Evening star., 1899-05-03
New Jersey Legislation Regarding
Tax on Franchises.
COMPANIES With ENORMOUS CAPITAL
The State Treasury Has Been Greatly
Enriched.
THREATENED COMPETITION

The Industrial commission is making an
investigation into the subject of trusts of
this country, and incidental to that work
has obtained information concerning trusts
corporations and syndicates whose aim
and effect is to limit competition or control
production in any line of industry organ
lied in the state of New jersey.
For years there had been on the statute
books OF New Jersey an act requiring cor
pcrations taking out certificates under the
seal or the state to pay a franchise tax of
one-tenth OF one per cent on their capital
stock, and that rate Of tax applied as well
to those capitalized for large figure as to
those capitalized for smaller one.
In 1884. during the administration of Gov
ernor Albeit, the state decided to try the
experiment of forcing corpora tions to pay
all the current expenses of the state gov
eminent and so avoid the imposition of a
srecihc state tax to pay state expenses
one OF the means was an act that largely
increased the tax on railroad property
visible and intangible. Its twin expedient
was the inauguration of more inviting
poilcy toward the miscellaneous corpora
tlons that are always seeking charters from
some state. With the franchise tax of one
tenth OF one per cent New Jersey offered
no special allurement to them because
franchises could be secured at about the
same rate In many of the other states.
Graduating the Tax.
Governor Albeit was urged, and at first
refused. but afterward consented to try the
experiment Of making the franchise tax
less onerous; and at his suggestion the
legislature modified the general corpora
tlCns tax act so that, as to the generality
OF corporations, the ten per cent franchise
tax became applicable only to those whose
capitalization was less than So 600 900 For
the larger corporations the rate was grad
ed tlll, as to those capitalized at more than
Sa.1Noh. 1t became scarcely nominal-S5o
per nllllon In excess of $5C00COO. The act
perhnls consolidation of corporations and
the issue or common and preferred stock
as agreed upon, and under an omnibus
clause the corporation NAV set ont its MIR.
pose TO DO everything under the sun excent
run bank or build a railroad in New Jer-
sey.
The first effect of this law was IN draw,
troops of corporations of one kind or anoth
ef from all over the country for their fran.
cnise charters. The theory that This note-
pte procession of corporations was due 10
the laXnesS of the state laws or to tho in
duigencc they extended to unsuhstantial on
terprises Is resented by the state officers
VINO insist that 1t Is rather because of tho
llgors OF the law and the faith that the
courts or the state of New Jersey will
strictly enforce them that they seek the
state for their charters-for safety and pro
lection, rather than for fraud or evasion.
Protected Outside the State.
Subsequent acts forbade the pursuit in the
courts OF the state of stockholders with a
view to holding them to d personal liability.
and having thus protected them from an
royance inside the state, the legislature in
lsas proceeded to. protect them by another
act from pursuit outside the state. Tax
satherers and other annoyingly inauisftiye
foIk are cut off by 1t from tracing promoters
ana stockholders to their homes or places
OF business. The act relieves them of the
recesslty OF designating in their certificates
their places of business in other states or
even the location of their main office or the
nome addresses OF their directors 1t re-
quires Of them merely that they shall dcs-
ignate in their papers local habitat-a lit
Tie corner somewhere in the state of New
Jersey, where they can be provided with
DISK room and have some one on hand to
answer for them in case they become in
volved N litigation.