws of Hawaii is 
 liereby anu'uded so as to read as follows: 
 
 "iSectiiiu 1217. Each jievson's interest assessed separately. 
 The interest of every person in any property shall be separately 
 assessed (except as in this chapter provided in resiDCct to share- 
 holders in or members of companies), and every person shall be 
 liable to taxation in respect of the full cash value of his interest 
 in such pro])erty. 
 
 "The interest of any person as tenant, lessee or occupier of 
 any real jiroperty that is exempt from taxation, or the owner 
 of which is exempt from taxation, shall be assessed to such ten- 
 ant, lessee or occupier in respect of the full cash value of his in- 
 terest therein." 
 
 Section 10. Section 1221 of the Eevised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1221. Property exemjit: public, educational, relig- 
 ious, eleemosynary. The following property shall be exempt 
 from taxation : real and personal property belonging to the 
 Territory, to the department of public instruction, to any coun- 
 ty, to incor])orated or private schools and in the actual use of 
 such schools, to the (Queen's Hospital, to the Tvapiolani ]\Iaterni- 
 ty Home and to religious societies and in the actual use of such 
 societies, the land of snch societi(>s exempt from taxation being 
 limited to church sites and burying grounds, such sites and bury- 
 ing grounds not to exceed five acres each in extent," 
 
 "All property l)oth real and personal of public library asso- 
 ciations shall be exempt from taxation." 
 
 Section 11. The Eevised Laws of Hawaii are hereby amend- 
 ed by inserting therein in Chapter flS thereof, .\ section to be 
 known as Section 1221 A: A]] institutions, corporations or per- 
 
59 
 
 sons m order to secure exeiiiptioii from property taxation, shall 
 make return of their property in manner andforni as by law 
 provided, and shall note thereon the claim for exemption. " Fail- 
 ure to make such return or to note such claim shall be a waiver 
 of exemption, for the current assessment period. Provided, 
 ho\ve\'er, that nothing in this section contained shall affect the 
 exemptions set forth in Sections 1222 and 1225 or the exemp- 
 tion from taxation of the Territory, the Department of Public 
 Instruction and the counties." 
 
 Section 12. Section 1235 df the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1235. Failure to make return; penalty. If any 
 person shall refuse or neglect to make said return, or shall de- 
 cline to take oath to the accuracy thereof, the assessor may make 
 such assessment according to the best information within his 
 reach, and the same shall be binding and conclusive upon all 
 parties, and shall not be subject to appeal. Provided however 
 that any taxpayer who may have failed as aforesaid to make a 
 return or shall have declined as aforesaid to take oath to the ac- 
 curacy thereof, and who shall feel aggrieved at the assessment 
 made by the assessor, shall have the right immediately to bring 
 suit to enjoin the collection of taxes based on such assessment, 
 and the Circuit Judge at chambers shall have jurisdiction in 
 such suit to assess and revalue the property assessed for the pur- 
 pose of taxation and to adjudge the amount of taxes due, sub- 
 jeer to appeal as by law provided. 
 
 Section 13. Section 1236 of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1236. Board of Equalization. For the purpose of 
 equalizing assessments of property, as. far as practicable, 
 throughout the Territory, there shall be a Board to be constitut- 
 ed as hereinafter stated, and which said board shall for purposes 
 of convenience be called the Board of Equalization. Such board 
 shall consist of five members who shall be appointed by the Gov- 
 ernor by and with the advice and consent of the Senate. Of the 
 five members so appointed one shall be chosen from the residents 
 of each Taxation Division and the fifth from the Territory at 
 large, provided however that neither the Treasurer of the Terri- 
 tory nor any Supervisor of any of the counties nor any tax as- 
 sessor nor any other person employed in the assessment or col- 
 
60 
 
 lection of taxes shall be eligible for appointment as a member 
 of such board. Each member of said Board shall hold office for 
 four years, unless sooner removed as by law provided and shall 
 receive as compensation for his services such sum as the Legis- 
 lature may appropriate. Said board shall hold one or more 
 meetings in ilonolulu in the month of November of each vear 
 and at such other times and jjlaces as it may seem necessary or 
 desirable. All meetings of the Board shall be public and one 
 week's notice of such meetings sliall be given by publication in 
 one or more newspapers printed and published in the English 
 language on the Island on which such meeting is to be held or 
 (and) in Honolulu on the Island of Oahu. Said Board shall 
 have the power, and it shall be its duty, to prepare, adopt and 
 fiubiish rules and regulations, not inconsistent with existing Stat- 
 utes, intended to secure equality and fairness of valuation of 
 taxable property and income throughout the Territory and com- 
 plete and detailed returns of such property and income and fur- 
 ther prepare and jirescribe the fVirms to be used by taxpayers in 
 making the statements, lists or (and) returns required by law 
 with, reference to their property and (or) income, and in and 
 by means of such rules and regiilations and (or) such forms of 
 statements, lists or (and) returns to require from taxpayers 
 such detailed information concerning the property and (or) in- 
 come so to be returned as to said Board may seem necessary to 
 secure to the assessor full, true and correct disclosures and state- 
 inents of each taxpayer's property and (or) income subject to 
 taxation and of the full cash value and the identity of such prop- 
 erty and every part thereof. Provided however that such re- 
 turns and the requirements thereof shall be unifoi-m to all tax- 
 l)ayiTS within any class. Said Board shall have the power fur- 
 ther to revise, alter and repeal such forms, rules and regulations 
 from time to time as in its judgment may seem necessary or 
 desirable. A publication once a week for three weeks in any 
 newspaper published in the English language in Honolulu and 
 once a M'eek for three weeks in any newspaper published in the 
 Hawaiian language in said Honolulu shall be a sufficient publi- 
 cation for the purposes of this Section. All rules and regula- 
 tions so adopted and published as aforesaid by said Board shall 
 have the force of law; and it shall be the duty of all taxpayers 
 to use the forms of returns so prepared and prescribed by said 
 Board and to furnish thereon, at the time required by law, all 
 
61 
 
 information by said blank forms ealltMl for. Said Board shall 
 have the power further to call the attention of any assessor to 
 any dereliction of dtity on his part and to offer suggestions to 
 any assessor concerning the proper performance of his duties. 
 Jt shall be the duty of said Board to make to the Governor of 
 the Territory, in the month of June of each year, a written re- 
 port of such derelictions of duty 'as it has observed on the part 
 of assessors or (arul) collectors of taxes and of its recommenda- 
 tions for legislation intended to improve the tax laws or (and) 
 the administration thereof, and, generally, of the business done 
 by it during the year preceding the date of such report. 
 
 Any assessor, taxpayer or other person who shall fail to per- 
 form any of the duties imposed upon him by or by virtue of 
 this section or by virtue of any rule, regulation or form made 
 or prepared under the authority of this section, or who shall in 
 . any respect fail to conqdy with any of the requirements of this 
 section or of any rule, regulation or form made or prepared un- 
 der its authority, shall be deemed guilty of a misdemeanor. 
 
 Section 14. Section 1341 of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1241. Records open to public. It shall be the duty 
 of each assessor to gather and tabulate under appropriate heads 
 aud in proper books, all information necessary or proper for 
 the ascertaining of values of property in their respective divi- 
 sions ; such information and all ma])s and records made, obtain- 
 c-d or received by snch assessor shall be public records, and in 
 case of his death, removal or resignation, shall innnediately 
 pass to the care and custody of his successor; such information 
 and all returns, books and other memoranda of assessment, de- 
 linquent and other tax lists, maps and other ])a])ei's and records 
 connected with or relating to the assessment and collectioTi of 
 taxes shall during business hours be open to the inspection of 
 (he public." 
 
