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Cornell University Library HJ2424 .A7 1907 3 1924 030 265 288 ! olin Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030265288 REPORT ■'"V> OF THE '".' ■-:* SPEQ AL TAX COMMISSION K ««»»l»r of Aasarobly. # STATE OF NEW YORK TRANSMITTED TO THE LEGISLATURE JANUARY 15, J907 ******* So^lHv ' $ ALBANY J, B. LYON COMPANY, STATE PRINTERS 1907 REPORT OF THE \ inn ft SPECIAL TAX COMMISSION OF THE STATE OF NEW YORK TRANSMITTED TO THE LEGISLATURE JANUARY 15, 1907 ALBANY J. B. LYON COMPANY, STATE I>KINTEB8 1907 J ' •'' // ft o o ■ vn aim; i.i ' [\^\*izt. TABLE OF CONTENTS. Part I. — Main Report. PAGE. Introduction 1 Inheritance tax 9 Corporate taxation 21 Stock transfer tax 27 Relation of State and local revenues 31 Relation of State and national revenues 34 Exemption of State property from local taxation 38 Statistical information 39 General conclusion 40 Part II. — Supplemental Reports. 1. Supplemental report on enforcement of personal property tax.... 42 2. Supplemental report on a substitute for the personal property tax by a graduated habitation tax 45 The graduated habitation or occupancy tax 51 Conclusions 56 3. Supplemental report on income tax 58 Part III. — Appendices. Appendix A: State receipts for 1906 65 State expenditures for 1906 66 Appendix B: Receipts and expenditures in villages of the State 68 Appendix C : Statistical tables showing working of personal tax system in the city of New York: System of taxing personal property 69 Tax districts . 69 Personal property defined 70 Place of assessing personal property 70 Form of assessment 70 Completion and verification of assessment rolls — Levy of tax • 71 Operation and effect of personal tax system in State 71 State tax rate 72, Estimated value of property in State 72 Percentage paid by real and personal property. 73 Operation of personal tax system in New York city 74 Comparison of assessments and collections in New York city. 70 in Table of Contents. Conclusions from the working of the personal tax system ... 79 Schedule A — Table showing tentative assessment, etc 80 Al — Table showing tentative assessment, Manhattan borough 80 A2 — Table showing tentative assessment, Bronx bor- ough 81 A3 — Table showing tentative assessment, Brooklyn borough 82 A4 — Table showing tentative assessment, Queens bor- ough 83 A5 — Table showing tentative assessment, Richmond borough 84 Schedule B — Table of tax rates of boroughs In the city of New York 84 Schedule C — Table showing personal tax levies and collec- tions in the city of New York 85 CI — Table showing personal tax levies and collections in Manhattan borough 87 C2 — Table showing personal tax levies and collections in Bronx borough 88 C3 — Table showing personal tax levies and collections in Brooklyn borough 89 C4 — Table showing personal tax levies and collections in Queens borough 90 C5 — Table showing personal tax levies and collections in Richmond borough -91 Schedule D — Table showing number of names on assess- ment rolls 92 Dl — Table showing number of tax payments in the various boroughs 94 Schedule B — Table showing relative percentage of collec- tions in the several classes 95 Schedule F — Assessed valuation of real estate In New York city 96 Schedule G — Area and population of boroughs in New York city 98 Schedule H — Local and State tax paid by real and personal estate in New York city 98 Schedule I — State tax rates 98 Appendix D: Tax laws of Massachusetts, Connecticut, New Jersey, Pennsyl- vania and Ontario, Can 99 State revenue of : 99 Taxation of business corporations in 101 >, •:■■■ ^*lon of public service corporations in 105 ■■■•' -vf State and National banks in 112 -•ist companies in 114 ■■»> -savings banks in 116 a? x» ^mpanies in 118 si'-">. i tax in 122 "•' T^ble of Contents: v Taxation of individual share and bondholders in 123 Taxation of mortgages in 124 Taxation of money and interest in Pennsylvania 127 Local taxation in Ontario 128 Inheritance tax 129 Past IV. — Proposed Legislation. 1. An act amending Inheritance Tax Law 132 2. An act amending the Tax Law relative to the taxation of cor- poration for State purposes 139 Organization tax 139 Annual franchise tax 140 Exemption of certain corporations from State taxation 142 Additional franchise tax on transportation and transmission corporations 143 Franchise tax on elevated and surface railroads 144 Franchise tax on water, light, heating and power companies. 144 Franchise tax on insurance companies 145 Franchise tax on trust companies 146 Franchise tax on savings banks 147 Appraisement of capital stock 147 Payment of tax and penalty 148 Action for recovery of taxes 149> Application of taxes 15fr S. An act amending the Tax Law relative to the taxation of cor- porations for local purposes 151 Exemptions from taxation 151 Taxation of corporate stock 166 Taxation of bank shares 156 Reports of corporations i59 Penalty for omission to make reports 180 County clerks to furnish data respecting corporations 161 Corporations, how assessed 162 4. An act relative to the taxation of special franchises 163 5. An act amending the Stock Transfer Tax Law 164 6. An act amending the Tax Law relative to the taxation of per- sonal property 166 7. An act providing for the return of surplus over $10,000,000 168 8. An act amending the Tax Law relative to the powers and duties of the State Board of Tax Commissioners 169 (a) Providing for statistical information and report 170 (b) Providing for uniformity in tax legislation 171 9. An act providing for a tax on occupants of habitations ,. . 172 10. An act providing for a tax on incomes 179 11. An act to amend the Tax Law relative to the assessment of the Income tax . ». . .. .. «. ,..*..., 189 State of New York No. 11. IN SKNATE January 15, 1907. REPORT OF THE SPECIAL TAX COMMISSION OF THE STATE OF NEW YORK To the Legislature: Pursuant to Chapter 346 of the Laws of 1906, the Governor was pleased to appoint as members of the Special Tax Commis- sion: Hon. Warner Miller, Mr. Samuel H. Ordway, Mr. Lawson Turdy, Mr. Edwin E. A. Seligman, Mr. Charles S. "Wheeler. The Lieutenant-Governor was pleased to appoint: Senator Thomas F. Grady, Senator Merton E. Lewis, Senator George E. Malby, Senator Martin Saxe, Senator Spencer K. Warnick. The Speaker of the Assembly was pleased to appoint: Mr. C. Fred Boshart, Mr. Sherman Moreland, Mr. Charles W. Mead, Mr. George M. Palmer, Mr. Arthur C. Wade. The Commission organized at the city of Albany on June 27, 1906, and elected Hon. Warner Miller chairman, and Mr. Sherman Moreland secretary. 2 Repobt of Special Tax Commission. Subsequently the Commission appointed William A. Suther^ land, ex-Corporation Counsel of the City of Rochester, as Coun- sel, and Henry M. Powell, formerly Assistant Corporation- Coun- sel in the Law Department of the City of New York, as Assistant Counsel. Since the organization of the Commission, Mr. Lawson Purdy was appointed President of the Department of Taxes and Assess- ments in the City of New York, and resigned his membership in this Commission. Mr. Charles S. Wheeler was appointed a Justice of the Supreme Court of the State of New York, and also resigned his member- ship in this Commission. No appointments have been made to take the places of these two members. Your Commissioners have held frequent sessions and some hear- ings have been given to special interests desiring to appear before them. The members of the Commission have given much time, thought and attention to the discharge of the duties devolving upon them. The Commission was instructed to consider the whole question of State and local revenues. We believe with the distinguished writer, Mr. David A. Wells, who wrote many years ago that " It needs but a most superficial examination of the prevailing system of taxation in the State of New York to abundantly satisfy one that whatever it is to-day, it has grown up in common with the tax system of all the other States, under the pressure of necessity and mainly under the influence of accident and circumstances." This Commission believes that its duty is to grapple with the situation which faces the State and the taxpayers, and to endeavor to attack the problem directly with the hope thereby to accom- plish the objects and purposes for which it was appointed. Originally all the State and local revenues were derived from a single source — the general property tax on real estate and per- sonalty. This is still the case in most of the American com- monwealths. In the year 1880, however, the State began to secure additional revenues from other sources. Light taxes were first imposed on corporations, then on inheritances, and by slow degrees, other sources of revenue were added. In this way the direct tax on real and personal property gradually diminished until at the present time the entire receipts of the commonwealth for State purposes are derived; apart from minor incidental rev- Repobt of Special Tax Commission. S enues, from these special taxes, sometimes, but not very happily, called indirect taxes because neither real nor personal property is directly taxed for State purposes. These special taxes are indeed not levied directly on the property of individuals, but some of them are none the less direct taxes in the usual acceptation of that term. Of the thirty million dollars which constituted in round numbers the expenses of the State for 1906, about nine and a half mil- lions were raised from the liquor licenses (tax on trafficking in liquors) ; about eight and a half millions from the corporation taxes; about six and a half millions from the Stock Exchange tax (tax on transfers of stock) ; about four and three-quarter millions from the inheritance tax (tax on transfers of decedents' estates), and the remainder from the tax on mortgages and minor sources. (The exact figures will be found in Appendix A.) A slight direct tax on general property was levied in 1905 and re- ceived in 1906, chiefly for canal purposes; but direct taxation was discontinued by the legislature of 1906, pursuant to the per- mission granted by the constitutional amendment of 1905, which removed the obligation to provide for the canal debt by a direct assessment on real and personal property. Thus New York has finally reached the point of complete separation of source between State and local revenues, and has thus escaped the difficult problems which continue to vex most of our sister States because of the lack of equalization in the assess- ments of property, both real and personal, as between the various counties. The system of local revenues remains, however, with a few slight modifications - , precisely the same as it was at the outset, namely, the taxation of the individual and of the corporation upon both real and personal property. The only change of importance consists in the fact that one-half of the liquor licenses are now turned over by the State to the localities, and that under the special franchise law, or, as it sometimes called, the Ford fran- chise law, the franchises of certain public- service corporations are classed as real estate and, while assessed by a State board, are collected and retained- by localities. In considering the whole question of State and local revenue we may approach the problem from two points of view : that of rev- enue and that of equality. From the first point of view it may be confessed at once that the need of increasing the revenue for 4 Report of Special Tax Commission. State purposes, while a matter of some importance, is not of paramount significance. It is indeed true that the State will need considerably more revenue during the next few years. Under existing laws the State has begun the issue of bonds to the extent of one hundred and one million dollars for the construc- tion of the barge canal, and of fifty million dollars for the im- provement of the highways. The need of paying interest upon, and providing a sinking fund for, these new issues together with other legislation that has been enacted for the increase of the judiciary, for the improvement of the State hospitals and other charitable institutions as well as for the enforcement of the " eight hour day and prevailing rate of wages " amendment to the 'con- stitution will probably call for an additional revenue within the next few years of at least seven or eight million dollars annually. About four millions of these will be needed for the enlarged canals, and about two millions for the improved highways. A part of this total increase of seven to eight millions may be ex- pected to accrue from the normal growth of the present sources of revenue, as the State increases in population and prosperity; but there will still remain a substantial amount to be provided for. It is, however, the looal burdens which are of chief importance from the point of view of revenue. The increasing demands upon the State treasury, as such, could readily be met by some ad- ditional subjects of taxation, without again resorting to the system of direct taxation of property for the support of the State; but the tax which is felt by the citizen is imposed upon him by his locality^ Since the complete separation of source between state and locality, neither the farmer nor the merchant contributes nowa- days directly- to the support of the State; but the farmer pays a heavy tax to county and town and the merchant contributes an appreciable sum to the support of his county and his village or his city. It is not generally recognized what an immense growth has taken place in recent years in local expenditures and in the needs of local revenues. In the city of New York, whereas only several decades ago the expenses were but a few millions, the budget at present calls for a revenue of about one hundred and twenty-five millions of dollars. In the remainder of the State, both in small villages and in prosperous towns, the increase of expenditure has been almost equally startling. The figures for a number of selected localities will be found in Appendix B and show very Rbpobt of Special, Tax Commission. clearly this prodigious increase of local expenditure. Even thus, however, the local revenues are not adequate to local needs. It is a well-known fact that in many of the rural districts especially it is impossible to raise sufficient funds to provide a modern system of education; while our local roads and highways are, for the most part, a disgrace to a civilized community. The State has undertaken the construction of a system of improved main high- ways, but there will still be many roads which ought to be im- proved and which would be improved if the revenues were ade- quate. Not alone in the matter of school facilities and highways, but also in many other domains of local administration, like police, jails, etc., the conditions are notoriously unsatisfactory. Under the American system of local self-government many functions of government which in other countries are carried on by the central government are here relegated to the locality. With the progress of civilization, these functions increase in extent and importance, so that the chief burden of supporting the demands of modern civilization falls upon the localities. From the point of view of revenue, therefore, the local needs are the ones of chief significance. Since the localities are really performing some of the most important- general functions of government, it is hence entirely justifiable that certain sources of State revenue should be in part utilized for the localities. This principle has long been recognized in New York State, and one-half of the proceeds of the liquor licenses tax is now turned over to the local divisions. As we shall see more in detail in the course of this report, it is proposed to extend this principle and to apply it to other sources of revenues as well. ~Fot while it is difficult to increase ' local revenues, it is comparatively easy to augment the state revenues, and it must not be overlooked that the system of state and local revenues must be regarded as a whole. So much for the question of revenue. We now proceed to the problem of equality of taxation: In considering the advantages and the defects of our present system of both state and local taxation, we have to recognize in the first place that many of our state taxes are unobjectionable in theory and effective in practice. Perhaps the one which gives almost universal satisfaction is the liquor license tax, which is now admirably administered by the state officials and which yields a revenue of almost twenty million dollars a year, half of it going 6 Eepoet of Special Tax Commission. to the state. The stock exchange tax which has been introduced but recently and which now yields a very considerable revenue, has been upheld by the Federal court and has been recognized as substantially just in principle, although as will appear later, it is desirable to introduce some minor changes. The various cor- poration taxes and the inheritance tax are again conceded to be defensible in principle, and effective in operation, although in both cases there is need of various modifications to secure greater equality of burden. Our recommendations on all these points will be found below. It is, however, in the matter of local revenues, that the chief defects are apparent. The local taxation of real estate is now on the whole free from any serious objection. There are indeed minor points to which attention might be called, but they are com- paratively insignificant, and will, therefore, be passed over here. The principal difficulty connected with our system of local revenues is the taxation of personal property. It is here that we find the chief derogation from the principle of equality in taxation. It is a universally accepted maxim that direct taxation of the citizen should be as nearly as possible in proportion to his ability to pay. The actual situation in New York involves in practice the very inverse of this principle. It is because results contrary to this principle are produced by our present methods of taxation that the people have demanded a substantial and just revision of the tax laws. We give, in Appendix C, a detailed account of the system of local taxation in New York State, and of the operation and effect of the tax on personal property, as illustrated especially by the ex- perience of the city of New York. We quote here the conclusions of that study: (1.) That there has been a gradual and steady increase in the value of real and personal property in the State of New York ; (2.) That personal property escapes bearing its share of the burden of taxation under the present system; (3.) That the greater the amount of personal property . placed on the rolls, the larger the cancellation or reductions; (4.) That the burden falls heaviest upon the residents of our own state, and principally upon the smaller taxpayer; (5.) That non-residents find it easiest to escape taxation, and have almost ceased to pay any taxes ; (6.) That the collection of the personal property tax has be- come more and more difficult. Kepobt of Special Tax Commission. 7 The government of the city of New York costs its citizens ap- proximately one hundred and twenty-five million dollars per annum. Of this sum the personal property tax collected from individual citizens of New York city is between two and three million dollars per annum; in other words, the local taxation in New York city has become, in effect, almost an exclusive taxation on real estate. Yet, the personal property tax law is still on the statute books. The advisory commission on taxation and finances appointed by the Mayor of New York has recently made public its report on personal property taxation. We quote the following passage: " So far as the personal property tax attempts to reach in- tangible forms of wealth, its administration is so comical as to have become a by-word. Its practice has come to be merely a re- quisition by the Board of Assessors upon leading citizens for such donations as the assessors think should be made, and is paid as asseseed, or reduced, according as the citizen agrees with the esti- mate of the assessor. Such a period of collecting revenue, would be a serious menace to democratic institutions, were it not so generally recognized as a howling farce. " But it is not a farce to those who are fully assessed. These are chiefly the widows and orphans, who are caught when their property is listed in the probate court, retail merchants and others, incorporated or unincorporated, with stocks of goods, and the small investors who are not skillful enough to make non-taxable invest- ments. The tax of one and one-half per cent, is equivalent to an income tax of twenty-five per cent., on a six per cent, investment. A general income tax of ten per cent, would create a revolution — yet -we take a quarter of their income or more, from the most help- less class in the community." What is true of the city of New York is more or less true through the state; and it is true not only in the state of New York, but in every American state where the modern forms of economic and industrial life have supplanted the simpler con- ditions of a purely agricultural community. We do not believe that the escape of personal property from assessment and taxation under the present system arises so much from the wickedness of our citizens or from the depravity of human nature or from the willingness of the owners of wealth to commit perjury and to debauch our tax officials, as it does from 8 Repobt of Special Tax Commission. laudable just and widespread sentiment to the effect tl ft all should be taxed alike. We are of the opinion that if our citizens generally could be- lieve that they are being taxed fairly, as well as equitably, there would be few who would seek to evade the payment of their due share, but no one can be blamed who wishes to avoid paying more in proportion than his neighbors in the same class. The experience of the state of New York in this regard is the experience of every other state and nation, except that as New York is the center of the nation's wealth and industry, and forms the chief type of the modern complex industrial organization, the breakdown of the personal property tax is more complete here than elsewhere. Eut the difference is only one of degree, and as the industrial systems of the other American states gradually approach that of New York, the fiscal situation is becoming the same. A general property tax upon the owners of personal prop- erty is everywhere, by legislators and economists alike, pronounced to be under modern conditions ineffectual, and therefore ineqv : ble and unjust. This is now so universally recognized by ai, those who choose not to be blind to actual facts, as to require no extended argument or comment. Your Commissioners are agreed on certain bills which they think will distinctly improve the present situation. Your Commissioners believe that the effect of these bills, if enacted into statutes, together with a bill to be discussed further on and providing for the return to the various counties of all sums in the State treasury above a reasonable and prudent surplus, will be, to reduce the taxation upon real estate considerably and to effect a greater approximation to justice in taxation than exists at present. These alterations, together with other minor recommendations to be explained subsequently, will, in the opinion of your Com- missioners, go far to satisfy the demands both of revenue and of equality, and, if enacted into law, will put the tax system of New York far in advance of those of her sister states. These recommendations will now be presented and explained in detail. Eepoet of Special Tax Commission. 9 THE INHERITANCE TAX. While laws imposing a tax upon inheritances have existed in the United States since 1826, there has been an especially note- worthy development of these taxes abroad during the last genera- tion and in the United States during the last fifteen years. The most extreme development of these laws have been in the most) democratic countries, like Switzerland, Great Britain, Austral- asia and Canada. In all of these nations the idea of a graduate'd progressive inheritance tax — that is, an inheritance tax graduated not only according to relationship, but also so as to increase with the size of the estate or with the size of the share coming to the recipient — has become firmly established beyond the reach of i criticism. In fact, it seems to be regarded with as much popular I i'avor as any tax measure can be expected to receive. The system of an inheritance tax graduated according to the size of the estate scarcely existed in this country until the short- lived Federal law passed in 1898 to meet the expenses of the Spanish- American war. Previous to , that time Illinois had adopted an act imposing a graduated progressive tax upon collat- eral inheritances, but it was not of much importance. Since then, however, the greater attention which the whole subject has received has led to very careful reports from a number of com- missions and to the adoption of elaborate and scientific graduated progressive inheritance tax laws by the States of Wisconsin (in 1903) and California (in 1905). It is probable that similar laws will shortly be enacted in a number of other states. The "system of possible graduation is, as has just been stated, two-fold: Graduation by relationship and graduation by the amount involved. ■ We have had in this State for some years two rates of inheri- tance taxes, or, as they are also called, transfer taxes — one at one per cent, for the immediate family, and the other at five per Vent, for the more distant relatives and total strangers. This grad- uation by relationship is, so far as we know, universal where in- heritance taxes are found, and meets with no criticism. It should undoubtedly be continued in our system. The only ques- tion is whether the number of different rates should not be in- creased so as to make some distinction between the nearer col- lateral relatives, such as nephews and nieces, and total strangers. ! t seems to your Commission that it would be fairer to make at least three rates; a minimum rate of, say, one per cent, for the 10 Eepoet of Special Tax Commission. immediate family — that is, the same persons who pay the mini- mum rate under the present law — a rate of three per cent, for the nearer relatives beyond the immediate family, such as the lineal descendants of brothers and sisters, uncles and aunts and first cousins; and a third rate of five per cent, for more distant relatives and strangers. In Wisconsin and California, which have the most elaborate m'odern laws, there are five or six grades among the relatives, but this seems to' us unnecessary. We think that it will be generally conceded that this addition of another grade for relatives who are near of kin, though not of the immediate family, is fair and just, and the only objection that can be made to it is that it will tend to reduce the revenue. As the revenue from the taxation of collateral inheritances, even at a heavy rate, is very much smaller in the aggregate than the revenue from the taxation of direct inheritances, even at a small rate, we feel that the reduc- tion in revenue caused by the change we suggest will not be large and will be much more than compensated by the increase in rates based upon amount, which we are recommending. The second kind of graduation is according to the amount of the estate or the share. This plan of a graduated progressive inheritance tax was publicly discussed in New York State in 1897, in which year a bill (known as the Dudley Act) imposing an inheritance tax graduated by the size of the estate and run- ning up as high as fifteen per cent, passed the Legislature, but was vetoed by Governor Black. Governor Black's message placed his veto mainly upon two grounds: First, that the State did not need the additional revenue, and, secondly, that the whole plan of graduating the tax so as to make the larger estate pay a larger rate than the smaller estate was unequal and unjust, and jfayored the poor jitjthe expense of the rich. We believe that the views expressed by Governor Black are jiQ_$j>o_gener ally held at the present day ; chiefly because the history of similar experiments in other cdnntries and in other states has shown that the law has worked satisfactorily and has not m et with_ serious criticism even frointhe classes that might be supposedTomost strongly object to it. Whatever the economic theory upon which we may support the idea of an inheritance tax at all — whether we believe in the theory that the State is entitled to a share in the estate of a' decedent for the reason that it surrenders its right to take the whole estate to itself, or for the reason that it supplies the means Repoet of Special Tax Commission. 11 and protection by means of which the deceased can distribute his property, or whether we adhere to the back tax theory, or to the diffusion of wealth theory or to the accidental income theory — we all agree that it is not unreasonable that a larger percentage I of a large fortune should be paid to the State than of a small f one. The man who saves a little can, if he sees fit to do' so, keep it in ordinary circumstances about him and distribute it virtually in person among those whom he wishes to have it after his death; but one of our modern enormous fortunes must almost neces- sarily be invested far and wide in enterprises of every description, with branches all over the country. The possessor of such a for- tune has never seen most of it; it is represented to him, in a large part, by a safe deposit box full of certificates of stock, bonds, con- tracts, mortgages, etc. The whole power of the State is essential not only to guard and to protect his interests, but to distribute them after his death. More than that, it was the State itself by its laws granting to individuals of great ability and force free sway to exercise their powers and to make them productive, which gave them scope and opportunity to accomplish the enor- mous' results which we see to-day. "While it is true, therefore, that ability and vigor were necessary to accomplish the end, the great results achieved could never have been attained without the active assistance and protection of the State; and this assistance and protection are more .necessary to the amassing of a great for- tune than of a small one. This conception of the social aspects of private wealth has made great strides in recent years and is now recognized by not a few of our wealthy citizens themselves. Mr. Andrew Carnegie, in a recent and striking speech at a meeting of the National Civic Federation, in New York in December, 1906, said, after describ- ing the growth of many of the large fortunes of the country: "Now, who made that growth? The growth of the American Republic — that is where that wealth came from and that is the partner in every enterprise where money is made honorably; it is the people of the United States * * * I say the com- munity fails in its duty and our legislators fail in their duty if They do not exact a tremendous share, a progressive share." It is largely for some such reasons that it seems to your Com- missioners that a great fortune may well be expected to contribute a greater percentage to the State when it passes to others than a small one. Your Commissioners believe that__agraduated in^ 12 Report of Special Tax Commission. Jjeritance tax is defensible, not so much on the ground that large fortunes are a menace to the public, as on the theory that the ability to contribute to the support of government grows more rapidly than the amount of the fortune or the size of the estate. This is a* subject, however, which could be discussed at far greater length than now seems desirable or necessary. Our conclusion that an inheritance tax graduated according to the amount is just and expedient is based not alone upon theory, but upon the practical experience of the nations and states that have tried it. It works there and it works well. We believe it will work here, and we, therefore, advise the adoption of an inheritance tax gradu- ated according to the amount involved. Before deciding upon the rate of graduation, however, we must decide on the method. This involves the question as to whether the tax is to be levied and computed upon the entireestate trans- ferred, as is the plan of the present iSTew York law ; or upon the individual^s_sljare coming to ^the recipient, which is the plan adop- led by the more modern statutes of .Wisconsin and California. The only substantial reason for assessing and computing the tax upon the entire estate, rather than upon the individual share re- ceived, is that greater revenue is thereby produced. We think, however, that this objection to taxing the individual share received can be overcome by so arranging the rates and percentages as to produce equally good results. On the other hand, reasons of fairness and justice, as well as sound theory, are on the side of the assessment and computation of the tax upon the individual', &hare received. For recipients who belong to precisely the same class and receive precisely the same amount will thereby in all cases pay precisely the same tax; whereas, if the percentage of tax were determined by the size of the estate, one of such a class might be compelled to pay far more than another. For example, if the rate of tax is three per cent to collateral relatives, in the case of small estates, rising to fifteen per cent to such relatives in the case of very large estates, a cousin who receives a legacy of $1,000 from a man of moderate means would have to pay a tax of only $30 upon it; whereas, a similar cousin of a man of great wealth who receives a similar legacy of $1,000, would have io pay a tax of $150 upon it. It was because of precisely such discrimination as this that the first progressive inheritance tax law, passed in Wisconsin in 1899, was declared unconstitutional; and while it perhaps cannot be claimed to be unconstitutional in Bbpobt op Special Tax Commission. 13 this State, such a state of affairs is certainly unjust and to be avoided. It is important in determining this question to bear in mind the decision of the Supreme Court of the United States (Knowl- ton v. Moore, 178 U. S. 41), upon the constitutionality of those sections of the Federal War Eevenue law of 1898 which levied a progressive inheritance taxi It had seemed, we believe, to most lawyers, and had been held by the lower Federal courts, that this Federal Inheritance tax of 1898 was graded in rate by the size of the entire estate, and not merely by the amount of the in- dividual legacies or distributive shares received. The Supreme; Court of the United States held, however, that the proper con- struction of the War Eevenue Act was that the progressive rate of taxation upon inheritances was to be determined by the amount of the individual legacy or distributive share, and not by the amount of the entire estate, pointing out (p. 77) that the other con- struction of the Act would "occasion great inconvenience" ami " produce inequality and injustice." In that case it was forcibly argued that the other construction, that upheld by the Courls below, would be unconstitutional. The Supreme Court declined to discuss this constitutional question, as it held that the true construction of the act was otherwise, but the prevailing opinion said as follows upon this point (p. 77) : " It may be doubted by some, aside from express constitution restriction, whether the taxation by Congress of the property of one person, accompanied with an arbitrary provision that the rate of tax shall be fixed with reference to the sum of the property of another, thus bringing about the profound ine- quality which we have noticed, would not transcend the limitations arising from those fundamental conceptions of free government which underlie all constitutional systems. On this question, however, in any of its aspects, we do not even intimate an opinion, as no occasion for doing so exists, since as we understand the law we are clearly of the opinion that it does not sustain the construction which was placed on it by the court below." The reservation by the Supreme Court of the United States of its decision upon this important constitutional question affords, in our opinion, a controlling reason why the method which the Supreme Court has declared to involve "profound inequality" should not be adopted, and why, on the other hand, the method approved by the Supreme Court, and which we now advocate, should be adopted. There is another reason, which we may perhaps call a sociolog- ical one, for the adoption of the plan which we advocate, namely, the calculation of the tax upon the amount coming to the in- 14 Kepobt of Special Tax Commission. dividual recipient, rather than upon the entire estate. The result of this plan is to make the tax somewhat less severe where an estate is divided among a number of beneficiaries, than in cases where it'isicft to a single legatee. We think it will be generally agreed that it is desirable that enormous fortunes should be widely* distributed, and not handed down to a single recipient to be in-/ creased and constantly to grow to even greater size. Our States* have never tolerated the law of primogeniture. We believe there is a strong public opinion in favor of the diffusion of estates. We believe, therefore, that the adoption of the plan here recom- mended, by reducing to some extent the tax to be paid where a large estate is divided among many recipients, will tend in some measure at least to the diffusion of the enormous wealth which has been heaped up by some of our more successful fellow citizens. The introduction of the plan of grading the tax by the size of the estate leads to these inequalities and is, in our opinion, a suf- ficient reason for changing the plan of computing the tax upon the entire estate, which has existed in New York for several years. For these reasons, therefore, your Commission recommends that the tax be assessed and computed upon the individual share re- ceived, rather than upon the whole estate. The bill we present, therefore, necessarily changes the size of the exemptions. We have endeavored to preserve the theory of the exemptions as it exists in the present law ; so that an estate of $10,000 passing by will or descent to the immediate family will not involve the recipients in the payment of any tax. We have made the exemption to any individual in the first class — that is, to the immediate family — $2,500; bxit have further provided that if the total estate does not exceed $10,000, there shall be no tax upon any recipient. As to more distant relatives, such as nephews and nieces, uncles and aunts or cousins, comprising the second class, we have placed the exemption at $250; and as to yet more distant relatives and strangers, comprising the third class, we have placed the exemption at $100. The chief object of this last exemption is to meet the common case of small legacies to friends, frequently consisting of watches, pieces of jewelry, pieces of silver, furniture, books and other articles of that kind, the tax on which is very minute and aggravating in inverse ratio to its size. We also consider it more equal and fair to allow these exemp- tions in all cases;- that is, to exempt the first $2,500, $250 and $100 respectively, out of each individual share coming to any Report of Special Tax Commission. 