New-York tribune., 1901-06-12
FRANCHISE T4TES IN NEW-JFPSFy


New-Jersey 10y a decision of its Supreme
Court has succeeded in establishing subject TO
the consent of the Court of Errors and Appeals
tho principle OF franchise taxation which long
prevailed unquestioned in this State until over
thrown n few years ago by the Court of
Appeals ana since re-established by legislation
/ The New-Jersey court holds as the New-York
Supreme Court has held that the right of way
10 maintain tracks I'm Il public street is prop-
erty right in the nature of real estate II is
permanent and exclusive possession, inseparable
from the ground In which il is an easement and
IL follows that il is just as much taxable as
any other permanent and exclusive occupancy
of real estate
This view is clearly in accord with common
sense and justice. That a street franchise is
property right in the street has been asserted
time and time again by the corporations when
attempts have been made 10 regulate the use of
the rights to their disadvantage or 10 forfeit
franchises which had been obtained by fraud
II was only when. with the great development
of traffic. franchises became exceedingly valu-
able and taxes on them an item To he con
sidered by corporations trying to pay dividends
on watered stocks that the doctrine that the
street easements were not property within any
OF the definitions Of the tax law was promuI
gated and accepted by our Court of Appeals:
and il became necessary 10 amend the defini-
tiOn in accordance with the ruling and make
property for purposes of taxation of what was
property for purposes Of purchase and sale
and property in the sense that it could not be
reclaimed by the public from whom IL had been
taken without compensation.
The corporations enjoyed exemption from
taxation on this property long enough TO
frpp ont Of 4,
right, and they are now making a prolonged
fight 10 preserve their immunity. declaring that
they victims of demagogy and already
heavily taxed 1t has been stated by Colonel
Timothy ). Williams. vicepresident of the
brooklyn Rapid Transit Company, that his cor
poratiOn pays in direct and indirect xes nearly
10 per cent on its gross earnings, and il is
argued that this is ample payment for the use
OF the streets, and more than the boldest advO-
Gates OF taxation Of earnings would demand
Such arguments confuse the issue A large
part of this tax is paid on cars buildings and
other equipment. Another part is paidsfor the
corporate privilege to do business which all
corporations subject 10 whether they use
public property or not. These payments have
nothing 10 do with the street privileges either
as rental for the use of the property or as taxes
upon the value Of the property used Such
"uuiiohdi as are made Tor the street
franchises are not taxes on the property
enjoyed but merely payment for the right TO
enjoy IT, IL instead of using the streets the
company secured right of way through private
lands IL would pay for il. and would not on
that account escape taxation on the land so
held. The fact that the grantor OF the property
right in the street is also the taxing power is
no reason for the application OF any different
rule. but by grace of n lenent legislature such
sum as the company really does pay for the use
of streets is deducted from the special fran
chise taxes levied. such part of that 10 per
cent spoken OF by Colonel Williams as is COM
pensation for street rights will go 70 Offset the
new taxes
Those who think 10 per cent of gross income
an enormous tax bill which cannot be Increased
without monstrous injustice should look at the
tax bills OF individuals. A house that will rent
nj from $1,000 10 81 200 a year In Brooklyn will
be taxed about $500. The tax gatherer takes
not 10 but from is TO 20 per cent of the house
owners gross income. The widow or orphan
| who happens 10 own a bond or mortgage which
Is taxed as personal property pays from 40 to
% per cent OF the gross income from that prop
erty The Brooklyn Rapid Transit Company.
Instead OF suffering hardship. has been exceed
'ngly lucky II IT has paid out only 10 per cent
| OF Its gross income. The house owner and
bondholder paid full value for all their prop.