 Section 15. Section 124.'! of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows: 
 
 "Section 124.'L Xotice of raise in value. In case any as- 
 sessor shall raise the valuation of any pro])ertv above the value 
 stated in the assessment return in this cha]iter jirovided for, or 
 shall refuse to allow a claim for exemption, such assessor shall, 
 on or before April 10 in each year, send a written or printed 
 
62 
 
 iHiticc l)y depositing the same in the Post Office, postage prepaid, 
 aekb'essed to the last known phice of residence of the person mak- 
 ing the retu.rn or chiim exemption describing the property, the 
 valuation of which has been so raised, and stating the proposed 
 assessment thereof, or stating the exemption refused, as the case 
 may be." 
 
 Section l(i. Section 1247 o'f the Revised Laws of Hawaii as 
 amended by Act S'.l of the Session LaAvs of l'J05 is hereby 
 amended so as to read as follows : 
 
 "Section 1247. Certificate of appeal. On receiving the 
 amount of costs and the statement of appeal the assessor shall 
 grant to the person appealing a certificate in substance in the 
 form following: 
 
 Tax Division District. 
 
 This is to certify that 
 
 of this district is assessed for the year 111. ... as follows: 
 
 Assessment. Tax. 
 
 Aggregate valne, business enterprise 
 
 Real property 
 
 Personal property . 
 
 I )ugs 
 
 Bicycles 
 
 Automobiles 
 
 Brakes and Sulkies 
 
 Ox-carts ...... 
 
 Other \'eliicles 
 
 Poll, Koa<l and School. 
 
 Total 
 
63 
 
 That . .he. . dis])iitcs tlie folJuwing items of such assessment, 
 to wit : 
 
 Assessment. Tax. 
 
 Aggregate value, husiness enterprise 
 
 Real Property 
 Personal Property 
 
 Dogs 
 
 Bicycles 
 
 Automobiles 
 
 Brakes and Sulkies 
 
 Ox-carts , 
 
 Other Vehicles _ 
 
 Poll, Road and School. 
 
 Total amount disputed 
 
 and has duly appealed from such assessment. 
 
 That I have received on deposit the sum of $ for the 
 
 cost of this appeal. 
 
 Dated 19 
 
 Assessor for deputy assessor). 
 
 Section 17. Section 12fi6 of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 1266. Tax liens. Every tax due upon property 
 shall be a prior lien upon the property assessed ; and every tax 
 dne upon improvements upon real property assessed to others 
 than the owners of the real property, shall also be a prior lien 
 upon the improvements ; and so also all taxes due from a tax- 
 payer, whether upon propertv or income or otherwise howsoever 
 accruing, shall be a prior lien upon the real property of such 
 taxpayer; which several liens shall attach as of January -SI in 
 each assessment vear, and shall continue for three years. 
 
64 
 
 Upon enforcement or foreclosure, in any manner whatsoever, 
 of any lien, all taxes of whatsoever nature and howsoever ac- 
 cruing due at the time of the foreclosure sale from the taxpayer 
 against whose jjroperty such tax lien is so enforced or foreclosed 
 as aforesaid shall be satistied ar far as possible oat of the pro- 
 ceeds of such sale remaining after jjayment of the costs and ex- 
 penses of such enfoi-cement and foreclosure. 
 
 "Said liens may be enforced upon the petition of the tax as- 
 sessor to the circuit judge at Chambers in the judicial circuit 
 in which said property lies or is held, and jurisdiction is hereby 
 conferred upon said circuit judges at Chambers to hear and de- 
 termine all proceedings brought or instituted to enforce and 
 foreclose such tax liens, and the proceedings had before said 
 circuit judge at chambers shall be conducted in the same man- 
 ner and form as ordinary foreclosure jjroceedings. If the own- 
 er or owners or claimant or claimants of tlie property against 
 which a lien is sought to be foreclosed was jiever an inhabitnat 
 of the Territory or is at the time without the Territory, or if 
 the owner or owners are unknown, and the fact shall be made 
 to appear by affidavit to the satisfaction of the court and it shall 
 in like manner .appear prima facie that a cause of action exists 
 against such absent owner or claimant or against the property 
 described in the petition, or that such absent owner or claimant 
 is a necessary or proper party to the suit the court may grant an 
 order that the service may be made by publication of the sum- 
 mons. In any sueli case publicatioji and other substituted ser- 
 vice may be made in the manner provided by Section 1724 of 
 the Revised Laws of Hawaii. 
 
 "For the purpose of foreclosing and enfoi'cing any tax lien 
 under this section, every tax has the effect of a judgment against 
 the person and every lieu created by said section has the force 
 and eifect of an execution duly levied against the property of 
 the delinquent returned unsatisfied." 
 
 Section IS. The Revised Laws of Hawaii are herebv amend- 
 ed by adding thereto in Chapter !»S thereof, a section to be 
 known as Section i266A, to read as follows: 
 
 "Section ]-2iU]A. Liens on real i)roperty ; enforcement by 
 sinnmary sale. \]] real pro])erty or any interest therein on 
 which a lien for lu-operty, personal, or (and) income taxes shall 
 have attached for the period of two years, shall after the expira- 
 tion of such period, be sold hy the tax assessor at public auction 
 
65 
 
 to the highest bidder for cash to satisfy the lien together with 
 all interest, ijeualties, costs, and expenses due or incurred on 
 account of the tax, lien and sale, the surplus, if any, to be rend- 
 ered to the person thereto entitled. The sale shall be held at 
 any public place proper for sales on execution, after notice pub- 
 lished at least once a week for at least four successive weeks im- 
 mediately prior thereto in any newspaper of general circulation 
 published in the taxation division wherein the property to be 
 sold is situate, or if there be no newspaper, then in any news- 
 paper of general circulation published in the city of Honolulu. 
 Such notice shall also be posted for a like period in at least three 
 conspicuous public places within the taxation division wherein 
 the sale is to be held, one being at a post office and one being on 
 such land. The notice of sale shall contain the name of the per- 
 son assessed, or from whom the tax is due, the character and 
 amoimt of the tax with interest, penalties, costs, expenses and 
 charges accrued, a descrijrtion of the property to be sold, and the 
 time and place of sale, and shall warn the person assessed, or 
 from whom the tax is due, that unless the tax with all interest, 
 penalties, costs, expenses and cliarges is paid before the time of 
 sale appointed, the property advertised for sale will be sold as 
 advertised. 
 
 It is hereby made mandatory upon the assessor to commence 
 the publication and posting of such notices within one week af- 
 ter the expiration of such period of two years, and to conduct 
 the sale as advertised, provided, however, that the tax assessor 
 may for good cause to him appearing postpone the sale from 
 time to time, but in no event for a longer period in the aggre- 
 gate than the unexpired term of the lien. 
 
 The tax assessor, or his deputy, shall, on payment of the pur- 
 chase price, make, execute and deliver all proper conveyances 
 necessary in the premises and the delivery of such conveyance 
 shall vest in the purchaser the title to the property sold. 
 
 This section shall be construed as applying to all liens that 
 have accrued on and after January 31, 1908. 
 
 Section 19. Section 1207 of the Kevised Laws of PTawaii is 
 hereby amended so as to read as follows: 
 
 "Section 12fiT. Public notice, time, place of collection. 
 Each assessor or his deputy, shall between January 31 and 'No- 
 yember 15, both inclusive of each year, for the convenience of 
 
66 
 
 taxpayers, attend at certain times oi- places in each district for 
 tlie collection of taxes. 
 
