for while 34 per cent, or one-third, of the estates absolutely escaped taxation, in the estates which did pay the tax varied from two-tenths of 1 per cent to nearly 19 per cent. In his report for 1899 the comptroller says that, excepting the stock of banks and trust companies assessed under a special law, and which can not escape taxation, the assessed valuation of personalty in New York State has not increased during the last 40 years, and that from study and observation he is convinced that not more than 3 per cent of the personal property in the State is assessed; and that the personalty of the State amounts to $18,000,000,000, or nearly four times the assessed valuation of real estate. In this and other reports he expresses a positive opinion that the attempt to reach personal property, in a general property tax, should be abandoned, as it has been in "practically every civilized community in the world except the United States."

The joint committee on taxation in the last legislature in its report accepts the above estimate of the comptroller as substantially correct, and says that this condition of tax affairs in the State has long been a subject of complaint and a prominent feature of the reports of special committees and commissions on taxation without exception, and has received serious comment in the annual messages of all governors for more than a quarter of a century.

Č. C. Plehn, in his work on Public Finance, says that in New York personal property is assessed at a trifle over 11 per cent of the real estate, and about 10 per cent of all property; that according to the census valuation of 1890 there was in New York $5,817,704,667 worth of real property and $2,758,997,324 worth of personalty. Real estate was assessed at $3,403,751,246, or about 58 per cent of its census value, while personal property was assessed at $382,159,067, or not quite 14 per cent of its census value. When," he says, "it is remembered that the census report omits some unascertainable items of personal property, it is fair to say that 90 per cent of the personal property in New York is untaxed, where, at the same time, only 42 per cent of real estate is untaxed."

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It is said that in two adjoining counties a few years ago there was a difference of $24,000 per mile in the assessment of the same railroad, illustrating the inequality resulting through the competitive valuation occurring from the levying of State and county taxes upon the basis of township assessment.

This unsatisfactory condition of the taxation laws and the manner of their enforcement has received special attention from State officials and the public generally during the past few years, resulting in some advantageous legislation in the substitution of a board of tax commissioners for the State board of assessors, with enlarged powers for the enforcement of more equitable valuation and assessment of property, in advancement in values, and in the addition of new properties to tax lists by local assessors, as shown in the increased valuation of both real and personal property during the past few years, which has excited considerable criticism and opposition.

The increase for the years 1896, 1897. and 1898 in real estate assessments aggregated $503,430,033, and in personal assessments, $216,970,118.

For the purpose of securing more equitable taxation of property, material amendments have been made to corporation and transfer tax laws, which will be referred to under those subjects.

Personal property, in general, is assessed locally for State, county, and local taxes, and that class of property alone is subject to deduction of just debts of owners. All real estate mortgages are included in the indebtedness of taxables, subject to deduction from the valuation of their personalty, a privilege resulting in gross abuses and escape of much property from taxation.

A public official stated to the writer in a general way that one year personal property in the city of New York was assessed at about $1,400,000,000, and deductions for indebtedness amounted to about $1,000,000,000.

The personal property of corporations, associations or partnerships, taxable under the law for the taxation of franchises, capital stocks or dividends, is exempt from taxation for State purposes, if the special taxes referred to have been paid, and so with the personal property of a private or individual banker taxed under special law.

The capital of nonresidents of the State, invested in business within the State, is taxable as personal property where the business is carried on to the same extent as if they were residents.

Debts owing to nonresidents of the United States are assessed as other personal property in the State, every agent of such nonresident creditor being required to make annual statement of such taxable property in any county where it may be for the purpose of local assessment and taxation.

The owner or holder of stock in an incorporated company, liable to taxation on its capital, is not taxed as an individual for such stock.

There are no special provisions for the listing of personalty for taxation, and the assessment is made largely by estimate of local assessors. There appears to be strong opposition to the adoption of a listing system; the conclusions of the joint committee on taxation of 1899 as to that method for increasing assessments of personal property, will be referred to in the consideration of its report.

