The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-05-01
The New York Franchise Tax.

Our portentous old friend. Vested In
terests,'' is having his dignity sorely. ruff
fed these days. The United States circuit
court of appeals handled him very roughly
in the Northern Securities case when it
laid down the startling doctrine that
illegal combina ton is not privileged to
continue it's existence because 1t was con-
summated before an adverse suit was be-
gun. The New York court Of appeals
came along the other day and gave the
old gentleman still another blow.
This court has upheld the constitutional
ity and validity of the Roosevelt law tax
ing the franchises of public service cor
porations. The companies that are af-
fected by the law have fought it for sew
eral years, and are now talking of appeal
ing to the supreme court Of the United
States; but 1t is evident that they will
have to submit in the end to taxation of
their franchises. One Of the grounds on
which the companies opposed the law was
that it placed the duty Of assessing the
franchises in the hands of the state in
stead Of the local political divisions. The
law was so drawn, by the way, at the
express request of the corporation who
feared that justice would not be done
them by local assessors. But that fact
did not feaze them at all when it came
to evading the law They promptly made
1t an excuse for resisting the law.
Still another corporation contention was
a vested interest had been created, and
they could not Justly be taxed now
Another argument Of the companies was
that, as no provision was made for tax
Ing franchises in their charters, 1t must
be assumed that it was not the intention
Of the state to tax them.
). The answer to this last argument was
[ that neither was taxation Of franchises
forbidden in the charters, and that, as
all property is subject to taxation, SC
X valuable property as a franchise could
not be expected to escape its share.
Opponents of franchise taxation derived
much satisfaction from the decision of a
lower court. that the law was unconsti-
tutional because it centralized the taxa
ton of franchises instead Of localizins
1t. That court did not attack the prin-
that of tangible property. The court OF
appeals, however, reverses the inferior cour
on this point.
1 1t is estimated that the special franchise
corporations Of New York will now have
to pay the state some So, 900, 600 of take:
that have accumulated while they wer.
fighting a just measure. It is strange tina
these public service corporations that owi
their existence to the public have thu
temerity so often to oppose equitable tax
alton. They do not seem to understand
that every such mistaken action bring
nearer the day Of municipal ownership
The argument against the taxation
OF franchises is that in the en-,
the people have to pay the tax, and tina
1t would be better for the governmen
to regulate public service corporations II
such a way that the cost of the servic
should be reduced to the public wheneve
a certain fixed profit for the compan
would permit. That is an ideal method
but we have not yet found out how t
regulate corporations so effectively a
that. And it is not strictly true that t
increase the taxation Of a public servic
:, corporation is to increase the taxatio
OF the patrons When the company
charges are fixed by law or ordinance
increased taxation for 1t means dirnid