The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1902-08-12
THE NEW YORK FRANCHISE TAX

law was the best act during Mr.. Roosevelt's
administration as Governor of New York.
The principle of the taxation imposed in
| that act has been carried out in Illinois
and perhaps in other States. and an at
tempt has been made in other States to
| impose that or similar methods OF taxinS
| quasi-public corporations. Upon every
| occasion the railroad and street car cor
rorations have fought the passage Of such
laws and generally procured their defeat.
In New York they forced certain conces-
sions which endangered the constitution
atty of the act. Since its passage in 1899
the act has been in the courts. The State
has won first blood. The Boston Tran
script of Saturday gives an interesting
history of the act and the present status
the General Assembly, for the first time,
this principle of taxation was recognized,
and a small tax was levied. The next
| Legislature will have before it the ques-
ton of a proper franchise tax. In view
of the local interest, therefore, as we'll as
the general interest upon this important
subject, we 0 below the editorial from
the Transcript:
"A decision by q justice of the State
! Supreme Court, confirming the report of
the referee that the franchise tax law Of
New York is constitutional marks an
other step in the litigation to which that
statute, enacted III 1899, has been sub
49, orlo, 40 nxy o1oti ~ & - 4
taxation has ever been attacked With
more vigor and persistence than this
Ford act. All the large corporations in
the city of New York refused to pay
the tax, and the law was contested, with
the assistance of some of the best legal
talent in the State, including ex-senator
! David Il. Hill. Even before the passage
of the act the opposition to it was deter
mined, and if Governor Roosevelt had
not been so heartily in favor of it that
he sent an incisive message to the Legis-
lature in it's closing days it probably
would have been defeated. Then the dis
position of Mr.. Roosevelt to listen to the
reasonable objections Of the corporations
affected was cVinced in his unusual ac-
ton of Immediately calling a special ses-
sion for the purpose of permitting an
important amendment to be made.
"Although this amendment, which gave
the assessment of the franchises to the
State Tax Commission in place of the
| local assessors, was made at the urgent
request of the corporations, which
claimed that local assessment would give
too great opportunity for bleeding them,
it became one of the grounds for the sub
sequent contention that the law was I'M
constitutional. 1t is to be said of this
law that While public-spirited citizens Of
New York regard it as one of the most
creditable events of Mr.. RooseVelts adj
ministration as governor, it was a potent
factor in creating a desire in a powerful
element there to see him hunted on the
Republican national ticket in 1900. With
little question, Senator Plat was entirely
willing to crafty this desire to the eX-
tent of his ability.
The Ford law relates exclusively to
franchises given for the use of streets
and other public places by public service
corporations. It's introduction into the
Legislature was due to the popularity
of the New York general property tax,
by which it was impossible to assess
these franchises as personally. If, in
deed, the courts had permitted that dis
position Of franchises, the law still would
have failed to reach such property for
taxation, because debts may Dc deducted
from the value of personal property, and
the bonded Indebtedness of the corpora
lions concerned was ample for the pur-
pose. Accordingly it was the idea of
Senator Ford, the author of the bill, to
regard these franchises as real estate
and to assess upon them what was de-
nominated & special franchise tax" The
assessment of values was left to the dis
erection Of the tax officials, instead OF
prescribing q definite rule, such as the
| difference between the value of the tan
Sible property and the market value of
stocks or of stocks and bonds, as in Mass
achusetts and Illinois. On this point also
the corporations contendcd that the law
was constitutionally detective.
The decision of the referee was a
sweeping declaration in support of the
act in every feature but one. 1t asserts
that the designation of a State board as
the authority which shall make the
assessments, thereby superSeding the To-
cal assessors in a portion of their natural
functions, is not contrary to other acts
of the Legislature that have been sus-
tanned by the courts. The wisdom of this
provision of the law is, of course, to be
| questioned. The Democratic members
| y III W III oplOScu IL udu al
strong prima-facie case, for, if local as
SCISSORS are competent to give values to
other forms of local real estates, it is
difficult to see why they should be dis
trusted in assessing these special local
franchises. Home rule has it's anger
but it will be by home rule that Ameri-
can municipalities wi. learn to do their
own business honestly and efficiently.
1t was this question of the constitution
atty of assessments by a State board
that gave the referee apparently his
hardest nut to crack. On such matters
as the alleged Impairment of contracts
and the freedom allowed in methods of
determining valuations he seems to have
had no doubts. But he admits that. if
the assessments of real estate in New
York cities is cuStomarily at only seven
ty or eighty per cent. of the true value,
the same percentage should apply to the
franchise valuations. This concession.