The sun. [volume] (New York [N.Y.]) 1833-1916, 1900-01-16
MuddlIng the Taxation Laws.

Win al que respect 10 tne Judges Oh our
State Court Of Appeals, they e%vince, at
| times. a talent for muddling tho interpre-
tation oi the laws relating to taxation In a
way, which, like Capt. CUTTLE's watch, Is
equallcd by few and excelled by none.
In the Union Trust Company case, re-
| ported In Volume i26 New York Reports, the
court very p'operly decided that the good
will OF the company's business, which it
had gained by many years OF honest and
able management, and which gave to it's
capital stock a value In the market far
above the value OF the money and
securities in which its capital was
invested, was not subject to taxation
under the tax laws Of this State. With a
singular lnsensibility. however, tothe mean
ing Of words, the court, in the course OF its
opinion, spoke OF "the franchise Of tho com
pany, which may be- deemed its business
opportunity and capacity" and said that
choice aud conduct Is the chief element OF
the value OF a franchise" Following up
this dictnm, the same court a few years
later, said, that having once decided that
franchises are not taxable, the franchise OF
an elevated railroad company to occupy
and use a public highway is not taxable
also, and it was to remedy the blunder that
tho new Special Franchise Tax law was
enacted last May.
It is perfectly plain that Il franchise
granted TO a corporation by the State, and
which it could not get except 10y such a
grant. is a very different thing from the
reputation and public confidence which IL
wins by good management. The privilege
OF doing business as u corporation and not
as a partnership in which all the partners
are personally liable to an unlimited extent
for debts, Is indeed a franchise, but it can
I've obtained with very little trouble and ex-
pense by anybody who desires il, and,
therefore, has very little %pecuniary value.
When. however, corporation like the Union
Trust Company is once formed, It's bust
ness opportunity and capacity and the
"choice aud conduct Of is affairs, are no
more a franchise than a lawyers or a
doctors reputation is. They are not gifts
TO il from the state; they a'srarnod by the
exertions OF It's officers.
In direct opposition to the principle Of It's
decision in the Union Trust Company case,
the Court Of Appeals subsequently, in the
Wiebusch and HilgerC ompanycase Volume
l54 New York Reports, involving the State
tax on corporate franchises, held that good
will. as part Of the assets OF a corporation,
Is subject to a franchise tax, as well as its
right TO do business as a corporation.
This decision was followed in the case Of
the 4. J. Johnson Company, Volume 159
New York Reports, also arising under the
law fortaxiIg corporate franchises tor State
purposes, the court holding that while
copyrights are not taxable, good will is.
In another tax case recently decided
that Of the Cornell Steamboat Company Of
K~ingston-the Court " Appeals has again
held that, for general town, county or
municipal purposes, good will IL not tax
able, Notwithstanding it has a market
value. because there IL no law on the
statute book or in court decisions making
II 30 taxable. The steamboat company
had purchased the good will Of another
company OF u like character, and had,
therefore, a valuable item Of personal
property, from paying taxes on which it
was exempt. To purchase it, however. 1t
had incurred n debt OF 100000, and this
sl5O,oOo it sought TO have deducted from
its admittedly taxable assets. Here il came
in conflict with the Tax law Of 800. which,
in section II, paragraph 6, explicitly pro-
yides that NO deduction shall be allowed
in the assessment o. personal property by
reason Of the Indebtedness OF the owner
contracted or incurred in the purchase Of
non-tsYablc property or securities owned
by him or held for his benefit" Conse-
qucntly, the deduction Of $780, 900 claimed
by the company was not allowed,
1t thus appears, that, according to the
Court Of Appeals while for one purpose,
good will is not I; liable property, it II, at
present, taxable for another purpose.
What will the courts next decision be?