15 recipient, no matter how large may be the total amount which he receives. We have carefully considered another class of exemptions pro- vided for by the existing law, namely, exemptions based upon the character of the recipient of the inheritance. These provisions are contained in section 221 of the present law, and represent the results of a number of amendments by past legislatures. We be- lieve that these exemptions as now provided for constitute a just and fair treatment of this subject, and we therefore advise that no changes be made ^herein. We come finally to the question of the graduation of the rates themselves. Here we believe that the rates should be made suf-( ficiently high to raise a large revenue, without being so high as to I drive large estates from our State. After careful consideration we suggest the adoption of the following grades, rates and per- centages : The rates or percentages above referred to, namely, one per cent in the case of near relatives; three per cent in the case of more distant but yet near relatives ; and five per cent in the case of most distant relatives and strangers, shall be called the primary rates and shall apply to the first $25,000 or amounts less than that sum coming to each recipient above the exemptions. When the amount of any individual share, that is, the amount coming to any recipient, shall exceed $25,000, above the exemp- tions, then the rates upon the excess shall be as follows: Upon all amounts received in excess of $25,000 above the exemption, and up to $100,000, twice the primary rates; on all amounts re- ceived in excess of $100,000 above the exemption, and up to and including $500,000, three times the primary rates; on all amounts received in excess of $500,000 above the exemption, and up to and including $1,000,000 above the exemption, four times the primary rates ; and on all amounts in excess of the first $1,000,000 above the exemptions, five times the primary rates. It will be noticed that these progressive rates or percentages are meant to apply merely to their own grade and not to the entire share or amount coming to the recipient. For example, the re- cipient of $2,500,000, who is, we will say, a son of the deceased, will pay one per cent on the first $25,000 over the exemption, two per cent on the next $75,000, three per cent on the next $400,000, four per cent on the next $500,000 and five per cent on the re- maining $1,500,000. 16 Repobt of Special Tax Commission. The effect of the change in the statute which we propose will be readily seen by the sub-joined computations which compare the tax now required to be paid and that required by the Bill we pro- pose, from an estate of $60,000, another estate of $600,000, still another estate of $6,000,000, and finally an estate of $60,000,000. In order not to render this report too verbose, we have sup- posed two classes of distributees for each of the assumed estates. Under the present statutes, an estate of $60,000 passing to the immediate family will pay a tax of $600. Passing to two cousins and a stranger, the tax would be $3,000. Under the Bill proposed, such an estate passing without will to a widow and two children, the total tax on the estate would amount to $525 ; whereas for the same estate passing to two cousins and a stranger, the total tax would be $2,180, or somewhat less than under the present law. . If the estate were $600,000 and passed to a wide w and two chil- dren, under the present statute the total tax collectible would be $6,000 ; whereas, under the proposed bill the total tax to be col- lected would amount to $14,025. Under the present statute a $600,000. estate passing to two cousins and a stranger would pay a total tax of $30,000; whereas under the proposed bill the re- cipient would pay a total tax of $52,190. In the case of an estate of $6,000,000 passing to a widow and two children under the present law, the total tax to be collected would amount to $60,000; whereas, under the proposed bill the total tax collectible would amount to $250',875. The same estate of $6,000,000 passing to two cousins and a stranger would pay a total tax of $921,150, as against $300,000 under the present statute. If the estate were $60,000,000 and passing to a widow and two children, under the present law, the total tax would be $600,000 ; whereas, under the proposed bill the total tax collectible would amount to $2,950,875, derived as follows: Dividing the $60,- 000,000 into three equal shares, the value of each share is $20,000,000. Deduct from this the exemption in such cases of $2,500, and there remains $19,997,500 as the taxable amount of such distributive share, taxable as follows: Twenty- five thousand dollars at the primary rate of one per centum, making $250; $75,000 at twice the primary rate, amounting to $1,500; $400,000 at three times the primary rate, which amounts to $12,000; the next sum, $500,000, at four times the primary rate, amounting to $20,000 ; and the remaining portion of the taxable amount of such Repobt of Special Tax Commission. 17 distributive share being $18,997,500 and taxable at five times the primary rate, or $949,875, each share must pay a total tax of $983,625. Hence the three shares would pay a tax amounting to $2,950,875. If an estate of $60,000,000 passed to two cousins and a stranger, under the present law the total tax received from such estate would be $3,000,000; whereas, under the proposed bill the state would receive the sum of $10,821,150. RECAPITULATION. Widow, etc., Widow, etc. Cousins, etc., Cousins, etc., ESTATE. present law. proposed law. present law. proposed law. Sixty thousand dollars $600 $525 $3,000 $2,180 Six hundred thousand dollars. 6,000 14,025 30,000 52,190 Six million dollars 60,000 230,875 300,000 921,150 Sixty million dollars 600,000 2,950,575 3,000,000 10,821,150 If we compare the suggested rates with those that are paid in other states, we shall find them not excessive. In England the highest rate on direct relatives amounts to 8 per cent, as against our suggested 5 per cent.-; but on the other hand the highest point reached in England for strangers is 18 per cent., as against our suggested 25 per cent. In Australasia and Switzerland, how- ever, the highest rates are as high as, or higher than, those sug- gested here, and. in one of the cantons in the latter country, the maximum (in case of intestacy) goes to 75 per centum. In the United States the highest rate now in force is 15 per centum, in Wisconsin, California and two or three other states, on very large legacies and distributive shares to distant relatives and strangers. A table of the rates of inheritance taxes in some of the leading foreign countries is appended herewith: GRADUATED INHERITANCE TAXES. Switzerland. (See note:) Maximum rates More Most applicable Near distant distant on sums relatives. relatives. relatives. Strangers, exceeding Bern 1— Itf 2—6* 6— 9£ 10—15,* $10,pOD Glaris i — 4 4—8 6—12 1O—20 100,000 St. Gall i— 6 4—12 6—18 10—30 Solothurn 3—6 9—18 10J— 21 12—24 4,000 Schaffhausen 2—4 4—8 6—12 10—20 18,000 Thurgan 2 — 4 3—8 5—10 6—12 5,000 Uri 1$ — 6 2—6 3—9 25—75 40,000 Zug i— 2i 1—3 2 — 4 8—10 20,000 Zurich 2—3 6—9 10—15 10—15 10,000 Note. — Compiled from Schanz, Die Steuern der Schweiz, vol. 1, pp. 155-160. Rates in force in 1890. 3 18 Kjepoet of Special Tax Commission. Otheb Etjhopean States. Maximum rates appli- Direct Near Distant cable on Date of law line relatives relatives Strangers sums over Italy 1894 1-6* 4J-8J* 12-13* 15* 1,000,000 Fr. France 1901 1-2J 3f-13i 12-18 J 15-18J £1,000,000 England 1894 1-8 1-8 1-18 1-18 £1,000,000 Germany ... 1906 4-8 '6-15 10-25 1,000,000 Mk. Attstbaiasia. (See note.) Maximum rate ap- plicable Amount Near Distant to sums exempted relatives relatives Strangers exceeding New South Wales £1,000 1-5* 2-10* 2-10* £100,000 Victoria 1,000 1-^5 2-10 2-10 100,000 South Australia 500 1J-10 1J-10 1J-10 (See*) Queensland 200 1-5 2-10 4-20 20,000 West Australia 1,500 J-5 1-10 1-10 100,000 Tasmania 200 2-6 2-6 2-6 500 New Zealand 100 1J-5 2J-10 5i-13 20,000 * £200,000 for near relatives and £20,000 for distant relatives. Note. — Compiled from Coghlan, Statistical account of Australia and New Zealand, 1904. We recommend two minor changes in the existing law, which will, in our opinion, prevent inequalities which have been shown by experience to exist. In the first place, we recommend an amendment to subdivision 5 of section 220, by which the word " donee " in the second lino from the end of such subdivision is changed to the word " donor.'" The reason for this change is as follows : As the law now stands, where a power of appointment is exercised by the donee of the power, there is declared to be a transfer taxable under the pro- visions of the Act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by said donee by will; but where the donee of such a power omits or fails to exercise the same, and the property goes in the manner provided by the instrument which created the unexercised power, then there shall be deemed to be a transfer taxable under the provisions of the act at the time of the omission or failure to exercise the power, in the same manner as though the property to which such ap- pointment might have applied belonged absolutely to the donee of such power of appointment and had been bequeathed or de- vised by such donee by will. The earlier provision of this sub- division, by which the transfer resulting from the exercise of a power of appointment is treated as if it were a transfer by will Repobt of Special Tax Commission. 19 by the donee of the power, seems to us just and proper. But the later provision, that where-there is a failure to exercise the power the transfer which takes place under the provisions of the original instrument creating the unexercised power shall be deemed to be a transfer as by the will of the donee of the power who has not exercised his power, seems to us unjust; and such transfer should be treated as if it were a transfer by the doner of the power, that is the person whose will or deed actually defines and effectuates the transfer which finally takes place. As an illustration of this point, we suggest the case of a man whose wife dies leaving two or three small children, and who thereupon marries again. He has no children by his second wife, and at his death provides that all of his property shall go to his widow for life, and after her death shall go to his children in such proportions as she shall by her will appoint, with the provision that if she fails to exercise the power it shall go to those children equally. If she choose to exercise the power, and does in fact determine what interests those children shall take after her death in their father's estate, we see no especial injustice in providing that they shall pay a transfer tax' as if they were receiving the property from her. But if she fails to exercise the power which those children really take under their father's will, the transfer is made from him and by him wholly unaffected by any act of their step-mother, who has failed to ex- ercise the power. Under these circumstances we see no reason why those children should be compelled to pay a five per cent tax a.= strangers simply because their step-mother was the donee of the power of appointment which she never exercised. In the second place, we recommend that there be stricken out )f section 221 of the present law a recent amendment which pro- rides that an adopted child shall not be deemed to be a member of the immediate family and entitled to the lowest primary rate, un- less it can .show that both of its parents were dead when the re- lationship commenced. This provision was put into the law by a recent amendment, and has proved in practice to work injustice in many cases, more especially in cases where one of the parents is dead and the other unable to support the child, as well as in cases where although both parents may be believed to be dead it is impossible to prove the fact. We, therefore, recommend that this added provision be stricken out, and that there be a return to the old law upon this subject. While instances occasionally arise under the old law where it seems unjust to treat an adopted child 20 Repobt of Special Tax CoMinssioir. as a member of the immediate family in case it has parents of means who are able to take care of it, experience has shown these cases to be very few compared with the other cases above men- tioned, which make the amended provision unjnst. Another question which remains for discussion is that of thr> division of the proceeds of the tax between the state and the coun- ties. At the present time the state retains the entire proceeds. As a much larger sum would be derived from the taxes proposed under the bill which we present, we further provide that one-half of the amount received from each county in the state shall be returned to such county for the support of its local government. The effect of this change will be to lighten the burden now resting upon the localities. This recommendation, however, presupposes the adoption of the other recommendations in our report, for if the other state taxes are not increased and if the yield of the proposed graduated inheritance tax does not at first turn out to be as satis- factory as we think it will ultimately be, it may become unwise io assign at once as much as one-half of the yield to the localities. This is, however, a matter which can easily be adjusted in the future. The last problem in connection with the inheritance tax is the danger that an inheritance tax may also be imposed at some future time by the national government. This is a situation that onr Commission should earnestly deprecate and we have something to say on this point later on in the discussion of the relation between State and National taxes. THE TAXATION OF CORPORATIONS. The system of taxing corporations for State purposes is the \ result of' a slow growth. . The legislation has been piecemeal and j the result is that there are many inequalities in the system. The subject is so important as to merit fuller consideration than wc have been able to give to it in the short time at our disposal. Your Commission is of the opinion that a thorough investigation of the whole system would disclose the fact that many classes of corporations are far from paying their fair share of taxes. This detailed investigation we have found it impossible to make, and we refrain, therefore, from such a comprehensive recommendation. Before, however; taking up the detailed changes that we recom- mend, we should like to call attention to one or two of the broader problems connected with the taxation of corporations. It is admitted on all sides that the present system of attempt-/ ing to reach corporations for local purposes on their personal prop-\ erty is ineffective. The Commission believes that it is worthy of consideration by the legislature whether the system now in vogue for administering the excise tax, and which now in a measure applies to corporation taxes, should not be extended to all corporation taxes. Under such a scheme, corporations, while remaining subject to local taxation on their real estate, would be exempt from direct local taxation on their personal prop- erty and would pay an increased franchise or license tax to the State authorities, a substantial portion of which could then be returned to the localities. The only caution to be observed would be to so arrange the proportion that the localities would under no circumstances receive less than they are receiving at present. In New Jersey, for instance, where a somewhat similar system was introduced in 1905 in the case of railroads, the tax on the main stem yielded in 1906 $3,503,529.70, as against $950,- 991.21 under the prior system; and of this amount $2,533,- 867.35 is to be appropriated for the benefit of the schools and the reduction of local taxes. In Pennsylvania railroads are not taxable at all for local purposes on their personal property. Under such a system of increasing the State tax on corpora- tions, but exempting their personalty, from local taxation, we rfu2iild_^tairLjapt_only_ greater, equity, but more, revenue ; and some members of this Commission believe that the localities also would secure more income from this source than at present. [21] 22 Eepoet of Special Tax Commission. Another point worthy of consideration is whether more equality might not be attained as among the corporations themselves bv levying the State tax on the basis of a valuation equivalent to stock and bonds, instead of on capital stock alone as is now the law. From the economic' point of view bonds are not a debt but a part of the productive capital. Two corporations with an investment of a million dollars, the one with one entire million dollars in capital stock and the other with half a million dollars in stock and half a million dollars in bonds, ought for the pur- poses of taxation be treated alike; yet at present we tax the one corporation just twice as much as the other. In our sister States like Pennsylvania and Connecticut, this inequality has been redressed, but we still pursue the older plan, which we adopted from Pennsylvania and which has long since been abandoned there. The Commission suggests this view of the case for the consid- eration of the Legislature. In view of the fact, however, that there would be at the present time considerable difficulty in making these changes and because of the greater urgency of the other reforms that we suggest, we have not as yet prepared bills to cover these points, and content ourselves with recommendations which, on the basis of the present system of State and local tax- ation, would equalize the taxes more justly on the various cor- porations and would assure more efficient and certain collection of these taxes. With reference to taxes imposed for local purposes, sections 12, 27, 28 and 31 of the Tax Law furnish the present method. Section 27 requires a report to be furnished by each of such cor- porations annually; Section 31 provides the form of the report; Section 28 specifies the penalty for failure to file these reports; but the penalty has proved ineffectual, because no officer author- ized to enforce the penalty was furnished the necessary informa- tion under any provision of the present statute. Under the bill proposed by your Commission, Section 28 is to be amended by making it the duty of the local assessors of the^ State to transmit the necessary information to the Attorney | General relative to corporations failing to file their reports as re- f quired by Section 27. A further proposed amendment to Section 28 makes it the duty of the Attorney General to bring the actions for penalties al- ready found in the statute; and further commands the Attorney General, in case of the willful neglect of a corporation for two Kepokt of Special Tax Commission. 23 successive years to file these reports, to bring action for the for- feiture of the charter of such corporation. Some other and slight changes in the phraseology of the pro- visions above described are suggested, so as to make the procedure clear and certain. Article IX of the Tax Law furnishes the authority for impos- ing taxes on corporations for State purposes; and varying rates are imposed by various sections of that Article. For example, ■ steam surface railroads are taxed at the rate of one-half of one per cent, on their gross earnings, while elevated and surface railroads are taxed one per cent., and in addition are required to pay a tax of three per cent, upon the dividends paid annually, in excess of four per cent, on their paid-up capital. The reason for this discrimination, if ever there was any reason, seems to your Com- missioners to have been removed by the enactment of the so- / called Ford Franchise Law found in Sections 42, 43, 44, 45, 46 and 47 of the Tax Law. Again the tax imposed upon water-works corporations, gas companies, electric and steam-heating companies, light and power companies is one-half of one per cent, upon their gross earnings, and three per cent, upon the amount of dividends declared in excess of four per cent, of the paid-up capital stock. It seems to your Commissioners that one rate should be estab- lished for all public service corporations of one and one-half per cent, upon the gross earnings, striking out the provisions for tax- ing dividends, and the bill proposed by your Commissioners amends Sections 184, 185 and 186 of the Tax Law in that respect. This rate of one and one-half per cent, upon gross earnings is I still far lower than is found in many of our sister "States. Under the present statute trust companies are taxed at the rate of one per cent, on their capital stock, surplus and undivided profits for the benefit of the State treasury; while banks of dis- count are taxed in a similar way and at a similar rate for the benefit of the locality. This rate of taxation is much less than other property pays in the same locality for local purposes. Your Commissioners are of the opinion that the rate should be increased to one and one-half per cent, in each case, but that the assessed value of the- real estate owned and occupied by them should be deducted from the value of the capital stock; and it is further recommended that one-third of the ti».t should be retained for the State, and two-thirds for the locality where the bank or trust com- pany is situated- 94 Repokt of Special Tax Coaranssioir. We next come to the subject of savings banks. When the tax upon the surplus of savings banks was adopted, it was freely pre- dicted that great hardship would ensue and the familiar argument was made that the tax was levied upon the savings of the poor. Indeed, there were those who even predicted that savings banks would be obliged to close their business on account of this tax. The brief experience of New York with this tax has, in the opinion of your Commission, not only demonstrated its wisdom, but has led us to advocate a small increase in the tax, so that the localities wherein these banks are located may derive a substantial benefit therefrom. Instead of the rate of dividends having been reduced by the savings banks, our New York city papers are filled with advertisements of the various savings banks in the city call- ing for deposit upon which 4 per cent, interest is promised. These advertisements in the New York city papers, from the first of January on, notify depositors that all sums deposited before January 10th, will draw interest from January 1st. It has long been the policy of some of our sister States to tax not only the surplus, but even the deposits themselves, as will appear from the details in Appendix D. Maine levies a fiat tax of 5/6 of 1 per cent, on deposits, as well as on surplus ; New Hampshire, 3/4 of 1 per cent, on deposits; Vermont, 7/10 of 1 per cent, on deposits; and in addition to this all deposits in excess of $1,000 are taxed locally against the depositors. Massachusetts levies a straight tax of 1/2 of X per cent, on deposits ; Ehode Is- - land 4/10 of 1 per cent, on deposits and surplus; Connecticut, 1/4 of 1 per cent, on deposits; New Jersey, a general tax on the full amount of the assets; Pennsylvania, 4/10 of 1 per cent, on loans and 3 per cent on net earnings; Maryland, 1/4 of 1 per cent, on deposits. In New Jersey, moreover, deposits in savings banks are also taxed against the depositors, just as all other personal property is taxed. In Pennsylvania, a further tax of 4 mills is levied on money at interest, including mortgages, judgment, bonds, notes, stocks, etc Thus it will be seen that New York is still behind the adjoining States in regard to this important and growing means of invest- ment, utilized by large numbers of wealthy citizens, because of the r-rrtainty of the return without labor, anxiety or sesponsibility upon the depositor. The claim has long been made that banks for savings were patronized by the mechanic, the laborer, and widow and the orphan ; that it would be unwise to tax these small savings. The Ebpoet of Special Tax Commission. 26 experience of later years shows that savings banks have bean utilized by persons of great means for the very purpose of escap- ing all taxation. The records of our Surrogates courts relative to the appraisal of estates for the purpose of the inheritance tax, shows some remarkable figures. Quite recently an estate was administered in one of our interior counties which showed a deposit in every savings bank in the State between and including Buffalo and Albany. Within a few weeks past, another estate was appraised for the inheritance tax, consisting of $65,000, every dollar of which was deposited among various savings banks of the State. Many other illustrations might be given drawn from the records of our Surrogates courts. Your Commissioners believe that a small deposit may well be exempted; but in view of the fact that the law books are full of cases brought for the settlement of the ownership of savings bank deposits standing in the name of John Smith as agent; John Smith in trust, John Smith as attorney, Ellen Smith — John Smith draw, and so on ad libitum, where the courts have held that " John Smith " was the owner of all the deposits, it seems to your -Commissioners that the time has come when these unusual deposits should, where it is possible to identify them, be made the subject of taxation. Of course, the best method of avoiding such abuses of the exemption of taxation, would be to prevent the duplication of deposits in savings banks by the same depositor, and the possible further restriction of the amount that can be deposited by any single individual. It is, however, well nigh impossible effectually to prevent this duplication of deposits by the same persons, and it therefore seems not unreasonable to your Commission to amend the present law by providing that deposits should be exempted to an amount not exceeding $1,000 to any person. It may indeed be claimed that this is an arbitrary figure, but it must be pointed out that the practical result of this provision will be very slight result indeed, for the great majority of deposits in our savings banks are even now under $1,000. The provision moreover may lead to the desirable result of limiting deposits in any one bank by any one person, to $1,000, and in that case, of course, there would be no tax at all on deposits. For local purposes, the real and personal property of cemetery corporations is now exempt, under subdivision 1 of Sec. 4 of the Tax Law. This exemption does not affect the small and mutual 26 Kepoet of Special Tax Commission. cemetery associations or companies scattered throughout the country or cemeteries connected with and forming a part of church yard properties; but it does exempt corporations organized for speculative purposes, many of which are now reaping large returns and paying large dividends. We see no reason why a cemetery corporation paying dividends should escape taxation, or why an investor reaping a profit from his investment in such a corporation should not be called upon just as a stockholder of any other corporation for profits, to contribute to the public treasury. The bill submitted by your Commissioners, therefore, includes the repeal of that portion of subdivision 7 which exempts cemetery corporations. There remains another matter connected with the special 'franchise tax, known as the Ford Franchise Tax. The adminis- tration of this law has developed a defect with regard to the collection of taxes thereby assessed. Having classed the property just brought under the taxing hand as real estate, the methods in vogue for the enforcement of the payment of taxes assessed upon real estate have been applied to the franchise tax. It has, how- ever, been observed that in many instances corporations have neglected or even refused to pay their taxes, and that the present remedies have not been sufficient to assure their collection. To advertise and sell telephone and telegraph wires as real estate is advertised and sold to-day for non-payment of taxes, does not produce satisfaction of the debt; and even the so-called lien of the tax upon the property of street railways has not led to as full collection of this tax as was anticipated; for in many of the cities of the State the purchaser attacks sales on account of real estate taxes acquires only a lien of questionable value. Where- fore, your Commissioners propose a bill adding a new section to article 2 of the Tax Law, to be known as section 48, providing for the forfeiture of the franchise whereof the owners failed to pay within sixty days after such assessment or tax becomes payable, or, in case of a contest, after its validity shall have been fully determined. The adoption of all these recommendations with reference to corporation taxes will, in the opinion of your Commissioners, result in considerably increased equality of taxation, as among the corporations, and will also provide a substantial increase of the revenues not only of the State but also, under the scheme of apportionment here suggested, of the localities as well. THE STOCK TRANSFER TAX. Your Commission has carefully considered the so-called Stock Transfer Tax, being Article XV of the Tax Law, and has been waited upon by a delegation from the Stock Exchange of the city of New York relative to the same, and has received a memorial presented by the Consolidated Stock and Petroleum Exchange of the city of New York. Both of these bodies advanced with great force a number of reasons against this tax and in support of its repeal. These arguments were, for the most part, the same as were presented to the Legislature prior to the enactment of the law. While some of the arguments advanced were very forcible, your Commission is not prepared to recommend the repeal of the law. Nevertheless, your Co mmi ssion feels that certain changes and amendments ought to be made. A leading criticism of the present law which was strongly urged ! upon the Commission was the fixing of a flat rate of two cents per share upon all shares of stock, whatever the par or actual value thereof. Among the important stocks of real value dealt in upon the Stock Exchange are stocks of a different par value; as for instance, New York Central, Saint Paul, Illinois Central and other stocks of a par value of $100 a share, whereas, Pennsylvaia stock and Eeading stock have a par value of only $50 a share, and Anaconda Mining stock has a par value of only $25 a share. The result of the present tax rate is that dealers in Pennsylvania stock and Eeading stock pay twice the tax rate paid by dealers in New York Central, St. Paul, Illinois Central and other similar stocks, and dealers in Anaconda mining stock pay four times the rate paid by dealers in the last mentioned stocks. In addition to this, dealers in stocks of a very small par value — and there are many such stocks, of a par value of a dollar a, share, and some even as low as a par value of one cent a share — have to pay a tax rate which is tremendously out of proportion to the tax paid by dealers in other stocks, and is, in many cases, absolutely confiscatory. It is true that many of these stocks of small par value are frequently of less real value, and often are little more than swindles upon the specu- lative public; but this is not true of all of them. It seems to your Commission unreasonable practically to confiscate many stocks as to which no criticism can be made, for the sake of restraining speculation in others which are open to criticism. [27] 28 Repoet of Special Tax Commtbsior. Since the above conclusions were reached by your Commission, the Court of Appeals has handed down its decision declaring the present flat rate to be unconstitutional. The effect of this decision will practically be a return to the method of taxation provided for by the original law upon this subject, namely, a tax of a percentage upon the par value of the stock transferred ; that is, two cents upon each $100 of par value. Your Commission is of the opinion, how- ^ I ever, that it would be more fair and equitable to proportion the j tax to the market value of the securities rather than according to ' the par value. If one share of stock of a par value of $100 is selling at $20, while a share of stock of another corporation, also of a par value of $100, is selling at $150 or $300, there is little reason why the tax should be the same. It might be claimed that the brokers' commissions are not calculated according to the market value of the stock. The answer to this, however, is that the brokers' commissions are paid as a reward for their trouble, and there is no more trouble in selling shares of stock of a higher value than there is in selling an equal number of shares of a lower value. In the case of the tax, however, which is ultimately borne by the prin- cipal himself and not by the broker (unless the broker be acting as a principal, as is the case with the so-called room traders and in some of the arbitrage operations), it is assuredly more equitable that the amount paid by way of tax should be in some proportion to the amount bought or sold. It might further be objected that the fixing of the rate according to the market value will make the tax cumbersome and complicated, because of the necessity of affixing different amounts of stamps to the slip for each operation. This objection, however, is likewise not a tenable one, for every broker's slip contains not only the number of shares and the price of each share, but the total result in dollars, so that it would be an exceed- ingly simple matter to take two per cent of this sum and to affix the requisite number of stamps. The stamps, of course, would have to be provided in convenient denominations, of $2, $1, fifty cents, twenty-five cents, ten cents, five cents, two cents and one cent. It seems, therefore, on the whole, to your Commission to be wiser to recommend a tax of two cents upon each $100 of actual or selling value of the stock, instead of upon the par value of the stock. The effect of this change is, in our opinion, somewhat problemat- ical from the point of view of revenue. It is indeed possible that Ebpoet of Special Tax Commission. 