 "Public notice of the time or times, place or places of such 
 attendance and the object thereof shall be given by advertise- 
 ment in a weekly newspaper or newspapers, and by posting a 
 notice of the same in at least three conspicuous places in each 
 district. Such notice shall alsd contain a statement that all 
 brake, sulky, ox-cart, automobile, bicycle, wagon, wagonette, 
 hearse, omnilius, cart and carriage taxes and one-half of all 
 property taxes not paid by ]\lay 15 will be delinquent and sub- 
 ject to a penalty of ten ]ier cent ailditional, and if not paid 15 
 days after delinquent interest from the date of expiration of 
 said fifteen days shall be added at the rate of ten per cent per 
 annum on such tax and penalty, and that the remaining portion 
 of the property taxes due and not jiaid by November 15 will be 
 delinquent and subject in like manner to a ten per cent penalty 
 and ten per cent interest. And that the delinquent tax list as 
 of December 1 will be published as soon after Dtecember 1 fol- 
 lowing as possible. 
 
 "Each taxpayer shall pay all specific taxes and one-half of all 
 property taxes due him to the assessor or his deputy on or be- 
 fore May 15 and he shall pay the remaining portion of the 
 propertj' tax due by him to the assessor or his deputy on or be- 
 fore November 15 of the year in which they are assessed, and 
 no other notification or demand than that in this chapter provid- 
 ed for, shall be required or necessary. 
 
 "No notice need be published and no demand for payment 
 shall be necessary concerning the p;iyuient nf personal and dog 
 taxes, except as in this chapter set forth." 
 
 Section 20. Section 12 (IS of the Revised Laws of Hawaii is 
 hereby amended so as to read as follows : 
 
 "Section 126R. Publication, delinquent lists. As soon after 
 December 1 of each year as practicable each assessor shall pub- 
 lish m the English language in one weekly newspaper, once each 
 week for four successive weeks, or liy public poster, the names 
 of the delinquent tax]iayers in his division and the amount of 
 assessed taxes and penalties remaining delinquent by each tax- 
 payer on December 1. The amount of taxes and penalties un- 
 paid by each delinquent need only be stated in the aggregate. 
 Such list be certified to and signed by the assessor. Such list 
 may be published either in the body of such newspaper or as a 
 
(i7 
 
 supplement thereto. Each assessor shall also cause a copy of 
 such list to be posted in at least eight public and conspicuous 
 places in each taxation district in his division. The sum of fifty 
 cents shall be added to each delinquent tax assessed and publish- 
 ed or listed for publication and costs, and shall be collected by 
 the assessor or his deputy as a part thereof." 
 
 Section 21. Section 1269 of the Revised Laws of Hawaii as 
 amended by Section is of Act S9 of the Session Laws of l'.»Or> 
 is hereby amended so as to read as follows: 
 
 ''Section 1 369. Payment enforced how. If any tax be un- 
 paid when due, the assessor may proceed to enforce the payment 
 of the same, with all penalties as follows : 
 
 1. By distress upon so much of the goods and chattels of the 
 taxpayer as he may deem sufficient to satisfy the payment of 
 the taxes due, costs and expenses of such distress or if the tax- 
 payer is delinquent, sufficient to satisfy the payment of taxes 
 due, costs, expenses of such distress, penalty and interest. 
 
 2. By suit or action in assumpsit, in his own name, on be- 
 half of the Territory of Hawaii, for the amount of taxes, and 
 costs or if such tax is delinquent for the amount of taxes, costs, 
 penalties and interest, before any district magistrate, irrespec- 
 tive of the amount claimed. Execiition may issue upon any 
 judgment rendered in any such suit which may be satisfied out 
 of any real or personal property of the defendant in such suit 
 without other or further authority. 
 
 Section 22. This Act shall take effect from and after the 
 Hate of its approval. 
 
 EXHIBIT B. 
 
 An Act 
 
 Eelattvg to the Tnherit.^noe Tax, Amending Act 102 of 
 THE Session Laws of 1905. 
 
 Be it Eiinrfrd hi/ the rjCf/islafiirp of the Terrilory of TJ<(wnii : 
 
 Section 1. Section 1 of Act 102 of the Session Laws of 1905 
 is hereby amended so as to read as follows: 
 
 '•'All "property which shall pass by will or by the intestate 
 laws of this Territory, from any person who may die seized or 
 possessed of the same while a resident of this Territory, or 
 
v.'bioh, being' within this Territory shall pass whether by the 
 laws of this Tervitory or otherwise, from any person who may 
 so die while not a resident of this Territory, or which, or any 
 interest in or income from which shall be transferred by deed, 
 grant, sale or gift, made in contemplation of the death of the 
 grantor, vendor or bargainor, or intended to take effect in pos- 
 session or enjoyment after snch death,- to any person or persons, 
 or to any body politic or corporate, in trust or otherwise, or by 
 reason \\-hereof any ])erson or body politic or corporate shall 
 become beneficially entitled, in possession or expectancy, to any 
 property, or to the income thereof, shall be and is subject to a 
 tax hereinafter provided for, to be paid to the Treasurer of the 
 Territory of Hawaii as hereinafter directed, for the use of the 
 Territory; and such tax shall be and remain a lien upon the 
 property passed or transferred and all administrators, execu- 
 tors, and trustees of every estate so transferred or passed shall 
 be liable for any and all such taxes until the same shall have 
 been paid as hereinafter directed. The tax so imposed shall be 
 upon the market value of such property at the rates hereinafter 
 prescribed and only upon the excess over the exemptions here- 
 inafter granted. 
 
 ''Whenever any ])erson or corporation shall exercise a powoi 
 of appointment derived from any disposition of property made 
 either before or after the passage of this Act, such appointment 
 when made, shall be deemed a transfer taxable under the pro- 
 visions of tips Act in the same manner as though the property 
 to which such appointment relates belonged absolutely to the 
 donee of such power and had been bequeathed or devised by 
 such donee by will ; and whenever any person or corporation 
 possessing such power of appointment so derived shall omit or 
 fail to 'exercise the same within the time provided therefor, in 
 whole or in part, a transfer taxable under the provisions of this 
 Act sliall be deemed to take place to the extent of such omissions 
 or failures, in the same manner as though the persons or corpor- 
 ations thereby becoming entitled to the possession or enjoyment 
 of the projierty to which such power related had succeeded 
 thereto by a will of the donee of the power failing to exercise 
 such power, taking effect at the time of such omission or failure. 
 
 "When the beneficial interest to any property or income 
 therefrom shall so pass to or for the use of his or her fatlier, 
 mother, husband, wife, child, grandchild, or any child adoj)tP('i 
 
69 
 
 as such in conformity with the laws of the lerritory ol Hawaii, 
 the rate of the tax shall he Two Per Cent, of the market value 
 of such property, received by each person, in excess of Five 
 Thousand Dollars ; in all other cases the rate of tax shall be : 
 Five per cent, of the market value of such property in excess of 
 Five Hundred Dollars. All property so passing for which such 
 exemption of Five Thousand Dollars can be maintained shall 
 not he taxable as income under the provisions of any other law. 
 
 Section 3. Section 5 of Act 102 of the Session Laws of 1905 
 is hereby amended so as td read as follows: 
 
 ''All taxes imposed by this Act, unless otherwise herein pro- 
 vided for, shall be due and payable at the death of the decedent 
 and if the same are paid within eis>hteen months, no interest 
 shall be charged and collected thereon, but if not so paid, interest 
 at the rate of ten per centum per anniun shall be charged and 
 collected from the time said tax accrued ; provided, that if said 
 tax is paid within twelve months from the accruing thereof a 
 discount of five per centum shall be allowed and deducted from 
 said tax. And in all cases where the executors, administrators, 
 or trustees do not ])ay such tax within eighteen months from 
 the death of the decedent, they shall be required to give a bond in 
 the form and to the effect prescribed in Section 3 of this Act 
 for the payment of said tax, together with interest." 
 
 Section 3. Section 1 2 of Act 102 of the Session Laws of 1905 
 is hereby amended to read as follows : 
 
 "When the value of any inheritance, devise, bequest, or other 
 interest subject to the. payment of said tax is uncertain, the 
 Circuit Judge before whom the probate proceedings are pending, 
 on the application of any interested party, or upon his own 
 motion, shall appoint some competent person or persons as 
 appraisers, as often as and whenever occasion may require, 
 whose duty it shall be forthwith to give such notice, by mail, 
 to all persons known to have, or to claim an interest in such 
 property, and to such persons as the Circuit Judge may by 
 order direct, of the time and place at which he will appraise 
 such property, and at such time and place to appraise the same 
 and make a report thereof, in writing, to said Circuit Judge, 
 together with such other facts in relation thereto as said Circuit 
 Judge may by order require to be filed with the clerk of said 
 court ; and from this rejiort the said Circuit Judge shall, by 
 order forthwith assess and fix the value of all inheritances. 
 
70 
 
 devises, bequests or other interests, and the tax to which the 
 same is liable, and shall immediately cause notice thereof to be 
 given by mail, to all persons known to be interested therein; 
 and the value nf every future or contingent or limited estate, 
 income or interest shall, for the purposes of this Act, be deter- 
 mined by the rule, method and standards of mortality and of 
 value that are set forth in the actuaries' Combined Experience 
 tables of mortality for ascertaining the value of policies of life 
 insurance and annuities and for the determination of the liabili- 
 ties of life insurance companies, save that the rate of interest 
 to be assessed in comjjuting the present value of all future in- 
 terests and contingencies shall be five per centum per annum. 
 Every appraiser shall be paid on the certificate of the Circuit 
 J udge at Chambers at the rate of Five Dollars per day for every 
 (lav actually and necessarily employed in such appraisal, and 
 his actual and necessary travelling expenses ; the fees paid such 
 witnesses shall be the same as those now paid to witnesses sub- 
 poenaed to attend Ci.urts of Record. Such fee as well as all 
 other charges herein provided for, shall be paid out of the estate 
 of the decedent as an expense of administration. 
 
 Section 4. Paragraph "b" of Section 25 of Act 102 of the 
 Sessidu Laws of 1;K),"i is hereby amended so that said paragraph 
 "h" shall read as follows: 
 
 "All actions under this section shall be triable before the Cir- 
 cuit Court of the Circuit in which decedent's estate is being or 
 has been administered." 
 
 Section •">. This Act shall take effect from and after the date 
 of its approval. 
 
 EXHIBIT V. 
 
 An Act 
 
 To AMI.;^■|) Seotiox MlsT) ok the "Revised Laws of LLvwaii 
 
 AS Exacted by Section 1 of Act 06 of the Session 
 
 Laws of 1!)07, Eelatixc. to Licenses. 
 
 Be il Kii,'trtc(] h)j (lie Ij'i/ishihirc of Hip Territory of Ilaimii : 
 
 Section 1. Section 14isn of the Revised Laws of Hawaii 
 :is enacted by Section 1 of Act 96 of the Session Laws of 1907 is 
 hereby amended so as to read as follows: 
 
71 
 
 "Section 1418D. Fishermen. The annual fee for a license 
 to engage in or carry on the business of fishing shall be a sum 
 computed at the rate of $5.00 for each fishing boat used in such 
 business, and the requirements ui this chapter regulating boats 
 to hire shall apply to fishing boats as far as the same are applic- 
 able. Any boat used for the purpose of fishing for profit that 
 has a beam of 30 inches or more shall be deemed a fishing boat 
 for the purposes of this act." 
 
 Section 2. This Act shall take effect from and after the date 
 of its approval. 
 
 EXHIBIT D. 
 
 An Act 
 
 To AxfEND Section 262.") of the Revised Laws of Hawaii^ 
 ^VwENDEij BY Section 2 or Act 98 of the Session 
 Laws of 1905, Relating to Foeeign Coepobations. 
 
 Be it Enacicd by flie Legislature of the Territory of Hawaii: 
 
 Section 1. Section 2625 of the Revised Laws of Hawaii as 
 amended by Section 2 of Act 9H of the Session Laws of 1905, is 
 hereby amended so that the same shall read as follows : 
 
 "Section 2625. Annual License. ISTo foreign corporation, 
 except foreign insurance companies, which does not invest and 
 use all its capital in this Territory, shall have an office or of- 
 fices in this Territory for the use of its officers, stockholders, 
 agents, or employees, unless it 'shall first have obtained from 
 the Treasurer an annual license to do so ; and for said license, 
 every such corporation shall pay into the treasury of the Terri- 
 tory, for the use of the Territory, annually, the siim of Twenty- 
 five Dollars, and the Treasurer shall not issue a license to any 
 corporation until said license fee shall have been paid. 
 
 "The Treasurer is hereby authorized to settle and have col- 
 lected an account against any company violating the provisions 
 of this Section for the amount of such license fee, together with 
 a penalty of fifty per centum for failure to pay the same. ^ Pro- 
 vided, that no license shall be necessary for any corporation en- 
 gaged solely in the business of foreign or inter-state commerce, 
 or while solelv eniploved by the Government of the United 
 States." 
 
72 
 
 Section 2. This Act shall take effect from and after the date 
 of its approN^al. 
 
 KXIIIBIT E. 
 
 Ax Act 
 
 To A-AFEXD Section 256(3A of Chapter 157 or the Revised 
 Laws of Hawaii, Exacted by Section 1 of Act 91 of 
 THE Session Laws of 1905 and Amended b\' Section 1 
 OF Act 74 OF THE Session Laws of 1907. 
 
 Bi' it EiMctcd hi/ the LecjisUtm-p of the Territory of Haimii: 
 
 Section 1. Section 25fifiA of the Revised Laws of Hawaii, 
 as enacted by Section 1 of xVct 91 of the Session Laws of 1905 
 and amended by Section 1 of Act 74 of the Session Laws of 
 1907, is hereby further amended so as to read as follows: 
 
 "Section 25(i()A. Fees. On filing any certificate or other 
 paper, relative to corporations, in the office of the Treas\irer of 
 the Territory, in addition to the stamp duty and recording fee 
 now charged, the following fees and taxes shall be paid to the 
 Treasnrer of the Territory for the nse of the Territory: For 
 certificate of incorijoration, twenty cents for each thousand dol- 
 lars of the total amonnt of capital stock anthorized, bnt in no 
 case less than twenty-five dollar ; increase of capital stock, twen- 
 ty cents for each thonsand dollars of the total increase anthoriz- 
 ed, but in no case less than twenty dollars ; co-partnerships of 
 corporations, twenty cents for each thonsand dollars of capital 
 authorized beyond the total anthorized capital of the corpora- 
 tions composing such co-partnerships, but in no case less than 
 twenty-five dollars; extension or renewal of corporate existence 
 of any corporation, the same as reqnired fr the original certifi- 
 cate of organization, change of name, change of nature of bnsi- 
 noss, amended certificates of organization (other than those 
 anthorizing increase of capital stock), decrease of capital stock, 
 increase or decrease of par value or of nnmber of shares, twenty- 
 f'.ye dollars ; pnd for all certificates not hereby provided for, five 
 dollars. Provided that none of these additional fees shall be re- 
 qnired to be paid bv anv religions, charitable, edncational or 
 other corporation which does not issue shares of capital stock, 
 
73 
 
 nor by any other corporation which is not organized for pecuni- 
 ary profit." 
 
 Section 2. This Act shall take effect from and after the date 
 of its approval. 
 
 EXHIBIT F. 
 
 An At.'T Relating to Mii-itia Enkollment. 
 Be it Emacti'd by the Leijislatiire of the Territory of Hawaii: 
 
 Section 1. The tax assessor of each taxation division of the 
 Territory of Hawaii shall during the month of June in each 
 year, and at such other times as he may be requested so to do 
 by the Governor prepare a roll containing the names of all the 
 inhabitants of his taxation division subject to military duty, 
 two copies of which roll shall be sworn to by him before some 
 person authorized by law to administer oaths and shall be de- 
 livered by him to the Adjutant General of the Territory of Ha- 
 waii. Such roll shall state the name, residence, age and occupa- 
 tion of each of the persons enrolled and also the previous exist- 
 ing military or naval service of each such person, and, if the 
 Governor shall so direct, and as often as he shall so direct, such 
 enrollment shall further show separately the names of all sea- 
 faring men of whatever calling or occupation, the names of all 
 men engaged in the construction and management of ships and 
 crafts, together with the names of ship-owners and their em- 
 ployees, yacht owners, members of yacht clubs and all other as- 
 sociations for aquatic pursuits. 
 
 Section 2. If any assessor shall neglect or refuse to perform 
 any of the duties required of him by this Act he shall be subject 
 to the same liabilities as are provided by law for the neglect or 
 refusal to properly perform any of the duties required of him 
 in the assessment or collection of taxes and in addition shall 
 forfeit to the Territory the sum of one hundred dollars to be 
 sued for in the name of the Territory of Hawaii by the Attorney 
 General. 
 
 Section .3. The assessors sliall receive compensation for pro- 
 paring the military roll aforesaid at the rate of $.5.00 for each 
 one hundred names of ])ersons enrolled by them as subjecl to 
 military duty. 
 
74 
 
 Section i. The assessor making the enrollment aforesaid 
 ><hall at the time of making the same serve a notice of such en- 
 rollment upon each person enrolled, by delivering such notice 
 t(i him or leaving it with some person of suitable age and dis- 
 cretion at his place of residence if known, and if not known by 
 mailing such notice to his last known place of residence. The 
 return of the enrolling officer filed with the original roll showing 
 such mailing of such notice shall be prima facie evidence of 
 service. All persons claiming exemption from military service 
 shall within fifteen days after receiving such notice make a writ- 
 ten statement of such claim of exemption in duplicate, each 
 verified by affidavit, and file the same in the office of the assessor 
 so enrolling him. Such affidavit shall be made before any per- 
 son authorized by law to administer oaths and for administer- 
 ing any such oath no charge shall be made or compensation re- 
 ceived by the officer administering the same. Each assessor 
 shall within five days after receiving any such verified claim of 
 e.xemption forward one original of each such claim to the Adjut- 
 ant Greneral aforesaid. 
 
 Section 5. All civil officers in each taxation division shall 
 allow the assessor of such division and any deputy or assist- 
 ant making the enrollment aforesaid at all proper times to ex- 
 amine their records and take copies thereof. All persons shall 
 u]ion the application of any assessor or his deputy or assist- 
 ant making the enrollment aforesaid, give the name of and all 
 other proper information concerning any person within their 
 knowledge liable to be so enrolled. Any civil officer refusing 
 to allow the examination and other acts hereby authorized and 
 any person refusing to give the name or other information in 
 tliis section referred to or who shall knowingly give false infor- 
 mation shall be deemed guilty of a misdemeanor and shall be 
 lumished upon conviction of the same by a fine not exceeding 
 one hundred dollars. Jurisdiction is hereby conferred upon dis- 
 trict magistrates to hear and determine cases arising under the 
 provisions of this act within the limits of their respective terri- 
 torial jurisdiction, subject to appeal according to law. 
 
 Section G. This Act shall take effect from and after the date 
 of its approval. 
 
75 
 EXHIBIT G. 
 
 An Act 
 Kelating to Inventories of Govekn.ment Assets. 
 Be if IHiincled bij the Legislalui-c of the TerrUoi-y of liawait: 
 
 Section 1. It shall be the duty of the Secretary of the Terri- 
 tory, the Superintendent of Public Works, the Commissioner 
 of Public Lands, the Treasurer of the Territory, the Attorney 
 General, the Superintendent of Public Instruction, the Presi- 
 dent of the Senate, the Speaker of the House of Representatives, 
 the President of the Board of Commissioners of Agriculture and 
 Forestry, the Auditor of the Territory, the Surveyor of the 
 Territory, the High Sheriff of the Territory, the Chief Justice 
 of the Supreme Court (for the whole Judiciary Department of 
 the Territory), the President of the Board of Health, and all 
 other persons and Boards of a piiblic character having in their 
 custody or under their control or in any wise using property 
 belonging to the Territory of Hav/aii (which latter persons and 
 Boards are not by law under the control and direction of any 
 of the Departments or heads of Departments herein specifically 
 named), in the month of July of each year to prepare and file 
 with the Tax Assessor of the taxation division in which such 
 ])roperty is sitiiate, a return or inventory, sworn to before a per- 
 son authorized by law to administer oaths, containing a full, 
 trne and correct list by detailed items of all property, of what- 
 soever nature, (as of July 1 of the year for which such return 
 is made) belonging to the Territory of Hawaii and in the pos- 
 session, custody, control or use of the ofiicer so making such re- 
 turn or of the Department of the Government over which he 
 presides or of any officer, agent or employee serving in such De- 
 partment or under such returning oificer, and containing fur- 
 ther opposite cMch such item a statement of the full cash value 
 of the property therein mimed according to the best knowledge, 
 information and belief of the officer making such return. 
 
 Section 2. It shall be the duty of the Chairman of the Board 
 of Supervisors in each County of the Territory in the month 
 of Julv of each year to prepare and file with the Tax Assessor 
 of the taxation division in which such property is situate a re- 
 
76 
 
 turn or inventory, switrn t(j before a person authorized by law 
 to aduiiuister oaths, containing a full, true and correct list by 
 detailed items of all property of whatsoever nature, as of July 
 1 of the year for which such return is made, belonging to such 
 County and of all property, as of July 1 of the year for which 
 such return is made, belonging to the Territory of Hawaii and 
 in the use, custody or possession for the time being of such 
 County or any of the officers thereof, and containing further op- 
 posite each item a statement of the full cash value of the proper- 
 ty therein named according to the best knowledge, information 
 and belief of the officer making such return. 
 
 Section 3. It shall be the duty of each Tax Assessor to ex- 
 amine each return or inventory so filed as aforesaid, to add 
 thereto all, if any, items of property (with a statement of their 
 full cash value) omitted therefrom and which under the provi- 
 sions of the preceding sections or either of them shoiild have 
 been included therein, to make such corrections and alterations 
 in the valuations as returned as aforesaid as in his judgment 
 iiiaj' be required by truth and accuracy, to enter in one or more 
 books to be kept for the purpose and to be available at all times 
 for inspection by any taxpayer, all of the property and valua- 
 tions named in such inventories, as so added to, revised and cor- 
 rected as aforesaid and classified for convenience and facility 
 of reference. 
 
