New-York tribune., 1921-02-03
4 franchise Tax
Repeal Sought
Inn Assembly
Jaislson Says Act Would In
yolye Saving of Millions
10 State Traction Lines
and Other Corporations
Governor Discusses Issue
Levy on Earnings of the
Public Utilities Is Sug-
gested as q Substitute
From q ston corr,anondant


ALBANY, Feb. 2.The repeal of the.
specsal franchise tax, involving the
saving of about $4,000, 600 year to
the traction lines of the state and
other public utility corporations, is the
purpose of d resolution introduced IN
&e Assembly to-day.
The resolution, which was offered by.
Assemblyman Franklin W. Judson. of
Monroe, viee-chairman of the special
legislative tax Investigating commit
Gee, merely extends the life of the
committee another year.
In view of the fact that the commit
tee has been sitting for two years,
holding hearings in almost every part
Of the state, and the general belief was
that it had completed its Iabors, an ex-
nlaaation was sought from Assembly
man Judson.
Mr.. Judson explained that the spe-
cal franchise tax. which had been
enacted during the Administration of
Colonel Roosevelt. had proved so bur-
densome and resultant OF so much
costly litigation, which in many In
stances exceeded the amount Of the
tax, that it was the belief of the COM
nlittee and of other tax experts that q
simpler substitute should be found.
One suggestion is to tax the earnings
of the public utility corporations
he special franchise tax law" said
Mr.. Judson, "is. in it's administration,
beyond all doubt the most burdensome
law or the statute books, and not the
ieast troublesome feature is the equaii.
zat5on of the tax, many different proc
esses being necessary to fix the tax In
the case of single corporation. 1t
has been suggested and might prove
wise to substitute for it some tax more
readily collectible--one on earnings,
TOR instance, where there would not be
the same room for guesswork as there
IS II making the assessment or where
intangible property as elusive in it's
value as franchise is concerned.
"This phase of the taxation problem
is the only one that we have not yet
touched, and we are going to devote
the next twelve months to study Of
rho special franchise tax in it's rela-
ti0n to utilities operations through
out the state"
1t is known that Governor Miller
has been discussing the question of
repeating the special franchise tax 1t
IS said that until more light is obtained
on the subject and substitute found
the law will remain on the books,
tut it can be said authoritatively that
substitute will be found within q
year. The repeal of the tax would
mean a saving of $4,000 900 annually
30 the public utility corporations in
New York City.
Ii Governor Miller's proposal for ar
united and municipality owned traction
system in New York City materializes
the roads would Immediately become
immune from taxation under the spe-
cial franchise tax, as is now the case
in the matter of subways, which are
municipality owned, although privately
operated.
1t is said that of the ten millions
collected annually in New York, City
but comparatively little comes from
tie. traction companies. It was also
said by state official that the loca
and state tax collectors have not beer
able to collect the special franchise
tax against the surface lines included
in the marlborough metropolitan sys
TEN. The plea of the companies IL
question has been that they were MOI
making money.
It is said the principal benefciaries
of the special franchise tax has been
4 little group of lawyers who hav.
made study of the law. Ever since
its enactment twenty years ago the
companies taxed, with rare exceptions
have gone into the courts on each oc-
casion, and. largely because of the elu-
sive nature of the value Of the fran
chise, they have had things pretty
much their own way.
The special franchise tax has also
been used as vehicle for boosting
rates where there have not been con
tractural agreements. One lighting
company in this state, in fixing it.
rates, values, it's franchise-a mere
scrap of paper-at several million dol
lars more than its tangible property.