29 tiie revenue will be considerably augmented, and in tbat case it may become advisable to reduce tbe rate of tbe tax, but we tbink tbat it is part of prudence to await tbe actual results, before taking any steps wbicb may imperil tbe revenue interests of tbe State. For tbis reason we do not at tbis time tbink it wise to recommend any alteration in tbe rate of tbe tax. During tbe last few days two decisions bave been banded down by our courts on tbe subject of tbis tax. Tbe Supreme Court of the United States bas upheld the tax as constitutional in general principle j the Court of Appeals of this State, addressing itself to the particular question of the flat rate, has declared this provision unconstitutional. It has been impossible for use to secure full copies of these decisions, and it is not at all improbable tbat these decisions contain discussions and suggestions of importance and which ought -to be borne in mind in framing a new bill. It is for this reason that we desire to have the bill which we submit here- with considered as merely tentative in character, although we are all agreed as to the substantial justice of the change which we recommend. Another point that has been raised is the injustice of the fact that this tax should be imposed solely upon transfers of stock, and should not apply to transfers of other property and commodities conducted upon other exchanges in much the same way as transfers of stock are conducted upon the Stock Exchange. It is argued that the stock exchange tax should be extended to transfers by way of sale of any product or merchandise dealt in upon any Exchange or Board of Trade within the State, having in mind more especially such exchanges as the Produce Exchange, Cotton Exchange, Wool Exchange, Coffee Exchange, Metal Ex- change, etc. It is contended that there is no good reason why transfers upon such exchanges should not be treated in tbe same way as transfers of stock. On tbe other hand it is claimed tbat a tax upon a sale or transfer of speculative interests in bread stuffs, cotton, wool or other commodities, is an unwise tax and objection- able because applying to tbe necessaries of life. As to this argument, however, two points are to be considered: It is indeed true that it would be unwise in the highest degree to tax those local boards which are found scattered throughout the State and which consist of the producers themselves or their im- mediate representatives, for such a tax would no doubt prejudi- cially affect the interests of either producers or consumers, or 30 Report of Special Tax Commission. both. So far, however, as the operations on the so-called exchanges are concerned, it may be contended that the matter is different. The object of such a proposed bill would be to reach primarily speculative transfers on the exchange. It is indeed not denied that speculation has its legitimate place in the modern economy, and it may be readily conceded that one of the functions of legitimate speculation is to provide a broad and continuous market and to contribute, to that extent, to the steadying of prices; but, on the other hand, it is not open to doubt that there are decided disad- vantages also in speculation, and that illegitimate speculation, especially in commodities, frequently results in a " corner " of some one or more of these necessaries of life. To this extent speculation is not in the interest of the ordinary consumer, and is just as much a species of gambling for the benefit of the members of the exchanges and those who speculate therein as in the case of illegitimate speculative dealings upon the stock exchanges. From this point of view it may well be agreed that a tax upon speeu lative transfers of such commodities made upon the exchanges will substantially affect the prices paid to the producers of such com- modities, or the prices paid for such commodities by the consumer. So far as any operation of such tax would fall upon the producer or consumer, it is contended that the slight injury done to their interests by such a tax would be more than offset by the ad- vantages resulting therefrom. In almost all cases the tax would thus really be paid by specu- lators, and so far as it had any effect upon dealings in the com- modities involved, would tend to restrict undue speculation — a result which will hardly be seriously criticized. The prices paid tc the producer are usually determined without regard to the prico to which the commodity may afterwards be forced by speculation or by cornering the market, but the price paid by the consumer is frequently increased by speculative movements and by corners. In commenting on the above arguments we concede that there is great force to the criticism that stock transfers are taxed, while speculative transactions in commodities are not taxed. Your Com- mission, however, has been unable to agree upon the precise terms of a bill for such a purpose and therefore submits the matter to the Legislature for its consideration. THE RELATION OF STATE AND LOCAL REVENUES. In the above recommendations for the taxation of inheritances, of corporations and of speculative transfers on the exchanges, we have sought to give effect to some of our ideas on the general reform of taxation. We take up next two other subjects of general importance, namely, the relation of state and local revenues, and the relation of state and national revenues. In this section we proceed to say a few Words about the subject of state and local revenues. We have called attention to the fact that the chief difficulty to- day is that of local taxation and that it is the local burdens in the communities that arouse the most discontent. We have also called attention to the fact that the local communities under the American form of government are fulfilling many functions which elsewhere are in the hands of the state government. It must also be remembered that a local assessment of most classes of taxation, outside of the real estate tax, is, for obvious reasons, less effective than if the assessment and collection are put into the hands of State officials. The truth of this statement is amply attested by our experience in New York with the liquor license tax, the special franchise tax, and the corporation taxes. It is for these two rea- sons that your Commissioners believe that while we should main- tain the separation of sources of revenue as between the state and the localities, at the same time, a substantial assistance ought to be afforded to the localities by the state. We have, therefore, extended the system which is already found in the liquor license tax, and have provided that not only one-half of the excise tax, but two-thirds of the state corporation taxes should be turned over to the localities. It may even be questioned whether it is not ad- visable to extend the same principle to the tax on stock exchanges. In this way the state would not only secure what it needs for its own purposes, but a way would be found to lighten the burden of the local divisions. Unless some such scheme as this is adopted, it will be necessary to supplement very largely the present sources of revenue for local purposes. Yet, as indicated above, it is ac- knowledged on all sides' that a local assessment and collection of special taxes are in most cases less effective and less successful than a State assessment and collection. It is, therefore, no argu- ment against the proposed increased of taxation for State pur- poses that the State does not need the revenues. We must looV. at [31] 32 Report of Special Tax Commission. the system of State and local taxation as a whole, and if we do this, there is unquestionably need of greater revenues, not only in them- selves, but also to lighten the burden of the local taxation on real estate. The apportionment to the localities of a share of the taxes collected through State agency is thus an integral part of the whole system of reform. The mere apportionment of definite shares of the State taxes to the localities is, however, not sufficient. Under the older system where State revenues were secured in whole or in part from the general property tax, there was never any embarrassment about adjusting State revenues to State expenditures. If in any one year less moneys were needed, the rate on the property tax was reduced. If, on the other hand, somewhat more was needed, the rate on the property tax was increased. In this way a complete elasticity was secured. This advantage, however, has now been lost since the separation of sources between State and local revenues. We do not indeed for a moment believe that the State should revert to the former method of direct property taxation, but we believe that the elasticity which has been lost under the new scheme, can again be secured in some other way. At present the rates of taxation on all the State taxes are fixed in the various laws and are not easily changed from year to year. The consequence is that if the taxes yield more revenue than is required, a surplus is heaped up in the treasury, and this surplus, when it exceeds a reasonable amount, becomes an unwieldy and unmanageable asset; for it is far better for the moneys not needed by the State to remain in the hands of the citizens. We have seen at various times in the his- tory of the nation the evils of a surplus financiering. The exist- ing surplus in New York State now exceeds eleven millions of dollars, and will probably continue to grow. On the other hand, if the revenues should be insufficient to meet the expenses, the only escape from the difficulty is to add new taxes thus, keeping the whole budget in a state of continual confusion. Your Commissioners believe that the difficulty can be avoided by pro- viding that whenever the surplus arising from the State revenues amounts to more than the reasonable sum of ten million dollars, the excess should be annually returned to the local divisions. By this proportion not only will an unmanageable surplus be averted, but the localities will profit from any excess of State revenues, and elasticity will again be restored to the whole budget. Report of Special Tax Commission. 33 By the adoption of this double scheme, namely, the assignment of a definite share of the taxes collected by the State to the local- ities, and the further apportionment to the local divisions of a variable surplus of State revenues, your Commissioners believe that the problem of the relation of State and local revenues will be sat- isfactorily and definitely solved. 8 THE RELATION OF STATE AND NATIONAL REVENUES. In any federal system of government the relations between State and National revenues always form a source of embarrass- ment. Political relations are largely affected by State lines, while economic and business relations generally transcend the limits of any one State. The questions of interstate comity in taxation increase in importance to the extent that business interests are becoming more and more national in character, and the difficulties in many cases assume grave proportions. Tour Commissioners believe that the time has come when some steps should be taken to secure a greater uniformity in the tax laws of New York as com- pared with those of her sister states, especially in her immediate neighborhood. Your Commissioners, accordingly, recommend that our State Tax Commissioners be authorized and directed to co-operate with like commissioners from other states, or, in their absence, directly with the legislatures of other states, in the endeavor to produce such uniformity in the tax laws of the states and such general adoption of broad and comprehensive principles of taxation as shall minimize interstate difficulties. If this is accomplished many of the complaints now directed against our varying system of state and local taxation will be effectually removed. There is, however, a still more important phase of the question. There is grave danger that in default of such a scheme, the national government may take as sources of revenue taxes which are sorely needed by the states. It goes without saying that if the national government should enact a constitutional income tax law, an inheritance tax law, a system of liquor licenses, or a sys- tem of stock and produce exchange taxes, the states will be practi- cally shut off from these sources of revenue. As a matter of fact, the national government has already utilized all these sources of revenue, but only for short periods and under the stress of peculiar exigencies brought about by war. A much needed warning was sounded by the present Secretary of State in an address delivered December 12, 1906, before the Pennsylvania Society in the City of New York. He said : " It is useless for the advocates of state rights to inveigh against the supremacy of the constitutional laws of the United States or against the extension of national authority in the fields of neces- sary control where the states themselves fail in the performance of [34] Refobt of Special Tax Commishiox. 35 their duty. The instinct for self-government is too strong to permit them to respect anyone's right to exercise a power which he fails to exercise. The government control which they deem just and necessary they will have. It may he that such control could better be exercised in particular instances by the governments of the states, but the people wEs>have the control they need either from the states or from the national government, and if the states fail 'to furnish it in due measure, sooner or later constructions of the Constitution will be found to vest the power where it will be exercised in the national government. The true and only way to preserve state authority is to be found in the awakened conscience of the state through broadened views and higher standard of re- sponsibility to the general public in effective legislation by the states in conformity to the general moral sense of the country and in the vigorous exercise for the general public good of that state authority which is to be preserved." No man inveighing against these sentiments can dispel their force or their truth. Unless New York and her sister states ex- ercise the rights which the states now possess, to derive revenue, from those who best can pay and who most ought to pay, the Nation will attract these streams of revenue to its own treasury. In approaching this problem we must remember two important facts: In the first place, the Federal Government does not need revenue from such sources. Tariff taxation, internal revenue, consisting of taxes upon a few selected articles of wide consump- tion, and the entirely untouched field of the taxation upon inter- state commerce furnish adequate and constantly increasing sources of supply open to the government. Many of these sources of supply are closed against the States. The present system of internal revenue and the tariff taxes yield all the needed revenue of the National government, and even if the tariff should ever be changed so as to lose its protective character, it might yield still more as a tariff for revenue. If in time of war or other financial distress more funds are needed by the government, an immense revenue could be derived from the taxation of interstate commerce, and if ever that were not adequate, some of the other taxes imposed during the civil war, and which it is not likely that the State would ever utilize, could easily be added. The National government, therefore, stands in no need of additional revenue from the sources which at present constitute the chief income of New York State or which may in future be added. 88 Ebpoet or Special Tax Commission. On the other hand, it must not be overlooked that just as the needs of local revenue far transcend those of State revenue, so do the combined needs of local and State revenue far transcend those of National revenue. We have, unfortunately, no exact statistics of State and local revenue for the entire United States. In the Census Bulletin of the United States we find it stated that in the year 1903 the total net receipts of 175 cities, with population over 25,000, was $541,624,203, and that the net receipts of cities in population between 8,000 and 25,000 was $69,103,174, making a total of over $610,000,000. In the same year the net ordinary receipts of the National government were $560,396,674; that is to say, the cities over 8,000 population alone had more receipts and expenditures than the National gov- ernment. If we add the receipts of all minor divisions under 8,000 population and of all the State governments, it is clear that the total local and State receipts are several times as large as those of the National government — in all probability, more than three times as large, and perhaps more. The real problem of revenue and taxation in the United States is, therefore, the State and local problem, and this will be in- creasingly true of the future; for with the advance of civiliza- tion and of industrial democracy, it is precisely those functions of government which under our scheme are assigned to the State and local bodies which will continue to grow at a far more rapid pace than those of the National government. From the point of view of financial needs, therefore, it is eminently desirable that the National government should refrain from seizing on those sources of revenue which can constitutionally be utilized by our various commonwealths and which will surely be more and more needed as time goes on. It is probably without a due appreciation of the importance of this fact that the President has recommended, and many public- spirited and wealthy citizens have endorsed National inheritance taxes. The States must, therefore, not only act proirptly by fastening upon these and other substantial subjects of taxarion by equitable methods, so as to hold within our borders much needed revenue for local purposes, but they must so seek to develop them that these sources of revenue be not closed to us in the future by the irresistible competition of the National government. The National government is stronger than any State government. If such taxes are once placed upon the statute books of the nation as permanent measures, they will not readily be removed. Report of Special Tax Commission. J7 On the other hand, if New York takes the lead and applies to her sister States for joint action with her, our State Legis- lature by petitioning our Senators and Congressmen can be effect- ively heard in the councils of the nation, and may be able to persuade the National government not to divert much needed streams of revenue from the States to the nation. Your Commissioners, therefore, recommend that our State Tax Commissioners be authorized and directed to co-operate with like commissions from other States or, in their absence, directly with the Legislatures of other States, not only in the endeavor to pro- duce uniformity in the tax laws and to minimize interstate diffi- culties, but also in order to protect the local treasuries against National encroachment. The chief burden of taxation to-day in this nation is found in the domain of State and local revenues. We should seek to induce the National government to leave to the States what they so greatly need and what the National gov- ernment does not need. A bill to accomplish this purpose is herewith submitted. EXEMPTION OF STATE PROPERTY FROM TAXATION FOR LOCAL PURPOSES. At present all the property of the State other than its wild or forest lands in the forest preserves is exempted from all taxes. The necessities of the State result in constantly increasing ac- quisitions of lands -which had heretofore borne part of the ex- pense of the local government and which, immediately upon the title passing to the State, are withdrawn from the list of lands which may be taxed for local purposes. This has resulted in exceeding hardship in many cases. Local school taxes are frequently a considerable factor in making up the aggregate con- of the real property in a school district has been appropriated to tributed by the local taxpayer. In several instances a large part purposes of the State for some large institution, leaving, a much less number of acres upon which to levy the taxes for the support of the local schools,- while, at the same time, by the introduction to those institutions of various employees and their families, the school population has materially increased, thus augmenting the expenses of the common school education, while, at the same time, decreasing the number of taxable inhabitants and the taxable property required to support these schools. Again, the property of the State when located in a city demands and receives fire and police protection, the furnishing of water for various purposes, and other necessities, not to say conveni- ences, of city life. These are now furnished without expense to the State and at the cost of the local taxpayers, although they are for the benefit of the administration of the entire State. Your Commission believes that all of the necessary expenses incident to caring for purely State institutions should be borne entirely by the State at large, and no part thereof cast exclusively upon the locality, whether it be city, village or purely farming community in which such State institution chances to be located. Fourteen hundred acres of land have recently been acquired by the State in one small county town for the purposes of the State Industrial School. The additional population brought in to that . town confers no benefit upon the town, being composed as it is almost exclusively of farming lands and its supplies being pur- chased not in the community where it is located, but by the State from one or more of the large business centres. The town ex- penses have much increased by reason of these institutions; the county expenses are increased and the lands of the institution 138] Repobt of Special Tax Commission. 39 having been deducted from the taxable property of the town and leaving an unjust and increased burden upon the remainder of the lands, furnish a sufficient and, we think, an unanswerable argument in favor of requiring the State lands to continue to pay toward the support of a town and of a county. Many other illustrations might be added. In the amendment to section four of the Tax Law, as proposed in the bill submitted, it is provided in substance that the property of the State other than its wild or forest lands in the forest preserve's shall be exempt from taxation for State purposes, and that the land owned by the State, exclusive of the improvements thereon should be taxable for local purposes. STATISTICAL INFORMATION. The members of this Commission regret that a policy pursued in some of our sister States of collecting and preserving statistical infor uiation relative to the operation of the revenue laws, both State and local, has not been in force in the State of New York. By virtue of the statutes of New Jersey, for instance, as well as of other States, regular reports are made by the Comptroller of the State from which much valuable information can be derived by any student of the revenue systems, as well as of the expendi- tures both State and local. In the absence of such a statute in our state, much information which your Commission greatly de- sired was not readily obtainable, and could not be secured at all without the expenditure of a vast amount of time and labor. We should have been glad to show, for instance, in this report just how many estates had been taxed under our present inherit- ance tax law in all parts of this State, and what those estates have yielded and what they would have yielded under the pro- posed bills. We should have been glad if from these and other figures it would have been possible for us to state the approximate revenue which would be obtained from the bills we propose. We have, however, been unable to secure this information from any jentral authority and we have found ourselves unable to ascertain the facts within the time at our command. We therefore recommend for the guidance of the Legislature the tabulation and preservation of suitable statistics, both State and local, and we submit herewith a bill to accomplish that pur- pose, making it one of the duties of the State Board of Tax Commissioners to collect and publish such information, and mak- ing it the duty of the local officials to cause such returns to be made to the State Board.. GENERAL CONCLUSION. In the preceding report we have considered all the fundamental problems of taxation, so far as they seemed necessary to us. One important point, however, still remains to be considered. We have spoken of the break-down of the personal property tax and the need of its abolition, in its present form, at least ; and we have attempted to show how the inequalities of the present system can be somewhat mitigated by the adoption of the graduated inherit- ance tax, the increase of the corporation taxes, the modification of the Stock Exchange tax, and the return to the localities of a substantial share of the revenues collected by State agencies. There is need, however, of a further and additional substitute for the unworkable and inequitable personal property tax with all its anachronisms and absurdities. It is at this point that your Commissioners have been unable to come to an unanimous agree- ment. This is not remarkable, in view of the importance of the problem and of the tenacity with which different opinions on the subject are held by great classes of individuals in our com- munity. This difference of opinion is due not only to the diver- sity between city interests and country interests, but also to the varying opinions held as to the importance of the administrative considerations when compared with considerations of fiscal prin- ciple. Some of your Commissioners believe in a direct income tax as a further substitute for the personal property tax, while others cannot lend their support to such a scheme, although some of them prefer the somewhat analogous project of the indirect income tax, sometimes known as the habitation tax. Finally, some of your Commissioners believe that the difficulty can be met by a change in the methods of enforcing the present system. Since therefore, we are a unit on all the preceding recommendations, it has seemed to us wise to conclude our unanimous report at this pointj and to add supplemental reports, each of which will contain substantive recommendations for meeting this particular problem. We, cannot refrain from expressing the hope, however, that entirely apart from these supplemental reports, the recommenda- tions contained in the preceding main body of the report will be [40] Repobt op Special Tax Commission. 41 found to solve some vexed questions and to constitute a step in advance in the fiscal system of New York. Respectfully submitted, WARNER MILLER, Chairman. C. FRED BOSHART, MERTON E. LEWIS, GEORGE R. MALBY, CHAS. W. MEAD.. SAMUEL H. ORDWAY, MARTIN" SAXE, EDWIN R. A. SELIGMAN, SPENCER K. WARWICK, I concur in the foregoing report but express my regret that the existence of this Commission is about to terminate without sub- mitting some practical and comprehensive scheme for equal taxa- tion for local purposes. ARTHUR C. WADE. I concur in signing the report of the Commission with refer- ence to the proposed amendments to the inheritance tax law and to the laws proposed to be amended with reference to corporations. I am not in favor of the exemptions proposed in the report and accompanying bills. I am in favor of taxing property of all kinds in equal and equitable proportions. I am prepared to agree with my colleague, Senator Grady, with reference to the adoption and signing the supplemental report proposed by Senator Lewis, if he agrees thereto. GEORGE M. PALMER We concur generally in the foregoing report dissenting only from the bill changing the exemptions now embraced with the present provisions of law. THOMAS F. GRADY, MARTIN SAXE. SUPPLEMENTAL REPORT ON THE ENFORCEMENT OF THE PERSONAL PROPERTY TAX. To the Legislature: The members of the Tax Commission appointed pursuant to the Act of the Legislature of 1906, to revise and amend the Tax Laws of the State whose names are signed hereto, are not con- vinced of the impossibility of taxing personal property success- fully and generally. We believe that it is desirable to continue the policy of taxing all real and personal property of the State as the law now provides, and that any defects in the operation of the law are due rather to inadequate machinery for the assess- ment and levying of the tax than to any inherent difficulty because of the character of the property sought to be reached. The provisions of the Tax Laws themselves have not been such as to impress upon public officials the duty, as a duty, of reach- ing and taxing personal property. The Tax Law has provided that personal property situated within the State shall be taxed. The taxing officers have been given no adequate machinery for the carrying of this provision into effect. It may be, as some members of this Commission believe, that it will be impossible, with any machinery that may be devised to successfully and equitably tax personal property, but we are thoroughly convinced that no real and honest effort has ever been generally made throughout the State to this end and that such condemnation as is contained in the main report presented by the Commission of the taxation of personal property is at least premature if not unjustified. Taxing officers have not seemed to realize the seri- ous character of their duties. In many respects a Board of Assessors is the most important public body known to our gov- ernment"; if it fairly and honestly performs its duty it will see that the burden of maintaining the government is fairly and hon- estly distributed upon those who should be willing to bear the burden, and who, under the law, are required to bear it. Too often it happens that personal friendship, political influence, or some other like reason enables individuals to escape the payment of their fair share of the cost of government. This condition prevails in communities where public sentiment is engrossed by other and perhaps, in some views, more important topics. It is more likely to prevail in large communities than small ones, but it should not prevail in any community, and it is believed [42] Repobt of Special Tax Commission. 43 that, with the enactment of the legislation hereby recommended, public sentiment can be aroused and public interest created which will operate upon the Boards of Assessors and other taxing offi- cers and inspire them to a more faithful performance of the duties of the offices to which they have been elected. Under the statute as it now exists, a person assessed for per- sonal property is permitted to appear on grievance day and seek a reduction of the assessment. The statute as it now stands, permits the assessors to require a statement in reference to the property owned by the complainant; in practice, however, such a statement is rarely if ever demanded, and in altogether too many instances the mere personal word of the complainant that he is not worth the amount of the assessment in personal property, over and above the indebtedness which he owes, is taken as a suf- ficient excuse for the reduction or total cancellation of the assess- ment. We are conscious of the unwillingness of the average cit- izen to pay a tax; we are aware of the somewhat lax moral senti- ment which pervades the public mind and which seems to jus- tify tax dodging; we realize that oftentimes individuals of other- wise high moral sentiment are unconscious of the immorality involved in a false statement made to a Board of Assessors. Men who could not be prevailed upon to commit perjury in any other matter cheerfully swear to a lie to escape the payment of a personal tax. It is this condition of affairs which should be corrected, and which, if the legislation herewith suggested and recommended be adopted will, if we are right in our conclusions, be corrected. Under the provisions of the Bill which we suggest any person claiming an exemption will be required to file with the assessors a list of all personal property owned by him subject to tax, together with a list of all debts owed by him with the names of. the persons to whom they are owed ; the dates when said debts were contracted ; the purposes for which they were contracted and a statement to the effect that they were not contracted for the purpose of evading taxation on personal property, and forbidding assessors to reduce or cancel any assessment for personal taxes unless such statement shall be filed with them. Such .statement is required to be sworn to by the person making it and any false swearing in connection therewith is declared to be perjury and punishable as such.. It is believed that with this amendment to Section Thirty-six of the Tax Law the enormous reductions in the amount of per- 44 Repobt of Special Tax Commission. sonal assessments in the great commercial centers of the State, of which the public have annual exhibitions, will cease. It is also believed that those persons whose names are placed upon the assessment-rolls for personal assessments and who have been themselves unable to escape the payment of the tax upon their personal property, will co-operate with the Boards of Assessors in reaching other individuals whose names do not appear upon the tax rolls and assisting to bring them in and compel them to It requires large expenditures of moneys to maintain govern- ment and government must be maintained for the protection of life and property; contributions by individuals whose lives and property are protected by the government, toward the expense of maintaining the government which protects them should be cheer- fully and willingly made. If public sentiment can be aroused and Boards of Assessors can be convinced that in honestly and fairly assessing those who should be assessed for the support of government, they will be supported and upheld by all good cit- izens, the duties of the assessors will be made easier, the burden of sustaining government will be more fairly distributed and the payment of the tax by individuals will be more cheerfully made. The heavy burden upon real estate, which heretofore has borne the greater share of the cost of government, has been rapidly in- creasing and soon will become unbearable. We feel that some method must be provided for reaching and taxing personal prop- erty ; that the method which we suggest is more equitable and more likely to-work successfully than any method heretofore tried, or in contemplation, but we realize that owners of real estate cannot go on bearing, as they do almost exclusively, the cost of supporting the government, and that unless relief is found by the taxation of personal property in the way we suggest, it will be found in somo other and perhaps more objectionable way. If personal property cannot be reached by any other method an income tax will neces- sarily be enacted in the near future. All of which is respectfully submitted: WARNER MILLER. MERTON E. LEWIS. THOS. F. GRADY. CHAS. W. MEAD. O. FRED BOSHART. SHERMAN MORELAND. GEORGE M PALMER. SUPPLEMENTAL REPORT ON A SUBSTITUTE FOR THE PERSONAL PROPERTY TAX BY A GRADUATED HABITATION TAX. To the Legislature: Two schemes have been discussed by the members of lihis Com- mission to remedy the present evils of the personal property tax. One of these consists in an attempt to retain the present personal property tax, but to make its administration more rigorous, anr] to require some form of listing. To your undersigned Commis- sioners, this plan scarcely merits any further consideration at all. To any one who is acquainted with the history of personal property taxation in the various commonwealths of the United States or the different countries of Europe, such a proposition must seem entirely out of place.' Every possible attempt h.ir been made to enforce the personal property tax. We have liad lenient measures and listing bills; self-assessments and official assessments, " tax inquisitors" and " tax ferrets." We have had taxation of debts and exemption of debts. It needs no argument in this place to prove what is universally acknowledged by all careful students of the problem that a tax on personal property cannot succeed under any conceivable method of administration. The root of the difficulty lies in the fact that personal property legally follows the residence of the owner, and that it is impossible to localize intangible personalty. The supplemental report of the majority is seeking to accomplish the impossible. The sole result of increasing the rigor of the law will be here, as it has always been elsewhere, to augment perjury instead of revenue and to breed more inequality while aiming at greater justice. No law, however carefully devised, can enforce a system which is out of harmony with the economic facts. The personal property tax has become an anachronism, and is hence unworkable under any pos- sible administrative method in our modern industrial centres. We, therefore, brush aside as undeserving of any serious con- sideration, the proposition to remedy the present evils of personal property taxation, by attempting to make the law more rigorous. What has been tried so often and always so unsuccessfully every- where else will not succeed here. Another proposition that has been seriously discussed by your Commission, has been to abolish the personal property tax, but to substitute for it a direct income tax. The undersigned members [46] 46 Repobt of Special Tax OomShssioit. of your .Commission believe that this proposition is worthy of at least attentive consideration but do not believe in the advisability or expediency, at this time at least, of a direct state income-tax. Our reasons are as follows: First: The income tax is indeed an admirable tax in abstract theory, but we feel convinced that it will not work in practice in New York. The general property tax is also defensible in theory, but it has been found not to "work in practice under American conditions. In the body of the report, the personal property tax is termed ineffectual, and therefore inequitable. The same would, in our opinion, be true of the income tax. It would not work well in practice, and whatever fails to work in practice is indefensible as a legislative proposition. In fact, it is easier to levy a personal property tax than it is to levy an income tax; for some personal property at all events is tangible and visible, while no part of income is ever tangible or visible. The income tax, has been tried in many of the American States, and now exists in several commonwealths. It has always been a dismal failure. What reason is there for supposing that what has always been a f ailure will at once become a success ? The reason of the failure is to' be found in the economic and political conditions of Ameri- can life. Those conditions cannot be changed by any law. They are the same conditions which have made the personal property tax: a failure. The second objection is that which is due to interstate com- plications. The income tax theory assumes that all the people subject to the tax secure their income in the State, and that all people receiving an income in the State live in the State. Both assumptions are illegitimate. A man may live in New York and get his income from all over the country; or a man may get his income from New York sources and live elsewhere. Any at- tempt to legislate for the whole country by a New York law must inevitably fail. Suppose that a resident of another State happens to spend several months in New York on a pleasure trip. According to (he scheme suggested, he would be subject to a tax on his entire income, quite irrespective of the question whether or not he was* already being taxed on his income or on his personal property in the State of his residence. This would create an intolerable situa- tion. Moreover, a man might carry on his business through n gents in New York City, and might live in New Jersey or Rhode Repobt of Special Tax Commission. 