The New York herald., 1921-02-03
LEGAL FEES ENORMOUS
Life of Taxation Committee
Assured by Assembly
Vote Yesterday.
OFFERS OWNERSHIP BILL
George N. Jesse Proposes an
Alternative to Governors
Traction Measure.

,special Despatch 10 THE New YosK HERALD.
New York Herald Bureau,
Albany. Feb. 2.
Gov. AIiller's proposal to combine
New Yorl's competing transit lines
into one comprehensive. unified system
under municipal ownership would re-
lieve the surface and elevated lines Of
the burden of special franchise taxes
and by that single and simple process
go a long way toward making those
routes seIf-maintaining. By the same
process. the Governors plan would
operate to make possible lower
rather than a higher fare.
The absurdity of the cry raised by
the Tammany- -Hylan-Hearst propa-
candists that the Governors plan is
designed purely as a fare raising grab
was still more evident to-day when the
scope of his recommendations was
understood more clearly. The city's
sorry transit mess is losing more and
more of its charm as political issue
as the merit of the Governors plan is
understood.
Taxation Committee Continued.
The Assembly adopted to-day reso-
luton reported by its Ways and Means
Committee continuing the life OF the
Davenport-Judson committee on TAXA
fion. A similar resolution was reported
favorably by the Finance Committee OF
the Senate and action will be taken IN
that body next week.
with this sanction the taxation COM
nittee is given an appropriation to con-
tinue its investigation OF assessments III
various forms and will devote itself al
most burdensome and unwieldy taxes
to study Of the special franchise tax
levied by the State against traction and
other corporations.
=, The special franchise tax is assessed
BY the state on tangible and intangible
assets OF railroad corporation. Inc
tangible property includes such things
as the rails in the street, which are
levied upon as real estate, and the IN
tangible is the good will value OF fran
chise. such as would be included in the
right Of the company to use the streets.
The proposal is to find some means OF
replacing this tax by assessing earnings
In such manner that losing companies
might be relieved
The WELD from that tax on all cor
porations in the state last year was
close to SIS, 10000 and in New York
city about S90OO.000. IL is one OF the
most brrdensome and unwieldly taxes
imposed by the state. Something like
third of the levy Is tied up every year In
LITIGATION. The result is that the cor
porations. in their fight against the as
sessment on intangible property conduct
almost limitless court actions.
At this moment the courts and the
Attorney Generals office literally are
clogged with cults testing out franchise
assessments: The result Is not only
big waste in State funds in carrying on
this LITIGATION but a tremendous expense
on the transit corporations which make
the fights and most fruitful source of
income for lawyers. Fees amounting to
hundreds OF thousands are collected by
high salaried attorneys who make these
legal battles for the corporations.
s2,OOO.OoO en- Surface Lines.
The franchise tax on the surface lines
alone in New York amounts to about
$4,000 900 a year, plus the tremendous
cost of levyfng and collecting the
4
other source OF revenue found II would
go a long way toward making those
lines self-sustaining.
Such a tax would not be levied against
a transit line in which the city was
partner. II does not lie now against the
subway because the city is a partner In
the subway. That Is one Of the reasons
the underground route is self-sustaining
so far az operating costs are concerned.
~. - ts.t.. Ia
proposed by the Governor. the franchise
tax would be lifted automatically the
moment the city became partner In
the enterprise.
The State Tax Commission Is going
thoroughly into this franchise tax prob
lem. 1t will seek TO find some other way
o. Ievying an assessment with view
to saving the state and the corporations
the big cost OF litigation involved in
the imposition and collection OF the tax.
Some other form Of assessment can be
found. it Is believed. which will protect
the state and municipalities and at the
same time afford relief from the exist
ing ineauitable system.
The commission Go be created under
tho Governors plan will go ut this prob
lon. u IL expected, from a different
angle TO determine 20 what extent taxa
ton relief would aid the transit situa-
ton under municipal control.
George y. Jesse. Republican. OF New
York. introduced to-day In the Assem-
bly, permissive municipal ownership
bill similar 10 the measure offered In
1919 by Senator Fowler II In designed
as an offset for the Governors plan, and
would give to municipalities complete
authority 20 undertake ownership and
operation of all public utilities. II has
some New York support including the
City club