Los Angeles herald., 1907-07-21
FRANCHISES
THE THEME
CITY ASSESSOR MALLARD ON TAX
DoDGING
OUTLINES SYSTEM FOLLOWED IN
FIXING RATES
Gives Succinct Statement of Difficult
ties Encountered and Shows
That He Endeavors to
Be Just to All

cIub Yesterday that 1t was his business 10
stand up for the people ana try MS pest
to put spines into spineless WONDERS 'na
the neople of Los Angeles county not only
elect the board of supervisors put persis.
in electing term after term. lie referreu
TO the solid Three" and then praised
Supervisor Alexander.
Ward said he was not speech maker
though he acknowledged ability to talk
before attorneys who on behalf of corpora
tions try to beat down assessments.
Citv Assessor Walter Mallard, following
his former chief-Mallard has been Ward s
chief deputy-made his first speech yes
terday. Even during his campaign he re-
fused to make an address.
Yet he entertained nearly 100 guests Tor
over an hour with his narrative OF how
corporations work to evade taxes lie salo'
Corporations, Not individuals
"In talking to you about the assessment
of the property of corporations what say
will refer to those corporations only, ana
not to the individuals connected with the
same.
"The attorneys for corporations seem to
think tho most important item in their
assessments is the franchise assessment
"In the case of San Joaquin and Kings
River Canal and Irrigation company VS..
the county of Merced the supreme court
said:
The creation of corporation, the
granting of power to exist and act as
such. is in itself franchise which is
assessable as property, and 1t must be
assessed wherever the corporate en-"
tirety has its domicile or residence,
and this in law is the place where It's
principal place of business is situated.
This franchise is separate and distinct
from other special franchises which the
corporation may acquire and exercise,
and each separate franchise may be
assessed and taxed
"I will call the franchise to be the state
franchise, and the franchise to do, the
local franchise.
'Now. to begin WITH the court has laid
down the rule that in assessing the fran
chises of corporations we must deduct the
tangible property from the market value
of the stock of the corporation and take
the difference as the value of the fran
chise. You will see by this that this diff
ference will be the total assessment on all
the franchises that the corporation may
have.
Where Multiplicity Exists
"For instance, the Edison Electric COM
pany may have twenty franchises.
think in this county 1t has two In each IN
other for an electrical business. You will
see that 1t will be necessary for the as
SCISSOR to pro rata this total difference be-
tween the tangible property and the
market value of the stock, among all these
different franchises.
Some attorneys have laid stress on the
assessment of the franchise to be, or the
! state franchise. There would be no law to
prevent the assessor from allotting SO per
cent of the franchise assessment to the
local and per cent to the state franchise,
which would make very small assess
ment on the franchise to be.
"A member of the city board of equal
ization, in discussing the assessment on
the state franchise, seemed to think that
there might be some equity in reducing
the assessment on the same, but admits
that the assessed value of the local fran
chse is not too high.
I'm the past few days this same coun-
Gilman has voted to city corporations to
appear and show cause why their local
franchises should not be raised in the
same amount that their tangible properly
might be reduced.
.',rhere is no good reason why he should
not also vote to cite corporations to ap-
pear and show cause why their local
franchises should not be raised the total
amount which he would be willing to re-
duce the state franchise.
Will Not Give EN- Away
at has been contended that these as
sessments against corporations will drive
them from the city. This, think, is a
fallacy.
There may be five or six oil companies
which could by resolution of their board
of directors change their principal place
of business to some other locality Wher-
ever they go in the state of California
they will be subject to tax on their
franchise.
"In the last few years the state board of
equalization has shown by their actions
that they intend henceforth to compel all
the assessors of this state to be more
careful in the future in this particular,
and If any assessor fails to make the
assessments at the figure that the state
board thinks just, in their equalization,
will raise the counties to bring their
assessments up to an equal percentage
with the other counties of this state.
Franchise Agitation Everywhere
"At the present time this franchise ques-
ton is being agitated in many states of
the Union.
''If you look back a few years you will
remember the agitation at the time when
Roosevelt was governor of New York. In
the state of Illinois, as well as IN OtnoT
states, the supreme courts have sustained
the system which we use here time and
time again
'In speaking of corporations we might
divide them into three classes, viz public
utility, oil and mining companies and cor
porations doing private commercial bus
mess.
''In the latter class l think there are
very few who have any complaint to make
concerning the amount of tax which they
have to pay on their franchise, and If you
stop to think you will come to the conclu-
sion that it would be impossible for cor
poration to have a very high assessment
on their franchise.
"On the face of 1t it looks as though five
or six oil companies are taxed out of all
proportion to what other industies are
taxed for.
AS to Oil Companies
1--WE will, for instance, take the Western
Union Oil company, the stock of which on
the first Monday in March was worth
So ZOO, 900. can see no reason why these
people should not pay taxes on their prop
erty just the same as any other taxpayer.
Heretofore they have paid on valuation
of about $4,000. Any fair-minded man can
easily see that the tax on $4,000 for prop
erty that is worth 100000 in the market
is not in fair proportion with other In
oil