47 Island and thus completely escape taxation. Instances of these interstate complications might be multiplied indefinitely and would show how difficult it is to reach any uniformity of burden by making the income tax a State or local tax. Economic and busi- ness life in the United States has become a national life and has transcended State boundaries. Any attempt by a single State to run against this current is doomed to failure. The third objection is that of practical inequality. So far as the tax would work at all, it would, in the opinion of your Com- missioners, work spasmodically and would produce injustice. The rich man would stand from under, as he does at present with the personal property tax, especially in those States which have a 3:stiiig system. Either he would live without the State and conduct his business here through agents, or he would so arrange his affairs as to secure most of his income from extra- state sources, which could not be reached and which could be so manipulated as not to show in his books. "While the aim of the law would be to press less hardly upon the moderate and fairly well-to-do class, the practical result would be, in our opinion, to impose the burden upon these very sections of the community, and to exempt the wealthier classes who can afford to employ the most astute legal talent to aid them in evading the law. The tax would seek to secure equality; it would result in crass inequality. The fourth objection is that an income tax of the kind recom- mended would lead to corruption. As is well known, there are two methods of levying an income tax. The one is to assess the recipients of the income directly upon their entire income. This is sometimes called the lump-sum income tax. The other method is to assess the tax, not upon the person who receives the income, but upon the person who pays the income, thus deducting the tax from the amounts payable to the income receiver. This is some- times called the stoppage-at-source income tax. England, at the beginning, tried the first method and abandoned it as completely unworkable. This method is indeed still in use in Prussia, but it is a matter of common knowledge that the administrative efficiency of the Prussian officials is very remarkable. Even thus, however, German critics of the Prussian tax sometimes call it the " Lug und Trug " system (the lie and deceit system) ; while the English officials consider their methods, in the main, far preferable to the Prussian. In fact the one notoriously imsuc- cessful schedule in the British income tax is schedule D, or the 48 Rbpobt of Special Tax Commibsiow. tax on business incomes, where the stoppage-atrsource principle cannot be applied. The income tax bill discussed by our colleagues proposes to reintroduce the discredited methods which have never worked well in Anglo-Saxon countries and which have been abandoned as far as possible in England. No one who is at all acquainted with the administrative conditions in the United States or with the difference as between Germany and America in the attitude of the average citizen to the administration, can entertain much doubt that German methods are inapplicable in this country. We feel that the only result of levying such a direct income tax, resting on the listing of all incomes by the taxpayers, would be as in the case of a rigorous personal property tax, to increase, not equality, but perjury and corruption. The law would either remain a dead letter, as is the case in most of the American states where the income tax is now imposed, or it would tend to create illicit bargains between the taxpayers and the assessors, as is now the case in almost every state of this country where the listing system has been introduced and where great power is given to the asses- sors in connection with the tax on personal property. The rich experience of the United States shows conclusively that an income tax of the kind recommended by our colleagues would be ineffective. Even the national income tax, during the civil war, was a notorious offender in this respect. The amount of revenue derived from it was ludicrously small; in fact, from careful investigations it has been shown that in the State of New York during the civil war the federal income tax worked scarcely if at all better than the personal property tax; and the personal property tax at that time worked far less badly than at present, because the industrial situation was not so complicated. An in- come tax of the kind recommended would, therefore, not even work so well now as it did during the civil war, when its administration became a by-word throughout the length and breadth of the land. The State income taxes which are found at the present time are mere farces, and there is, in our opinion, no reason to expect much better results in New York. Human nature is about the same in New York as it is everywhere else. While there is, in our opinion, no doubt as to the inadvisability of an income tax of the kind recommended by our colleagues, the question arises whether a different method of levying and admin- istering the income tax might not remove most of the above Kbpoet of Special Tax Commission. 49 objections. As an abstract proposition,, again, we do indeed be- lieve that a stoppage-at-source income tax as employed at. the present time in England is far preferable to the lump-sum income tax discussed by our colleagues. Even the adoption of the English system, however, would not, in our opinion, completely remove the objections to an income tax. Our chief doubt arises from the fact that the English system is not applicable to American conditions. In England everyone who receives dividends or interest on his securities, domestic or foreign, receives them through a banker, who is compelled to make returns to the Income Tax Board. In America this is not the custom. A man keeps his securities in safe deposit vaults, cuts off his coupons and deposits them for collection in a bank, which is, as often as not, situated in another state. Bonds, moreover, are not usually registered in the name of the owner, so that it would be almost impossible for a bank or an agency to know whether the person who has so deposited the coupons is the owner or the as- signee. Moreover, to the extent that a man's income is derived from foreign corporations — and a great mass of New York in- come is derived in that way — it would be impracticable to reach the foreign agencies or organizations. In short, looked at from any point of view, the whole system of stoppage at source, as applied to its most important point, namely, the income from intangible securities, breaks down almost completely, except in so far as New York corporations are concerned. It is easy to see that the probable result of such a law would be to transfer invest- ments to foreign corporations. It is significant that the only writer who has made an exhaustive study of the history and the facts of income taxation in the United States — Mr. Kinsman — in his monograph entitled -" The Income Tax in the Common- wealths of the United States," published by the American Eco- nomic Association, concludes that the English method is inap- plicable to American conditions. He says : " In England industry is carried on in such a way that three-fourths of the income can be taxed with no question or demand on the individual taxpayer. This would be impossible in our states. While the method of assess- ment of the tax can be applied to a few forms of income, and, in so far as it is possible to do so, the income tax would be successful, still we must also say that with our present system of industry the method could not be applied by our states to a large part of the income received, and that, therefore, the general state income tax 4 50 Kepoet of Special Tax Commission must be a failure." In this conclusion all careful students have agreed. The Massachusetts Tax Commission, of 1897, considered this very point and concluded that an income tax would be in- effective. The recent report by the Tax Commission of California comes to the same conclusion. The stoppage-at-source idea is virtually impracticable under present conditions. In the next place we incline to the opinion that even if the iucome tax is advisable at all, it is advisable at present only as a federal tax. As long as .New York is surrounded by common- wealths which seek to attract to themselves much of the wealth of their rival, it is unreasonable to expect a development of interstate comity in taxation which would redound to their disadvantage. Such an interstate comity can probably be forced upon the Ameri- can commonwealths only from above; and it is a debatable question whether the national government has the constitutional power to do this. At all events, for New York State to act inde- pendently in this matter would be, in our opinion, highly inexpedient. We, therefore, conclude that any form of State income tax is at present inadvisable. Some of the undersigned were years ago in favor of such a scheme, but a closer acquaintance with the admin- istrative and economic conditions of American life has forced them to the conclusion that a state income tax would be a failure. The project is beautiful in fiscal theory, but useless in actual practice. We quote again from the only thorough investigation of the subject — that of Mr. Kinsman : "As a result of our study, we conclude that the State income tax has been a failure. The tax cannot be successful as long as taxpayers desirous of evading taxation are given the right of self- assessment. Since all attempts to change the method of self- assessment have failed, and the nature of industry in the states is at present such as to make impossible the assessment of a general income tax at the source, we are forced to the conclusion that, even though no constitutional question should arise, failure will continue to accompany the tax until our industrial system takes on such form as to make possible the use of some method other than self -assessment, " Whatever may be the situation in future years, your Commis- sioners are convinced that to advance the project of a direct State income tax at the present time is an iridescent dream. The scheme might succeed in bringing in some revenue, but it would, Eepobt of Special Tax Commission. 51 in our opinion, be sure to bring in its train inequality, fraud and corruption. Far from being a remedy for our present evils it would only accentuate those evils. It is for these reasons that we consider the imposition at the present time of a direct State income tax inexpedient and inadvisable. In lieu of this direct income tax, which is practically unwork- able, we venture to suggest an alternative scheme for reaching incomes. This indirect income tax, as it might he called, is what is sometimes known as the habitation tax or occupancy tax. THE GRADUATED HABITATION OR OCCUPANCY TAX. In the direct income tax an endeavor is made to ascertain a man's income directly ; in the habitation tax an attempt is made to ascer- tain his income indirectly, by taking an external indication of the income. This external indication is the rental value of the dwell- ing occupied by him. The habitation tax involves an attempt to approximate the probable income of the citizen, through measur- ing his income by some form of expenditure. In other words, a man with an income of $100,000 naturally expends more for his personal uses than one with an income of $10,000. The plainest exposition of these differences in the mode of living is found in the character of the dwelling of the individual. A man of modest' means must, perforce, dwell in a modest house; while a man of great means can live in a palace. It may at once be objected that the rental value of a man's dwelling is not a sufficiently accurate measure of his income, be- cause of the well known fact that the larger a man's income, the less will he proportionately pay for rental. The poorest classes in our large cities, for instance, spend from a fifth to a quarter of their entire income on their rent, while the wealthier a man is, the smaller will the proportion be. This objection is very largely met by the introduction of the system of graduation or the progress- ive rate of the tax. Under the scheme submitted herewith small rentals are entirely exempt from taxation, the amount exempted varying, according to the character of the locality, from $600 to $200 a year. On moderate rentals above $600 or $200, respec- tively, the rate is small, beginning at three per cent on the excess over $600 up to $2,000, and gradually rising with the size of the rental, (five per cent on rentals from $2,000 to $5,000, ten per ",ent on rentals from $5,000 to $10,000, 15 per cent on rentals from 52 Repobt op Special Tax Commission. $10,000 to $20,000) until in the case of palatial mansions yielding a rental of over $20,000 a year, the rate is 20 per cent on the excess over that figure. As in the case of the inheritance tax, each grade is to pay its own rate. In this -way there would he se- cured a substantial approximation between the tax and the ability of the individual to pay. The great advantages of such a tax are the certainty of the tax and the simplicity of administration. If a man lives in a house, whether he owns it himself or rents it from another, the rental value of that house can be easily ascertained. If he pays rent to a landlord, the tenant will have no objection to disclosing the amount of rent which he pays. Generally speaking, the rental value of dwellings is from six to ten per cent of the selling value thereof, according to the character of the dwelling. The selling value is ascertained by the local assessors in every part of the State, so that whether one owns his dwelling, or rents it from an- other, the rental value of that dwelling is a fact readily ascertain- able under the present machinery of our assessment laws. For this reason the method of reaching one's income through a valu- ation of the rentals of the dwelling which he occupies is surely and readily accomplished by the present local assessors. Again, one's dwelling does not escape observation and cannot escape being listed on the tax roll. It is, therefore, believed that a tax based upon rentals will be collectible without any difficulty and without an appreciable increase in the machinery of the law. Adequate pro- vision is also made for the collection of the tax in the case of hotels and apartment houses. This occupation or habitancy tax is in operation in many of the European countries and is also in use in parts of Canada. It is interesting to note that it has long been in operation in the City of Montreal and that it has recently been introduced in Toronto. In both cases the evils of personal property assessment had become so glaring as to call for relief, and when the personal property tax j was abolished the occupation tax was introduced in its stead. In Toronto, it is true, it was combined with a so-called tax on in- comes, but this portion of the tax is far from successful. So far as the occupation tax is concerned, the Mayor of Montreal writes to the Commission : " We find that this tax is a practical one and works 'successfully." The chief tax official of Toronto writes to the Commission : " This method of assessment is, I would say, the easiest of application, and while we have had but two years Repobt of Special Tax Commission. 53 experience of it, I can say that, speaking generally, aside from some inequalities, it meets with general favor ; and, in my opinion, ia a great improvement over the former method of assessment of personal property." It is to be noted, however, that in Canada the tax applies to business rentals. We have preferred to limit it to residences for dwelling purposes, in order not to interfere with business, and for the further reason that since the business man must live in some dwelling, a tax on both business premises and residences would be double taxation. Moreover, the character of a man's dwelling is some indication of his success in business, es- pecially when the tax is made a graduated tax, as we propose. For this system of graduation is absent, at all events to any such extent, both in Canada and in Europe. We believe that the habitation tax would be a great improvement upon our present unenforceable personal property tax. It would not only secure equality where now there is inequality, but it would also result in far greater revenue. In order to emphasize these points, we subjoin a few statistics showing the amount of personal property tax now actually paid by taxpayers upon the tax rolls of the City of ISTew York. The names and places of resi- dence are suppressed, but the eases are actual and are taken from the tax books. We have chosen at random seven individuals owning dwellings among the finest class of residences in the Borough of Manhattan, giving in separate columns the amount of personal assessment in 1905, the value of the residence occupied by the tax- payer, the present tax on personal property, and the tax. which would be required to be paid under the new law. Always bearing in mind that a dwelling pays its real estate tax, it will be seen that the owner or occupant of a high-priced dwelling would be. called upon not only to pay his real estate taxes for local purposes, but woxild also be called upon to pay a habitation tax as represent- ing his proportion of the former personal property tax, for the benefit of the local government. The examples, therefore, set forth in the subjoined statistics show the taxes that will be paid by the owners or occupants of the dwellings described, in addition to the regular real estate taxes paid thereon under the system which we do not propose to change. As the assessments of real estate in ISTew York are from 80 to 90 per cent of the true value, we have taken the rental value of the premises to be eight per cent of the assessed valuation. 54 Repobt op Special Tax Commission. Value of res- Nominal Personal ldence (land Present tax Tax undei designation. assessment. and build- on personalty. new law. ing). A $300,000 $1,600,000 $4,436 $22,792 B 150,000 2,745,000 2,218 40,112 C 100,000 1,200,000 1,478 17,392 D 50,000 765,000 739 10,442 E 50,000 490,000 739 6,032 F 100,000 590,000 1,478 7,532 G 1,000,000 3,000,000 14,780 46,192 From this striking table it appears that each one of these wealthy taxpayers would pay from three to twenty times as much taxes as he now pays. Under the operation of the graduated scale, the people who now evade the personal property tax would be reached with a considerable degree of effectiveness, and the chief objection to the habitation tax, on the ground that it would not reach the rich man, is removed. Yet the burden upon the average well-to-do taxpayer, living in a house of moderate rental, would be very slight, and for the great mass of the people living in the so-called tenements and cheap apartment houses, the rents would be far lower than at present, because of the reduction of the tax on real estate; coupled with their exemption from the habita- tion tax. With reference to the revenue to be derived, we have taken a single small section of the Borough of Manhattan (Section 5, Block 1257, et seq.) containing about 8,000 parcels of real estate with an assessment of approximately $580,000,000. This would mean an average rental value of about $7,200, which, according to our scheme, would yield a revenue of between $5,000,000 and $6,000,- 000 for this section alone. This if* more than three times the personal property, tax at present collected from individuals in the qntire City of New York. There can, therefore, be no question but that the adoption of this tax will considerably reduce the rate of taxation on real estate. The chief argument in favor of the direct income tax is that in theory, but only in theory, it would reach every man on his actual income. The arguments in favor of the indirect income tax, known as the habitation tax, are, first, that in practice it would inevitably reach those better able to pay, in some approximation to their in- lome ; secondly, that because of its contribution to the real estate tax it would lessen the rentals of the great mass of our citizens living in our most populous cities ; and thirdly, that the tax would be certain in its application, simple in its administration and al- most impossible of evasion. Report of Special Tax Commission. 55 Another important advantage of the plan herein set forth is the introduction of the modified local option scheme, in con- formity with the idea of home rule in taxation. Since the de- finite abandonment by the State government of the policy of levying any direct taxes on real and personal property, the as- sessment of personal property has become a matter of exclu- sively local importance. It is recognized, however, that while some localities would in all probability like to substitute the indirect income tax or the habitation tax for the present personal property tax, as has been the case in Montreal and Toronto, other localities, and especially in rural districts, may prefer to continue the present method of personal property assessment, which works . somewhat less badly in the country towns than in the large cities. It is a well established principle that the taxation of personal property as a part of the general property tax arose at a time when economic conditions were simple, and before there was much differentiation of wealth ; and it is an. equally incontestable fact that the more developed and complex the industrial basis of society, the less effective does the taxation of personal property become. It is, hence, not at all improbable that small rural dis- tricts which have been only slightly affected by the prodigious development of recent years, may prefer to retain the present methods of local taxation. On the other hand, it is manifestly unfair to compel the larger cities and industrially more developed portions of the State to continue a system which is no longer suitable to their needs. We have, therefore, sought to include in the bill a provision permitting any locality to substitute the occupation tax for the ordinary tax on the personal property of individuals liable to assessment under the law as it now stands. Since the entire pro- ceeds of the tax, whether in the old form of personal property or on the rental value of dwellings, will accrue to the locality and will be spent entirely by the locality, it should obviously be a 9- matter of indifference to any other locality what plan is pursued ^ by its neighbor. As long as the old system of taxing property for / State purposes was in vogue, it is readily seen why one place should object to any alteration in the methods of assessing personal property in another place, since any exemption or under- assessment by one locality would have to be made good by the others. Now, however, that this obstacle has been definitely removed, and that under the recommendations of this Commission 56 Report of Special Tax Commission. there is no likelihood of the State reverting to the former system, it is submitted that there should be no objection on the part of any locality to the method of personal property taxation by any other. The adoption of the graduated habitation tax as a volun- tary substitute for the present personal property tax, possesses this great additional advantage that it will allow each locality to experiment with the two schemes, in conformity with the sup- posedly best interests of each locality. In pursuance of the arguments here adduced, your Commis- sioners have prepared a bill placing a graduated tax upon the rental values of dwellings, making exemptions to cover the case of men of modest means whose income may be regarded as only sufficient for the support of their families, and providing for the taxation o'f rentals in an ascending scale. CONCLUSION. In considering the above scheme for a graduated habitation tax, it must be remembered that this must be taken in conjunction with the other recommendations in the main body of the report. It would be a great mistake to think that the graduated habita- tion tax is advanced as the sole substitute for the personal prop- erty tax; for it must not be overlooked that so far as a man's personal property consists in corporate securities — and that is precisely where the present personal property tax breaks down most completely — the citizen is already reached by the corpo- ration taxes, and will be still more effectively reached by au increase in those taxes. In fact, the New York system of cor- poration taxes already constitutes one of the chief features of the English income tax. It reaches a man's income which is in- vested in corporate securities. In the second place, it must be remembered that by the pro- posed graduated inheritance tax, personal property i3 very effect- ively reached when a man dies. Through the adoption of the graduated scale a large and constantly increasing revenue will be derived from property which it is impossible to reach at the present time through a local assessment of personalty. The proposed graduated habitation tax is only the last link 'in the chain which provides a substitute for our present unworkable methods. Your Commissioners, therefore, submit that with the adoption of the inheritance tax as recommended in the report, with the Repobt of Special Tax Commission. 57 acceptance of the equalization and reform of the corporation taxes that are suggested in the report, and with the enactment of the indirect taxation of incomes through the habitation tax, the problem of equal taxation would be in a large measure solved. The evils of the present tax on personal property will be avoided and the undue burdens now resting upon the rural districts and upon the real estate in our cities will cease. For under this scheme a large part of the State inheritance tax, and of the State corporation taxes would accrue to the localities and would far more than compensate for the local tax on personal property, which would be abandoned; while the indirect income or habita- tion tax would, in those localities that choose to adopt it, effect- ively reach many of the wealthier residents that now escape all taxation on personal property. In this way we should secure a system of taxation whereby the source of a citizen's income would be reached by the corporation tax; whereby the income of the citizen, while living, would be reached, approximately, but effectively, by the habitation tax; and whereby the capitalized income or the estate of the individual, when dead, would be reached- by the inheritance tax. This, joined to our present methods in the taxation of real estate, of liquor licenses, of stock and produce exchange taxes and of mortgage taxation, would con- stitute a system of both State and local revenue which would pro- duce ample revenue and secure virtual equality, while possessing all the advantages of convenience and economy of administration. Its adoption would put New York' well in advance of her sister States and would create a system in harmony with the conditions of modern industrial life. Respectfully submitted, SAMUEL H. ORDWAY, MARTIN SAXE, EDWIN" R. A. SELIGMAN. SUPPLEMENTAL REPORT ON THE INCOME TAX. We, the undersigned, members of the Tax Commission, have signed and concur in the conclusions and recommendations ar- rived at in our main report, but beg herewith to submit an ad- ditional and supplemental report for the taxation of incomes as a substitute for the present tax on personal property. We deem' the following facts have been fully established before this Com- mission. First. That the assessed value of all real estate in the State is approximately seven billions of dollars. Second. That the assessed value of all personal property is approximately $800,000,000. Third. That the market value of all real estate is but slightly in excess of its assessed valuation. Fourth. That the value of all personal property owned by the citizens of this State is not less than twenty-five billions of dollars. Fifth. That the income from investments made in real estate is of much lower percentage than that derived from personal property. Sixth. That the richer a person grows the less he pays in rela- tion to his property or income. Seventh. That the owners of personal property have advocated and voted for local improvements without any substantial con- tribution on their part, until the taxes on real estate has become a great burden. Eighth. Experience has shown that under' the present system, personal property practically escapes taxation for either local or State purposes. As proof of this the following table showing the amount assessed against well-known multi-millionaires for per- sonal property is as follows, 'for the year 1907 in the City of New York: August Belmont $100,000 00 Oliver H. P. Belmont 200,000 00 Cornelius Bliss 100,000 00 Andrew Carnegie 5,000,000 00 Henry Clews 100,000 00 William E. Corey .' 100,000 00 Morris K. Jesup 100,000 00 [58] Report of Special Tax Commission. 59 Chauncey M. Depew $50,000 00 John W. Gates 250,000 00 Frank J. Gould ". 50,000 00 John D. Rockefeller 2,500,000 00 John D. Rockefeller, Jr 50,000 00 William Rockefeller 300,000 00 H. H. Rogers 300,000 00 Russell Sage 2,000,000 00 Alfred G. Vanderbilt 250,000 00 Cornelius Vanderbilt '. 150,000 00 Elsie F. Vanderbilt 100,000 00 Fred W. Vanderbilt 250,000 00 George W. Vanderbilt 50,000 00 William K. Vanderbilt 100,000 00 John Jacob Astor 300,000 00 George Ehret 200,000 00 All economic writers concede that a tax upon income derived by the citizen from his property, or his earnings, or his investments, graduated according to the extent of that income, with reasonable exemptions so as not to encroach upon that which is necessary for the support of one's family, is the ideal system of taxation. All the members of this Commission are agreed that the present Personal Property Tax Law has proved so inefficient, and has bred so much injustice, as to have produced common and justi- fiable discontent with its operation. The Commissioners disagree as to the best method of remedying the evils which are apparent to all. The subscribers to this supplementary report are of the opinion that the time has come when a direct income tax will prove the most efficacious, as well as the most equitable method of the adjustment of the burdens of taxation. Realizing the complaints that have been made in this and sister States against income tax laws in the past, the subscribers be- lieve that in large part those complaints have been due to the subjection of the inquiry into one's income to publicity, and in part to the narrow view which is at times obtained as to the proper scope of taxation, and the legitimate distribution of its burdens. In the days when fortunes were slow of accumulation, and he was regarded as a man of wealth who, today, would be known simply as a man of very moderate means, when he who surpassed 60 Repobt of Special Tax Commisstow. his neighbor did so by slow degrees only, there was a prejudice against the attempt to reach and tax the then slow and wholly natural increase of wealth ; but in these later days, when fortunes oftentimes accumulate by leaps and bounds, when the vast op- portunities afforded in this great country by combinations and for the utilization of ideas and creative faculties of other men by those who are superior only in generalship, there have developed discontent and restlessness permeating large bodies of our citizens, and a manifest and widespread change of sentiment has taken place. Realizing that laws are difficult of enforcement which run counter to the prevailing sentiment of the people, and that there- fore income tax laws in the past have not proved as efficacious as they ought, we believe the time has come when the masses of the people demand, and will support and enforce, reasonable and moderate, as well as equitable taxation, not only upon these large incomes which in great measure flow to those who do not produce them, but also by a proper gradation, reasonable, fair and equitable taxation upon the smaller incomes which result from business activities, professional labors and skilled employment. Accordingly, the bill we propose exempts all incomes up to $1,500 from taxation. Believing that every citizen, who reason- ably can do so, should contribute something to the support of his government in order that he may realize that he is a part of the government, that he is a citizen, a sovereign, a law-maker and a voter upon the expenditures from the public treasury, we have provided that all incomes above $1,500 annually, and up to and including $10,000, shall pay a tax of one per cent. A tax of $10 upon an income of $2,500 viewed in the light of the duty which the citizen owes his government, cannot be called onerous; nor can a tax of $100 upon an income of $11,500 be regarded as burdensome by any one. When one's income passes $11,500 the subtraction of a larger percentage from the excess above this sum seems most reasonable and just. We propose to make the first income up to and including $25,000 of income. That is to say, upon $25,000 of income in excess of the first $11,500, 2 per cent; so that one whose income would be $35,500 being exempt upon the first $1,500 would pay $100 upon the next $10,000 and $480 upon the next $24,000. Fur- Eepobt of Special Tax Commission. 61 ther gradations, which we believe are similarly justified, appear in the bill herewith submitted. Much discussion has been had in the Commission as to whether the statement of one's income shall largely depend upon informa- tion to be given by the taxpayer, or whether it shall be ascertained in a great measure by State agents, and it has developed the con- clusion in the minds of the subscribers that it is better at present to apply the expedient most familiar, namely, the direct, sworn statement to the assessors made by the taxpayers, setting forth the amount and the sources of his income in detail; but in order to prevent publicity as to the details of this income, the bill we submit assures every person making this return of its absolute secrecy, except in those cases where the proper authorities have reason to believe it to be inaccurate, in which cases, by judicial proceedings, its accuracy will be established, or else its falsity dis- closed. We have, therefore, provided that the local assessors shall, in the first instance, have power to bring a citizen reason- ably suspected of concealing his income, or suppressing proper information with respect thereto, before the county court of his county for examination by the District Attorney ; the reports themselves we provide shall be filed with the County Treasurer and kept secret from all eyes save those of a few special agents of the State, who will from time to time, examine these returns and who may, under the direction of the State Tax Commissioners, or upon their own motion, institute proceedings for the examina- tion of those whom they have reasonable cause to believe have suppressed any important facts or details relative to their income. We have provided reasonable penalties for failure to make re- turns, and for making untrue returns, not to the extent of con- fiscation of the property omitted from the return, but by the im- position of a reasonable and proportionate fine or multiple tax on account of such omission. Our bill provides for the abolition of the present system of taxation upon the, personal property of in- dividuals, estates, etc., owned by citizens of the state and we be- lieve that the tax collected from income under the bill we propose, which, by its terms, is to be devoted to the purposes of local taxa- tion, will develop a revenue for the purposes of local taxation, far in excess of the revenue now derived from the taxation of personal property. While the subscribers do not pretend to claim for this, or for any other of the bills herewith presented, absolute 62 Kepobt op Special Tax Commission. perfection, we do believe that the Income Tax Bill herewith pre- sented will, if adopted, prove as satisfactory to the State and as unobjectionable to the citizen as is the Income Tax Law of Great Britain; and even though it shall not immediately attain all the results which we hope will be secured, we are of the opinion that it will certainly be a decided step forward in the attempt to obtain equality in taxation, and that it will' at least prove to be far more equitable as well as more productive of revenue than our present system of taxation of personal property. We invite attention particularly to two features of the Bill; the one relating to the domicile or residence of the person taxed, and the other the gradation feature of the tax. Under our pres- ent system of taxing personal property too many citizens escape by claiming residence, on the first of July, to be in Newport or New Jersey, or elsewhere ; or by secret transfers of their property with such strings attached thereto as to enable its speedy return after taxation day, or by. temporary investments in nontaxable securities and other well-known means. Recognizing that all who seek the protection of the laws of the State of New York, other than simple travellers or temporary so- journers within our borders, should contribute to the expenses of the government, the Bill we propose levies this tax upon every one who, for the space of three months in any calendar year, becomes a resident or householder or carries on business within the State. To cover the cases of actual nonresidents in the State who are doing business through their agents within the State, the pres- ent Personal Property Tax Law is retained as such property, and personal property having its actual situs within the State of New York, controlled or managed by agents of nonresident owners, is to be entered upon the local assessment-roll as under the present statute and the tax collected from the agent or other person in possession, and, if necessary, out of the personal property itself. But as to those who own houses, many of them of great value, within the State of New York, and who live here during por- tions of the year and sojourn at times in the summer resorts or in Europe ; and as to those who live so near the State line as that their places of business are maintained within our State, their in- come derived under the protection of the laws of our State, and in a large part from the pockets of other citizens of our State, we believe our proposed Bill will compel them to make proper contribution to the suport of the government, both State and local. Ebpoet of Special Tax Commission. 