New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-09-22


State in connection with the Tax laws. without,
however, discussing the amendments to the cor
poration tax laws. To go into this subject IN
detail would mean the writing Of an exceedingly
technical legal paper on taxation, and as my
object Is to explain to laymen something OF the
legislative work under Governor Odell. and not
to write legal essay. I shall only outline the
subject I refer to
Generally speaking, corporations suoJecl 10
taxation pay both State taxes and local taxes
although some pay only State taxes. These taxes
for domestic corporations. that is those organ
ICED under our State laws. are: A State tax at
the time Of their organization based upon the
amount of the authorized capital, annual
State tax, based upon the earnings of certain
corporations, assessed upon the surplus OF
others, etc, commonly. but really enormously.
called franchise tax, for 1t is license tax, and
not strictly speaking, tax upon the franchises.
and annual tax to the county or municipality
in which they have real or personal property
For foreign corporations. that is. corporations
organized under laws other than those OF
New York there is a State tax for the privilege
of doing business in this State, annual State
tax like that of domestic corporations and the
local taxes. again like those on our own corpora
tons The exceptions and variations in the ap-
plcations of these provisions of law are FAR too
numerous to be included in as brief statement
this must necessarily be.
The tax imposed upon the organization Of
company u.s. of course the first tax encountered
by persons wishing to form corporation 1t
produces fairly large income This tax was
before 1901 one-eighth of 1 per cent the
corporations capital. 1t by Chapter AS Of
the Laws of 1901 reduced to one-twentieth Of
1 per cent The incorporation tax collected in
1899 was S474 667 65 (of which one-third
was paid by three corporatons); in 1900. 1885,
O91 %. and in 1901. S295091 %. and 1t is ex-
pected to reach 100000 this year. AS the rate
Of the tax in 1900 was two and half times the
tax Of 1901 it would seem that the number Of
interpretations had largely increased. and such
is undoubtedly the fact. This increase was prob
ably not wholly due to the change Of the law.
but was without doubt largely caused by II. The
license tax on foreign corporations left at
one-eighth of per cent OF the capital employed
in the State (Chapter sos Laws of 19O1). This
tax is the tax which foreign corporations pay for
the privilege of doing business in New-York
State 1t is two and one-half times the tax on
domestic corporations. and Intentionally
changed. because the legislature hoped by
this to encourage the formation of corporations
Under our laws
Not long after we had amended this part of |
the tax law. the Northern Securities Company
was organized, but not in this State and there |
was naturally some disappointment over the |
failure OF our State to secure the incorporation
tax on large a company. The reason for in !
cooperating this company in New-Jersey. and
not IN York, was. of course. not made pub
lie II must however. be expected that business
men will. for some time to come go TO a State
with whose policy they familiar and not to
New-York. with whose new policy OF liberality
they are not we'll acquainted. 1t is confidently
believed in the State Controllers office that a
-o1-N 10
tages of our laws are more generally known.
After a corporation has begun business It be-
comes annually liable to a State tax. based for
certain corporations the dividends declared,
for others on their earnings. and levied as far
as others are concerned on their surplus. The
tax is not heavy, and applies equally to domestic
and foreign corporations. Where the corpora
tons pay less than per cent dividends. the
tax is at a reasonable rate on the appraised
value Of the stock Referring briefly to only
one class OF corporations to which this law
applies and taking for example a corporation
the tax which is estimated upon the amount
Of its dividends. If 1t declares 10 per cent divi
dends on 81 00000 the tax is $4,000 But for
the same corporation. paying no dividends. on
capital valued at 81 100000 the tax would be
only 81 800 The tax is levied only on the cap
ital employed within the State. and produces a
large income Certain corporations. like banks,
savings banks ana insurance companies are
wholly. while others are partly exempt from it:
others again. like railroads. pipe lines, express
companies, etc, subject TO a wholly different
tax The amendments affecting this law relat
ed. however. only to the existing exemption OF
laundrying. manufacturing and mining corpora
tons These companies. which were formerly
wholly exempt If they did business here at all.
must under the recent amendments employ at
least 40 per cent of their capital IN this State
this again being for the purpose of encouraging
corporations to do business in this State. The
laws relating to the tax on banks and relating
trust companies. to be collected by the State are
new, 1 have pointed out In previous article
Finally. the law taxing insurance companies was
somewhat changed. the tax those subject to
a tax being increased
The whole policy OF the amendments of the
law relating to corporation taxes Except the tax
on savings banks and trust companes> to
encourage corporations which organize es-
pecially in New-Jersey and West Virginia-and
their number is very Sreat-to organize here and
do business here Experience alone Will show
how we have succeeded.
At the same time that the tax laws were
amended the constitution amended in
1901 as to prevent the State from granting spe
cal exemptions on real and personal property.
This very excellent provision of law, suggested
by Assemblyman, now Senator, Lewis, OF
Rochester. not only the legislature no little
annoyance but also prevents favoritism IN tax
exemptions With the exception of those insti-
tutions which by existing special acts have had
special favors granted them. all exemptions
must henceforth come under general laws and
If the charters of institutions do not bring them