The sun., 1908-02-10
CHEATING ON THE STOCK TAX
COMPTROLLER GLYNN SAYS THE
BROKERS BEAT THE Law.
He SPECIFICS . Loss OI Nearly Sl4S 900
From Jan. 4 60 Oct. 4, 1907, and
Thinks IT'S Only Small Part Of the To-
taI-sugSests Remedies to Legislature.

tai-suSSests Remedies to Legislature.
ALBANY, Feb. 9.-That the State is being
defrauded OF hundreds Of thousands Of
dollars annually by evasion Of the law
taxing the transfer Of shares OF stock, is
the conclusion Of Comptroller Martin H.
Glynn in a report that he will present to
the Legislature tomorrow night. He
attributes this result to weak features in the
statute itself and to the inadequacy of the
machinery providing for its operation. and
recommends additional legislation to cure
the evils. He says:
The State s not getting all the tax to which
It Is entitled. Reports show that between
January and October 1. 1907. the New York
stock Exchange and the Consolidated Stock
FhchaDge sold IeI 600 223 shares of stock
OF which 3s.9S2 O6S shares consist ed Of Read
ing and Pennsylvania stock OF the par value
Of $50 and the par value Of all the rest of
the stock was slO0. The State was entitled
10 receive on these sales under this law the
sum Of SS.l3l. .soI.3i. and the receipts for the
same period from the entire State. including
corporations, curb brokers and bucket shops.
only amounted to s., ,2S0, 1871, which Is
Slf2. 1915 less than the total tax on The sales
made By the two exchanges alone. From
rhe reports Of our inspectors this department
is convinced that these figures represent but
small fraction OF the loss TO the state The
system OF balancing" and paying on differ
"hces in vogue among brokers deprives
III" state of a vast revenue due Il uNd.r
.irCt Interpretation of the law.
u Is interesting to note that the Excise
Department, whose revenues to the state
are less than double this -n gle bureau OF the
tonprrOllCr's Department, is allowed sixty
special agents and a nunIber of special de-
LNf ~ hnlT Ia. h.. -,
lquOT TAX Law. think this comparison il all
that Is needed to emphasize he absurdity of
enforcing the stock transfer lax law with siN
inspectors, " would take six men at least
~,N years TO examine the 81, ,OOO TO N, ,OUu cor
porsil0nS In this state which should use
stamps In the transfer Of stock to say not hing
81 the brokers offices. IN Inspector was
Put to work Oh these corporal ions for n few
DAYS and he discovered a single company
which had transferred 20 OOO shares OF stock
"n which no tax had been paid The officers
at the corporation pleaded that they sup
nosed ihe transfer tax affected only brokers'
Our inspector compelled them To buy and
ark $500 worth Of stamps ia their rriicatc
book in hts presence. Ihis il a sample Of
nat could be done with "A sufficient corps Of
u-pa,tors.
dmptronr CIynn recommends that the
law bc amended so a, TO re lyirn every
PERSON or cOrpuiatiOn making a -aic or
transfer of stock 10 fle monthly q sworn
fHr'ement with the Comptroller slONing
~" number of stamps pIrchased rsed or
So'd, and n so'd 10 whom and the amoInt
remaining unused. H. alsO urges tho
enactment Of another ameEdmcuj maNiag
II 1n'awful for Sny corporation or any uf
u agents 10 scoSp; anv htUGx fuT Transfer
.Hlcs' the certificate hears the rrlJ ired
sihmps. 1ad reQliring the corporation 70
"le the certificate in ils Office SO ,hai the
rame NAV be- inspected by the torTt-u'lr.'.
inspectors. \ ssV ere penalty ror io'..;ipn
o' either proposed prov ision IL rsCaw.
Inended. The report continues
The manufacture and care Of stoc,; transfer
tax stamps presented IA serioIs pro ZEN
when the present incumbent or the Comp-
troller's Department assumed the duties
oi his ONCE ~ Fmps OF ne value of more than
seven millions OF dollars had been in the sole
custody Of a clerk and the process OF printing
had been attended by careless and loo-,
methods and the absence oi snfcgulriS
necessary TO protect the State. There had
been lack of proper prPCaution I'm handling
this valuable properly. aud stamps Of q face
value OF over ~ iOO,nOO we're reported A.
having been destroyed without the e'prespncc
81 atte@ting witnesses or according 10 the
ordinary Tutes that govern the method OF
destruction Of evidences ur value
Paper used in the manufacture OF ,tamos
hsd been rereived in bulk and had been de-
livered In that condition 10 the printer. re-
manning about his establishment in open cases,
surrounded by the dangers of lheit OF fire.
'Fhr plates from which the stamps were
printed we're also in the possession OF the
rTnter. While the actual process OF printing
was IN progress one clerk had charge Of the
tlates. paper and ether mat erials used, with
rC supervision whatever on the part of any
other person. The possibilities under these
conditions are obvious.
The protection Of completed and salabe
stamps was wholly Inadequate While they
we're placed in a safe deposit vault they we're
10 the sole charge Of the chief clerk of the
stock transfer tsN bureau. He had access
70 them at all times. There was no double
key OF combination system 10 safeguard tho
millions OF dollars Of property almost a ne
gotiable as currency. The single clerk had
key OF entry 10 the building OF the safe de-
poeit company and the combination Of the
vault in which the stamps were kept. and
thus had direct access 20 the stamps at any
hour Of the day OF night.
Although the books OF the stock transfer
tax bureau balanced and all the stamps
printed were accounted for as sold or on I
hand or destroyed, yet several sheets Of
stamps of a face value OF 81 312 were found
in the month OF February, 1907 IN an old
desk in the workshop of the contractor in
which ell the stamps had been printed
These conditions made H. necessary ~
establish an entirely new system. which H.
il believed will protect the State in the print
ing OF stamps from the time Of the manu-
faeturs OF the paper until they are offered
for sale to the public Under this system an
entirely new issue Of stamps on new paper
and from new plates IL being Manufactured.
one man power has been eliminated and re-
sponsibility is 80 distributed as 20 make loss
70 the state an impOssibiity in the care and
printing OF the stamps.
The conpleted stamps are kept In safe
deposit vault entry 10 which can he had only
By the use Of three keys, each Of which is
held BY an individual. two OF whom are rep
resentatives Of the Comptroller and the third
OI the safe deposit company.