63 To the graduated scheme of taxation we invite especial atten- tion. In the days when property in this country was more nearly equalized in its distribution among our citizens one rate of taxation was practically equal taxation; not so now. To subtract one per cent from an income of $1,000,000, and the same rate upon an income of $1,000 is not equality. One whose in- come is $1,000,000 annually will not begin to feel the subtraction of $10,000 therefrom as would the mechanic or the clerk if called upon to pay $10 upon his taxable income of $1,000. The principle that the duty to pay taxes is to be largely meas- ured by the ability to pay is coming to be more and more recog- nized as a fundamental principle of economics ; and, furthermore, it has been demonstrated in the last quarter of a century, that as one's property rights increase, his wealth grows and the in- tricate and delicate character of his transactions multiplies his demands upon the government increase in equal ratio. Police and fire protection are but nominal features in the office of government in sparsely settled and poorer sections of the country, whereas these, and many other items of governmental expense increase in geometrical ratio with the concentration and the accumulation of wealth. Our criminal laws, the enforcement of which involve a very large proportion of both State and local expenses, are continually being amended so as to include new classes of offenses punishable by imprisonment which a few years ago were offenses only against the moral code. The concentration of valuable property within a narrow compass acts as a magnet to the crim- inal classes, and the high and fortress-like storehouses erected in our metropolis for the safeguarding of large amounts of treasure not only incite the ingenuity of the criminal classes, but demand increased and rapidly increasing expense for police, fire and other protection. Even the civil laws, whose administration is a tax upon the citizens at large, produce adjudications in our courts, not so much upon the rights of the humbler citizen as upon the vast and intricate transactions of business and commerce which have come to be more than inter-state and are now international. The recent increase in our judges is not made necessary for the protection of the farm or the homestead of the laboring man, but for the expeditious administration of justice as invoked by our rapidly increasing corporate enterprises and the intricacies of our modern commercial life. All the citizens of our State are called upon to pay the salaries of the increased judicial force of the 64 Repobt of Special Tax Commission. State, but concede that judicial force is constantly attracted to the commercial centers and very heavily drawn upon for relief of the litigants of the metropolis. Not only, therefore, does the principle of " he who best can ought most to pay " apply to the gradation of the income tax, but also the principle that he who most creates the expense should, if able, yield largest contribu- tions toward meeting that expense. For these and many other reasons which we do not deem it necessary now to elaborate we earnestly press this Income Tax Law upon the attention of the legislature. SPEJSTCER K WARWICK GEO. R. MALBY. APPENDIX A. RECEIPTS AND EXPENDITURES FOR THE YEAR ENDING SEPTEMBER 30, 1906. The following statement shows the receipts and expenditures during the fiscal year, giving the principal sources of revenue and purpose of expenditure, omitting $3,497,901.16, amount of transfers in the adjustment of accounts between the several funds : Receipts. Direct State taxes, including special taxes for judges, stenographers, etc , $1,402,717 30 Tax on corporations 7,832,842 86 Tax on organization of corporations $485,030 60 Tax on transfers of decedents' estates 4,713,311 33 Tax on transfer of stocks 6,631,903 22 Tax on trafficking in liquors 9,486,500 28 Tax on mortgages 431,323 17 Tax on racing associations 201,371 14 Tax on land of nonresident owners , 153,829 37 State prisons 100,000 00 Sales of lands, including Jamaica Normal school and Binghamton armory . . 170,167 60 State institutions, sales, private patients 345,753 58 Fees of public officers, including fines and penal- ties 293,138 63 Fees of notaries 66,444 75 Interest on treasury deposits less amount belong- ing to trust and sinking funds 107,526 43 Insurance Department, for expenses 322,940 00 Bank Department, for expenses 108,018 46 Railroad Commission, for expenses 85,090 08 Niagara Reservation 14,556 26 State Fair Commission, surplus receipts Fair of 1905 28,357 86 Chancery fund 36,501 74 United States government, for soldiers and sailors' homes 204,027 48 United States government, for reimbursement of claims on account of war of 1812, and war of rebellion 184,210 08 S [«1 66 Refobt of. Special Tax Commission. Principal and interest on bonds for canal debt sinking fund, and interest on deposits for same. $318,005 05 Proceeds of sale of Barge Canal bonds 1,011,466 67 Proceeds of sale of temporary bonds for highway improvement 100,000 00 Trust funds, including principal and interest on bonds and deposits 687,384 42 Miscellaneous 74,548 56 $35,596,966 92 Expenditures. State departments, commissions, etc $2,745,348 80 Charitable institutions 2,453,364 43 Hospitals for insane 5,695,104 14 Educational purposes 6,165,384 50 Canals for all purposes, including $2,583,499.25 paid from Canal Debt Sinking Fund 4,980,053 04 Legislature 764,501 33 Legislative printing, including advertising. . . ^. 580,234 32 Judiciary 1,095,847 48 National Guard, including arsenals and armories 1,053,867 06 Principal and interest on public defense bonds. . 205,250 00 State prisons, asylums for insane criminals and penitentiaries ". 1,061,052 99 Public buildings 203,011 99 . Improvement of public highways , 571,741 82 Repairs of highways, money system 603,853 35 Non-resident taxes, including redemption and erroneous payments 116,662 32 Adirondack Park and Catskill Preserve 69,203 81 Eefunds, Excise Department 450,122 20 Louisiana Purchase Exposition 1,237 85 Jamestown Ter-Centennial Commission 5,000 00 Hudson Fulton Celebration 5,000 00 McKinley Monument 49,840 85 Enumeration , 27,542 23 Relief of people of State of California 200,000 00 Palisades Commission - 50,000 00 Prison Ship Martyrs Mon-unent Commission . . . 25,000 00 Rkpoet of Special Tax Commission. 67 Public administration $13,869 96 Expense of public lands 28,678 49 Claims of counties, bonded for railroad purposes 165,524 23 Niagara Reservation 28,519 95 Quarantine 88,487 71 Agricultural societies 278,829 42 Abolition of grade crossings 41,040 83 Trust fund transactions, less amount included in payment for educational purposes — . 472,269 96 Miscellaneous . .,...,. ... . . . . .,. 26,487 71 $30,350,096 21 APPENDIX B. SHOWING RECEIPTS AND EXPENDITURES IN VIL- LAGES OF THE STATE. The following list is not selected, but taken at random from Tillages through- out the State: Form- Expen- lation. Tear. Receipts. ditures. Village of Massena 1,049, 1890 $1,290 08 $1,148 79 Village of Massena 1895 2,134 83 1,815 38 Village of Massena 2,032,1900 5,88166 5,593 67 Village of Massena 2,547, 1905 $18,004 66 $18,242 75 Village of Patchogue 1890 (Not incorporated.) Village of Patchogue 1895 6,253 32 3,34137 Village of Patchogue 2,926, 1900 19,587 83 17,682 52 Village of Patchogue 3,456,1905 31,836 79 22,439 79 Village of Catskill 4,920, 1890 28,623 98 26,457 89 Village of Catskill 1895 32,904 04 29,672 48 Village of Catskill 5,484, 1900 ' 63,518 42 51,755 25 Village of Catskill 5,294,1905 54,612 37 43,537 59 Village of Dobbs Ferry 2,083, 1890 22,540 41 14,532 69 Village of Dobbs Ferry 1895 29,791 32 25,996 42 Village of Dobbs Ferry 2,888, 1900 32,364 96 29,599 90 Village of Dobbs Ferry 3,575, 1905 40,180 00 38,989 81 Village of Liberty 734,1890 Village of Liberty 1895 Village of Liberty 1,760,1900 6,142 78 5,952 78 Village of Liberty 2,124, 1905 11,134 93 10,959 40 [68] APPENDIX C. THE SYSTEM OF TAXING PERSONAL PROPERTY FOR LOCAL PURPOSES IN THE STATE OF NEW YORK. Under the law of the State of New York, all real property within the State, and all personal property, whether corporate or in- dividual, situated or owned within the State, is subject to taxation at its actual full value, unless expressly exempt by statute. The present system of assessing and taxing real and personal property has been in -practical operation for over a century, and many of the basic statutes of this system go back to Colonial times. Indeed, the first important revision of the statutes of New York, undertaken in 1827, shows that the present system existed at that time almost in its entirety. Until within the last three decades the revenue of the State of New York has been almost entirely derived from a direct tax on real and personal property, assessed, levied, and collected, by local officers, and any discussion of local taxation prior to that time is necessarily a history of the State system of taxation. TAX DISTRICTS. In the assessment of personal as well as of real property the entire State is divided into a number of Tax Districts for pur- poses of administration. Under the present law the term " Tax District" means a political subdivision of the State, having a Board of Assessors authorized to assess property for State and County purposes. It includes cities, towns and wards, wherever ward divisions have not been abolished. The assessments of per- sonal property, as well as of real property, • are made by the as- sessors in the several tax districts of the State, generally between May first and July first in each year, but the Charter provisions of the various municipalities in the State may fix different periods. The general method of assessing personal property is the same throughout the State. Our statute does not provide for the list- ing of personal property, but for an inquiry and ascertain- ment, by the assessing officers, of the names and property subject to taxation. In practice there is a partial listing of property by corporations, which are obliged to make returns on forms pro- vided by the assessors, and in the City of New York the assessors have recently provided forms for making lists of personal property by individuals after the tentative assessments are made. The statutes of this State expressly define what shall be considered personal property for the purposes of taxation, and unless personal [68] 70 Rbpobt of Speoiax Tax Commission. property comes within this definition it cannot be made the sub- ject of taxation. PERSONAL PROPERTY DEFINED. Under the statute the term "Personal Property" includes chattels, moneys, 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 re- siding within this State, however secured or wherever such security 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. It also includes rents reserved in leases for a term of more than twenty-one years. The exemptions from personal property taxation include, among other things, State, Federal and Municipal property, and property exempt by law from execution; mortgages exempt under the Mortgage Tax Law, Savings Bank deposits and stock in corpora- tions liable to taxation on their capital. Certain deductions are also allowed for indebtedness and for other reasons. PLACE OF ASSESSING PERSONAL PROPERTY. As to place, personal property is taxed as follows: In the case of a resident individual, at the place where he resides at the date when the original assessment is made. In the case of a resident corporation, at the place of its principal office within the State. In the case of a non-resident or foreign corporation, it is taxed on the capital invested in business, as personal property, at the principal place of business within this State of such non-resident of foreign corporation. The property of a non-resident actually situated in this State, but not invested in business, is taxed at the place where the property is situated. FORM OF ASSESSMENT. The form of assessment of the personal property of residents is against the owner at his place of residence, and in the case of non-residents, it is legally and theoretically on the capital in- vested in business or on the property situated here. In actual practice the assessors have used the same form of assessment in case of non-residents as in that of residents, by placing* upon the assessment rolls the owner's name and the amount of his personal Repobt of Special Tax Commission. 71 property within the State. The Courts have held that in. the case of non-residents the name is inserted on the roll merely for the purpose of identifying the property. Whatever the real merit of this decision may be, it has been found impossible in the case of non-residents to collect the tax by means of a personal remedy or a suit against the owner named in the rolls, and these assessments have, therefore, become largely uncollectible. (See Schedule C). NOTICE OP COMPLETION OF ASSESSMENT — VERIFICATION OF ROLLS — LEVY OF TAX. After the assessments have been made, notice is given thereof by posting or publication, and opportunity is given to those con- sidering themselves aggrieved to obtain a reduction or remission of the assessment. When the period has expired for securing a remission or reduction of the assessment, the rolls are completed and verified by the assessors and delivered to the Town or City Clerk in the particular Tax District in which the assessment is made. Notice is given of the filing of the assessment rolls and thereafter they are delivered to the various supervisors of the Tax Districts in which the assessments are made, and the assess- ments are thereafter equalized by the Board of Supervisors of each County of the State. The tax rate is then fixed and the tax levied, including the tax for State, Town, County, or City pur- poses. The roll is then delivered to the collector in each Tax District, with the proper warrants annexed, for collection of the tax and lie payment thereof to the County Treasurer or other officer. This is, in brief, the general system of assessing, levying and collecting personal taxes within the State. It is not different in most of its features from the system of assessing, levying and collecting taxes on real property in the State, which assessments p.nd levies are made at the same time, in the same manner and by the same officers, except in so-far as the statute may have provided different regulations. THE OPERATION AND EFFECT OF THE PERSONAL TAX SYSTEM IN THH STATE, AND ITS OPERATION ILLUSTRATED IN THE CITY OF NEW YORK. It has been previously stated that the revenue of the State was, at first, almost entirely derived from the direct tax on real and personal property within the State, and originally the portion of that tax contributed by the assessment of personal property was a reasonable and fair proportion of the total revenue. Beginning with the year 1880, the State inaugurated a system of raising its own revenue from indirect sources, which has^nrvw 72 Ebpoet op Special Tax Commission. obviated the necessity of this direct tax on real and personal property. A summary of the principal sources of the State's revenue for the past year will easily show this : Tax on corporations $7,832,842 88 Tax on organization of corporations 485,030 60 Tax on transfers of decedents' estates 4,713,311 31 Liquor tax 9,486,500 29 Stock transfer tax 6,631,903 21 Tax on mortgages 431,323 15 The above, with minor sources of State revenue, now provide sufficient funds to defray the entire State expenses. As a result, the State tax rate has fallen from three and five- tenths mills, in 1880, to one hundred and fifty-four-thousandths of a mill, in 1906, and to nothing in 1907. (See Schedule I.) STATE TAX RATE. Yeah In Mills 1880 3.50 1901 1.20 1902 .13* 1903 13* 1904 13* 1905 154* 1906 154* 1907 , . .000 As to real and personal property within the State, it is difficult, if not impossible, to obtain any accurate figures in this respect, but, for the sake of illustration, we present the statistics taken from the United States report (Department of Commerce and Labor), of the estimated amount of real and personal property in the State of New York for the years 1900 and 1904; ESTIMATED TRUE VALUE OF PROPERTY. Rpal Property Yiab Total and Tmprov. Personal Property 1900 $12,505,330,137 $7,972,386,390 $4,532,943,747 1904 14,769,042,207 9,151,979,081 5,617,063,126- It would appear from these figures, as well as from such other data as may be available for the purpose of estimate, that the * During these years the direct tax was imposed to pay for the interest on the canal debt and other obligations connected therewith, which, under the State Constitution, were required to he paid by a direct tax on real and personal property. In 1905 a constitutional amendment was carried, which became effective in 1906, permitting the Legislature to provide an appropria- tion equal to the amount of the direct State tax, so that in X907 there will, be no direct State tax. Repobt of Special Tax Commission. 73 amount of personal property within the State, if not equal to the amount of real estate, should come closer to the percentage shown by the earliest statistics that we have in this State, as to the relative amount of taxes paid by real and personal property. In the year 1867, it will be seen from the accompanying table that the amount of personal property upon which a State tax was levied bears the proportion of about one to three to the real estate of the State ; whereas, in the year 1905, it bore a proportion of one to 11. PERCENTAGE PAID BY REAL AND PERSONAL. The annexed table shows the amount of State tax paid by the real and personal in each year from 1867 to 1904, both inclusive; the amount of State tax levied, and the percentage of tax paid by the real and personal in each of the years named : State tax T „_ -,-ij T „ T „-.,! Per cent Per cen YEAB JfiSg. b/rWate ^ ~. reWte ££3 1867 $12,647,218 71 $9,439,644 00 $3,207,754 00 .74.61 25.39 1868 10,243,317 01 7,852,483 00 2,390,834 00 77.64 22.36 1869 10,463,179 33 7,996,877 00 2,466,292 00 76.43 23.57 1870 14,285,976 55 11,067,282 00 2,218,694 00 77.47 22.53 1871 11,613,943 51 8,902,802 00 2,700,141 00 75.82 24.18 1872 19,850,882 30 15,390,096 00 4,190,786 00 78.60 21.40 1873 14,800,903 38 11,712,805 00 3,088,298 00 79.13 20.87 1874 15,727,482 08 14,206,680 81 1,188,867 00 79.78 20.22 1875 14,206,680 61 11,522,116 00 2,684,564 00 81.11 18.89 1876 8,529,174 32 7,416,774 00 1,112,400 00 86.96 13.04 1877 8,726,511 01 7,527,319 00 1,199,192 00 87.94 12.06 1878 7,941,297 94 6,983,264 90 958,033 00 87.94 12.06 1879 7,690,416 34 6,671,281 00 1,019,125 00 86.75 13.25 1880 9,232,543 33 8,103,902 00 1,128,640 00 87.78 12.22 1881 6,032,826 31 5,165,753 00 867,974 00 85.63 14.37 1882 6,820,023 29 5,969,669 00 860,353 00 87.40 12.60 1889 9,334,886 31 8,310,959 00 1,023,877 00 89.04 10.96 1884 7,762,572 78 6,960,928 00 771,644 00 90.06 9.94 1885 9,160,405 11 8,176,55100 983,854 00 89.66 10.34 1886 9,512,812 91 8,554,716 00 858,096 00 89.93 10.07 1887 9,075,046 81 8,168,120 00 927,926 00 90.00 10.00 1888 9,089,303 85 8,181,180 00 908,133 00 90.00 10.00 1889 12,557,352 74 11,310,362 62 1,246,490 11 90.07 9.93 1890 8,619,748 17 1,718,122 51 901,625 66 89.54 10.46 1891 5,196,666 40 4,617,283 43 525,382 97 89.89 10.11 1892 7,784,848 16 6,982,758 71 802,089 45 89.70 10.30 1S93 10,418,192 08 9,168,008 96 1,250,183 12 88.06 11.94 1894 9,600,231 79 8,374,650 39 1,225,581 40 87.23 12.77 1895 13,906,346 22 12,447,442 81 1,458,90141 88.79 11.21 1896 11,751,837 71 10,514,815 58 1,237,022 13 89.48 10.52 1897 12,033,651 80 10,790,575 56 1,243,076 24 89.67 10.33 1898 10,189.110 93 9,047,587 18 1,141,523 75 88.80 11.20 1899 12,640,228 09 10,990,678 23 1,649,549 77 86 95 13.05 1900 10,704,153 39 9,430,359 14 1,273,794 25 88.10 11.90 1901 6,824,306 01 6,025,862 21 798,443 80 88.30 11.70 1902 748.072 05 672,010 05 76,062 00 89.83 • 10.17 1903 761,085 02 688,709 30 72,375 72 90.49 9.51. 1904 968,04189 877,433 17 90,608 72 90.64. 9.36 1905 1,191.677 51 1,085,975 71 105,701 80 91.13 8.87 74 Report of Special Tax Commission. Table showing the assessed valuation of real and personal property and the aggregate State and local taxes at intervals from 1840 to 1904, as returned by the clerks of the Boards of Supervisors : Personal taxed Yeab Real locally for Taxation local purposes 1840 $517,723,170 $121,447,830 $3,088,408 22 1845 486,490,121 115,988,895 4,170,527 95 1850 571,690,807 153,183,486 6,312,787 33 1855 1,107,272,715 294,012,564 11,678,015 69 1860 1,119,933,484 320,617,352 18,956,024 50 1870 1,599,930,166 452,607,732 50,328,684 21 1880 2,340,335,690 340,921,916 49,117,782 18 1890 3,397,234,679 382,159,067 60,493,038 17 1900 5,093,025,771 672,715,703 100,099,372 77 1904 7,051,455,025 758,893,605 103,676,463 65 The above figures and tables showing the decrease in the tax- able personal property as compared with real property, have been taken from the reports of the State Board Tax Commissioners and are intended to illustrate the working of the Tax Law in the State generally.- The same conditions prevail in the great met- ropolitan district, and can be more easily demonstrated there since we are provided, not only with the figures showing the assessments in each of the respective classes of personal property, but also with the collections in those classes. OPERATION OF THE PERSONAL TAX SYSTEM IN THE CITY OF NEW YORK. The city of New York has been taken as the most conspicuous example for the purpose of illustrating the workings of the per- sonal tax law, because a large or the largest portion of the per- sonal tax is collected in that city and also because the statistical information is more readily and exactly obtained here than any- where else in the State. In most parts of the State the collec- tions of real and personal taxes, as well as the special franchise tax, are aggregated in one set of books, whereas in the city of New York we have been enabled to obtain each of these items separately, so that comparisons can be readily made. Schedule A. In the borough of Manhattan there are five sets of books for recording the first or original assessments of personal property, namely, resident -corporations, nonresident corporations, resident personal - , estates, and nonresident personal. These assessments are made between September and the second Monday in January, Report of Special Tax Commission. *5 at which latter date the books of annual record containing the ten- tative assessments are sworn to by the Board of Taxes and As- sessments, and are open for examination and correction until the 31st day of March in each year. During the time the books are open for examination and correction, corporations and in- dividuals appear in person or by their representatives before the Board, and the final or complete assessments are thereafter trans- ferred to books known as the Assessment Eolls of Keal and Per- sonal Property in the city of New York. The five classes of books above referred to are not used in any borough except Manhattan, the charter only requiring separate assessments of corporations in each borough. For instance, in the minor boroughs there is no separate assessment of nonresident individuals or nonresident corporations, with the single exception of Brooklyn (Schedule A-3) where there is a separate book for the assessment of nonresident corporations. Schedule B. There is a slight variation in the tax rate of each borough, with the exception of Manhattan and the Bronx, which is explained by the fact that the boroughs of Brooklyn, Richmond and Queens are, respectively, in the separate counties of Kings, Richmond and Queens. The variation in the expenses of each of these county governments produces a slight change in the Tax Rate. The amount of the tax for any given borough or classification may be determined in any given case by multiplying the final assessment (shown on the receiver's book and noted in the third column of Schedule A) by the Tax Rate for that borough shown in Schedule B. ~, Schedule C The various agencies through which the personal taxes are col- lected are, respectively: (1) The Receiver of Taxes who collects the tax by virtue of the warrant issued to him by the Board of Aldermen ; (2) The Marshal, who collects the taxes in arrears after they have been turned over to him by the Receiver of Taxes on the 15th day of January, in each year and when necessary, collects by distress and sale; and (3) The Corporation Counsel, or his immediate assistant in charge of " The Bureau for the Collection of Arrears of Personal Taxes," noted in Schedule C as "Attorney," who proceeds to col- lect by suit or supplementary proceedings. 76 Repobt of Special Tax Commission. The total amount collected by these respective agencies for the years 1901 to 1905, inclusive, are shown on the first page of Schedule C and in the last column of the various sub-schedules of O. The amount of any given year's taxes collected by the Assistant Corporation Counsel in charge of the collection of Arrears of Personal Taxes is not shown but may be approximated as ex- plained in Schedule C, first and second pages, by taking the aver- age percentage of collections made by him in the last six years, which has not been more than seven per cent, of the total remitted to him. In the year 1902, shown on the second page of Schedule C, $385,032.20 was collected by the Attorney. This propor- tionately large collection by that office was due to an accumulation of arrears of taxes for the years 1897, 1898, 1899 and 1900, which, about the beginning of the year 1902, were turned over to the Bureau for collection. THE SCHEDULES COMPARED. Schedule A, which contains the original or tentative assess- ments, the amounts cancelled and amounts finally left on the Re- ceiver of Taxes' books in the various boroughs of the City of New York and in the various classifications of corporations, individuals and estates, for the years 1901 to 1905, discloses the fact that in the case of corporations, about ninety per cent, or more of the original assessment placed . against such corporations on the tax books is sworn off or reduced before the tax is levied. This is not only the case in Manhattan Borough, where the prin- cipal corporation assessment is laid but the result is practically the same in every one of the other boroughs. This heavy cancel- lation of corporate assessment can be largely explained by the fact that the tentative assessments against corporations are frequently based on their capitalization and not on the value of their capital stock or personal property. It will be noticed, in connection with the corporate assessments, that the figures showing the original and final aggregate assess- ments of non-resident corporations are from one-third to about one-half of the aggregate amounts assessed against resident corporations. While the assessment of resident individuals, or resident per- sonals as they are termed in the Schedules, is considerably smaller than the original or tentative asssessments of corpora- Ebpoet of Special Tax Commission. 77 tions, by the time the swearing-off process is ended and the tax levied it will be seen from the last columns in Schedule A thai the individual resident assessments make up the largest item on the rolls. This is particularly the case in the minor boroughs, where corporations are few and unimportant. The amount of reduction obtained by the individual resident varies from sixty to more than seventy per cent. The Estates are also to be taken into account in this last classification, because the assessment is in the end actually imposed on an individual and it will be seen from an examination of the figures in Schedule A that in this class the assessment is reduced in about the same proportion as the individual assessments. The nonresident personal or nonresident individual assess- ments bear only a small proportion to the resident individual and estate assessments, and in the minor boroughs there are prac- tically no nonresident assessments. The percentages of reduction obtained and percentages left on the assessment roll, are noted at the side of each classification. Turning to Schedule B we find the amount actually collected in each of the boroughs and in each of the classifications, regardless of the amount assessed. Examining the first page of Schedule B, showing the total collections in the various boroughs for 1901 to 1906, without classifying the collections, we find that the borough of Manhattan pays from 70 to more than 80 per cent, of the total tax collected. As appears from Schedule Gr, showing the area and population of the various boroughs, Manhattan is the smallest borough iD area, containing 14,038 acres, as opposed to Brooklyn with 49,680 acres, and with a population (January 1, 1906) of 1,974,284, as opposed to Brooklyn's 1,402,729. Yet Manhattan pays seven or eight times as much of the personal tax as does Brooklyn. Queens, with a population and area between two and three times as great as Richmond, pays very little more personal tax than the latter borough. , A peculiarity in the borough of the Bronx seems to be that while in 1901, 1902 and 1903, it paid about 50 per cent more of the personal tax than did Queens, yet in 1904, it paid some- what less than Queens and in 1905 it paid considerably less than the Long Island borough. This appears to have been due to a considerable loss of corporation taxes in the borough of the Bronx during the years 1904 and 1905. 78 Rbpoet os Special Tax Commission. Going back again to Schedule A containing the details, showing the tentative assessments of personal property in the city of New York, it will be observed that almost invariably whenever the tentative assessments have been increased a greater portion of the amount is sworn off. Thus, in Manhattan borough for the years 1902, 1903 and 1904, the tentative assessments show an increase each year over the preceding year's assessments, and yet the per- centage of cancellations for each of those years with the single exception of 1903 is greater than the increased assessment; and correspondingly when the tentative assessments have been de- creased or lowered the percentage of cancellations are somewhat less. In Brooklyn we notice the same principle operating, as will be seen from Schedule A-3. The smaller boroughs are not always effective for purposes of illustrating this or any other tendency in taxation, as the removal of some large corporation may effect the entire result Schedules C, D-l and E are perhaps the most instructive tables annexed hereto because they show where the burden of taxation lies ; Schedule C showing the total collections of all boroughs from 1901 to 1905; Schedule D-l, showing the number of payments in the various boroughs for the year 1905, according to the amounts of the payment, and Schedule E_ showing the relative percentage of payments in any class in every borough compared with the total collections. Examining these three schedules together, it will be observed, first, from Schedule 0, that the actual collections have decreased year by year from 1901 to 1905, viz.: The collections in 1905, amounted to $7,465,741.72 ; in 1902, they were $6,922,285.65 ; in 1903, they were $5,247,248.04; in 1904, they were $4,987,- 520.23, and in 1905, they were $4,412,116.55. In other words, since 1901 the personal tax collections have fallen off about 40 per cent.; and this in spite of the fact that the tenative assess- ments have been from time to time increased and that there has been a gradual increase of personal property in the last five years. Schedule E shows quite accurately who pays the tax. Taking each of the years and the two larger boroughs of Manhattan and Brooklyn for comparison, we find in the year 1901 and up to 1905, that the resident individuals and estates paid about two-thirds of the tax. This proportion seems to be increasing, rather than diminishing. Rkpoet of Special Tax Commission. 79 Sechedule D-l shows that 7,401 residents in the borough of Manhattan paid taxes averaging in amount from $5 to $15 in the year 1905, viz.: Upon assessments of from $1,000 down; that 2,958 paid taxes running from $15 to $75 (that is, on valuations of $1,000 to $5,000 ; that 999 paid taxes of $75 to $150 (valua- tions of $5,000 to $10,000) ; that 946 paid taxes of $150 to $300 (valuations of $10,000 to $20,000) ; that 913 paid taxes of $300 to $450 (valuations of $20,000 to $50,000) ; that 268 paid taxes of $750 to $1,500 (valuations of $50,000 to $100,000) ; 157 paid taxes of $1,500 to $15,000 (valuations of $1,000 to $1,000,000 ; and that only five paid taxes over $15,000 (valuations over $1,000,000). In all, 7,401 residents of the borough of Manhattan paid 65 per cent of the total tax and an average tax of $188.28 ; and that by far the larger number of these were the small tax- payers. In Brooklyn, only eleven paid on a valuation of $100,000 or over, but relatively the same proportion as in Man- hattan paid on less than $1,000 valuation, and between the valuation of $1,000 and $5,000. The average tax -payment in the borough of Brooklyn by resident individuals was $77.59. The non-resident payment is the smallest of any class, and the aver- age payment in the borough of Manhattan is only $65.64. It will be noticed from Schedule E, that non-resident individuals and corporations paid the smallest proportion of the tax and that this proportion is getting smaller. CONCLUSIONS. 1. That there has been a gradual and steady increase in the value of real and personal property in the State of New York. 2. That the greater the amount of personal property placed on the rolls, the larger the cancellation or reduction. 3. That the burden falls heaviest upon the residents of our own State and principally upon the smaller taxpayer. 4. That non-residents find it easiest to escape taxation and have almost ceased to pay any tax. 5. That the collection of the personal property tax has become more and more difficult. 80 Ebpobt of Special Tax Commissioh. SCHEDULE A. Tentative assessment of personal property, amount cancelled and amount finally left on Receiver of Taxes' book upon which, the tax levy is made. A-l MANHATTAN. Tentative assess- Hecerrer'i hook Per Bent, meat on annnual Per cent. or final assess- retained record. Cancelled cancelled. mentooll. on book. Taxes of 1901: Res. Corp $1,323,563,500 $1,237,028,800 93 $86,534,700 6 Non-Res. Corp 420,411,000 380,630,058 91 39,780,942 9 Res. Personal 583,062,973 412,974,348 71 170,088,625 29 Estates 208,198,906 112,455,249 54 95,743,657 46 Non-Res. Personal. 97,911,346 61,779,319 63 36,132,027 37 $2,633,147,725 $2,204,867,774 83 $428,279,951 16 Taxes of 1902: Res. Corp $1,934,142,000 $1,842,206,450 95 $91,935,550 4 Non-Res. Corp 427,991,500 391,372,963 91 36,618,537 8 Res. Personal 287,638,865 147,113,364 51 140,525,501 49 Non-Res. Personal. 143,276,275 93,169,277 64 50,106,998 35 Estates 211,821,276 118,619,604 55 93,201,672 44 $3,004,869,916 $2,592,481,658 86 $412,388,258 13 Taxes of 1903: Res. Corp $2,185,170,000 $2,080,474,594 95 $104,695,406 6 Non-Res. Corp. 625,599,500 588,307,214 94 37,292,286 6 Res. Personal 631,277,010 306,908,899 57 224,368,111 42 Non-Res. Personal. 