The terms real estate and personal estate are, for purposes of taxation, comprehensively defined in the law of New York as recently amended. Real estate includes the land itself, above and under water, all buildings and other articles and structures erected upon, under or above or affixed to the same; all wharfs and piers, including the value of the right to collect wharfage, cranage, and dockage thereon; all bridges, all telegraph lines, wires, poles, and appurtenances; all supports and inclosures for electrical conductors and other appurtenances upon, above, and under ground; all surface, underground or elevated railroads, including the value of all franchises, rights, or permission to construct, maintain, or operate the same in, under, above, on, or through streets, highways, or public places; all railroad structures, substructures, and superstructures, tracks, and the iron thereon; branches, switches, and other fixtures permitted or authorized to be made, laid, or placed in, upon, above, or under any public or private road, street, or ground; all mains, pipes, and tanks laid or placed in, upon, above, or under any public or private street or place for conducting steam, heat, water, oil, electricity, or any property, substance, or product capable of transportation or conveyance therein or that is protected thereby, including the value of all franchises, rights, authority, or permission to construct, maintain, or operate, in, under, above, upon, or through any streets, highways, or public places, any mains, pipes, tanks, conduits, or wires with their appurtenances for conducting water, steam, heat, power, gas, oil, or other substance, or electricity for telegraphic, telephonic, or other purposes; all trees and underwood growing upon land, and all mines, minerals, quarries, and fossils in and under the same, except mines belonging to the State.

A franchise or right is designated as a "special franchise," and is deemed to include the value of the tangible property of a person, copartnership, association, or corporation situated in, upon, under or above any street, highway, public place or public waters, in connection with the special franchise, and such tangible property is taxed as a part of the special franchise.

The term "personal property" includes chattels, money, things in action, debts due from solvent debtors, whether on account, contract, note, bond, or mortgage; debts and obligations for the payment of money due or owing to persons residing within this State, however secured or wherever such securities shall be held; debts due by inhabitants of this State to persons not residing within the United States for the purchase of any real estate, public stocks, stocks in moneyed corporations, and such portion of the capital of incorporated companies liable to taxation on their capital as shall not be invested in real estate.

MORTGAGES.

This species of property, except when held by savings banks, life insurance companies, building and loan associations, and nonresidents, is subject to assessment at full value in the local tax district where the holders reside, at the local tax rate in each locality. This local rate varies, but will average at least 2 per cent.

As a matter of fact, however, this class of property, while legally taxable, yields very little revenue, and usually succeeds in avoiding the tax rolls. When the local assessors do happen to find it and place it upon the roll, it is usually in the case of trustee, guardian, executor, or the abnormally conscientious citizen of the State, in which case the local tax rate upon a high valuation operates with undue severity, and subjects the mortgage property to many times the tax actually paid by personal property in general. It subjects those who are taxed upon such security to the gross injustice of a tax equal to one-half the income thereon, while the great mass of mortgages escape entirely.

The joint legislative committee on taxation, after careful investigation, reported the estimated value of the mortgage indebtedness of the State to be $2.000,000,000. The assessed valuation of all personal property in the State was only $748,424,938. The committee, in view of these facts, and taking into consideration the revenue needs of the State, the effect upon the rate of interest, and the condition of borrowers of the State, recommended in lieu of other taxes a State tax of 5 mills on the dollar upon indebtedness secured by mortgage upon corporate and individual real property, estimating the State revenue that would be derived therefrom at $10,000,000, being the amount of State taxes now raised by direct levy upon real estate. After careful investigation, the committee concluded that although mort

gages generally escape taxation, under the existing system, the liability to tax affects the interest rate to the extent of one-half of 1 per cent now, so that the exemption of mortgages from all taxation, except to the extent of a State tax of one-half of 1 per cent, would produce no substantial change in the average rate of interest in the State.

The committee contended that the tax would not be subject to the common objection of double taxation, "a phrase which is itself brimful of duplicity and highly convenient for sophistical reasoners," for the reason that the mortgage would be subject only to a State tax, while the land would be subject to local taxation alone under the plan to raise all the State revenue otherwise than by direct levy upon assessed valuations of real and personal property.

In the taxation of mortgages under the proposed plan, recourse would be had by the State to mortgage records, therefore none would escape, and opportunity for tax dodging would be removed. There would be no deduction for debts and no exemptions, and the revenue from that source would be steady and reliable.

TAXATION OF CORPORATIONS.

While the general property tax is the main part of the system of New York for even State purposes, it is supplemented by certain other methods for reaching corporate property. The existing corporation tax law in its entirety is one of the most complicated and clumsy statutes on the books.

