The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1905-05-31
The Franchise Tax.

Tho decision OF the United States
Eupre,nc Court In the franchise Tux
cases from New York is n popular vic
tory. The history Of the case is inter-
csting.
"ISor years, says the New York
Tribune corporate assessments for local
taxation Included In n loose sort of way
the val,,o Of franchises until tho Court
of Appeals, In the Union Trust Com
pa1,y and the Manhattan Railway cas-
reversed tho old rule of treating the
sale OF stock above par as conclusive
evidence of unimpaircd capital, and so
assessing the whole pital minus COM
pany's rcnl estate. This had, of course
included franchise values. In enforcing
that ruling In a subsequent case. Justice
Cullen, Of the Appellate Division of the
Second Department. now chief Judge or
tho Court of Appeals, recognized TINS
in notable opinion and pointed the way
to new 1cgislation taxing tue great
franchise values that were escaping MS
sessment In 1880? the Legislature as tho
result of n popular movement, IN winch
The Tribune took a leading part, passed
an act for tho local taxation, as real
estate, along with tangible property IN
the streets. of franchises to use the
streets. At tho request of the corpora
lions, Governor Roosevelt mt n special
session Eof the Legislature secured a.
modified bill providing for the valuation
OF franchises by the State Tax Corpora
ton. Then the corporations made this
state, instead OF local assessment, one
OF the chief grounds for attacking the
constitutonality of the measure.
Justice IIerrick. of Albany, appointed
Robert Earl cx-chief Judge of the Court
of Appeals referee to report on the
validity of tho tax law. lie upheld 1t.
with the minor concession that the same
proportion of assessment, to actual value
must he followed IN dealing with fran
chses as with lands and houses. Justice
Herrlck confirmed his report. but the
Appellate Division in the Third Depart
ment, in January, 1903, reversed It by
a vote Of three to two, mainly on the
ground that the assessment by n State
board violated the home rule provisions
of the Constitution. In the following
May, the Court OF Appeals unanimously
found tho other way, holding that the
assessment of franchises was new
function. which wa 8 never lawfully exer-
cised by local officials, and hence could
he reversed wherever the Legislature
directed. 1t also clearly sustained the
right to tax franchise values, and to
define them as part of the real estate
to which they were nseparably attached.
From this decision the corporations have
ever since been hoping, rather AGAINST
hope. for relief from the United States
Supreme Court"
< We arc glad that tho New York court
was sustained for in our opinion this pa
per is uncompromislngly opposed to double
taxation, and we arc opposed to taxing
shadows. We do not believe in taxing
a piece of6paper which is merely the
evidence of ownership, hut We believe
in taxing all actual property Of atever
character, wherever 1t may be found,
once but only once. A franchise is an.
intangible thing. but 1t Is property. 1t
4 is privilege for street car company,
for example, to operate It's lines upon
the streets of n city. Such line as
everybody knows, is usually worth far
more than the cost OF track and equip
lment. 1t has value of position which
is to be determined by the earning ca
pacty Of the road. 1t is very much in
the nature Of an income tax, than which
no tax is more reasonable or less bur
densome.