170,638,910 103,210,714 60 67,428,196 39 Estates 300,155,576 184,096,322 61 116,059,254 38 $3,812,840,996 $3,262,997,743 85 $549,843,253 14 Taxes of 1904: Res. Corp $2,209,207,700 $2,146,909,450 97 $62,298,250 3 Non-Res. Corp 721,099,000 685,298,877 95 35,800,123 5 Res. Personal 556,819,865 324,334,565 58 232,485,300 42 Non-Res. Personal. 149,771,995 77,838,985 51 71,933,010 48 Estates 279,072,122 173.110.150 62 105,901,972 38 $3,915,970,682 $3,407,492,027 87 $508,478,655 13 Taxes of 1905: Res. Corp $1,362,840,000 $1,274,359,755 93 $88,480,245 6 Non-Res. Corp 486,965,000 436,293,660 89 50,671,340 10 Res. Personal 638,867,025 396,303,220 62 242,563,805 38 Non-Res. Personal. 202,522,160 114,888,650 66 87,633,510 43 Estates 296,268,295 197,226,405 66 99,041,890 33 $2,987,462,480 $2,419,071,690 80 $568,390,790 19 Taxes of 1906: Res. Corp $1,449,880,000 $1,390,549,890 95 $59,280,110 4 Non-Res. Corp 258,662,000 228,732,995 88 29,929,005 11 Res. Personal 623,530,370 419,694,795 67 203,835,575 33 Non-Res. Personal. 208,425,005 142,496,160 68 65,928,845 32 Estates 261,360,385 173,149,370 66 88,211,015 33 $2,801,807,760 $2,354,623,210 84 $447,184,550 16 Repoet of Special Tax Commission. 81 SCHEDULE A— (Continued). A-2. BRONX. Tentative assess- Receiver'!. book fa cent, tnent on annual Per cent. or final assess- retained record. Cancelled, cancelled. meat-roll, on book. Taxes of 1901 : Individuals $20,397,840 $11,921,645 58 $8,476,195 42 Corporations 21,800,000 19,521,713 89 2,368,287 11 Estates 3,401,299 2,057,174 60 1,344,125 40 $45,689,139 $33,500,532 73 $12,188,607 27 Taxes of 1902: Personal $27,601,220 $18,199,315 65 $9,401,905 34 Estates .". 3,111,825 2,277,000 73 834,825 27 Corporations 12,880,000 10,433,620 81 2,446,380 19 $43,593,045 $30,909,935 70 $12,683,110 29 Taxes of 1903: Personal $27,719,715 $16,552,510 69 $11,167,205 40 Estates 2,616,575 1,313,794 50 1,302,781 60 Corporations 19,891,500 17,599,445 88 2,292,055 12 $50,227,790 $35,465,749 70 $14,762,041 29 Taxes of 1904: Personal $29,090,455 $15,981,568 54 $13,108,887 45 Estates 3,313,931 2,307,840 69 1,006,091 30 Corporations 21,549,000 20,907,025 97 641,975 03 $53,953,386 $39,196,433 72 $14,756,953 27 Taxes of 1905 : Personal $31,604,812 $16,785,042 53 $14,819,770 47 Estates 2,545,891 1,606,156 63 939,735 37 Corporations 24,518,000 23,603,880 96 914,120 04 $58,668,703 $41,996,078 71 $16,673,625 28 Taxes of 1906: Personal $30,980,906 $14,979,379 48 $16,001,527 52 Estates 3,080,260 2,136,535 69 943,725 31 Corporations 26,392,500 25,308,895 95 1,083,605 04 $60,453,666 $42,424,809 70 $18,028,857 30 i 32 Repoet of Special Tax Commission. SCHEDULE A — (Continued). A-3. BROOKLYN. Tentative la- ment on annual record. Taxes of 1901: Personal $190,916,281 Estates. 28,972,760 Corporations 184,238,000 Non-resident corpo- rations 10,592,000 Cancelled. $132,601,487 19,024,730 164,167,850 9,683,350 Per cent, cancelled. 69 65 89 $414,719,041 $325,477,417 Taxes of 1902: Personal $105,639,871 Estates 26,635,470 Resident corp'ations. 216,930,500 Non-resident corpo- rations 17,122,500 $53,612,272 16,854,600 194,087,032 16,197,335 $366,328,341 $280,751,239 Taxes of 1903: Personal $176,149,450 Estates 52,144,610 Resident corp'ations. 274,172,000 Non-resident corpo- rations .. , 10,125,000 $112,951,287 38,612,810 251,575,230 9,399,385 $512,591,060 $412,538,712 Taxes of 1904: Personal $187,880,563 Estates 38,271,670 Resident corp'ations. 293,680,000 Non-resident corpo- rations 14,775,000 $122,103,293 23,742,450 286,398,490 13,789,225 $534,607,233 $446,033,458 Taxes of 1905 : Personal $185,485,870 Estates 39,010,820 Resident corp'ations. 281,105,400 Non-resident corpo- rations 1 1,325,000 $118,382,670 25,205,362 272,050,945 10,376,150 $516,927,090 $426,015,127 Taxes of 1906: Personal $187,214,120 Estates 43,008,158 Resident corp'ations. 282,284,150 Non-resident corpo- rations 8,835,000 $119,782,090 28,741,413 276,948,920 8,146,195 $521,341,428 $433,618,618 91 78 50 63 89 94 76 64 74 91 92 80 64 61 97 93 83 63 64 96 91 82 64 66 98 92 83 Receiver's book Per cent. or final assess- retained ment-roll. on book. $58,314,794 9,948,030 20,070,150 908,650 $89,241,624 $52,027,599 9,780,870 22,843,468 925,165 $85,577,102 $63,198,163 13,531,800 22,596,770 ' 725,615 $100,052,348 $65,777,270 14,529,220 7,281,510 985,775 $88,5-73,775 $67,103,200 13,805,458 9,054,455 948,850 $90,911,963 $67,432,030 14,266,745 5,338,230 685,805 $87,722,810 31 34 11 9 22 49 37 11 5 23 36 26 8 7 20 35 38 02 07 17 36 35 3 8 18 36 33 2 8 17 Repobt of Special Tax Commission. 83 SCHEDULE A— (Continued). A-4. QUEENS. Tentative assess- Receiver's book Per cent meat on anuual Per cent, or final assess- retained record. Cancelled, cancelled. ment-roil. on book Taxes of 1901 : Personal $17,337,000 $10,864,540 62 $6,472,460 37 Estates 2,835,550 1,816,300 63 1,019,250 36 Corporations 22,790,000 19,454,900 85 3,335,100 15 $42,962,550 $32,135,740 74 $10,826,810 25 Taxes of 1902: Personal $9,768,550 $4,471,145 45 $5,297,405 54 Estates 2,224,350 1,389,045 62 835,305 38 Corporations 20,705,000 17,811,576 86 2,893,424 14 $32,697,900 $23,671,766 72 $9,026,134 28 Taxes of 1903: Personal $9,188,000 $3,975,275 42 $5,312,725 58 Estates 1,849,810 1,148,064 62 701,746 37 Corporations 61,230,000 56,967,571 93 4,262,429 7 $72,267,810 $62,090,910 85 $10,176,900 14 Taxes of 1904: Personal $10,237,400 $4,520,625 44 $5,716,775 56 Estates 2,193,773 1,484,898 67 708,875 32 Corporations 54,066,000 53,014,225 98 1,051,775 02 $66,497,173 $59,019,748 88 $7,477,425 11 Taxes of 1905 : Personal $12,246,800 $5,054,725 41 $7,192,075 59 Estates 1,662,273 709,905 42 952,368 57 Corporations 35,612,500 34,662,205 97 950,295 03 $49,521,573 $40,426,835 81 $9,094,738 18 Taxes of 1906: Personal . . .' $12,278,300 $4,843,255 39 $7,435,045 61 Estates 3,384,568 2,098,745 62 1,285,823 38 Corporations 37,325,650 ' 36,352,090 97 .. 973,560 03 $52,988,518 $43,294,090 81 $9,694,428 18 S4 Eepobt of Special Tax Commission. SCHEDULE A — (Continued). A-6. RICHMOND. Tentative assess- Receiver's book Per cent, merit on annual Per ecnt. or final assess- retained record. Cancelled. canceled. ment-roll. on book. Taxes of 1901 * Personal $38,035,000 $29,807,680 78 $8,227,320 22 Estates 2,452,100 1,661,650 67 790,450 32 Corporations 18,992,000 18,354,150 97 637,850 03 $59,479,100 $49,823,480 83 $9 655,620 16 Taxes of 1902 : Personal $9,530,300 $3,865,025 40 $5,665,275 59 Estates 988,450 350,265 34 638,185 66 Corporations 24,467,850 24,045,775 98 422,075 02 $34,986,600 $28,261,065 86 $6,725,525 19 Taxes of 1903 : Personal $7,847,000 $2,762,165 35 $5,084,835 65 Estates 1,093,500 451,325 41 642,175 59 Corporations 23,937,000 23,632,460 98 304,540 01 $32,877,500 $26,845,950 81 $6,031,550 18 Taxes of 1904 : Personal $6,546,535 $1,667,000 25 $4,879,535 75 Estates 1,420,375 734,650 51 685,725 48 Corporations 10,971,000 10,744,190 97 226,810 02 $18,937,910 $13,145,840 69 $5,792,070 31 Taxes of 1905 : Personal $5,854,700 $1,319,135 22 $4,535,565 77 Estates 1,484,125 763,950 51 720,175 49 Corporations 10,756,000 10,520,930 97 235,070 02 $18,094,825 $12,604,015 69 $5,490,810 30 Taxes of 1906: Personal $6,769,000 $3,106,475 45 $3,662,525 54 Estates 1,1506,750 858,600 53 748,150 47 Corporations 10,783,000 10,517,380 97 265,620 02 $19,158,750 $14,482,455 75 $4,676,295 24 SCHEDULE B. Tax rates for the various boroughs in the City of New York, 1901-1906, inclusive,. Year. Manhattan and Bronx. Brooklyn. Richmond. Queens. 1901 2.31773 2.38853 2.35191 2.35702 1902 2.27384 2.35368 2.39692 2.31913 1903 1.41367 1.48945 1.49675 1.47508 1904 1.5734 * 1.5729 1.5928 1.57228 1905 1.49051 1.56264 1.55821 1.55623 1906 1-4789 1.53769 1.65422 UJ5484 Repobt of Special Tax Commission. 85 SCHEDULE C. Personal taxes collected from the tax levy in the City of New York for the years 1901 to 1905 inclusive. Per Cent. Tax of 1901: Collected. Tax Levy. Collected. Borough of Manhattan $6,331,039 28 $9,744,594 12 65 Borough of Bronx 109,145 34 278,659 36 39 Borough of Brooklyn 887,868 20 2,109,055 41 42 Borough of Queens 70,833 50 250,682 49 28 Borough of Richmond 66,855 40 226,545 52 30 Total, exclusive of attorney'8 collections $7,465,741 72 $12,609,536 90 59 Tax of 1902: Borough of Manhattan $5,896,841 61 $9,276,973 67 64 Borough of Bronx 89,774 59 286,197 74 31 Borough of Brooklyn 827,754 63 1,998,632 07 41 Borough of Queens 57,91167 206,498 46 28 Borough of Richmond 50,003 15 156,929 42 32 Total, exclusive of attorney's collections $6,922,285 66 $11,925,231 36 58 Tax of 1903 : Borough of Manhattan $4,578,241 75 $7,766,087 62 59 Borough of Bronx 64,604 69 208,553 03 31 Borough, of Brooklyn 527,953 09 1,489,142 84 35 Borough of Queens 42,154 11 149,809 48 28 Borough of Richmond 34,294 40 90,257 97 38 Total, exclusive of attorney's collections $5,247,248 04 $9,703,850 94 54 Tax of 1904: Borough of Manhattan $4,302,90132 $7,690,152 42 56 Bprough of Bronx 42,092 67 223,430' 35 19 Borough of Brooklyn 563,374 16 1,392,889 59 40 Borough of Queens 44,391 54 117,521 31 38 Borough of Richmond 34,760 54 92,246 09 38 Total, exclusive of attorney's collections $4,987,520 23 $9,516,239 76 52 Tax of 1905: Borough of Manhattan $3,823,635 63 $8,459,095 41 45 Borough of Bronx 31,459 92 248,696 88 13 Borough of Brooklyn 483,076 85 1,420,086 65 34 Borough of Queens 43,172 32 141,401 41 31 Borough of Richmond 30,77183 85,546 51 36 Total, exclusive of attorney's and marshal's collections.. $4,412,116 55 $10,354,826 86 43 Note. — The 1906 personal tax collections are not given because at this writing the receiver's books are not fully posted. The attorney's collections are not given in the total collections for any year because the exact figures could not be obtained. The average collection of the attorney's office, however, has not been more than seven per cent of the total taxes remitted to him for collection. (See table on next page.) 86 Report of Special Tax Commission. SCHEDULE C — (Continued). collections bt attorney for the collection of arrears of Personal Taxes from 1901 to 1906 Inclusive. Total YEAR. collected. 1901 $70,710 74 1902 385,032 20 1903 215,102 48 1904 220,173 09 1905 183,078 33 1906 (To Nov. 3) 98,865 90 Remark. The Attorney's collections, in any year, for example : The col- lections for the year 1901, may have covered the personal taxes for the years 1897, 1898, 1899 and 1900. Under these circum- stances the amount collected by the Attorney for any year can only be approximated by an average. A fair estimate would be about seven per cent of the amount remitted to him for collection in any year. Report of Special Tax Commission. 87 SCHEDULE C— (Continued). C'— 1. MANHATTAN. Per cent. Tax of 1901. L.evy. To marshal. To attorney. collected. Resident pers .$3,941,457 98 $1,819,258 89 $1,673,704 64 $2,267,753 34 58 Nonres. pers .. 837,274 72 579,770 91 549,824 39 287,450 33 34 Resident corp . 1,866,296 62 983,449 11 661,477 53 1,204,819 09 65 Nonres. corp . 880,878 96 347,311 67 294,902 34 585,976 62 67 Estates. ' 1902. 84 290,721 54 233,645 94 1,985,039 90 89 $9,744,594 12 $4,020,512 12 $3,413,554 84 $6,331,039 28 65 Tax oi Resident pers ..$3,194,705 89 $1,539,632 82 $1,373,606 41 $1,821,099 48 57 Nonres. pers .. 1,139,127 27 926,796 89 870,606 82 268,520 45 24 Resident corp . 2,013,116 99 1,124,153 17 655,220 15 1,357,896 84 67 Nonres. corp . 811,146 43 337,011 83 275,057 90 536,088 53 66 Estates . ' 1903. . . 2,118,877 09 277,498 25 205,640 78 1,913,236 31 90 $5,896,841 61 64 Tax ol Resident pers ..$3,172,817 41 $1,696,630 46 $1,562,260 76 $1,610,556 65 51 Nonres. pers . . 953,182 42 795,471 09 766,812 24 186,370 18 20 Kesident corp . .. 1,473,598 82 874,816 17 513,191 64 960,407 18 65 Nonres. corp . . 525,520 06 215,421 13 157,444 67 368,075 39 70 Estates . f 1904. 91 252,919 50 188,136 56 1,452,832 35 89 $7,766,087 62 $3,835,258 35 $3,187,845 87 $4,578,241 75 59 Tax o Resident pers ..$3,518,455 03 $2,060,212 3T $1,925,152 91 $1,593,302 12 45 Nonres. pers . . 1,088,626 26 925,814 45 903,960 02 184,666 24 17 Resident corp . 939,359 84 219,413 92 133,149 41 806.210 43 86 66 211,873 29 182,100 23 357.968 43 66 Estates , 1,603,642 63 284,103 70 242,888 53 1,360,754 10 85 $7,690,152 42 $3,711,417 73 $3,387,251 10 $4,302,901 32 56 Tax of 1905. Resident pers ..$3,615,379 97 $2,221,807 42 $1,393,572 55 39 Nonres. pers .. 1,303,847 73 1,166,645 82 137,201 91 11 Resident corp 1,312.146 14 455,610 92 856,535 22 65 Nonres. corp 75.1,500 78 460,752 29 290,748 49 39 Es tates 1,476,220 79 330,643 33 1,145,577 46 78 $8,459,095 41 $4,635,459 78 $3,823,635 63 45 Taxi of 1906. Resident pers ...$3,014,476 37 Nonres. pers .. 975,002 32 Resident corp 872,248 73 Nonresident Corp.. 440,289 97 Estates 1,304,546 29 • • $6,606,563 68 •' 88 Eepoet of Special Tax Commissioh. SCHEDULE C — (Continued). C — 2. Tax of 1901. Personal . . . Estates . . . . Corporations . Levy. $196,317 05 31,147 09 51,195 22 BRONX To marshal. $164,717 72 10,413 04 39,432 75 To attorney. $159,0*3 57 8,249 27 2,251 18 Per cent collected. $32,303 48 19 22,897 82 74 48,944 04 06 $278,659 36 $214,563 51 $169,514 02 $109,145 34 89 Tax of 1902. $192,084 53 $184,127 86 $29,607 07 14 10,913 80 9,568 00 9,410 75 50 Corporations . . .... 53,484 06 43,719 73 2,727 29 50,756 77 95 $286,197 74 $246,718 06 $196,423 15 $89,774 59 81 Tax of 1903. Personal $157,871 49 $142,105 29 $136,008 07 $21,863 42 14 6,918 82 5,860 06 12,556 50 68 Corporations . . . 32,264 98 24,976 58 2,080 21 30,184 77 94 $208,553 03 $174,000 69 $143,948 34 $64,604 69 $223,430 35 $195,407 75 $181,337 68 $42,092 67 1905. Tax of Personal . . Estates . . . Corporations Tax of 1906. Personal Estates Corporations . , 31 Tax of 1904. $181,638 03 $174,471 11 $24,031 49 12 9,346 81 5,109 71 10,116 16 67 Corporations .... 9,701 "88 4,422 91 1,756 86 7,945 02 82 19 $221,088 43 $204,325 03 $16,763 40 8 14,006 33 8,083 81 5,922 52 42 13,602 12 4,828 12 8,774 00 64 $248,696 88 $217,236 96 $31,459 92 13 $236,642 25 13,956 15 15,973 55 $266,571 95 Eepoet of Special Tax Commission. 89 SCHEDULE C— (Continued). — 3. BROOKLYN. Per cent Tax of 1901. Leyy. To marshal. To attorney. collected. Personal $1,399,556 95 $1,029,702 28 $976,595 10 $422,961 85 30 Estates . ...... 237,608 61 75,813 68 66,676 87 170,931 74 72 Corporations . . . 471,889 85 341,867 60 177,915 24 293,974 61 62 $2,109,055 41 $1,447,383 56 $1,221,187 21 $887,868 20 42 Tax of 1902. Personal $1,224,426 02 $947,462 18 $890,682 58 $333,743 44 27 Estates 230,192 72 75,447 68 60,049 57 170,143 15 74 Corporations . . . 544,013 33 435,017 63 220,145 29 323,868 04 60 $1,998,632 07 $1,457,927 49 $1,170,877 44 $827,754 63 41 Tax of 1903. Personal $941,270 34 $693,953 50 $655,962 05 $285,308 29 30 Estates 201,546 11 67,546 18 46,155 13 155,390 98 77 Corporations . .. 346,326 39 268,490 95 259,072 57 87,253 82 25 $1,489,142 84 $1,029,990 63 $961,189 75 $527,953 09 35 Tax of 1904. Personal $1,034,601 52 $759,107 99 $758,446 55 $276,154 97 27 Estates 228,535 61 88,647 31 45,500 98 183,034 63 80 Corporations... 129,752 46 43,065 90 25,567 90 104,184 56 80 $1,392,889 59 $926,821 20 $829,515 43 $563,374 16 40 Tax of 1905. Personal $1,048,544 67 $809,555 24 $238,989 43 23 Estates 215,726 50 65,366 62 150,359 98 70 Corporations . . . 155,815 48 62,088 04 93,727 44 60 $1,420,086 65 $9,370,098 80 $483,076 85 34 Tax of 1906. Personal $1,036,832 43 Sstates 219,374 80 Corporations . .. 92,269 62 $1,348,476 85 90 Repobt of Special Tax Commission. SCHEDULE C — (Continued). C— 4. QUEENS. Per cent Tax of 1901. Levy. To marshal. To attorney. collected. Personal $152,555 02 $116,045 25 $111,104 18 $41,450 84 27 Estates 24,023 67 7,565 37 6,042 16 17,981 51 75 Corporations 74,103 80 70,085 40 62,702 65 11,401 15 15 $250,682 49 $193,696 02 $179,848 99 $70,833 50 28 Tax of 1902. Personal Estates , Corporations . , Tax of 1903. Personal . . . . Estates . . Corporations . $122,826 53 $93,594 40 $89,783 28 $33,043 25 27 19,368 07 10,094 04 6,801 52 12,566 55 65 64,303 86 53,091 61 52,001 99 12,301 87 19 $206,498 46 $156,780 05 $148,586 79 $57,911 67 2S $76,887 86 $55,378 78 $52,371 19 $24,516 67 32 10,350 95 4,454 37 3,663 98 686 97 65 62,570 60 53,027 60 51,620 20 10,950 40 18 $149,809 48 $112,860 75 $107,655 37 $42,154 11 28 Tax of 1904. $67,565 67 $65,220 15 $24,655 96 27 3,968 67 3,665 25 7,479 81 67 Corporations 16,500 14 9,224 49 4,244 37 12,255 77 74 $117,521 31 $79,758 83 $73,129 77 $44,391 54 38 Tax of 1905. Personal $111,849 22 $85,357 40 $26,491 82 24 Estates 14,81103 7,114 96 7,696 07 52 Corporations 14,741 16 5,756 73 8,984 43 61 $141,40141 $98,229 09 $43,172 82 31 Tax of 1906. Personal $115,598 38 Estates 19,952 03 Corporations 15,114 30 $150,704 71 Eepoet of Special Tax Commisskvh. 91 SCHEDULE C— (Continued). C — 5. RICHMOND. Per cent. Tax of 1901. Levy. To marshal. To attorney. collected. Personal $193,492 53 $149,982 23 $146,335 87 $47,156 66 24 Estates 18,590 28- 6,70149 5,856 02 12,734-26 69 Corporations 14,462 71 8,312 39 7,498 23 6,964 48 48 $226,545 52 $164,996 11 $159,690 12 $66,855 40 30 Tax of 1902. Personal Estates Corporations . . Tax of 1903. Personal Estates Corporations . . $132,365 71 $103,716 25 $97,575 74 $34,789 97 26 14,911 02 6,247 43 4,082 67 10,828 35 73 9,652 69 5,389 34 5,267 88 4,384 83 45 $156,929 42 $115,353 02 $106,926 27 $50,003 15 82 $76,101 69 $57,019 80 $53,992 98 $22,108 71 29 9,611 41 1,305 40 957 46 8,653 95 90 4,544 87 1,118 86 1,013 13 3,531 74 78 $90,257 97 $59,444 06 $55,963 57 $34,294 40 38 Tax of 1904. Personal Estates , Corporations . , $77,717 77 $57,360 21 $55,151 95 $22,565 82 29 10,921 94 1,583 48 1,352 53 9,569 41 88 3,606 38 1,195 45 981 07 2,625 31 73 $92,246 09 $60,139 14 $57,485 55 $34,760 54 88 Tax of 1905. Personal $70,670 99 $52,164 02 $18,506 97 26 Estates 11,221 55 1,942 57 9,278 98 83 Corporations 36,539 97 668 09 2,985 88 82 $85,546 51 $54,774 68 *30,771 03 36 Tax of 1906. Personal $56,921 06 Estates 11,627 54 Corporations 4,112 43 $72,661 03 : . ' * : a . Kjepoet op Special Tax Commissioh. s OS OS CO CO ^ eo \q co co o O ft lON«OC» ! a 0«ONH . N N o. a lO L-O CO r-^CO i g ° o _ OQ H o n to « o SB lonfflww ©^b-ioto^q oo ■ajToo cf eo" 5a. NpH * -1- OS CO t- a OS CD © IO o OHIO CO ttf »-t CM CO -I— wis >-: CO IO CM O CO T* ^< fflHH i-H g l-^ CM M - fc M iO •^< t~ CO Til o COIOIO CO a QOHin ira o OS CM t* CD n CO i-H ira CM^t- T* "^ of of t-T 00 co «-< eo o •-H OO CO »o Oi 00 CO •* CO OS 00 •<# IO t- 00 CD t* o ft f-H 9* ^H K © oo eo 00 OS i-l. C> i-H rH us oa co « t< u o O o a E to a m m J8 m 2 o -^ 2 co cj Ph S- -^ ~ OJ l/J O g on g E.S & CD « O Repobt of Special Tax Commission. 93 S — ; cm <- -3 G Og CO 00 CO CM r- OJ q r* t— i-H fr- ■a IN tO N Co t— IO IO 0> ©. CS ■"" ' CO l-H ** $r 111 94 Ebw)et of Special Tax Commission. m a « > a n « o &. w p o o a ►j wo >j . WW - 1 copq O B2; ►a t-'o WOcO{N U3C4 0COCO HOOiNO ^H OdC-lCOO CD ■tf ©Oar*"* II PScDtNOS "Q-« i ra a h >-* §* 13 o.«ob5| O 15 O » ttxvxm Id, » an «<0 III in Hepobt of Special Tax Commission. 95 schedule e. Table showing relative percentage of payments or collections in any class in each borough, compared with the total payments or collections in that borough. MANHATTAN. 1901. 1902. 1903. 1904. 1905. Resident personal 35.8 30.8 35.1 37.0 36.4 Non-resident personal 04.54 04.55 04.0 04.2 03.58 Resident corporations 19.0 23.0 20.9 18.7 22.4 Non-resident corporations 09.2 09.0 08.0 08.3 07.6 Estates 31.3 32.4 31.7 31.6 29.9 BRONX. 1901. 1902. 1903. 1904. 1905. Personal 34.1 33.0 33.8 57.2 53.3 Estates 20.9 10.4 19.4 24.0 18.8 Corporations 33.1 39.1 46.7 18.9 27.9 BROOKLYN. 1901. 1902. 1903. 1904. 1905. Personal 47.6 40.3 54.0 49.0 49.4 Estates 19.2 20.55 29.4 32.4 31.1 Corporations 33.1 39.1 16.52 18.4 19.4 QUEENS. 1901. 1902. 1903. 1904. 1905. Personal...., 58.54 57.0 58.2 55.6 61.4 Estates 25.3 21.7 15.8 16.8 17.8 Corporations 16.1 21.2 26.0 27.6 20.8 Personal Estates Corporations 10.4 RICHMOND. 1901. , 19.0 1902. 69.57 21.6 08.7 1903. 64.4 25.2 10.2 1904. 64.9 27.52 07.55 1905. 60.2 30.1 09.7 96 Repoet op Special Tax Commission. 8 a r- o CD 8 t- C~ » CO oa CO CO b- J5 r- N books on ond Mon of Januar oa rH © o m ■* o < CO ». CO CO 00 CO CO o •s.g "o » Og IN CM CO CO © CO US © S £3 co CS CJ Ci io n co^ (m co' i© © p-T ©f eo tH (n »o © r-i <-< (M CO ©1 (O 06 N H H H i-H 00 CO gj 01 04 CO CO ■* i-H IN of CO t-T ■* of CO © lO la lO 03 t- CO t~ CO CO CO CO © lO U0 CO t-~ ea o CO Ml CO CO r~i of CO CO CO •f tt T r*T >-* (M CO CS CO Ol t— I CD OS ID C' ■ CJ to TjT co" cs" CO CM CO h o CM r- to o cm" of ^ T^ rt< e& 'D a> .-t OK. " oi& . m o 03*0 >. I-- OS bC C " TP OS ffSg S g £3 3 « « o c<** © ~ ■coo r-1 v^3 t- rH_ ■* i-T -h o» t— rt os o ^ t-l C-l lO »c CO o cs r-- h- o co CO -t <= © 00 OS OS s 8 98 Repobt of Special Tax Commission. SCHEDULE G. Area Boroughs (In acres) Manhattan 14,038.00 Brooklyn 49,680.14 Bronx 26,017.00 Queens 82,883 . 00 Richmond 36,600 . 00 1900 1,850,093 1,166,582 200,507 152,999 67,021 SCHEDULE H. Population 1905 2,112,697 1,358,891 271,629 198,241 72,846 Jan. 1, 1906 1,974,284 1,402,729 339,860 210,925 77,477 TOTAL LOCAL TAX OF REAL AND PERSONAL ESTATE IN THE CITY OF NEW YORK FROM 1899 TO 1905. Year. 1899 1900 ;... 1901 1902 1903 1904 1905 Tax levied for all purposes. $86,179,794 00 82,539,199 00 88,241,853 00 88,178,612 00 77,631,787 00 86,068,403 00 88,980,731 22 Tax paid by real estate. $72,805,555 00 71,758,393 00 75,632,267 00 76,303,322 00 67,927,925 00 76,552,164 00 78,625,867 49 Tax paid by personal. $13,374,239 00 10,780,806 00 12,609,586 00 11,875,290 00 9,703,862 00 9,516,239 00 10,854,863 73 TOTAL STATE T/K OF REAL AND PERSONAL ESTATE IN THE STATE OF NEW YORK FROM 1899 TO 1904. State tax levied Tax paid by Per cent. Per cent, tor all rpal Tax paid by paid by paid by Year. purposes. estate. personal. real est. personal. 1899 $12,640,228 09 $10,990,678 23 $1,649,549 77 $86 95 $13 05 1900 10,704,153 39 9,430,359 14 1,273,794 25 88 10 1190 1901 6,824,306 01 6,025,862 21 798,443 80 88 30 11 70 1902 748,072 05 672,010 05 76,062 00 89 83 10 17 1903 761,085 02 688,709 30 72,375 72 90 49 9 51 1904 968,041 89 877,433 17 ' 90,608 72 90 64 36 SCHEDULE I. STATE TAX RATES FROM 1880 TO 1907, INCLUSIVE. Year Mills Year 1881 2.250 1882 2.450 1883 3.250 1884 2.575 1885 - 2.960 1886 2.950 1887 2.700 1888 2.620 1889 3.520 1890 2.340 1891 1.375 1892 1.980 1893 2.580 Hills 1880 3.500 1894 2.180 1895 ' 3.240 1896 2.690 1897 2.670 1898 2.080 1899 2.490 1900 1.960 1901 1.200 1902 1903 1904 1905 1906 1907 .130 .130 .130 .154 .154 .000 APPENDIX D. REPORT ON THE TAX LAWS OF MASSACHUSETTS, CONNECTICUT, NEW JERSEY, PENNSYLVANIA AND ONTARIO. (1) Prepared by Robert H. Whitten, New York State Library. (1) Prepared in accordance with a resolution of the Special Taxation Commission, adopted July 11th, 1906. STATE REVENUE. Many states are evidently working towards a separation of State from local taxation and in quite a number of states this has already been accomplished. The separation of sources of revenue is practically complete in New York, Vermont, Connecticut, New Jersey, Pennsylvania and Delaware. A bulletin of the United States Census Bureau now being pub- lished will contain complete statistics of the revenue of the various states. Massachusetts. — Of the revenue needed for State purposes Massachusetts in 1905 raised $4,000',000 from the general prop- erty tax and $6,327,029 from independent sources. The prin- cipal receipts for 1905 are as follows : Corporations. . .,. ., $1,347,571 46 Bank stock 366,399 42 Savings banks 1,809,684 23 Collateral inheritances 694,180 69 Insurance companies ,. ..... .' 887,895 80 Liquor licenses . .>. . . . 840,460 21 Miscellaneous ,. ., ..» .. 380,897 49 $6,327,089 30 General property tax .,. . . ... ... . .i. ., 4,000,000 00 Total ...-..■ .. f. .. $10,327,089 30 Connecticut. — In Connecticut there is no tax levy for State purposes on general property. The principal receipts for 1905 are as follows: [99] 100 Ekpoet of Special Tax Commission. Railroads ...... $1,204,93« 48 Street railways 237,908 23 Express companies , . . 13,121 47 Telegraph and telephone ...... ,. ., 30,464 49 Savings bank ,..,..,.., ,..,.. 469,611 55 Insurance companies 335,301 81 Insurance commissioner receipts 130,318 04 Corporations (non resident stock) . . 140,035 51 Investment tax (notes, bonds, etc.) , 139,375 35 Inheritances , 284,117 07 Military commutation tax i. ,. . . 152,537 80 Miscellaneous. ; 397,245 51 $3,534,973 31 New Jersey. — There is no tax levy on general property for State purposes in New Jersey. The principal State receipts for 1905 are as follows: Miscellaneous corporations . $2,423,846 04 Railroads . . . 942,272 23 Secretary of State (incorporation and other fees) 295,437 42 Commissioner of banking and insurance (fees and taxes) 176,569 65 Collateral inheritance tax ,. 202,667 87 Miscellaneous. , , 558,282 94 $4,598,075 75 Pennsylvania. — No tax is levied on real estate for state pur- poses. The tax on certain kinds of personal property is on the theory at least a State tax though assessed and collected by local officials. The principal receipts for 1904 are as follows: Banks ... ., , . $808,735 53 Trust companies , 905,710 66 Interest on State deposits . ., 311,904 71 Foreign insurance companies .,. .. 1,109,145 94 Corporations — Capital stock 4,632,023 58 Bonds .. . 1,158,504 84 Cross receipts ' 1,207,753 ,41 Incorporation and license fees 488,533 02 Bbpobt op Special Tax Commission. 101 Personal property: (3/4 returned to counties) 3,228,297 33 Collateral inheritance tax 1,080,578 08 Mercantile licenses 932,657 33 Liquor licenses — Retail 605,504 99 Wholesale 513,506 99 Brewers' , 282,003 25 Bottlers' 158,989 59 Miscellaneous 2,337,944 48 Total ,. ., $19,767,593 73 Ontario. — There is a complete separation of local and pro- vincial taxation. The principal receipts for 1905 are as follows: From Dominion of Canada $1,339,287 28 Interest on investments ... 169,668 51 Woods and forests: Bonus , 520,070 91 Timber dues 1,480,910 06 Ground rent 61,194 94 Licenses 377,610 88 Law stamps 93,516 70 Secretary's department 131,059 21 Corporations 445,688 33 Inheritance tax 684,178 36 TAXATION OF GENERAL BUSINESS CORPORATIONS. An excellent digest of the business corporation tax laws of all the States is contained in the report of the Massachusetts Commit- tee on Corporation Laws, 1903, p. 227-303. Of the States under review Massachusetts and Pennsylvania have quite fully differentiated methods of taxing, general business corporations. The State Tax Commissioner of Massachusetts as- sesses a tax at the average rate of taxation throughout the State (about 1-1/2 per cent.) on the total market value of the shares of all domestic corporations, less real estate and machinery locally assessed, and the Auditor General of Pennsylvania, a tax of 1/2 of 1 per cent, on the actual value of the franchises, property and 109 Hepoet op Special Tax Commission. entire earning capacity of all corporations having a capital stock, and also a tax of 2/5 of 1 per cent, on the bonds or other obliga^ tions of domestic corporations held by residents of the State, which is paid by the corporations and deducted from interest due. Massachusetts. — Keal Estate. Keal estate and machinery of general business corporations is assessed by local assessors for State and local purposes. (Mass. 1903, Chap. 437, § 71). Personal property of domestic corporations. The State Tax Commissioner ascertains the market value of the shares of dom- estic business corporations and estimates therefrom their fair cash value. From the aggregate value of the shares of each cor- poration as thus determined there is deducted (1) the value of real estate and machinery subject to local taxation within or with- out the State, (2) the value of securities which, if owned by a natural person resident in Massachusetts, would not be liable to taxation. The remainder is taxed at the average rate of taxation through the State for the three preceding years, obtained by dividing the aggregate assessed valuation of real and personal property in the State by the aggregate amount of taxes (except poll taxes) to be raised for State and local purposes. But the said tax shall not exceed a tax levied at such average rate upon an amount, less said deductions, 20 per cent, in excess of the value of the real estate, machinery and merchandise and of securities which if owned by a natural person resident in the State would be liable to taxation; and the said tax shall not be less than 1/10 of 1 per cent of the market value of capital stock. (Mass. 1903, Chap. 437, §§ 72-74 as amended by Mass. 1904, Chap. 261 and 1906, Chap. 271, § 12). The tax is paid into the State treasury and such a proportion of the tax of each corporation as corresponds to the proportion of its shares held by non-residents of the State, is retained for State purposes and the remainder is distributed to cities and towns in proportion to the number of shares held by residents of each city and town. (Mass. 1903, Chap. 473, § 86). Personal property of foreign corporations. No special provi- sion has been made for the taxation locally of foreign corpora- tions doing business in the State and they are taxed under the general law for taxation of all real estate and personal property. Not being residents of the State they can only be taxed on such personalty as is made taxable wherever situated, while personal property the situs of which follows the residence of the owner cannot be taxed. Besides being taxed on their real estate and Rkpobt of Special Tax Commission. 103 machinery they are subject to assessment, therefore, only on goods, wares, merchandise and other stock in trade, including stock employed in the business of manufacturing or the mechanic arts. (E. L., Chap. 12, § 23, par. 1). To this method of taxa : tion a State excise tax has recently been added. Foreign cor- porations having a usual place of business in the State and foreign corporations carrying on within the State the erection or repair of any building or structure are required to pay a State excise tax of one-hundredth of one per cent of the par value of their authorized capital stock less the amount of taxes upon property paid to any city or town in the State ; but the amount of such tax shall not exceed $2,000. (Mass. 1903, Chap. 437, § 75). Connecticut. — Real estate and personal property of general business corporations is assessed and taxed in the towns in the same manner as the property of individuals. They pay no State tax. New Jersey. — Real estate of business corporations is taxed where situated by local assessors for local and school purposes. (ST. J., 1903, Chap. 202, § 6). Local taxation of personal property. Tangible personal prop- erty of domestic and foreign business corporations is taxed in the district where situated. Intangible personal property of domestic corporations is taxed in the taxing district where the chief office is located, for local and school purposes, in the same manner as personal property of individuals. Foreign corporations doing business in the state are assessed in the taxing district where such business is most usually carried on, on the amount of capital usually employed in the State and not otherwise taxed as real property or tangible personal property. (N. J., 1903, Chap. 208, § 16). Mortgages owned by corporations are exempt from taxes to the same extent as when owned by natural persons. (N. J. 1903, Chap. 208, § 16). Corporations have the same right to a deduc- tion for debts due to creditors residing within the State as have individuals. Corporations, domestic and foreign, are not taxed on personal property situated and taxed within the state. (29 Vroom, 633; 34 Vroom, 525 ). State taxation of capital stock. All domestic business corpora- tions except manufacturing or mining corporations 50 per cent of whose capital stock is invested in manufacturing or mining within the State, are subject to an annual State license fee or franchise '104 Eepobt of Special Tax Commission. tax on the par value of capital stock issued and outstanding, at the rate of one-tenth of 1 per cent, on amount not exceeding $3,000,000, one-tenth of 1 per cent, on amounts over $3,000,000 and not exceeding $5,000,000, and $50 for each $1,000,000 in excess of $5,000,000. (3ST. J., 1901, Chap. 9). New Jersey corporations organized to carry on business in other States form by far the largest class of corporations subject to this tax. State taxation of foreign business corporations. A State fran- chise tax of 5 per cent, on gross receipts from business done in the state is levied on foreign business corporations excepting man- ufacturing and mining corporations having at least 50 per cent, invested in manufacturing and mining in New Jersey. (N. J., 1904, Chap. 221). Pennsylvania. — Real' estate of business corporations is not sub- ject to taxation for state purposes but is taxed wherever situated for local purposes. Capital stock. Domestic business corporations and foreign business corporations doing business in the State pay a State tax of five mills on the appraised value of their capital stock. The tax on capital is defined as a tax on franchises, property and en- tire earning capacity. (164 Pa. 284). The valuation may not be less than the average price at which the shares have sold during the year nor less than the value indicated by net earnings, div- idendends and increased surplus. A proportionate deduction is made for capital employed without the state. A portion of the capital stock of manufacturing corporations proportionate to the capital employed exclusively in manufacturing, is exempt from taxation. (Pa. 1891, Chap. 200, § 4; 1893, Chap. 288j § 1; 1906, Chap. 377). Personalty and net earnings. Personal property of corporations subject to the five mill tax on their shares, is not otherwise tax- able. (Pa. 1893, Chap. 288, § 1). The corporations not subject to this tax pay a tax of four mills on certain kinds of personalty. (Pa. 1891, Chap. 200, § 1). The tax on personalty, though termed a State tax, is assessed by the local assessors and three- fourths of it goes to the county and one-fourth to the State. (Pa. 1891, Chap. 200, § 3). Corporations, except manufacturing, that are not subject to the five mill tax are also subject to state tax of 3 per cent on their net earnings. (Pa. 1889, Chap. 332, § 27). Report of Special Tax Commission. 105 Bonds. Loans. The obligations of domestic and foreign cor- porations held by residents of the state are subject to a state tax of four mills on their par value. (Pa. 1905, Chap. 162, § 4; 1891 Chap. 200, § 1). The tax is paid by the corporations in behalf of the holders and deducted from the interest due. If no interest is paid no tax can be collected. (150 Pa., 312). The supreme court of the United States thas held that a domestic cor- poration doing business in the State and paying interest to resi- dents of the S*tate by checks drawn without the State can not be compelled to pay the tax and deduct the amount from interest. (153 IT. S. 628.) This decision practically exempts foreign corporations from the tax. Residents holding the obligations of foreign corporations that do not pay this tax are required to list their obligations as personal property and pay a tax of four mills on their value. (Pa. 1891, chap. 200, § 1.) Ontario. — General business corporations pay no tax to the provincial government. They are taxed locally on their real property but there is no tax on personal property. In addition to the tax on real property most business corporations also pay a business or surtax levied on a varying percentage of the assess- ment of real estate used in their business. This percentage in the case of manufacturers is 60 per cent. ; in the case of whole- sale merchants 75 per cent. ; distillers 150 per cent. ; retail mer- chants 25 to 35 per cent., etc. (Ont. 1904, Chap. 23, § 10.) Holders of shares of companies subject to this business tax are exempt from taxation on their shares. TAXATION OF PUBLIC SERVICE CORPORATIONS. Under the term public service corporations as here used are included all transportation and transmission corporations and all corporations exercising the right of eminent domain or any fran- chise to use streets or public places. Of the States under review Connecticut and New Jersey have noteworthy laws for the taxation of railroads. Connecticut levies a State tax of 1 per cent on the market value of shares plus the par value of funded and floating indebtedness. A New Jersey law of 1906 levies a State tax at the average rate of taxation on all railroad property including personalty and franchises, except buildings, branch roadbeds, etc., locally assessed. New Jersey has also recently provided for a yearly increase in its gross receipts tax on the franchises of street railways until a 106 Repokt of Special r Tax Commission. maximum rate of 5 per cent is reached in 1911. Connecticut levies a State gross receipts tax of 5 per cent on express companies. A very complete compilation and tabulation of the laws of the various States relating to the taxation of railroads was published in 1903 by the United States Interstate Commerce Commission. The Report of the Ontario Commission on Railway Taxation, 1905, contains much information relating to systems of taxing transportation companies in the United States and Canada. The final report of the California Special Commission on Revenue and Taxation, which has just been published, contains a full and valuable treatment of the taxation of railways and other public service corporations in the various States. Massachusetts. — Real estate. Strictly speaking, the property of a corporation to the extent to which it is devoted to a public use is exempt from taxation. As property cannot be taken by eminent domain except for a public use it follows that all prop- erly so taken is exempt. In the case of Worcester vs. Western Railroad, 4 Met. 564, the court held that only property outside of a railroad's right of way was taxable. The State, however, ac- tually succeeds in taxing property of corporations devoted to pub- lic uses through its general tax on the market value of shares less real estate and machinery locally assessed (R. L., chap. 14, §§ 37-42) ; this tax is called a franchise tax and legally a tax on a franchise of a corporation is not a tax on its property. (12 Mass. 252.) All real estate and machinery of public service cor- porations except such as is devoted in a legal sense to a public use is assessed by the local assessors for State and local purposes in the same manner as real estate of individuals. (R. L., chap. 12, § 3 ; R. L., chap. 14, §§ 37-42.) Personal property. Capital stock. Public service corpora- tions are subject to the general " franchise tax " on the market value of shares less real estate and machinery locally assessed. (R. L., chap. 14, §§ 37-42; for railroads, see 1906, chap. 463, pt. 2, §§ 211-17; for street railways, see 1906, chap. 463, pt. 3, §§ 125-37.) The tax applies to all domestic corporation's and to foreign telegraph and street railway companies operating within !ie State. In the case of railroads, street railways and tele- naph companies only such a proportion of the aggregate value if the shares is taken as the length of line in the State bears to the total length ; and in case of telephone companies only such Report of Special Tax Commission. 