In general, the real estate of all incorporated companies liable to taxation, including that of quasi-public corporations, is required to be assessed in the tax district where it is located in the same manner as real estate of individuals, and the personal property of such companies in the tax district where their principal offices are located. The reports of corporations as to personal property are meager, and the assessment thereof by local assessors is in practice arbitrary and largely estimated.

The law also requires the capital stock of every company liable to taxation, except such part as shall have been excepted on the assessment roll or exempt by law, together with its surplus profits or reserve funds exceeding 10 per centum of its capital, after deducting the assessed value of its real estate, and all shares of stock in other corporations owned and otherwise taxable, to be assessed at its actual value.

Every moneyed or stock corporation deriving an income or profit from its capital or otherwise, is required under penalties for failure, to give annual verified written statements to the assessors of the tax district in which it is liable to be taxed, showing:

First. Its real property, location, and unless a railroad corporation, the sums actually paid therefor.

Second. The capital stock actually paid in, or secured to be paid in, excepting sums paid for realty and capital stock held by the State and by any incorporated literary or charitable institution.

Third. The tax district in which its principal office is located or operations carried on.

The assessors are required to assess corporations liable to taxation in their respective districts as follows:

In one column, the name, amount of capital stock paid, amount paid for real property, amount of surplus profits or reserve funds exceeding 10 per cent of capital, after deducting real property and stock exempt; in another, the real property, except special franchises, and value thereof; in another, the capital stock paid, and surplus profits as aforesaid, after deducting sums paid for real estate and amount of stock exempt; in another, the value of any special franchise owned by it as fixed by the State board of tax commissioners, in accordance with the provisions of the franchise tax act of 1899.

SPECIAL FRANCHISE TAX.

In May, 1899, the legislature of New York passed an important act amending the tax law of the State in relation to the taxation of public franchises as real property. It provides for the valuation of each special franchise subject to assessment in each city, town, village, or tax district by the State board of tax commissioners, and the filing of a written statement of such valuations as fixed by said board, preceding each annual assessment of property, with the clerk of each city, town, or village; such valuation so fixed being the assessed valuation on which all taxes based on such special franchises shall be levied by the local assessing officers.

For this purpose every person, copartnership, association, or corporation subject to taxation on a special franchise is required to make a written report duly verified to such board containing a full description of every such franchise possessed or enjoyed, and a statement of the authority under which the same is held, together with such other information relating to the value thereof as such board may require, and supplemental reports as requested by such board.

Notice of hearing on each special franchise assessment is required to be given by said board to each franchise taxable.

When such special franchise tax is due and payable, any tax that may have been paid by the taxable within the year preceding to any city, town, or village, under any agreement or statute, based upon a percentage of gross earnings, or any other income or license fee, or any sum of money on account of such special franchise, is to be deducted from such tax based upon the assessment of such board, and the remainder shall be the tax on such special franchise payable for city, town, or village purposes.

The imposition of such special franchise tax does not relieve from any other tax provided by law, but tangible property subject to such franchise tax situated in, upon, under, or above any street, highway, public place, or public waters is

not otherwise taxable.

The rates of taxation upon special franchise assessments is the same as on other property locally assessed and equalized and expended by the boards of supervisors of the several counties. It is expected that this franchise tax will yield a large revenue and relieve real estate and taxable personalty.

The clerk of each board of supervisors is required to deliver to the county treasurer a statement showing the names, valuation of property, and amount of tax of every railroad corporation, telegraph, telephone, and electric-light line in each tax district in the county, and each company may, upon receipt of notice of such statement, pay its tax with one per centum fees to the county treasurer, who is required to credit the same to the collector of the tax district.

The corporation taxes above referred to on real and personal property, capital stock, and special franchises being mingled in assessment and taxation with other property on local assessment rolls, we are unable to give the amount of such taxes paid by the several classes of corporations separately, except in some instances hereafter referred to.

There are, however, in addition to the taxes already referred to, other special taxes imposed on corporations requiring special notice.

ORGANIZATION TAX.

Every stock corporation organized under any law of the State is required to pay to the State treasurer a tax of one-eighth of 1 per cent upon the amount of stock authorized or any subsequent increase thereof. This does not apply, however, to State and national banks, or to building, mutual loan, accumulating fund, and cooperative associations. This tax yielded in 1899 $474,667.65.

