The progressive farmer. [volume] (Winston, N.C.) 1886-1904, 1899-11-21
Living Issues.
TAXATION OF PUBLIC FRAN.
CHISES.

Iohu Ford, of New York, author of the
franchise tax bill. which bears his
name. At the outset Mr.. Ford says
that in order to an intelligent compre
hension OF this law and the questions
uhich it raises one must have a clear
conception of the distinction between
a corporate franchise, which is simply
the right to ex vet and do business as a
corporation, epj Dyed by ell corpora.
tions alike, and the so called public
franchise, such as the right acquired to
construct and operate q railroad in the
public streets which is a species of
valuable property received from the
community. He cites the fact that the
New York Supreme Court clearly recog-
nfz I'D this marked distinction between
the franchises to construct and operate
a railroad on the street, which fran.
ohise is absolute property, independ-
ent of the existence Of the corporation,
and other corporate franchises, such as
those of trading companies, which are
merely to be q corporation aud to do
business"
The distinction is very easily drawn
and yet many people do not see the
difference bstween a corporation
formed tor the purpose Of carrying on
some manufacturing or mercantile
business in a community and a COZ
poration formed to occupy the steeets
Of a city and to do a nor or less ex-
elusive business with the people of a
community. To ILLUSTRATES: II q mum
Der of business men in Richmond
should secure a charter to conducE q
wholesale dry goods business, they
would receive no special franchise.
Tney would simply receive the right to
carry on business in a corporate ca
pacity, a right which any individual
Of firm might secure without any char
ter at all and without paying for the
privilege, except in the way Of a license
tax. But il other men should secure
from the city Of Richmond the exclu-
sive right to operate an electrical rail
way along the streets Of Richmond
with the privilege Of collecting fares
from the people of Richmond, it ia
manifest that they would receive
something from the city which the
mercantile corporation did not receive.
They would get a valuable concession
which would be a property, over and
above and entirely independent OF their
physical properly. In order to make
this very plain, it Is only necessary to
state that the gentlemen who secured
from the city of Richmond the right to
operate an electric line on Broad street
secured a privilege which they might
have sold to some other concern for q
large sum Of money, before ever they
laid a solitary rail. Such a franchise
is an asset, and it il that class Of prop
ersy which the New York law proposes
to tax,
Mr. Ford goes on to say that since
the decision of the Court Of Appeals in
the case of the Union Trust Company,
rendered in 1891, franchises, both pub
lie and corporate, in the State Of New
York have been absolutely exempt
from local assessment, although they
had previously borne some considerable
shar Of the burden Of taxation as per-
sonsl property. He says that the tax
commission Of New York city estimates
that that municipality alone has lost
since this decision upwards Of $780,
coo. 600 in taxes.
Public franchises, he proceeds, are
easements in the street, Of such a char
actor as have been classified as real
property since the dawn Of the COM
mon law. Therefore, the question
naturally rose, Why is not this prop
erty taxed in common with other r. al
estate, even though the Court of APP
peals has held in the Union Trust Com
gany's case that it cannot be taxed as
p~ersonality3 The answer, he says, is
found in the fact that although under
every one of the half dozen or more
definitions of the terms, land" real
estate, " and real property" found in
the various statutes Of New York, pub
lie franchises Of street railroads and
transportation corporations would be
included, they were carefully excluded
from the special definition of those
terms, which was found in the tax law.
They we're real estate, but not for the
purposes of taxation, and so it hap
pened that the most valuable and pro
ductive property in the community,
which cost les owners practically moth
ing, was exempted from taxation, and