New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1899-05-24
FRANCHISE RENTS AND TAXES.

Governor Roosevelts desire TO make the taxa
ton of franchises in all respects equitable does
credit TO him. Nobody can read his message
and entertain the least suspicion that he has
any purpose but TO secure exact justice TO all in
terests involved In this tax question. While
firmly convinced Of the propriety Of the levy, he
is anxious to make no discrimination thaSy can
operate TO anybody's injury. If he must take
chances he wisely prefers to let the balance In
cline little to under-taxation rather than give
any corporation just ground to say that 1t is OPP
pressed by heavier taxes than are its neigh
bors. Accordingly he recommends
1t should be provided that from the sum
sessed by the State authorities as the tax which
o corporation must pay because of its local fran
chise there shall be deducted the amount al
ready annually paid by II to the locality for such
franchise In no other way is II possible to tax
these corporations with uniformity and equity.
IT 10 contended by the advocates Of the bill that
in reaching the value Of the franchise under the
new law the amount thus paid away in taxes
must be allowed for and deducted anyhow; but
1t is not certain that this would be done, and In
any event the principle should be definitely
established in the law itself.
This is admirable In spirit, and If the idea Of
equalization can be embodied into law so as to
accomplish the Governors object and nothing
else happy result would be achieved. Just
what form Of assessment and deduction will do
that better than the simple assessment under
the provisions of the Ford bill, which the Gov
crnor fears may not be adequate, Is a matter Of
some interest and Importance. The deduction
proposed assumes that the franchise assess
ment may not take account Of the payments for
them. II 1t does not, then a proportionate de-
duction may be justified by expediency, II not
by the strict logic that refuses to be COMPOUNDED
by the corporation plea that franchise rents are
franchise taxes We say "proportionate reduc-
tion." because the reduction Of the tax itself by
the amount Of the gross rental as proposed
would probably not be just. For example, sup
pose two corporations hold similar franchises
One pays no rental and is worth, say, $4,000
The other would be worth, say, 100000 ex:
cept for the fact that 1t pays rental Of $1,000 q
year. Obviously the two franchises are sub
stantially of equal net value. because the 81 oOC
annual rental is per cent on and 50 practically
offsets the extra $4,000 Of value. Now, II each
franchise was assessed at $50. 000-as we believe
Il would be under the Ford blll-each corporation
would on a tax rate of 20 mills pay 81 900. But
II the Ford bill operated as the Governor fears
the franchises would be valued at $4,000 and
100000 respectively. Then, If the simple de
duction from the tax OF the gross rental Is al
lowed. one corporation would pay $1,000 tal
and the other with franchise Of equal ne
value only $1,000. Proportlonate reduction
however, would lessen the assessment by TIT
capitalization of the rent and leave each OF thu
two companies to pay $1,000, which would b
right, as their properties. after taking account
OF the rent charge, are equally valuable.
All this on the supposition that the Ford bill
does not of itself bring about this equalization
But IL the assessment does, as claimed, MAKE
allowance for rental charges then the deduc
tons proposed will be double deductions, ant
the holders Of free franchises will be discrim
mated against, and the inequality will be al
claring In that direction as the Governor seek
TO prevent 1t from being In the other. On wha
basis is an assessment to be made so as to avoit
having the rental charge affect the result? II
make the deduction tolerable we must secur'
assessments which are themselves unequal
that is place the same value on franchises o.
Ike character, though one pay nothing and tn
athcr large sums into the city treasury. Ap!