The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-01-20
GOVERNOR ODELL'S CHANGE OF
BASE ON FRANCHISE TAXA
TON.

little while ago it was currently re-
ported that upon his retirement from the
executive office in New York Governor
Odell would accept position al a salary
of 500, 900 from a trans-contnental rail-
road. This was rather surprising be-
cause Governor Odell had been the leader
in advocacy of just taxation upon the
franchise of quasi-public corporations,
and it was supposed that he was not in
good standing with them. He is an ex-
cellent business man and would succeed
in any great enterprise calling for eXecu-
tive capacity and business talent.
There was general regret and surprise
recent message. At the last session of
the Legislature, Governor Odell was lead
ing the fight for tax on franchises Now
he recommends the abandonment of the
franchise tax. His recommendation, in
view of his former policy, has evoked
much surprise and criticisms, and some
of the Senators, who helped to pass the
franchise act, are up in arms against the
proposed abandonment of policy that
as fair and just. The current issue of
the Outlook has temperate and just criti-
cism of Governor Odells recommenda-
ton as follows:
Apart from his Recommendation of a
costly canal and his argument against it,
the most striking feature of Governor
Odells message is his plan for the aban-
donment of the franchise tax law adopted
under Governor Roosevelts administra
ton. This law, it will be recalled, SIM
ply provided that the value of municipal
franchises should be assessed like real
estate. Governor Odell reports that
some corporations can bear this burden
without serious results following. But
as is we'll known, the continued increase
of street railroad traffic and the demands
for light, water, telephone and other pub
lie utility facilities have perhaps brought
into existence many corporations which
cannot bear the excessive burden which
is now imposed under the present law. In
our view, this IS as bad reasoning as has
often appeared in Governors message.
The franchise tax imposes no burden
upon corporations which merely earn
fair rate of interest on the capital actu-
ally invested. In such eases the fran
chise has given no additional value to
their property, and the tax upon it
amounts to nothing. 1t is only where
the franchise gives to the securities of
cess of the capital invested that the fran
chise tax becomes important. To say
that any corporation cannot afford to
pay taxes upon the surplus value given
to its property by public privilege is
pTepOSterous. The argument, further
more, is made worse by the lines calling
attention to the recent great increase in
the demand of the public for the services
of municipal monopolies. Had there
been a decrease in these demands there
would have been an argument fer tax
reduction, but the increase is an argu-
ment for increased taxation. The Gov
ernor's argument that the franchise tax
will yield less than anticipa ted does not
affect the justice of the law, and only
further weakens the force of his protest
against the burdensomeneSs of the new
law. The Governors argument that the
State, and not the municipality, ought
to receive the tax on the value from
municipal franchises only needs to be
stated to expose its weakness His final
contention, however, that taxes on the
earnings of municipal m1nopolies would
be farer than the tax Oh the value of
their property does demand a word Of
comment. Taxes on earnings cripple cor .
poratiCns not yet paying their running
expenses. and place unjust burdens upon
new enterprises. Taxes on market values
fall but lightly upon corporations max
| ing small profits, and rest chiefly upon
those holding monopoly privileges. Fur
thermore, and finally the assessment Of
market values is the method applied in
the taxation of the property of individ
uals and all who care for equal taxa
ton wish the Same method applied to
the taxation of corporations.
The argument of the Outlook follows
the line of the quotations from Justices
Miller and Brewer recently made in this
paper. Takes upon market values fall
but lightly upon corporations making
| small profits, and rest chiefly upon those
| holding monopoly privileges place
| where they ought to rest