107 a proportion as the number of telephones -within the State bears to the total number. The taxes imposed at the average rate of taxation throughout the State for the three preceding years, obtained by dividing the aggregate assessed valuation of real and personal property in the State by the aggregate amount of taxes to be raised for State and local purposes. (Mass. 1906, chap. 271, § 9.) The tax is paid into the State treasury and such a proportion of the tax of each corporation, except street railways, as corresponds to the propor- tion of shares held by residents of the State is retained for State purposes and the remainder is distributed to cities and towns in proportion to the number of shares held by residents of each. Street railways. Besides being subject to the above described general franchise tax on the value of shares street railways are re- quired to pay the following special taxes: (1) A tax equal to the excess of dividends paid over 8 per cent, provided the company has paid since commencing operations dividends averaging 6 per cent; (2) a commutation tax intended to take the place of certain work formerly performed by the street railways, but now per- formed by the city or town. The rate of the tax may on peti- tion be fixed or altered by the State Board of Railroad Commis- sioners at an amount sufficient to cover this expense. Unless so fixed the rates are as follows: 1 per cent on gross receipts if less than $4,000 a mile; 2 per cent if from $4,000 to $7,000 a mile; 2i per cent if from $7,000 to $14,000; 2£ per cent if from $14,000 to $21,000 ; 2| per cent if from $21,000 to $28,- 000 ; 3 per cent if more than $28,000. The tax on gross receipts is paid into the city or town treasury, and is assessed by the local assessors on such a proportion of the aggregate gross receipts as length of track within the city or town bears to its entire length. The tax on dividends is paid into the State treasury and together with the entire amount of the franchise tax on the value of the shares is apportioned back to the cities and towns in which the street railways are situated in proportion to length of track. (Mass. 1906, chap. 463, pt. 3, §§ 125-37. Connecticut. — The real and personal property of public service corporations other than railroad, street railway, express, tele- graph and telephone companies is assessed and taxed in the towns in the same manner as the property of individuals and they are not required to pay any State tax. 108 Report op Special Tax Commisskht. Express companies pay a State tax of 5 per cent on gross receipts from business in the State. In lieu of the payment of this tax for any year the State Treasurer may accept the sum of $10,000. This tax is in lieu of all other taxes, State and local, on property of such companies used in the express business. (G. S., §§ 2433-2435.) It is provided, however, that the rate of tax shall be 2 per cent instead of 5 per cent for companies con- ducting an express business wholly on the lines of electric or street railways within the State. (Conn., 1905, chap. 264.) Telegraph companies pay a State tax of twenty-five cents on each mile of wire operated within the Stata This is in lieu of all other taxes, State and local, except the local tax on real estate. (G. S., §§ 2436-37.) Telephone companies pay a State tax of twenty-five cents on each mile of wire operated within the State and of seventy cents on each telephone transmitter. This is in lieu of all other taxes, State and local, except the local tax on real estate. (G. S., §§ 2436- 39.) Railroads and street railways pay a State tax of one per cent on the market value of their stock plus the par value of funded and floating indebtedness. If part of the road lies outside the State a proportionate deduction is made, based on mileage. The tax is assessed by the State Board of Equalization. It is in lieu of all other taxes, State and local, on the property of such companies used for railway or street railway purposes. (G. S., §§ 2423-33.) New Jersey. — Real estate of public service corporations except railroads and canals is taxed by the local assessors for local and school purposes. Personal property of public service corporations, except steam railroads and canals, is taxed for local purposes, in the same man- ner as personal property of individuals. (K~.. J., 1903, ch. 208, § 16.) The valuation of the corporate franchise cannot be in- cluded in the valuation of the property for taxation, and debts, due the creditors residing within the State may be deducted. (13 Vroom, 367.) Corporations, domestic or foreign, can only be taxed on personal property actually within the State. (29 Vroom, 663.)' Franchises. — All public service corporations (except street rail- ways, railroads and canals) using streets, highways or public places are required to pay an annual franchise tax of two per cent on gross receipts. (N. J., 1900, ch. 195, as amended by 1903, ch. 142 and Ebpobt or Special Tax Commission. 109 151.) The tax is apportioned by the State Board of Assessors to the taxing district in proportion to the assessed value of property therein in streets, highways and public places, and is then assessed and collected by local authorities and devoted to local purposes. Express companies and palace sleeping car companies pay a State tax of two per cent on gross receipts from business done in the State. (N. J., 1892, ch. 76.) The rate of gross receipts tax on street railways formerly the same as that of other public service corporations, will now be annually increased one-half of one per cent each year until in the year 1911 it reaches a maximum of five per cent (N. J., 1906, ch. 290.) Railroads. — A tax for local purposes is assessed by the local assessors on branch roadbeds and all other property except: (1) the " main stem " of each railroad, including the roadbed not ex- ceeding 100 feet wide with tracks and structure, except passenger and freight buildings, and (2) rolling-stock, canal boats and all tangible and intangible personalty. The tax is at the local rates of taxation for other property in the tax districts where the prop- erty is situated. (K J., 1906, chap. 280.) A State tax at the average rate of taxation through the State is assessed by the State Board of Assessors on the actual value of all other property ("main stem," personalty and franchise). (¥. J., 1906, chap. 82.) Permsylvama. — Keal estate. Public service corporations are exempt from all local taxation on so much of their property as is essential to the exercise of their franchise, except railroad prop- erty in Philadelphia and Pittsburg. Railroad tracks rolling stock, stations, telegraph lines, etc., are thus exempted. (148 Pa. 162 ; 148 Pa. 282; 168 Pa. 401.) Real estate is not taxed for State purposes in Pennsylvania. Capital stock and bonds. — Public service corporations like other corporations are subject to a State tax of one-half of one per cent. on their capital stock, i. e., their franchises, property and entire earning capacity, and domestic corporations are also subject to a State tax of two-fifths of one per cent, on their bonds or other obligations held by residents of the State, which is deducted from interest due the holders. (For more extended description, see page 628.) Gross receipts. — Transportation and transmission companies of every kind, domestic and foreign, pay a State tax of four-fifths of one per cent, on their gross receipts from passengers and freight 110 Repobt of Special Tax Commission. transported wholly within the State, or from telegraph, telephone or express business done wholly within the State. Electric light companies are subject to a like tax on gross receipts from their electric lighting business. (Pa., 1889, chap. 322, § 23; 1899, chap. 66, § 2.) Ontario. — Street railway, light, heat and power companies are taxed locally on the real estate. In addition they pay a business tax at the local rate on an amount equal to twenty-five per cent, of their real estate assessment exclusive of the value of machinery, plant, or appliances. (Ont., 1904, chap. 23, § 10, par. 1.) Stock- holders in companies taxed as above are exempt from assessment on the income from their stock. Gas and electric light companies operating in any city pay in addition to local taxes a provincial tax of one-tenth of one per cent, on paid-up capital. (Ont., 1899, chap. 8, § 2, par.. 10.) Street railways operating in any city also pay a provincial tax based on mileage as follows : $20 per mile if whole mileage does not exceed twenty miles ; $35 if mileage more than twenty and less than thirty; $45 if more than thirty and less than fifty;. $60 if more than fifty. (Ont, 1899, chap. 8, § 2, par. 6.) Railroads pay a provincial tax of $30 per mile for one track, and $10 per mile for each additional track. In unorganized counties, however, the tax is $20 per mile for one track and $5 per mile for each additional track; and for independent com- panies operating not over 150 miles of track the tax is $15 per mile for one track and $5 per mile for each additional track. Switches, spurs, and sidings are not included in the measurement of trackage. (Ont., 1904, chap. 5.) Other than the provincial mileage tax there is no tax either provincial or local on the personal property and franchises of railroads. A local tax is assessed by local assessors on railroad real estate at the same rate as that on other real property. Land occupied by right of way however is assessed at the average value of land in the locality with no consideration of the value of tracks and other structures. Buildings and also tracks and other structures over public streets or places (not being merely at street or road crossings) are assessed at their value for railroad purposes. The valuation of railroad real estate is made every five years. (Ont, 1904, chap. 23, §§ 44-^5.) Repoet of Special Tax Commission. Ill Stockholders are subject to assessment tinder the income tax on income from railroad stock. (Ont., 1904, chap. 23, § 11.) Express companies operating over 400 miles or less of railway pay a provincial tax of $800, and an additional tax of $125 for each additional 400 miles or fraction thereof. (Ont., 1899, chap. 9, § 2, par. 12.) Express companies in addition to the local tax on real estate pay a business tax at the local rate on an amount equal to seventy- five per cent, of their real estate assessment. (Ont., 1904, chap. 23, § 10, par. 1.) Stockholders are exempt from assessment on income from their stocks. Telegraph companies which own lines operated by others or operate lines owned by others, pay a provincial tax of one-tenth of one per cent, on paid-up capital. (Ont., 1899, chap. 8, § 2, par. 7.) Telegraph companies are taxed locally on the value of their real estate, exclusive of poles, wires and other appliances, plant or machinery. In addition they pay a business or surtax at the same rate on a valuation equal to 25 per cent of the value of their real estate as above assessed. (Ont., 1904, Chap. 23, § 10, par. 1.) This is a substitute for an income tax or tax on personal property and relieves stockholders from assessment on income from their stock. Telegraph companies in addition pay another special tax for local purposes. In cities, towns and villages an amount equal to 50 per cent of their local gross receipts is added to the assessment list and in townships they are assessed at the rate of $40 per mile for a single wire and $5 per mile for additional wires. (Ont, 1904, Chap. 23, § 14.) Telephone companies pay a provincial tax of one-eighth of one per cent on paid up capital. (Ont, 1899, Chap. 8, § 2, par. 9.) Telephone companies are taxed locally on the value of their real estate exclusive of poles, wires and other appliances, plant or ma- chinery. In addition they pay a business or surtax at the same rate on a valuation equal to 25 per cent of the value of their real estate as above assessed. (Ont., 1904, Chap. 23, § 10, par. 1.) This is a substitute for an income tax or tax on personal property and relieves stockholders from assessment on income from their stock. 112 Eepobt of Special Tax Commissioit. Telephone companies in addition pay another special tax for local purposes. In cities, towns and villages under 10,000, 60 per cent, and in cities from 10,000, 75 per cent of their local gross receipts is added to the assessment list; and in townships they are assessed at the rate of $135 per mile for a single wire and $7.50 per mile for each additional wire. (Ont., 1904, Chap. 23, § 14.) Sleeping and parlor car companies pay a provincial tax of one- third of one per cent on the capital invested in cars and rolling stock in use in the province. (Ont., 1899, Chap. 8, § 2, par. 13.) TAXATION OP STATE AND NATIONAL BANKS. There is considerable uniformity in the taxation of State and national banks throughout the United States. The existing system has grown out of the exemption from taxation of United States bonds, in which much of the capital of national banks is invested and the provisions of the national banking act permitting the taxa- tion of nation al bank shares in the hands of individuals at a rate not greater than that at which other moneyed capital in the hands of individuals is taxed. (National Bank Act, 1864, § 41.) In Massachusetts real estate is taxed for State and local purposes and the banks pay a tax in behalf of the shareholders at the average rate for state and local purposes on the market value of the shares, less a proportionate deduction for real estate separately assessed. In Pennsylvania the tax on real estate is for local pur- poses only and the state levies a tax of two-fifth of one per cent, on the actual value of shares, determined by adding together capital stock paid in, surplus and undivided profits. In Con- necticut a tax of one per cent, is levied on the market value of shares less the value of real estate locally taxed. Massachusetts. — Real estate of state and national bank3 is assessed where situated for state and local purposes. Shares of stock are assessed to each individual holder at their fair cash value less the proportionate part of the value of the real estate of the bank. The shareholders are assessed, not in the city or town of their residence, but in the city or town where the ■ bank is located, at the rate, State and local, at which other prop- erty is assessed. The bank is required to pay the tax in behalf of the shareholders and it is given a lien on the shares for all taxes paid. The tax is apportioned between the State and the cities and towns in the same way as the general tax on domestic corporations; each city and town receives the tax collected on the Repobt op Special Tax Commission. 113 shares held by its residents and the State receives the tax col- lected on the shares of non-residents of the State. (E. L.,' chap. 14, §§ 9-18.) Connecticut. — Real estate of State and national banks is as- sessed and taxed in the town where located, for local purposes. A tax of one per cent, is levied on the market value of shares less the value of real estate locally taxed. The tax is assessed to the owner of the shares but is paid by the corporation in his behalf. The tax is collected by the State Treasurer and the amount col- lected on the shares held by residents of the State is returned to the towns where such stockholders reside. The amount from the shares of State banks held by non-residents is retained in the State treasury. The amount from the shares of national banks held by non-residents is returned to the town where the" bank is located. (G. S., §§ 2331-35.) New Jersey. — Real estate of State and national banks is as- sessed where situated for local and school purposes. Shareholders are taxable for local and school purposes in the tax district where they reside on the actual value of their shares less a proportionate deduction for real estate of the bank separately assessed. The tax on shares of non-residents of the State is assessed in the district where the bank is located and it is paid by the bank and charged to the holders. (N. J., 1903, chap. 208, § 17.) It is also provided that in assessing shares of stock the same deductions and exemptions shall be granted as are granted in the case of other taxable property owned by individuals and that the assessment on such shares shall not be at a greater rate than is assessed on other moneyed capital in the hands of individuals. (N. J., 1905, chap. 234). Pennsylvania. — Real estate of State and national banks is assessed where situated, for local purposes. Shares of stock are subject to a State tax of 2/5 of 1 per cent, on their actual value, determined by adding together capital stock paid in, surplus and undivided profits. Though nominally a tax on the shareholders it is actually paid by the bank and charged to the shareholder. The bank has the option instead of paying a tax of 2/5 of 1 per cent on the actual value of its shares of paying a tax of 1 per cent on their par value. (Pa. 1897, Chap. 227). Ontario. — Banks pay a local tax on the value of their real estate but there is no tax on personal property. In addition to the 8 114 Repobt op Special Tax Commission. tax on real property they pay a business tax levied on a sum equal to 75 per cent of the assessed value of real estate used for their business. (Ont. 1904, Chap. 23, § 10, par. 1). Stockholders are exempt from assessment on income from their shares. Banks in addition pay a provincial tax of 1/10 of 1 per cent on paid up capital stock up to $2,000,000 and $25 for each additional $100,000 in excess of $2,000,000 and not exceed- ing $6,000,000 ; also a tax of $100 fox each principal office, and $25 for each branch office or agency in the province. (Ont. 1899, chap 8, § 2, par. 1.) TAXATION OF TRUST COMPANIES. In Massachusetts trust companies pay a state tax, at the average rate of taxation throughout the state, on the market value of their shares less real estate separately assessed. In Connecticut they pay a tax of one per cent, on the market value of their shares less the value of real estate separately assessed. In Penn- sylvania they pay a tax of one-half of one per cent, on the actual value of their franchise, property and entire earning capacity. . Massachusetts. — Ileal estate of trust companies is assessed where situated, for state and local purposes. A state tax is levied on the market value of shares less real estate separately assessed. (R. L. chap. 14, §§ 37-42.) The tax is imposed at the average rate of taxation throughout the state, obtained by dividing the aggregate assessed valuation of real and personal property in the state by the aggregate amount of taxes to be raised for state and local purposes. The tax is paid into the State treasury and such a proportion of the tax of each corpo- ration as corresponds to the proportion of its shares held by non- residents of the State is retained for State purposes and the re- mainder is distributed to cities and towns in proportion to the number of shares held by residents of each state and town. There is also a tax on all personal property held in trust that would be taxable if held by an individual trustee. This tax is levied by the State tax commissioner at the average rate above described. (R. L. chap. 14, § 35.) A tax of three-quarters of this average rate is levied on deposits that are not held subject to withdrawal on demand or on less Rbpoet of Special Tax Commission. 115 than ten days' notice. This tax and also the tax on property held in trust is paid into the State Treasury but the amount as- sessed on trust funds and deposits held by companies for persons residing in cities and towns of the State, is apportioned back to the cities and towns, and the amount assessed on trust funds and deposits for persons not residing in the State, is retained for State purposes. (R. L. chap. 14, § 35.) Connecticut. — Real estate of trust companies is assessed and taxed in the town where located for local purposes. A tax of one per cent, is levied on the market value of their shares less the value of real estate locally taxed. The tax is assessed to the owner of the shares, but is paid by the corporation in his behalf. The tax is collected by the State Treasurer and the amount collected oh the shares held by residents of the State is returned to the towns where such stockholders reside. The amount from the shares held by non-residents is retained in the State treasury. ' ( G. S. §§ 2331-35.) New Jersey. — Real estate of trust companies is taxed where situated, for local and school purposes. Trust companies are assessed in the taxing district where the office is situated on the full amount of capital stock paid in and the accumulated surplus, less the assessed value of real estate separately taxed. (N. J. 1903, chap. 208, § 18.) Mortgages and other exempt securities held by a trust company may also be - deducted. Pennsylvania. — Real estate of trust companies is taxed where situated, for local purposes. In addition the following taxes are levied: (1.) State tax of one-half of one per cent, on actual value of capital stock; i. e., franchises, property and entire earning capacity. (2.) State tax of four-tenths of one per cent, on obligations or bonds held by residents of the State. This tax though collected from the companies is deducted by them from interest due the holders of the obligations taxed. (3.) Tax of two-fifths of -one per cent, on taxable securities held in trust. (Pa. 1891, chap. 200, § 1.) Ontario. — Trust companies pay a local tax on the value of their real estate, but there is no tax on personal property. In 116 Ebpoet op Special Tax Commission. addition to the tax on real estate, they pay a tax levied on a sum equal to 75 per cent, of the assessed value of the real estate used for their business. (Ont. 1904, chap. 23, § 10, par. 1.) Stock- holders are exempt from assessment on income from their shares. Trust companies in addition pay a provincial tax of $250 on the first $100,000 of paid up capital and $65 on every additional $100,000 or fraction thereof paid up capital; and if the gross profits are $20,000 per annum a further tax of $500 is imposed. (Ont. 1899, chap. 8, § 2, par. 4.) TAXATION OF MUTUAL SAVINGS BANKS. There are two general systems of savings banks in the United States, mutual and stock. The mutual banks have no capital stock and pay no dividends except to depositors. Stock savings banks are run on the same plan as other business corporations and very frequently do considerable commercial business in addition to their work as a. savings institution. The mutual savings banks are confined almost exclusively to the New England and Eastern States and the stock banks to the remaining States. Of the 668 mutual savings banks reporting to the Comptroller of the Currency in 1904 all but 23 were within the New England and Eastern States. Outside of this section there were three in Ohio, five in Indiana, one in West Virginia, two in Wisconsin and 12 in Minnesota. The New England States and Maryland follow the plan of taxing the bank on its deposits and exempting the depositor. In Vermont, however, in order to discourage large deposits, the ex- emption does not apply to the excess over $1,500. Maine and Rhode Island tax surplus as well as deposits. New York taxes surplus and undivided earnings only. New Jersey taxes the bank on the amount of its assets, less real estate otherwise taxed and less mortgages and other exempt securities. Pennsylvania taxes loans and net income. Both New Jersey and Pennsylvania tax the depositor on his deposits. The almost universal rule is to levy a small tax upon the bank and to exempt the depositor. Repoet of Special Tax Commission. 117 Taxation op Mutual Savings Banks. State. Taxation of Mutual Savings Banks. (1) Deductions. Me. N. H. Vt Mass. R. I. Conn. N. J. Penn. Md. % of 1 per cent, on deposits and surplus, Revised Stat- utes, 1903, p. 148. % of 1 per cent, on deposits. 1905, ch. 108. 7/10 of 1 per cent, on de- posits (2) Statutes, sec. 582. % of 1 per cent, on deposits. R L. ch. 14, sec. 19-21. 4/10 of 1 per cent, on de- posits and surplus, G. L., ch. 29, sec. 3. % of 1 per cent, on deposits, G. S., sec. 2422. Tax on full amount of assets. 4/10 of 1 per cent, on loans. P. L. Digest, p. 4456. 3 per cent, on net earnings (3( P. L. Digest, p. 4471. >4 of 1 per cent, deposits. G. S. art. 81-86. Real estate; U. S. bonds corpora- tion stock exempt to holder; 2/5 of other assets. Revised Statutes, 1903, p. 148. Real estate; loans secured by mort- gage in State at not exceeding 5 per cent. Laws 1905, ch. 108. Except railroad loans, Laws 1901, ch. 82. Real estate, United States bonds ; deposits in excess of $1,500 (taxed to depositors.) Statutes, sec. 582. Real estate; loans secured by mort- gage on real estate; shares of banks taxed by State (partial). R. L. ch. 14, sec. 19-21. Real estate (taxable) ; certain State and municipal railway bonds; $50,000; amount invested in bank or national bank stock, insurance, in- vestment, and bridge companies. G. S. sec. 2422 as amended by Laws 1905, ch. 189. Real estate; mortgages and other exempt securities. (1) Table- does not include taxation of real estate used for banking purposes, which is as a rule taxable like other real estate by local authorities. (2) Individual deposits exceeding $1,500 are subject to tax- ation to the depositor. (3) Deposits also subject to taxation to the depositor. Massachusetts. — Eeal estate of savings banks is assessed where situated for State and local purposes. Depositors are exempt from taxation on their deposits but the bank pays a State tax of one-half of 1 per cent on its deposits, less the amount invested in real es- 118 Report of Special Tax Commission. tate and in mortgages on taxable real estate. The entire tax is retained for State purposes. (R. L., Chap. 14, §§ 19-21.) Connecticut. — Savings banks pay a State tax of one-fourth of 1 per cent on deposits, after deducting real estate locally taxed, certain State and municipal railway bonds, shares of national and State banks and of trust, insurance, investment and bridge companies and the sum of $50,000. Individual depositors are exempt from taxation on their deposits. (G. S., § 2422 as amended by Conn. '03, Chap. 189.) New Jersey.— The savings banks of New Jersey are without capital stock. They are assessed locally on their real estate and such other assets as they may have other than mortgages and exempt securities. Most of their assets are of the exempt class. Deposits are subject to assessment to the depositors in the same manner as other personal property. Pennsylvania. — Savings institutions having a capital stock are taxed in the same manner as state and national banks. Mutual savings institutions are subject: (1) to the local tax on real es- tate; (2) to the flour mill tax on taxable bonds, mortgages and other securities held in their own right; three-fourths of which goes to the county and one-fourth to the State. (Fa. '91, Chap. 200, § 1) ; and (3) to the State tax of 3 per cent on net earnings or income. (Pa. '89, Chap*. 332, § 27). Deposits are not tax- able to the bank but time certificates of deposit bearing interest are taxable to the depositors at the four mill rate. (Pa, '91, Chap. 200, § 1). TAXATION OF INSURANCE COMPANIES. A tabulation and digest of the fire insurance tax laws of the United States and Cannada is contained in the annual entitled; " Fire Insurance Laws, Taxes and Fees," published by the Spec- tator Co., New York. Information as to the taxation by each state of the insurance companies of other states will be found in the annual pamphlet published by the New York Insurance De- partment entitled " Fees and Taxes Charged New York Insur- ance Companies by Insurance Departments of Other States." A digest of the tax laws of the various states relating to life insur- ance is contained in The Insurance Year Book (volume on Life and Miscellaneous). Massachusetts. — Life insurance. Real estate of life insurance companies is taxed where situated, for State and local purposes. Repobt of Special Tax Commission. 119 Every domestic company having a capital stock is taxed on the market value of its shares, less real estate separately assessed, under the general law for taxation of domestic corporations. (R. L., chap. 14, §§ 37-42.) The tax is assessed by the State Tax Commissioner at the average rate of taxation in the State. Such a proportion of the tax of each corporation as corresponds to the proportion of its shares held by nonresidents of the State, is re- tained for State purposes and the remainder is distributed to cities and towns in proportion to number of shares held by each. Domestic and foreign life companies, both mutual and stock, pay a State tax of one-fourth of 1 per cent on the net value of policies held by residents of the State. (R. L., chap. 14, § 24.) Additional taxes on foreign companies may be levied under the retaliatory clause. (R. L., chap. 14, § 28.) Insurance other than life. Ileal estate is taxed where situated for State and local purposes. Domestic companies having capital stock divided into shares, and mutual fire and marine companies with a guaranty capital or permanent fund, are subject to the same tax on the market value of shares as are life insurance companies. (R. L., chap. 14, § 53.) Mutual domestic companies not subject to above tax on capital or permanent fund are subject to a State tax of 1 per cent on gross receipts from premiums and assessments; but premiums received in other States, where they are subject to a like tax, are deducted. (R. L., chap. 14, § 26.) Foreign companies are subject to a State tax of 2 per cent on premiums received in the State. (R. L., chap. 14, § 27.) Addi- tional taxes on foreign companies may be levied under the retalia- tory clause. Connecticut. — -Real estate of insurance companies is assessed and taxed in the town where located for local purposes. Domestic stock companies pay a tax of 1 per cent on the . market value of their shares less the value of real estate locally taxed. The tax is assessed to the owner of the shares, but is paid by the corporation in his behalf. The tax is collected by the State treasurer and the amount collected on the shares held by residents of the State is returned to the towns where such stock- holders reside. The amount from the shares held by nonresi- dents is retained in the State treasury. (G. S., §§ 2331-2335.) Domestic mutual life companies pay a State tax of one-fourth 120 Repoet o* Speoiax Tax Commission. of 1 per cent, on the amount of premium notes and the value of other assets, deducting, however, the amount of unpaid losses, certain exempt securities and real estate otherwise taxed. The tax is in lieu of all other taxes except the local tax on real es- tate, and if the company have a stock department, except taxe? on its stock. (G. S., §§ 2444-2446.) Domestic mutual fire insurance companies pay a State tax i of 1 per cent on the amount of assets less unpaid losses, certain exempt securities and premium notes. (G. S., § 2444—2445 as amended by Conn., 1903, chap. 139, 183.) The tax is in lieu of all other taxes except the local tax on real estate and if the company have a stock department, except taxes on its stock. (G. S., § 2447.) Insurance companies of another State are required to pay the same fees and taxes as are imposed by such State on Connecticut companies. (G. S., § 2450.) The resident managers of insurance companies of foreign countries are required to pay a state tax of 2 per cent on the gross amount of the premiums in the state. (G. S., § 2452.) New Jersey. — Life insurance. Real estate of life insurance companies is taxed where situated for local and school purposes. Domestic life insurance companies pay a State tax of 1 per cent, on their entire surplus and also a State tax of 35/100 of 1 per cent on the gross amount collected from premiums in all States. The tax on foreign life companies is governed entirely by a reciprocal or retaliatory law and all taxes collected of foreign companies are deducted from the amount that domestic com- panies would otherwise be required to pay. (N. J., 1892, chap. 76.) Domestic life insurance companies pay taxes for local purposes at the local rates in the taxing district where the principal office is located. This tax is assessed on the full amount of their prop- erty (exclusive of real estate located in the State and exclusive of securities to the value of $500,000), deducting the amount of their debts and liabilities. No tax may be assessed against them on their personal property in any other taxing district. (N. J., 1906, chap. 218.) Foreign life insurance companies are not taxed unless in retaliation. Fire insurance. Real estate of fire insurance companies is taxed where situated for local and school purposes. Repobt of Special Tax Commission. 121 Domestic fire insurance companies are assessed in the taxing district where the office is located on the full amount of capital stock paid in and accumulated surplus, less the assessed value of real estate located in the State. (N. J., 1903, chap. 208, § 18.) The shares of stock are to he valued at their true value. (37 Vroom, 86.) Mortgages and exempt securities are to he deducted. - (25 Vroom, 138.) Foreign fire insurance companies are subject to a State tax of 2 per cent on premiums received in the State; but companies of States imposing a greater tax on New Jersey companies are subject to an equal retaliatory tax. (G. S., p. 1844, par. 3; p. 1745, par. 11.) , Pennsylvania. — Domestic companies. Real estate of domestic insurance companies is taxed where situated for local purposes. In addition the following taxes are levied: (1) State tax of \ of 1 per cent, on actual value of capital stock, i. e., franchise, property and entire earning capacity ; except that in case of fire and marine companies the rate is 3/10 of 1 per cent, instead of i of 1 per cent. (Pa., 1891, chap. 200, § 4; 1893, chap. 288," § 1.) (2) State tax of | on bonds or obligations held by residents of the state. The tax is deducted from interest due holders. (Pa., 1891, chap. 200, § 1.) (3) State tax of f of 1 per cent on gross premiums and assess- ments from business within the State. This tax applies to all domestic companies and associations except companies doing business on the purely mutual plan without any capital stock or accumulated reserve and purely mutual beneficial associations whose funds for the benefit of members are made up entirely of weekly or monthly contributions of members and accumulated interest there. (Pa., 1889, chap. 332, § 24.) (4) Mutual companies not subject to the tax on premiums are subject to State tax of 3 per cent on net earnings or income. (Pa., 1879. chap. 122, § 10.) (5) Mutual companies without capital stock are subject to the tax of f of 1 per cent on taxable mortgages, bonds and other securities held. (Pa., 1891, chap. 200, § 1.) Foreign companies. Real estate is taxed for local purposes. Tn addition there is a tax of 2 ner cent, on gross premiums from business within the State. (Allowance is made for return and reinsurance premiums.) One-half of the amount collected from 122 Kbpoet op Special Tax Commission. foreign fire insurance companies is apportioned by the State to the cities and boroughs from which the premiums were received., (Pa., 1873, chap. 3, §- 10; 1889, chap. 332, § 24; 1895, chap. 289, § 2.) Ontario. — Insurance companies pay a local tax on the value of their real estate, but there is no tax on personal property. In addition to the tax on real estate they pay a business tax levied on a sum equal to 75 per cent, of the assessed value of real estate used for their business. (Ont Laws 1904, chap. 23, § 10, par. 1.) Stockholders are exempt from assessment on income from their shares. Life insurance companies transacting business in Ontario pay a provincial tax of 1 per cent., and all* other insurance companies a tax of two thirds of 1 per cent, on the gross premiums for busi- ness in the province. A life insurance company whose principal business is outside of Ontario and whose premium receipts are less than $20,000, that lends money on security and has invested in Ontario $100,000 or more, is required to pay a tax of 1 per cent, on gross premiums and one-quarter of one per cent, on in- come from investments within the province. (Ont. Laws 1899, chap. 6, par. 2.) In addition retaliatory taxes may be imposed on companies of another State or country doing business in Ontario where such State or country imposes a tax or fee in effect discriminating against Ontario companies. (Ont. Laws 1899, chap. 8, § 12.) INCORPORATION AND LICENSE TAX. The report of the Massachusetts committee on corporation laws 1903, contains a digest of the laws of all the States relating to the incorporation taxes of domestic corporations and the license raxes of foreign corporations. Massachusetts. — An incorporation fee of one-fortieth of one per cent, is levied on the authorized capital stock of domestic cor- porations and on every subsequent increase; but not less than $10 in any case. (Laws 1903, chap. 437, §§ 88, 89.) No simi- lar tax is imposed on foreign corporations doing business in the State. Connecticut. — An incorporation fee is charged of fifty cents on each $1,000 of authorized capital (or any subsequent increase of same) up to $5,000,000, and of ten cents on --.:3i $1,000, in Repoet of Special Tax Commission. 