The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-10-02
SPECIAL FRANCHISE TAX.
THE FORD Law GOES INTO run
OPERATION TO-DAY.

Report, Specifying tho Limits of tho
Tax-I,Ianks to lie Filled Up by Nov. 4.
The Ford Special Franchise Tax law goes
into full opera; ion to-day. The taxes assessed
tbereunder are not payable until late text year.
That was the reason why the la " was made to
take effect on oct | OF this year. Mr.. J. New
tnn Fiaro NJ Albany was designated by Attor-
ney-Gcneral Davies and the state Tax Com
mission some time ago to examine and report
upon the legal and general aspect of the full
operation OF this statute. MIR Fiero reported to
the Attorney General and the Tax mmisson
some weeks ago. and an examination Of his
report has resulted in Its adoption. without
material change by the Attorney General and
the Tax Commission. Mr.. Fisro in his report
outlines the scope OF the law and plan to
cure its effective operation.
Us the result. the State Tax Commission to-
day will mail to all the corporations affected
uy the law a blank form calling for informa-
ton regarding their financial condition and
statistics touching their earning power. The
CORPORATIONS have until Nov. | to submit
rcIorts to the State Tax Commission. Not un-
III then. when they will have the Information
furnished by these reports. will the State Tax
Commission be In n position 20 20 ahead and
definitely assess the value Of special fran
chi,es" upon which assessments will be based
the tax to be levied by tho local assessors
whore the corporate property is situated.
The prevalent erroneous impression that cor
yuratons affected by the new law do not pay
largo amount Of taxes annually is fully demon
strated by the examination OF existing tax
statutes by the Tax Commission and its at
torney in their work OF attempting to assess
the corporations affected by the Ford Special
Fganchis" law. While a large revenue will re-
suit from til" operation Of this law. it will be
less than half the amount suggested by people
who were not familiar with the existing cor
roraton tax laws.
Nomatter how stringent the State Tax Com
mission may be In assessing the value OF n
special franchise tho amount OF tax to be
paid hereunder by a corporation will not tend
In any way to cripple its finances. nor is it eX-
peced that n corporation affected by this law
will have to reduce it's dividends by even one
per eat. in order to meet this added burden.
Necessarily during the first years operation Of
the law the State Tax Commission will have to
depend upon information obtained from the
CORPORATIONS 10 aid IL in fixing the assessable
value Of ~ &c al franchises"
II would require the employment by the
commiss on OF large corps OF expert men to
make personal examination OF the corporate
proreriy taxable under the lazy IN order to
nation upon which to FIX the assessane value
OF the special franchises, IT is evident that
material amen ,lments to the present law will
lie recommended nv the state Tax Commission
t3the next icGts ntnre as result OF the detects
la.li years opel at on OF the ,aw. ,--,.-,-.
In his rePor. to me ne s!s" Tax Commission
should adopt in putting the law into operation.
Mr.: Fiero's essential points are:
The special franchise SUBJECT to taxation
the right. authority or permission to con-
l,ruct. maintain or operate' certain meehan-
l6ovn. upon or through streets. highways or
bubble places and no method e provided Tor
The taxation Of any other franchises: as to all
other corporate franchises the law remains as
before.
stock and the amount OF bonded indebtedness
IRE not to he considered as controlling inctois
corTora,ion. including the franchises. '1 wRere
other sources Of information exist and are
ayyoiane and that suGh aTMe Gang"t be ADOPT
valuation 1t does not follow. however, that
he valuation OF the capitai stock or the valua-
tion OF the bonded Indebtedness cannot be
considered The authorities fully Justify the
several elements that may be used in arriving
at the valuation OF Il corporate franchise.
In arriving at the earning capacity. with a
view ~ determi ming the value OF the corporate
roE sH "t also the bonded ndcbtsdness
9" asc w the value OF the e1tre cor cor
Iorate property since the capacity to earn in
with the capacity to pay q dividend upon the
stock, are elements which must enter into any
method OF ascertaining the value OF the prop
The more important elemeats that enter into
said to have a market value because there is
no other property like it. are-nrst. its earning
pSS az an e9s Il nd se1nd Gs
These must be the controing elements in ar.
rvnS at the ya,naticn OF spssia frsnc ais
IN as far m possible AMI pT tS.
i1srsioro. that q practical and practica:
bic method OF arriving at the entire valuation
the value OF the special franchise" necetsI-
t9tcs the onsIderlng OF the cost OF production
the properly has as !, whol", and as an Gle
ment going to make ~ the corporate
ho W Taa Ssowis apa s sdi
the b1pnSsa aGs tHe ao'4' ado" T"
ing, mud attending facts and circumstance
tanning value as We'll as such facts and cir
cumstancss OF a character which in anyways
do not detract from or depreciate the valuation
i is impossible to give any hard and last
rule for ascertaIning the value !, o. corporate
acter, and only very broad general rules can he
laid down, which must be mod Ned in particu-
stances in each individual instance.
Rea. estate connected with the special Iran
cannot he allowed as an Offset to the assessed
valuation i Is. OF course lutte plain that real
speGial franchise" and. theretCre =, The
deducted from the valuation OF the entire
corporate property Under the terms OF the
statute it is equally clear that the valuation OF
the tangible and personal property OF the cor.
poraton must lie deducted. since only real
estate and tho special franchise" asSessable
hsreal estate is to be taxed under the terms ol
the act.
Still further. it is necessary to deduct the
valuation Of the franchises to make corpora;
ton; that is the business opportunity and
capacity of the corporation which 10 taxed UNI
der the general tax law. and which Is fran.
ehise separate and distinct from that sui Jeci
10 taxation under this act including also the
conduct and good will OF the business. which
are not taxable under the statutes: hence
these various elements are not made taxable
under the amendment within the definition oil
special franchise" In fact all the tangibls
prorerty which does not come within the stat,
ulorY definition OF special franchise" must
30 deducte / from the total valuation.
The value Of special franchise. therefore
ia arrived at by ascertaining the value OF The
enlIC corporate property, taking into con
sideraton all the elements which go Il
make NJ such va uatlon. and deductna
thereirom the value OF tho persona