 Section 4-. Any officer, member of a Board of public charact- 
 er, assessor or other person who shall fail to perform any of the 
 diities imposed upon hira by this Act, shall be deemed guilty of 
 a misdemeanor and shall be punished by a fine not exceeding 
 Five Hundred Dollars or by imprisonment for not exceeding 
 six months. Jurisdiction is hereby conferred upon each of the 
 District ^lagistrates to hear and determine all cases of alleged 
 \'i(ilations of any -if the provisions of this Act committed •with- 
 in the Judicial Circuits within which the District for which 
 ^■ncli Magistrate was a])pointed is situate. 
 
 SectioTi .">. This Act shall take effect from and after the date 
 of its approval. 
 
77 
 EXHIBIT II. 
 
 An Act 
 Relating to the Taxation ok Insurance Companies^ 
 Amending Section 26"21 of thk Kevised Laws of Hawaii. 
 Be it Enacted hi/ the Lefjislafiiie of the Territory of Hawaii : 
 
 Section 1. Section 2621 of the Revised Laws of Hawaii as 
 amended by Act 77 of the Session Laws -of 1905, is hereby 
 amended so as to read as follows : 
 
 "Section 2621. Taxes; penalty. All insurance companies 
 or corporations doing business in this Territory must file with 
 the Commissioner annually, on or before the first day of June, 
 in each year hereafter, a statement under oath, setting forth 
 the amount of gross premiums received by said companies or 
 corporations during the year ending December 31, next preced- 
 ing, from all risks located in, and all business done, within this 
 Territory. All such insurance companies or corporations, ex- 
 cept life insurance companies, shall pay to the Treasurer 
 through the Insurance Commissioner a tax of two per cent, on 
 the gross premiumrs received from all risks located in, and from 
 all business done within this Territory during the year ending 
 on the preceding 31st day of December, less return premiums, 
 re-insurance in companies or corporations authorized to do busi- 
 ness in this Territory and losses actually paid to policy holders ; 
 and all life insurance companies shall ])ay t<:i the Treasurer 
 through the Insurance Commissioner a tax of two per cent, on 
 the gross premiums received from all business done within this 
 Territory during the year ending on the preceding 31st day of 
 December less return premiums, re-insurance in companies or 
 corporations authorized to do business in this Territory, death 
 claims and ]jayments made to policy holders, which taxes when 
 paid shall be in settlement of all demands of any taxes or 
 licenses or fees of every character imjjosed by the laws of the 
 Territory, excepting property taxes, and the fees set forth in 
 Section 2620, for conducting said business of insurance in said 
 Territory. Said taxes shall be due and i^ayable on the fli'st day 
 of July succeeding the filing of the statement provided for in 
 
78 
 
 tliis chapter. Any organization failing or refusing to render 
 sucL statement and to pay tlie required taxes above stated for 
 move tlian tliirty days after tlie time so specified, shall be liable 
 to a penalty of $25.<J() for each day of delinquency, and the 
 taxes may be collected by distraint, and the penalty recovered 
 by an action to be instituted by the Commissioner in the name 
 of the Territory, in any court of competent jurisdiction, and 
 the Commissioner shall revoke and annul the certificate of auth- 
 ority of such delinquent organization until such taxes and fine, 
 should any be imposed, are fully paid." 
 
 Section i. This Act shall take effect from and after the date 
 of its approval. 
 
 EXHIBIT I. 
 
 I'he Tax Commission is instructed to "thoroughly examine 
 and investigate the tax laws of this Territory, and to consider 
 their legal operation and effect, the manner of their enforce- 
 ment, and general adaptability with respect to existing condi- 
 tions, and to consider ways and means for revision and improve- 
 ment of said laws as they shall deem necessary or advisable." 
 
 The Commission solicits your assistance in their work and 
 I'equests you, if such be your pleasure, at your earlj' convenience 
 to address them in writing, setting forth your views: 
 
 1. As to any change which might be made to the common 
 advantage in the present laws of Hawaii concerning taxation or 
 m the administration or enforcement of such laws. 
 
 ■1. Your reasons wdry such change should be made. 
 
 ;3. An^' improvement in the tax laws M'hich might be regard- 
 e<l as more than a change of present laws, with such suggestions 
 framed appropriately as additions to or substitutes for the pre- 
 sent laws. 
 
 Vours faithfully, 
 
 ALBEET F. JUDD, 
 iSccretavy, Tax Commission of Hawaii. 
 
 To jMerchants Association of Honolulu, 
 Honolulu, T. H. 
 
79 
 
 11, -r. . ^ February 1st, 1908. 
 
 ME. A. F. JUUD, 
 
 Secretary, Tax Coimiiission of IJawaii, 
 Honolulu, T. H. 
 
 Dear Sir : — I herewith beg to enclose a copy of report sub- 
 mitted by the Trade and Finance Committee of the Merchants' 
 Association of lionolulu, on the subject of amendments to the 
 present tax law. 
 
 This report is in answer to your request, which was made of 
 the Association some considerable time ago. We trust you will 
 pardon the delay in replying to same, and hope that the sugges- 
 tions made in the report may prove of assistance to your Com- 
 mission. 
 
 "^'ours respectfully, 
 
 EDW. H. PAPJS, 
 Secretary, ^Lerchants' Association of Honolulu. 
 
 Honolulu, T. H., January 16th, 1908. 
 
 GEORGE W. SMITH, ESQE., 
 
 President ]\Iei'chants' Association, 
 Honolulu. 
 
 Dear Sir: — Your Committee on Trade and Finance, to 
 whom was referred a communication from Mr. A. F. Judd, Sec- 
 retary of the Tax (Commission of Hawaii, in which he solicits 
 the assistance of the Association in their work, beg leaves to re- 
 port as follows : 
 
 We find that on January 25th, 1905, an able report was sub- 
 mitted to our Association dealing with proposed amendments 
 to the law providing for a Tax on real and personal property. 
 
 This report was submitted by two of our most able and best 
 qualified members, Mr. James Wakefield and Mr. H. P. Wich- 
 nian and appears to cover the requirements fully. 
 
 We would, therefore, recommend — subject to the approval 
 of the Association, that the Secretary be instructed to forward 
 a copy of that report to the Secretary of the Tax Commission. 
 
 We would also add, if it meets the approval of the Associa- 
 tion, that in the opinion of this Committee, the method now in 
 
80 
 
 force of having the assessing and collecting of Taxes in the 
 hands of one man is wrong, and wonld suggest the following : 
 that a coimnittee consisting of three able independent men (not 
 Tax Assessors from the other Islands) be appointed in each 
 County, to act as a Board of Equalization and Appraisement, 
 whose duty it shall be to make fair and equitable assessments 
 in their respective jurisdictions, and whose appraisements shall 
 remain in force for at least three full years, and the work of 
 tlie Tax Ofhee as now constituted be changed to that of the col- 
 lecting of taxes only. 
 
 The report reads as follows: 
 
 Honolulu, January 25th, 1905. 
 
 MR. GEORGE W. SMITH, 
 
 President, Merchants' Association. 
 
 Dear Sir : — The committee appointed to deal with the sug- . 
 gested amendments to the present law, providing for a tax on 
 Real and Personal Property, beg to report as follows : 
 
 1. Real Property. Except as herein provided, all real prop- 
 erty within the Territory of Hawaii shall be subject to a tax of 
 1 % on the cash value of same. 
 
 2. Definition of Cash Value. Cash value for real estate 
 shall be determined by actual sales of property, of like value, 
 made during the previous 12 months, within the vicinity of 
 property assessed, or by sales of property of a similar character. 
 
 3. Definition of Real. Property. The term real property 
 fo.r the purposes of this act shall mean and include all lands 
 and town lots and house lots, with buildings, structures, fences, 
 Avharves, improvements and other things erected on or affixed 
 to the same. 
 