LICENSE TAX ON FOREIGN CORPORATIONS.

Every foreign corporation, joint stock company, or association, except banking, fire, marine, casualty, and life insurance companies, and corporations wholly engaged in carrying on manufactures in this State, cooperative fraternal insurance companies, and building and loan associations, authorized to do business under the general corporation law, is required to pay to the State treasurer for the use of the State a license fee of one-eighth of 1 per cent for the privilege of exercising its corporate franchises or carrying on its business in the State, to be computed upon the basis of the capital stock employed by it during the first year of carrying on business in the State.

This tax was in 1898, $2,454.58; 1899, $2,981.38.

CAPITAL STOCK TAX ON CORPORATIONS.

Every corporation organized under the laws of New York must also pay to the State treasurer an annual tax, to be computed upon the basis of the amount of its capital stock employed within the State at the rate of one-quarter of a mill for each 1 per centum of dividends made and declared upon its capital stock during the year, if the dividend amounts to 6 per cent or more upon the par value of such capital stock; if less than 6 per cent on the par value of the capital stock, the tax is at the rate of 14 mills upon such proportion of the capital stock at par

as the amount of the capital employed within the State bears to the entire capital of the corporation. If no dividend is made, the tax is at the rate of 14 mills upon each dollar of the appraised capital employed within the State.

If such corporation has more than one kind of capital stock, and upon one dividends amounting to 6 or more per cent upon the par value thereof have been made and upon the other no dividends made, or less than 6 per cent, then the tax is at the rate of one-fourth of a mill for each 1 per cent of dividends upon the former, and in addition a tax of 1 mills upon every dollar of the valuation of the latter.

Foreign corporations must pay a like tax for the privilege of carrying on business within the State, computed upon the basis of the capital employed within

the State.

Certain corporations are exempted from this tax, viz: Banks, savings banks, institutions for savings, insurance or surety companies, laundry corporations, manufacturing corporations to the extent of capital employed within the State in manufacturing and selling, mining corporations engaged in mining in the State, agricultural and horticultural societies, and corporations operating elevated railways or surface railroads not operated by steam, gas, water, electric, steamheating, lighting, and power companies.

TRANSPORTATION AND TRANSMISSION COMPANIES.

An additional excise or license tax is imposed upon steam surface railroad, canal, steamboat, ferry, express, navigation, pipe line, transfer, baggage, express, telegraph, telephone, palace, or sleeping-car companies, and all other transportation companies except elevated railroads and surface railroads not operated by steam. This tax is at the rate of five-tenths of 1 per cent upon the gross earnings within the State, not including earnings derived from business of an interstate character.

STREET AND ELEVATED RAILROADS.

A like tax is imposed by the State on corporations operating any elevated railroad or surface railroad not operated by steam, amounting to 1 per cent upon gross earnings from all sources within the State, and 3 per cent upon the amount of dividends declared or paid in excess of 4 per cent upon the actual amount of paid-up capital employed.

WATER, GAS, AND ELECTRIC COMPANIES, ETC.

Corporations formed for supplying water or gas, or for electric or steam-heating, lighting, or power purposes, must also pay a franchise tax of five-tenths of 1 per cent upon their gross earnings from all sources within the State, and 3 per cent upon the amount of dividends declared or paid in excess of 4 per cent upon the actual amount of paid-up capital employed.

INSURANCE CORPORATIONS.

Every insurance or surety corporation doing business in the State, except fire, marine, or casualty companies of another State, must pay to the treasury of the State an annual tax of five-tenths of 1 per cent upon the gross amount of premiums received for business done in the State.

Life insurance companies and purely mutual benefit associations, whose funds are for the benefit of members, their families or heirs, or made up of contributions of members, are exempt from this tax.

FOREIGN BANKERS.

Every foreign banker, corporation, or partnership doing business in the State must pay to the treasurer a tax of one-half of 1 per cent on business done in the State, to be ascertained by computing the daily average for each month of business done and dividing the aggregate of such monthly averages by the number of months during which business was done in the preceding year.

The special taxes upon the several classes of corporations above enumerated are based upon detailed, verified reports of the corporations to the State controller, who is empowered to examine books and records and take testimony and proofs as to such corporations. The special taxes on corporations above set forth are for State purposes.