123 excess of $5,000,000. (Laws 1903, chap. 194, § 61.) No similar fee is charged of foreign corporations doing business in the State. New Jersey. — A tax of one-fiftieth of one per cent, is levied on the authorized capital stock of domestic corporations, and same on every subsequent increase, and on every increase of aggregate capitalization through consolidation; but the tax for incorpora- tion may not be less than $25, nor for any increase less than $20. A fee of $10 is charged for filing a copy of the charter of a foreign corporation, and issuing a certificate of authority to transact business; (Gen. Corp. Law, 1896, § 114.) But if New Jersey corporations are charged a greater fee for doing business in any State an equal fee is charged for corporations of such State for doing business -in New Jersey. (Gen. Corp. Law, 1896, § 101.) Pennsylvania. — A tax of one-third of one per cent, is levied on the authorized capital stock of domestic corporations except build- ing and loan associations, and on every subsequent increase, (Pa. Laws 1899, chap. 120, § 1.) A tax at the same rate is imposed on foreign corporations other than insurance that have a principal office in the State or a part of their capital actually employed in the State. (Pa. Laws 1901, chap. 121.) Ontario. — Incorporation fees are charged as follows : If au- thorized capital is $40,000 or less, $100; $40,000 to $100,000, $1 00 and $1 for each $1,000 in excess of $40,000 ; $100,000 to $1,000,000, $150 and $2.50 for every $10,000 in excess of $100,000; $1,000,000, $385 and $2.50 for every $10,000 in ex- cess. (See U. S. Corporation Legal Manual, 1905, p. 607.) No similar fee is charged of foreign companies doing business in the province. TAXATION OF SHARES AND BONDS TO THE INDIVIDUAL HOLDERS. The report of the Massachusetts committee on corporation laws, 1903, contains a digest of the laws of all the States relating to i he taxation of shares and bonds to the individual owners. Massachusetts. — Shareholders in all domestic corporations, and in foreign telegraph and street railway corporations, operating within the State, are exempt from taxation on their shares. (It. L., chap. 14, § 61.) Shareholders in foreign corporations :nd bondholders in both domestic and foreign corporations are subject to assessment on their shares or bonds by the local assessor 124 Repobt of Special Tax Commission. for State and local purposes. Shareholders in foreign manu- facturing corporations taxed within the State on real estate and machinery, are entitled to a proportionate reduction for the value of real estate and machinery thus taxed. (E. L., chap. 12, § 23, par. 2.) Connecticut. — The shares of stock of both domestic and for- eign corporations whether doing business in Connecticut or other States, are exempt. (G. S., §§ 2323, 2328-2329.) New Jersey. — Shareholders in domestic and foreign corpora- tions are exempt on taxation on their shares. (17 Vroom, 194; 26 Vroom, 110.) Bond holders in domestic corporations and in foreign corporations doing business in the State are exempt. (G. S., p. 3319, par. 198; p. 3304, par. 113; p. 2109, par. 37.) Bond holders in foreign corporations not taxed within the State are liable to taxation on their bonds for local purposes. Pennsylvania. — Shareholders in all domestic corporations and in foreign corporations doing business in the State, except banks, savings institutions, and foreign insurance companies, are exempt from taxation on their shares. (Pa., '91, chap. 200, sec. 1.) Shareholders in other corporations are assessed on their shares by the local assessors at the rate of four mills on the dollar. Three-fourths of the tax goes to the county and the remainder to the State. (Pa., '91, chap. 200, § 3.) Ontario. — There is no tax on personal property. Income from bonds is subject to local taxation at the same rate as other prop- erty. Income from shares of stock is subject to a like tax unless the company (as is generally the case) has itself paid a business or income tax. (Ont., '04, chap. 23.) TAXATION OF MORTGAGES. Most States tax mortgaged realty in the same manner as if it were unincumbered and at the same time attempt more or less seriously and effectively to tax the mortgage to the mortgagee at the same rate as other real and personal property. Idaho exempts from taxation " all dues and credits secured by mortgage, trust deed or other lien." (National Civic Federation, Mortgage Taxation Bulletin, No. lj p. 4.) Five States (Colorado, Connecticut, Massachusetts, New Jer- sey, and Wisconsin) practically exempt mortgages by treating the mortgage as an interest in real estateand permitting the mort- gagor and mortgagee to agree between themselves as to which Repobt of Special Tax Commission. 125 shall pay the tax. Michigan enacted a similar law in 1891, but repealed in 1893. A similar law passed by the same State in 1901 was vetoed by the Governor. (Ibid., pp. 9, 10, 1902.) California exempts the mortgaged property to the amount of the mortgage, requires the mortgagee to pay a tax on the mort- gage and renders void any contract by which the debtor agrees to pay the tax. A similar law passed by Oregon in 1882 was re- pealed in 1893. In Missouri a constitutional amendment con- taining similar provisions was declared unconstitutional by the State Supreme Court in 1901. (National Civic Federation, Mort- gage Taxation Bulletin, No. 1, p. 14.) Indiana. — Indiana permits every owner of mortgaged real estate a mortgage exemption of not exceeding $700. (Laws '99, chap. 190.) Maryland. — Maryland exempted mortgages in 1874. In 1896 it levied an 8 per cent income tax on the interest received by the mortgagee. (Ibid., p. 4.) In 1904, however, Baltimore city and fourteen counties were exempted from this tax. ('04, chap. 405.) In 1903 Alabama adopted a recording tax for mortgages in lieu of all other taxes. (Ala,, '03, p. 227.) The rate is 15 cents per $100 on the amount of the mortgage. Pennsylvania in lieu of other taxation levies a tax of four mills on all money at interest, including mortgages, bonds, notes, etc. (Pa., '85, chap. 162, § 4; L. '91, chap. 200, § 1.) Mortgage Taxation Bulletin, No. 1, of the National Civic Federation, publishes the mortgage tax laws of a number of States in full and gives a description of the systems of various States. Massachusetts. — A piece of mortgaged real estate and the mortgage interest therein is taxed but once; and the mortgagor and the mortgagee are allowed to arrange between themselves in what manner the tax shall be met. Either the mortgagor or the mortgagee may bring to the assessors of the town where the mortgaged real estate lies a statement of the amount of the mort- gage and the name and residence of every holder of an interest therein as mortgagee or mortgagor. If this be done the mortgage is taxed to the holder usually at its face value, but not to an amount exceeding the fair cash value of the mortgaged premises. The outcome is that but one tax is levied and that the mode of payment of this one tax is left to be adjusted between the mort- gagor and mortgagee in such a manner as they may agree. In 126 Kbpobt of Special Tax Commission. practice the mortgagor or borrower agrees to pay the one tax and contracts his loan with the mortgagee or lender on this basis. (See revised laws 1902, chap. 12, §§ 16-19; also Report of Mass. Spec. Tax Commission 1897, pp. 7-8, and. 36-40.) Connecticut. — Money loaned on interest, with an agreement that the borrower shall pay the taxes thereon, and secured by mortgage on real estate in the State, is exempt from taxation to an amount equal to the assessed value of the land. (Conn. Gen. Statutes 1902, § 2319.) Any person may send to the office of the State Treasurer any bond, note, or other chose in action (including as to mortgages, only notes secured by mortgage on real estate outside of Con- necticut), and pay a tax of 2 per cent on the face amount thereof. The treasurer will then make an indorsement on such chose in action, certifying that the same is exempt from all taxation for the period of five years, or for such longer or shorter period for which a proportionate tax has been paid. (Conn. Gen. Statutes 1902, § 2325.) New Jersey. — A piece of mortgaged real estate and the mort- gaged interest therein is taxed but once; and the mortgagor and mortgagee are allowed to arrange between themselves in what manner the tax shall be met. The following is a copy of the law : " No mortgage or debt secured by mortgage on real property which is taxed in this state, shall be listed for taxation, and no deduction from the assessed value of real property shall be made by the assessor on account of any mortgage debt; but the mort- gagor or owner of the property paying the tax on mortgaged real property shall be entitled to credit on the interest payable on the mortgage for so much of the tax as is equal to the tax rate applied to the amount due on the mortgage, except where the parties have otherwise agreed, or where the mortgage is an in- vestment of funds not siibject to taxation, or where the parties have lawfully agreed that no deduction shall be made from the taxable value of the lands by reason of the mortgage." (N". J., 1903, chap. 208, § 10, as amended by 1904, chap. 112.) Pennsylvania. — A tax of four mills is levied on money at in- terest, including mortgages, bonds, notes, etc. This tax is as- sessed and collected by county officials, and one-fourth of the rev- enues derived from it are paid into the State treasury and three- fourths go to the county. To facilitate the assessment of this tax each taxpayer is required to make a sworn detailed statement of Report of Special Tax Commission. 127 property owned by him, and heavy penalties are imposed for making a fraudulent return. The Recorder of Deeds, Mortgages and other Instruments in each county is required to keep a de- tailed record of all mortgages, and furnish a sworn statement of such record to the county or city board of the revision of taxes. It is the duty of the County Commissioners or the Board of Re- vision of Taxes, on obtaining a record of the existence within any city or county of mortgages owned outside of that county, but within the State, to transmit a certified statement of such record to the commissioners or board of the county where such obligations are owed. A statement of such obligations is in turn transmitted to the local assessors. (Pa. 1891, chap. 200.) Bonds of domestic corporations held by residents of the State are exempt from this tax, but subject to a four-mill State tax on their par value. This tax is paid by the corporations in behalf of the holders and deducted from interest due. (Pa. 1885, chap. 162, § 4; Pa. 1891, chap. 200, § 1.) Ohio. — Mortgages are subject to assessment in the same man- ner as other personal property. Tax inquisitors may be appointed in any county to ferret out "evasions. Their compensation is lim- ited to 20 per cent of the taxes recovered, except in counties con- taining large cities, where no percentage limit is fixed. Ontario. — Mortgages are exempt from taxation, but interest from mortgages is subject to assessment at the same rate as other property. TAXATION OF MONEY AT INTEREST IN PENNSYLVANIA. Pennsylvania is the only State in the union in which the gen- eral property tax has never existed. Broadly speaking, all per- sonal property is exempt from taxation except money at interest. (Notes, mortgages, stocks, bonds, etc.) Passenger vehicles for hire, horses, mules and cattle over four years of age and col- lateral inheritances. Real estate is exempt from all State taxes, but pays county and local taxes. A tax of four mills is levied on money at interest, including mortgages, judgments, bonds, notes, stocks, eta This tax, though considered a State tax, is assessed and collected by county officers, and only one-fourth of the proceeds go to the State treasury. To facilitate assessment each tax payer is required to make a sworn detailed statement of property owned by him and heavy penalties are imposed for making a corrupt or fraudulent return. 128 Repobt of Special Tax Commission. The Recorder of Deeds, Mortgages and other instruments in each county is required to keep a detailed record of all mortgages or agreements to secure the payment of money and furnish a statement of such record to the county or city board of revision of taxes, and the prothonotary or clerk of the court of common pleas in each county or city is required to keep and furnish to such hoard a like record of every single bill, bond, judgment or other in- strument securing a debt entered of record in his office. It is the duty of the county commissioners or board of revision of taxes, on obtaining record of the existence within any county or city of such mortgages and other obligations owned outside of that county but within the State, to transmit a certified state- ment of such record to the commissioners or board of the county where such obligations are owned. A statement of such- obliga- tions is in turn transmitted to the local assessors. Bonds of domestic corporations held by residents of the state are subject to a four mill tax on their par value, but the tax is paid by the corporations in behalf of the holders, and deducted from the interest due. This tax is collected by the State auditor and bonds paying this tax are exempt from the four mill tax assessed, by the county officers. LOCAL TAXATION IN ONTARIO. Ontario levies no tax on personal property. Real property is taxed and in place of a tax on personal property there are busi- ness and income taxes. The business tax is levied as a surtax on a varying percentage of the assessed valuation of the real estate used in a person's business or occupation. In the case of a manufacturer, the business assessment is sixty per cent, of the assessed value of the real estate used by him ; for distillers it is 150 per cent. ; brewers, wholesale merchants, insurance, loan, trust, banking, express companies, seventy-five per cent. ; department stores, printers, coal, wood or lumber dealers, professional men, etc., fifty per cent. ; retail merchants, twenty-five per cent, to thirty-five per cent. ; persons carrying on business of photographer, public or amusement hall, livery stable, restaurant, etc., twenty- five per cent. ; telegraph, telephone, street railway, light, heat and power companies, twenty-five per cent. Persons paying a business tax are exempt from taxation on the income from such business, and stockholders in corporations that pay a business tax are ex- Repobt of Special Tax Commission; 129 erapt from taxation on the income from their shares. (Ont. 1904, chap. 23, § 10.) The income tax aims to reach income from property, business or occupation not otherwise taxed. Income from real estate, ex- cept from interest on mortgages, is exempt. The income of the farmer derived from his farm, is exempt. Annual income from personal earnings is exempt to the amount of from $400 to $1,000. The tax rate on income is the same as that on real estate and also as that on the business assessment. The laws of Ontario relating to local taxation were codified in 1904 in " An Act Kespecting Municipal Taxation." (Ont. 1904, chap. 23.) INHERITANCE TAX. The inheritance tax is now found in thirty-five States and Terri- tories, including Hawaii and Porto Rico. In about half of the States the tax applies only to collateral inheritances. In all States except Utah and Minnesota, the rate is higher on collateral than on direct inheritances. In about one-third of the States, the rate of the tax is progressive, increasing with the size of the estate or the amount passing to a single individual. This is a notable feature of many of the more recent statutes. In recent laws en- acted in California and Wisconsin, the rates vary from 1 per cent to 15 per cent. The rate of the tax is also more or less progressive in Colorado, Illinois, Minnesota, Nebraska, North Carolina, Ore- gon, Porto Pico, South Dakota and Washington. A tabulation of inheritance tax laws of all the states is contained in the Massa- chusetts Labor Bulletin for July, 1904. A good account of the development of the inheritance tax in the United States will be found in an article by S. Huebner in the Quarterly Journal of Economics for August, 1904. Supplementary material will be found in the articles of Dr. Max West in the annual Review of Legislation, issued by the New York State library; and a full treatment of the whole subject will be found in the forthcoming second edition of the work on the Inheritance Tax, by Dr. Max West, published in the Columbia University Series, in History, Economics and Public Law. Many States tax personal property of descendants who were - residents of the State whether such property is located within or without the State, and at the same time tax personalty located 9 130 Repobt of Special Tax Commissioh'. within the State of decedents who were nonresidents. If the State of residence and the State where the personalty is located both have inheritance tax laws it follows that the personalty is doubly taxed. Connecticut in order to obviate this injustice, pro- vided in an act of 1903 (chap. 63) : " The treasurer shall waive and not seek to collect the tax hereinbefore referred to in all cases where the decedent resided in a State, Territory, or country which does not in usual practice seek to collect succession or trans- fer taxes from personal property within its jurisdiction belonging to the State of Connecticut's decedents." This provision was, how- ever, repealed in 1905 (chap. 256). The Ontario Act (1905, chap. 6) contains a reciprocal provision that will prevent double taxation in so far as other States and coun- tries pass similar laws. Personal property brought into the prov- ince for administration or situate outside the province, that has paid an inheritance tax to another State or province, is entitled to a deduction from the Ontario tax equal to the amount so paid, provided a similar allowance is made by the jurisdiction collecting the tax on personalty situated in Ontario. Massachusetts. — The inheritance tax applies only to collateral inheritances. The rate of the tax is 5 per cent. It is levied on all property above $500. (R. L. ch. 15, § 1.) Connecticut. — The inheritance tax applies to both direct and collateral inheritances. The rate for direct inheritances is one- half of 1 per cent, and for collateral inheritances 3 per cent. It is levied on all property above $10,000. (G. S., §§ 2367, 2368.) New Jersey. — The inheritance is levied on collateral inherit- ances only. The rate of the tax is 5 per cent. It is levied on all property above $500. (N. J., 1894, chap. 210.) Pennsylvania. — The inheritance tax is levied on collateral in- heritances only. The rate of the tax is 5 per cent. It is levied on all property above $250. (Pa., 1887, chap. 37.) Ohio. — The inheritance tax is levied on collateral inheritances only. The rate of the tax is 5 per cent. It is levied on all prop- erty above $200. (O., 1894, p. 169.) Canada. — There are inheritance taxes in most of the Canadian provinces. The tax applies to the transfer of both real and per- sonal property to both direct and collateral heirs. The rate of the tax is progressive, increasing with the size of the estate or the amount passing to a single individual. The rates average con- siderably higher than in the United States. The following table Report of Special Tax Commission. 131 has been adapted from one prepared by Mr. Huebner and jjublished in the Quarterly Journal of Economics for August, 1904: Collateral Heirs t ' > Rate per cent; Exemption British Columbia 5 to 10 $5,000 Manitoba 1 to 10 4,000 New- Brunswick 5 to 10 5,000 Nova Scotia 5 to 10 5,000 Ontario 5 to 10 10,000 Prince Edward Island 2J to 7i 3,000 Quebec 5 to 15 1 Ont. 1905, ch. «. » Quel). 1906 Direct Heirs Rate per cent Exemption li to 5 $25,000 2 to 10 25,000 li to 5 50,000 2J to 5 x 25,000 1 to 8 50 onn li to 2J 10,000 1 to 8 5,000 6, ch. 11. INHERITANCE TAX LAW. AN ACT To amend sections two hundred and twenty, two hundred and twenty-one, two hundred and twenty-two, two hundred and forty, two hundred and forty-one, and two hundred and forty- two of article ten, of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation," constituting chapter twenty-four of the general laws, as amended. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Section two hundred and twenty of article ten of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation " consti- tuting chapter twenty-four of the general laws, as amended, is hereby amended so as to read as follows: § 220. Taxable transfers. — A tax shall be and is hereby im- posed upon the transfer of any property, real or personal [of the value of five hundred dollars or over] or of any interest therein or income therefrom, in trust or otherwise, to persons or corporations not exempt by law from taxation on real or personal property in the following cases: 1. When the transfer is by will or by the intestate laws of this state from any person dying seized or possessed of the property while a resident of the state. 2. When the transfer is by will or intestate law, of property within the state, and the decedent was a non-resident of the state at the time of his death. 3. When the transfer is of property made by a resident or by a non-resident when such non-resident's property is within this state, by deed, grant, bargain, sale or gift made in contempla- tion of the death, of the grantor, vendor, or donor, or intended to take effect in possession or enjoyment at or after such death. 4. When any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the in- come thereof by any such transfer, whether made before or after the passage of this act. [132] Refobt of Special Tax Commission. 133 5. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer, taxable under the provi- sions of this act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power, and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of tbis act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the person or corporations thereby becoming en- titled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the [donee] donor of the power failing to exercise such power, taking effect at the time of such omission or failure. 6. The tax imposed hereby shall be at the rate of five per centum upon the clear market value of such property, except as otherwise prescribed in the next section. § 2. Section two hundred and twenty-one of article ten of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation," consti- tuting chapter twenty-four of the general laws as amended is hereby amended so as to read as follows : § 221. Amount of tax — Exceptions and limitations. — When property real or personal or any beneficial interest therein of the value of less than '[ten thousand] two thousand five hundred dol- lars passes by any such transfer to or for the use of any father, mother, husband, wife, child, brother, sister, wife or widow of a son, or the husband of a daughter, or any child or children adopted as such in conformity with the laws of this state, of the decedent, grantor, donor or vendor, or to any child to whom any such decedent, grantor, donor, or vendor for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child's fifteenth birthday and was continuous, for said ten years thereafter, [and provided also that the parents of such child shall be deceased- when such relationship commenced] or to any lineal descendant of such decedent, grantor, donor or vendor born in lawful wedlock, such transfer of property shall not be 134 Repobt of Special Tax Commission. taxable under this act; if real or personal property, or any bene- ficial interest therein so transferred is of the value of [ten thou- sand] two thousand five hundred dollars or more it shall be tax- able under this act at the rate of one per centum upon the clear market value of such property, in excess of two thousand five hun- dred dollars. When such property real or personal or any bene- ficial interest therein of the value of less than two hundred and fifty dollars passes by any such transfer to or for the use of any other lineal ancestor of the decedent, grantor, donor or vendor, or to or for the use of any lineal descendant of any brother or sister, or to any aunt or uncle, or to any first cousin of the decedent, grantor, donor or vendor, such transfer of property shall not be taxable under this act; but if real or personal property or any beneficial interest therein so transferred is of the value of two hundred and fifty dollars or more it shall be taxable under this act at the rate of three per centum upon the clear market value of such property in excess of two hundred and fifty dollars. When property, real or personal, or any beneficial interest therein of the value of less than one hundred dollars passes by any such transfer to or for the use of any other relative or person or corporation, other than those hereinbefore named, such transfer of property shall not be taxable under this act; but if real or personal property or any beneficial interest therein so transferred is of the value , of one hundred dollars or more, it shall be taxable under this act at the rate of five per centum upon the clear market value of such property in excess of one hundred dollars. The rates of taxation hereinbefore prescribed are hereby desig- nated as " primary rates." Whenever any property, real or personal, or any beneficial inter- est therein which passes by any such transfer to or for the use of any person or corporation, shall exceed the amount of twenty- five thousand dollars over and above the exemptions hereinbefore provided the rate of taxation thereon shall be as follows: Upon all amounts in excess of the said twenty-five thousand dol- lars and up to and including the sum of one hundred thousand dollars, twice the primary rates: Upon all amounts in excess of the said one hundred thousand dollars and up to and including the sum of five hundred thousand dollars, three times the primary rates; Upon all a/mounts in excess of the said five hundred thousand dollars and up to and including the sum of one million dollars, four times the primary rates; Kepobt of Special Tax Commission. , 135 Upon all amounts in excess of the said one million, dollars five times the primary rates; But no such tax shall be assessed against such legatee, distri- butee, donee, grantee or vendee in case the entire estate passing by death or otherwise is. less than the sum of ten thousand dollars, and the primary rate hereinbefore fixed, is at one per centum; and no such tax shall be assessed against such legatee, distributee, donee, grantee or vendee, in case the entire estate passing by death or otherwise is less than the sum of twenty-five hundred dollars, and the primary rate hereinbefore fixed is at three per centum, or at five per centum. But any property devised or bequeathed to any person who is a bishop or to any religious, educational, charitable, missionary, benevolent, hospital, or infirmary corporation, including corpora- tions organized exclusively for bible or tract purposes shall be exempted from and not subject to the provisions of this act. There shall also be exempted from and not subject to the pro- visions of this act personal property other than money or securi- ties bequeathed to a corporation or association organized exclu- sively for the moral or mental improvement of men or women, or for scientific, literary, library, patriotic, cemetery or historical purposes, or for the enforcement of laws relating to children or animals or for two or more of such purposes and used exclusively for carrying out one or more of such purposes. But no such corporation or association shall be entitled to such exemption if any officer, member, or employee thereof shall receive or may be lawfully entitled to receive any pecuniary profit from the opera- tions thereof, except reasonable compensation for such services in effecting one or more of such purposes or as proper beneficiaries of its strictly charitable purposes; or if the organization thereof for uny such avowed purpose be a guise or pretense for directly or indirectly making any other pecuniary profit for such corporation or association, or for any of its members or employees or if it be not in good faith organized or conducted exclusively for one or more of such purposes. § 3. Section two hundred and twenty-two of article ten of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation," con- stituting chapter twenty-four of the general laws, as amended, is hereby amended so as to read as follows : § 222. Accrual and payment of tax. — All taxes imposed by this article shall be due and payable at the time of the trans- 136 Eepoet of Special Tax Commission. fer except as herein otherwise provided. Taxes upon the transfer of any estate, property or interest therein limited, con- ditional, dependent or determinable upon the happening of any contingency or future event by reason of which the fair market value thereof cannot be ascertained at the time of the transfer as herein provided, shall accrue and become due and payable when the person or corporations beneficially entitled thereto shall come into actual possession or enjoyment thereof. One-half of such tax shall be paid to the state comptroller in a county in which the office of appraiser is salaried and the other half shall be paid to the county treasurer, and in other counties all of such tax shall be paid to the county treasurer; and said state comptroller or county treasurer shall give, and every executor, administrator, and trustee shall take duplicate receipts from him of such pay- ment as provided in section two hundred and thirty-six. § 4. Section two hundred and forty of article ten of chapter nine hundred and eight of the laws . of eighteen hundred and ninety-six, entitled "An act in relation to taxation," constituting chapter twenty-four of the general laws, as amended, is hereby iimended so as to read as follows: § 240. Reports of county treasurer. — Each county treasurer in a county in which the office of appraiser is not salaried shall make a report under oath to the state comptroller, on Jan- uary, April, July and October first of each year of all taxes received by him under this article, stating for what estate and by whom and when paid. The form of such report may be pre- scribed by the state comptroller. He shall, at the same time, pay the state treasurer one-half of all taxes received by him under this article and not previously paid into the state treasury, and for all such taxes collected by him and not paid into the state treasury within thirty days from the times herein required, he shall pay interest at the rate of ten per centum per annum. § 5. Section two hundred and forty-one of article ten of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation," constituting chapter twenty -four of the general laws, as amended, is hereby amended so as to read as follows : § 241. Application of taxes. — All taxes levied and collected under this article when paid in the treasury of the state shall be applicable to the expenses of the state government, and to such other purposes as the legislature shall by law direct. The Repobt of Special Tax Commission. 137 boards of supervisors of the several counties shall on or before the fifteenth day of December in each year ascertain from the county treasurer or city chamberlain the net amount of transfer tax collected and retained by said county treasurer or city cham- berlain in pursuance of this article, and shall apportion the same as follows: one-half thereof to the payment of the school taxes and one-half thereof to the payment of the county, city and town taxes; where a town contains within its limits a city or incor- porated village or portion thereof, the supervisor of such township shall apportion to such city, village or villages so much of the share credited to the said town as the assessed value of the said city, town or village, or portion thereof bears to the total assessed valuation of the said town, and one-half of the remaining balance shall be applicable to the payment of county and town taxes and one-half to the payment of school taxes. The board of super- visors of each county, on or before the fifteenth day of December each year shall determine the respective sums applicable here- under to each of the foregoing purposes and shall issue their warrant for the payment to the city or town collector of the amount payable to said city or town, and their warrant for the payment to the village treasurer of the sum of money to which the village shall be entitled, and for the payment to the city official having authority to receive the other moneys raised by tax for school purposes in said municipality, and to the supervisor of each town of the amount to which the town is entitled for the payment of school taxes; and it shall be the duty of said supervisor of a town to apportion the sum so paid to him for school purposes between the several school districts upon the basis of the aggregate days' attendance as appears from the statement filed with him by the school commissioners in March of each year and shall notify the trustee or trustees of said school district of the amount standing to the district's credit in his hands, which sum shall be deducted from the next annual school levy of said district and shall be paid by the supervisor to the collector of the school dis- trict as soon as the said collector shall have received his warrant for the collection of the next annual tax. § 6. Section two hundred and forty-two of article ten of chap- ter nine hundred and eight of the law3 of eighteen hundred and ninety-six, entitled "An act in relation to taxation." constituting chapter twenty-four of the general laws, as amended, is herehy amended so as to read as follows: 138 Report op Special Tax Commission. § 242. Definitions. — The words " estate " and " property " as used in this article shall be taken to mean the property or interest therein [of the testator, intestate, grantor, bargainer, or vendor, passing or transferred to those not herein specifically exempted from the provisions of this article and not as the prop- erty or interest therein] passing or transferred to individual or corporate legatees, devisees, heirs, next of kin, grantees, donees, or vendees, and not the property or interest therein. of the decedent, grantor, donor or vendor passing or transferred, and shall include all property or interest therein, whether situated within or without this state. The word " transfer " as used in this article, shall be taken to include the passing of property or any interest therein in possession or enjoyment, 'present or future, by inherit- ance, descent, devise, bequest, grant, deed, bargain, sale or gift, in the manner herein prescribed. The words " county treasurer " and " district attorney " as used in this article shall be taken to mean the treasurer or the district attorney of the county or the surro- gate having jurisdiction as provided by section two hundred ami twenty-eiand Assembly, do enact as follows: Section 1. Section one hundred and eighty of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, as amended by chapter five hundred and fifty-eight of the laws of 1901, entitled "An act in relation to taxation, constituting chapter twenty-four of the general laws," is hereby further amended to read as follows : § 180. Organization tax. — Every stock corporation incorpo- rated under any law of this state shall pay to the state treasurer ka. tax of one-twentieth of one per centum upon the amount of \ capital stock which the corporation is authorized to have, and a Qike tax upon any subsequent increase. