New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-07-13

He recommends the passage of Assembly
man Goldberg's bill providing that the State
Board Of Tax Commissioners may equalize
special franchise assessments before certi-
fying them 10 the local authorities and
Senator Harte's bill proposing minimum
tax OF quarters Of a mill on each dol
lar of issued capital stock employed within
the state.
Provision is made for increasing the tax
when dividends higher than 8 per cent are
declared.
The message follows:
July t. 1911.
To the legislature
Special Franchise EQUALIZATION.
The special franchise tax has been
source of litigation ever since its enact
ment. i'm 1899. Many of the points litigated
have now been settled finally. but some
still remain open. one of the veXed ques-
tons has been the right Of those assessed
for special franchises to have these valu.
atoms equalized to the same percentage OF
full value TO which ordinary real estate In
the tax district was assessed by the local
assessors. Although the courts have de-
cided that such equalization must be made
as matter Of right. the law on the sub
Ject remains defective that it is neces-
sary in each case for a writ OF certiorari
To be issued and decided before such
equalization can be entered on the local tax
roll Thousands of such writs are issued
annually, thus putting a wholly unneces-
sary burden upon the courts. upon our
state and local officials the Attorney Gen
erals office and on those who pay these
taxes. Such a condition in our admins
trauve system should not be allowed TO
continue.
The assessment for taxation Of the value
Of special franchise under authority of
the tax law is ma lie by the State Board of
Tax commissioners, and the valuation upon
which this board finally determines is GER
tuned by them 10 the assessors OF the prop
or district. TO be placed by them on the
local tax roll. The courts have held that
the assessment made by the state board
must be regarded under the existing stat
ute as a full valuation. and that neither the
state board nor the local officials have any
statutory authority TO reduce such assess
inent TO a percentage basis. The courts
have also held, however, that the owners
Of such special franchises are entitled to
have such assessment reduced to the same
basis at which other real estate in the dis
ti1ct is assessed by the local officials. We
thus have the curious situation of the state
board being compelled to make an assess
ment which neither II nor the local Of
ficials can correct. but which must he cor
rected before any taxes upon IL can he col
lected. Such correction can only be made
after the local tax rate is fixed, and by
court proceedings, so that not only Is the
collection Of the tax delayed but local
finances are deranSed, because the tax rate
is calculated upon the basis Of an assess
ment roll. part of which the courts after
ward reduce
The Court of Appeals in the case of the
Jamaica Water Simply COMPANY has said
that the Legislature should empower the
State Board of Tax Commissioners to make
an cqu&lized assessment The lower courts
in settling these special franchise cases ac-
cept the equalization table of the state
board. The State Board Of Tax Commits
Sioners in their annual reports have dis
cussed this subject extensively, and have
40
that the board may equaliZe these assess
mentS in the first instance before certi-
lying them 10 the local authorities. Such
a change in the law would greatly simplify
the administration Of this statute. which in
wolves assessments Of more than $500 600 900
annually, remove a useless burden from the
courts and facilitate the local collection Of
taxes upon this class of property.
y bill Is before YOU Assembly nil 1885
introductory 494 by Mr.. Goldberg, which
VIII accomplish these desired ends. 1t
does not affect the rights of persons or
corporations assessed as to their remedies
at law. but viii remove the present neceS-
sitN for most Of this class of litigation.
The provisions Of this bill are in exact con-
formity with one Of the resolutions Of the
Utica tax conference composed OF tax Of
tcials from all parts Of the state. who
have to deal constantly with the vexations
arising from the existing statute.
Franchise Taxes on porations.
Section ls2 Of tie tax law, under which
corporations are taxed for the privilege
OF doing business in corporate capacity,
has been a constant source of litigation
1t is SO complicated and involved that 10
ordinary business man can understand its
provisions, and even the Court of Appeals
has complained that the Legislature seems
TO have tried 10 express a very simple idea
In very complicated language. Yet over
I fort ythousand business corporations are
assessed annually under this statute and
/ are compelled to make reports in regard
a al in h.,s. l.-
confusion and even their attorneys are
| frequently Dewildered in their efforts to
comply with, its provisions. This statute
! was amended in 1906 with the general in
/ tention Of providing minimum tax based
| upon the par value of issued capital stock
| determined 10 be employed in business in
this state, with a reasonable increase based
/ upon the amount OF dividends declared
! The purpose Of this change was 10 over
! come the effect of a decision OF the Court
OF Appeals. and this purpose was suisse
qucntly recognized in n dissenting opinion
IN which three members Of the court con-
CURED. But owing chiefly TO an amend
ment the following year TO another section
Of the law, majority of the court held
that this intention Of the Legislature had
not been expressed with sufficient clearness
to Justify the court in changing its former
Interpretation Of tho law.
AS a result OF this last decision the state
Is losing over 100000 annually, as nearly
as can be determined. for the reason that
in certain cases the tax must be com lutei
corporation. and not upon It's carita'iz1-
ton.
The state Controller has for several
years recommended simplifcaiion Of this
law for the purpose of making Il fairer
distribution Of the tax burden correcting
the loss of revenue incident To the court
decision referred TO, and also TO avoid the
necessity for the annual appraisal OF cor
porate assets.
, If this franchise tax upon corporations
is computed upon the par value of issued
stock its collection Will require only 4
simple mathematical calculation, which
anv taxpayer can understand, and which
will avoid the necessity for the exercise OF
Judgment on the part OF the assessing Of
fetal which frequently, and OF necessity,
must be arbitrary
A busjness tax upon a business CORPORA
ton should be so simple In It's terms that
any officer of the corporation can under
stand the law, compute the tax and make
a payment without the ala OF an attorney
and Il lawsuit.
senate bill 1871. by Mr. Harte, proposes
simple mathematical rule for the assess
ment Of this tax, following as closely as
possible the general theory OF the existing
| statute and conforming 10 the recommended
! tons OF the Controllers office.
| The BIZ! will make the law easy TO UNI
derstand and admiuister, II VIII prevent
! LITIGATION and IL will result in a consider
! able Increase Of revenue TO the state, coll
| lected upon fair and reasonable basis
This bill proposes minimum tax OF
/ three-quarters Of a mill on each dollar Of
! issued capital stock employed within the
state This amounts to a charge of SO on
| a capitalization of 100000 for the privilege
of using a corporate name and exercising
/ corporate powers. When dividends higher
| than per cent are declared the tax is in
/ creased One-quarter Of mill for each
! Der cent of dividends, thus being equiya-
/ lent to an income TAX OF 212 per cent. on
corporations paying per cent Of dividends
or over the rate and amount Of tax would
] lao existing