570 



NEW YORK. 



under the provision for deduction on account of 

 debt, and general irregularity and uncertainty in 

 the operation of the laws. The Governor, in his 

 annual message, recommended the appointment 

 of a commission to make a careful revision of 

 the statutes relating to this subject, and to re- 

 port at the next session ; but this method had 

 been tried more than once with unprofitable 

 results, and the suggestion was not acted upon. 

 Resolutions declaratory of the principles on 

 which a revision of the tax laws should be 

 made were introduced, and after some delay a 

 joint special committee of the two Houses was 

 appointed to deal with the whole subject. 

 This committee set out with an avowed de- 

 termination to make the needed revision of the 

 laws, and adopted as an outline of their work 

 the taxation of all corporations on their capi- 

 tal stock or receipts, from which source the 

 entire revenue for State purposes was to be 

 derived, the abolition of all exemptions ex- 

 cept in the case of property used for public 

 purposes, a strict assessment of all forms of 

 wealth, including credits and certificates of 

 shares, and a rigid enforcement of all provi- 

 sions for a thorough and equal assessment and 

 collection of taxes. It encountered a good 

 deal of opposition in its work, and was forced 

 back from some of its plans, while the bills 

 prepared were largely modified after they left 

 the hands of the committee, and some of them 

 wholly defeated. The consequence was, some 

 material changes in the laws, but no system- 

 atic revision. A bill defining lands was drawn 

 which was intended to bring under assessment 

 railroad tracks, telegraph wires, underground 

 pipes, private docks, etc., but it was amended 

 so as to exempt horse-railway tracks, and as 

 passed was vetoed by the Governor, on the 

 ground that on account of its loose wording it 

 would fail of much of its purpose. The effort 

 to restrict exemptions was wholly defeated. 

 A bill to tax the deposits in savings-banks en- 

 countered so much opposition that it had to be 

 abandoned, and the scope of that taxing the 

 premiums received by life-insurance companies 

 had to be materially limited. The latter passed, 

 however, in such a form as to levy eight tenths 

 of one per cent, on the premiums derived from 

 business within the State during the year for 

 which the assessment was made. This tax was 

 to be levied and collected for the use of the 

 State under the authority and direction of the 

 Comptroller. A more general act for obtain- 

 ing revenue for the State from corporations 

 was passed, after some modification from the 

 form given to it by the committee. It pro- 

 vides for a State tax on capital, to be collected 

 under the authority of the Comptroller, the 

 companies themselves being required to make 

 reports of the amount and value of the capital, 

 manufacturing corporations not being included. 

 The tax, in the case of corporations paying 

 dividends of six per cent, or more, is one 

 fourth of a mill for each one per cent, of 

 the dividend on every dollar of the par value 



of the stock, and where smaller dividends 

 or none at all are paid, one and a half mill 

 on each dollar of an appraised value of the 

 stock. A tax of eight tenths of one per cent, 

 was also levied on the gross receipts of fire and 

 marine insurance companies, and five tenths of 

 one per cent, on the gross receipts of transporta- 

 tion companies. Street surface-railroads were 

 exempted from the operation of the tax on 

 gross receipts. The real estate of corporations 

 was left subject to assessment for local pur- 

 poses, but it was declared that their capital 

 and personal property should be exempt from 

 taxation except as in this act provided. The 

 operation of this law did not prove altogether 

 satisfactory, and the experience of the year 

 failed to justify the anticipations of its sup- 

 porters. Some difficulty was experienced in 

 obtaining a list of all the corporations in the 

 State, and in securing the reports required by 

 the law. Then the provision exempting the 

 capital and personal property of corporations 

 from other taxation gave rise to doubt which 

 resulted in litigation. A transportation com- 

 pany belonging to Richmond County claimed 

 exemption from local assessment, but Judge 

 Gilbert held that the exemption applied only 

 to taxes for State purposes, and left the prop- 

 erty subject to taxation for local purposes. 

 The State Comptroller reported a collection of 

 only $141,127.03 in taxes under this law up 

 to October 1st, but he anticipated that, when 

 its meaning was clearly settled, and it could be 

 effectively enforced, there would be a revenue 

 of $2,000,000 annually from this source. He 

 suggested, however, a number of important 

 amendments to be made to the law. 



The matter of taxing shares in the stock of 

 national banks not only occupied much atten- 

 tion in the Legislature, but in the courts as 

 well. The statute of the United States relating 

 to national banks, which forbids the taxing of 

 their capital by State authority, declares that 

 their shares may be included in the assess- 

 ment of the personal property of the holders, 

 but must not be assessed at a " higher rate " 

 than " other moneyed capital in the hands of 

 individual citizens of the State." The Legisla- 

 ture passed an act in 1866 for the assessment 

 of bank-shares, providing that the tax should 

 be paid by the banks, and by them held back 

 from the payment of dividends on the stock. 

 The question was raised whether deductions 

 for debt were to be allowed. The Attorney- 

 General gave it as his opinion that such was 

 not the intent of the act, and the assessor pro- 

 ceeded on this interpretation of the law. The 

 Exchange Bank in Albany resisted the collec- 

 tion of the tax, and the matter was carried 

 through a protracted litigation which culmi- 

 nated in a decision of the Supreme Court of 

 the United States in March of this year. The 

 State Court of Appeals had sustained the in- 

 terpretation of the act of 1866, which had been 

 acted upon in the assessment of bank-shares, 

 and the Federal tribunal accepted its construe- 