 4. Personal Property. The value of stocks of merchandise, 
 furniture, fixtures, and imjilements of trade and profession, for 
 taxation, shall be the inventory value, less a discount of 20%. 
 
 5. The inventory of stock must be taken in detail in Eng- 
 lish figures and language, and miist accord in total value and 
 total amount with the total value and total amount of stock of 
 merchandise, fixtures, furniture, and implements of trade or 
 profession, shown as assets in the merchandise and trading 
 books of the business. 
 
81 
 
 6. The Tax Assessor or his deputy shall at all reasonable 
 times have access to the books of any partnership, firm, corpora- 
 tion or individual trading in the Territory of Hawaii : f aikire 
 on the part of any partnership, firm, corporation or individual 
 to grant to the Assessor or his deputy fiiU access to said books, 
 shall render such partnership, firm, corporation or individual 
 liable to a penalty of not less than $100.00 and not exceeding 
 $500.00. 
 
 7. Inventory of stock for the purpose of taxation shall be 
 made each year. All partnerships, firms, corporations or indi- 
 viduals trading in the Territory of tiawaii shall file with the 
 Assessor of the Territory, written notice of the date they pro- 
 pose taking stock, and tax returns for same shall be made with- 
 in a period of thirty days after taking stock. Failure on the 
 part of any partnership, firm, corporation or individual to take 
 a detailed inventory of stock each year shall render such part- 
 
 ■nership, firm, corporation or individual liable to a penalty of 
 not less than $100.00 and not exceeding $500.00. 
 
 8. Any partnership, firm, corporation or individiial, trading 
 in the Territory of Hawaii, who shall be found to have under- 
 valued their stocks of merchandise, fixtures, furniture and im- 
 plements of trade or profession, for the purpose of taxation, or 
 shall be found to have made a false or untrue inventory of stock, 
 for the purpose of evading taxation, shall forfeit all rights to 
 the discount allowed on stocks of merchandise, fixtures, furni- 
 ture and implements of trade or profession, as provided in arti- 
 cle 4 : and after the value of said stock has been adjusted, 50% 
 of the total value shall be added thereto and the tax of 1 % pay- 
 able on the whole. 
 
 9. Definition of Personal Property. The term "Personal 
 Property," for the purpose of this act, shall mean and include 
 all household furniture, effects, jewelry, watches, goods, chattels, 
 wares and merchandise, machinery, ships or vessels, whether at 
 home or abroad, all moneys in hand, leasehold and chattel 
 interest in land and real property, franchises, patents, contracts, 
 growing crops, public stocks and bonds not exempted by law 
 from taxation, and all animals not herein specifically taxed. 
 
 10. Partnerships, firms, corporations or individuals selling 
 pierchandise for profit in the Territory of Hawaii, or profes- 
 sional men of all professions, carrying no stocks of merchandise, 
 or carrying stocks of merchandise less in value than one-fourth 
 
82 . 
 
 of their total sales or earnings, shall be taxed one-half of one 
 per cent on their total annnal sales or earnings, and the books 
 of such firms, cm-porations, ijartnerships or individuals, shall at 
 reasonable times be accessible to the Tax Assessor or his deputy 
 for examination. Failure to grant the Assessor or his deputy 
 full access to the books of the partnership, firm, corporation or 
 individual shall render same liable to a penalty of not less than 
 $100.00 and not exceeding $500.00. 
 
 We would further recommend that section S21 to section 837 
 inclusive of the present tax law be incorporated in above. 
 
 Respectfully submitted, 
 
 E. A. MelXERXY, C'hairman, 
 W. T. LUCAS, 
 E. 11. PARIS. 
 
 EXHIBIT J. 
 
 Cost of Assessixg axd Collecting All Taxes Othek 
 Than License Fees. 
 
 Percentage 
 Taxes Actual of Amt 
 
 Fiscal Yr, Collected. Amount Paid. Collected. 
 
 1!»00-1!»01 $1,215,325.91 $54,996.06 4.52 
 
 1901-1902 1,658,107.09 63,500.33 3.81 
 
 1902-1903 1,651,023.12 70,194.45 4.25 
 
 1903-1904 1,I)S1, 190.49 71,362.16 4.24 
 
 1904-1905 1,626,075.97 59,665.71 3.66 
 
 1905-1906 « 2,587,290.23 70,350.92 2.83 
 
 1906-1907 1,773,833.44 66',7n.41 3.84 
 
 " For purposes of comparison, $1,922,290.23 should be used 
 instead of $2,587,290.23. During the year ending June 30, 
 1 906, on account of the change in the time of collecting taxes, 
 $6()5,000 was collected which otherwise would not have been 
 collected during tlip 12 months. 
 
83 
 
 EXHIBIT K. 
 
 Statement of Taxes Collected by Divisions foe the 
 Yeabh 1901-1907. 
 
 
 FIKST DIVISION, 
 
 OAHU. 
 
 
 Year. 
 
 *General. 
 
 Income. 
 
 Road. 
 
 Total. 
 
 1901. . 
 
 .$623,832.96 
 
 $255,048.55 
 
 $48,960.50 
 
 $ 922,842.01 
 
 1902. . 
 
 . 582,996.19 
 
 171,148.41 
 
 39,096.00 
 
 893,240.60 
 
 1903. . 
 
 . 717,858.80 
 
 163,335.89 
 
 40,203.00 
 
 921,397.69 
 
 1904.. 
 
 . 728,299.32 
 
 138,319.99 
 
 41,181.00 
 
 907,800.31 
 
 1905 . . 
 
 . 878,000.38 
 
 303,399.04 
 
 45,258.00 
 
 1,126,658.32 
 
 1906. . 
 
 . 741,390.63 
 
 122,832.14 
 
 57,790.00 
 
 922,012.77 
 
 1907. . 
 
 . 721,607.87 
 
 182,919.91 
 
 52,547.00 
 
 957,074.78 
 
 
 SECOND DIVISION 
 
 , MAUI. 
 
 
 1901.. 
 
 . 166,781.45 
 
 4,134.36 
 
 11,248.00 
 
 182,263.81 
 
 1902.. 
 
 . 158,676.61 
 
 3,968.74 
 
 12,221.00 
 
 174,926.35 
 
 1 903 . . 
 
 . 174,127.30 
 
 4,027.98 
 
 15,958.00 
 
 194,127.30 
 
 1904.. 
 
 . 175,050.77 
 
 3,273.22 
 
 17,140.00 
 
 195,463.99 
 
 1905.. 
 
 . 226,632.44 
 
 4,737.40 
 
 17,154.00 
 
 248,523.84 
 
 1906. . 
 
 . 230,098.38 
 
 5,807.17 
 
 18,173.10 
 
 254,078.65 
 
 1907.. 
 
 . 235,863.28 
 
 25,714.00 
 
 18,505.50 
 
 280,082.78 
 
 
 THIKD DIVISION, 
 
 HAWAII. 
 
 
 1901. . 
 
 . 317,702.42 
 
 11,255.98 
 
 44,173.00 
 
 373,131.40 
 
 1902.. 
 
 . 312,120.48 
 
 11,248.02 
 
 40,122.00 
 
 363,526.50 
 
 1903.. 
 
 . 336,214.37 
 
 13,613.35 
 
 41,388.00 
 
 391,215.72 
 
 1904.. 
 
 . 303,589.50 
 
 8,958.98 
 
 39,254.00 
 
 351,802.48 
 
 1905. . 
 
 . 319,603.60 
 
 11,542.05 
 
 35,486.00 
 
 355,098.60 
 
 1906.. 
 
 . 308,642.59 
 
 6,150.97 
 
 35,808.00 
 
 350,601.56 
 
 1907.. 
 
 . 298,480.73 
 
 11,585.27 
 
 35,728.90 
 
 345,794.90 
 
 * This includes not, license fees, but all taxes, penalties and 
 interest other than income and road taxes. 
 
84 
 
 FOUETPI DIVISION, KAUAI. 
 
 1901. 
 1902. 
 
 1 903 . 
 1904. 
 1905. 
 1906. 
 3 907 
 
 154,285.05 
 149,404.57 
 146,150.53 
 137,429.94 
 173,637.93 
 163,568.57 
 175,988.34 
 
 9,304.62 
 6,104.74 
 6,519.94 
 5,234.12 
 6,804.16 
 11,965.52 
 7,507.04 
 
 17,844.00 
 18,257.00 
 19,965.00 
 19,737.00 
 18,928.00 
 19,129.60 
 19,806.90 
 
 181,434.68 
 173,766.31 
 172,635.47 
 162,401.06 
 199,370.59 
 194,663.69 
 203,303.08 
 
 Statement of iNHERiTANe'i-: Tax 
 CAi. Yeae Exdimg 
 
 June 30, 1905 
 
 Jmie 30, 1906 
 
 Jniie 30, 10()7 
 
 Collections for the ris- 
 
 ^6,271.71 
 5,879.69 
 8,789.74 
 
 EXHIBIT L. 
 
 License Fees. 
 co^[PARATIVE statement of receipts under the following 
 
 ACfor.XTS FOR THE YEAR ENDING JUNE 30, 1907, AND 
 FOR THE 11 MONTHS ENDING MAY 31, 1908. 
 
 Year Ending 
 June 30, '07. 
 
 1 'ar license tax $ 245.00 
 
 Social Club license tax 213.28 
 
 General licenses 59,019.43 
 
 Liquor licenses 97,460.97 
 
 5th class liquor seals 5,173.80 
 
 Revenue stamps 29,858.50 
 
 11 Months 
 Ending 
 May 31,'08. 
 
 $ 470.00 
 
 1,200.00 
 113,951.73* 
 90,366.72 
 
 20,766.00 
 
 $191,970.98 $226,754.47 
 
 '•"Collectpd under law of 1907 $ 52,020.42 
 
 Collected under old law 61,931.33 
 
 $113,951.75 
 
 ^License law 1907 abolished liquor seals. 
 
 Treasurer's Office, T. LI., 
 
 TTnnolulu, June 15, 1908. 
 
85 
 EXPIIBIT M. 
 
 COMPABATIVE StATKMENT OF THE DiSBUKSEMENTS OF THE 
 
 Teekitoky of Hawaii for the Fiscal Years 
 1905-6 AND 1906-7. 
 
 1905-6. 1906-Y. 
 
 Department of Public AYorks 
 
 Salaries $ 45,083.59 $ 44,050.40 
 
 Expenses 31,285.01 43,T14.00 
 
 Roads and Bridges 1,972.17 42.00 
 
 Add. and Noav Public Works 29,687.15 26,652.64 
 
 Subsidy to Wireless Tel. ... 2,950.00 
 
 Agriculture and Forestry 
 
 Salaries " 12,400.00 12,498.21 
 
 Expenses 16,668.53 23,364.49 
 
 Attorney General's Dept. 
 
 Atty. General Salaries 14,084.03 14,713.43 
 
 High Sheriff Salaries 45,128.64 44,808.59 
 
 , Atty. Gen. Expenses 8,393.80 5,975.68 
 
 High Sheriff Expenses 47,116.23 46,393.56 
 
 Auditing Department 
 
 Salaries 1 1,281.14 11,001.11 
 
 Expenses 1,888.65 1,686.05 
 
 Printing Tax Books 1,637.57 760.65 
 
 Bureau of Conveyance 
 
 Salaries 8,878.39 9,300.00 
 
 Expenses . . .- 1,132.90 1,857.10 
 
 Land Registration (^ourt 
 
 Salaries 3,000.00 3,000.00 
 
 Expenses 2,546.50 2,099.50 
 
 Permanent Settlements 
 
 Salaries 8,500.00 8,494.45 
 
 Commission Public Lands 
 
 Salaries 10,505.00 10,.-.20.00 
 
 Expenses 4,232.S1 6,368.67 
 
 Public Grounds 
 
 Salaries 6,540.00 .6,540.00 
 
w 
 
 Survey Departiiifiit 1905-6. 1906-7. 
 
 Salaries 9,300.00 9,300.00 
 
 Expenses 13,549.82 14,904.97 
 
 Secretary of the Territory 
 
 Salaries 4,230.00 4,492.68 
 
 Court Expenses 250.00 1,038.24 
 
 Immigration 300.00 299.16 
 
 Elections 1,348.24 9,095.79 
 
 Entertainment U. S. Senators 
 
 and Representatives 12,525.55 
 
 Archives 910.42 889.58 
 
 Expenses 1,677.60 4,504.94 
 
 l^epartment of Pub. Instruction 
 
 Salaries 294,229.30 303,682.35 
 
 Expenses 67,229.69 46,250.7!) 
 
 J udiciary Department 
 
 Salaries 58,498.34 58,236.44 
 
 Expenses 36,482.08 33,115.75 
 
 Treasury Department 
 
 Salaries 11,872.50 11,848.30 
 
 Expenses 3,550.06 2,055.94 
 
 Bonding- Pub. Off 1,461.18 1,306.97 
 
 Interest, Commissions & Ex. . . 118,914.24 223,153.59 
 
 Bureau of Water Works 
 
 Salaries 24,682.00 24,664.00 
 
 Expenses 52,751.74 44,071.37 
 
 Taxes — Oahu 
 
 Salaries and Commissions ... . 25,161.30 27,754.56 
 
 Expenses '. 4,065.29 4,090.23 
 
 Taxes — Maui 
 
 Salaries and Commissions ... . 12,560.37 9,920.92 
 
 Expenses 434.12 619.79 
 
 Taxes — Hawaii 
 
 Salaries and Commissions ... . 18,142.23 13,487.84 
 
 Expenses 753.79 1,303.67 
 
 Taxes — Kauai 
 
 Salaries and (Commissions. . . . 9,777.19 8,222.81 
 
 Expenses 799.06 550.94 
 
87 
 
 1905-6. 1906-7. 
 Board of Health 
 
 Salaries 80,237.29 84,682.50 
 
 Add. to Public Wks 3,707.43 7,605.06 
 
 Expenses 207,553.69 207,793.87 
 
 Expenses of Legislature 
 
 Senate Expenses 14,110.40 8,494.54 
 
 House Expenses 2(i,400.96 19,157.5'J 
 
 Governor 
 
 Expenses 431.14 5,113.68 
 
 Net Expenses of Territory. $1,420,213.58 $1,530,486.89 
 
 Counties ". . 867,461.41 918,510.39 
 
 Roads 695.00 
 
 Improvements Lands 206.50 
 
 Outstanding Warrants .55 
 
 Transfers Land Registration 
 
 to Fund 889.16 
 
 Road Tax to Counties 139,849.00 129,331.00 
 
 Land Sales to Sinking Fund 22,028.15 148,845.00 
 
 Makiki Road Sinking Fund 5.00 
 
 Total Expenditures from Rev- 
 enue $2,449,552.14 $2,728,969.49 
 
 !N"et Deposit with Banks for int. 63,123.75 
 
 I^et Drawn from Banks for int 63,123.75 
 
 Gross Amt. Expenditure $2,512,675.89 $2,665,845.74 
 
i^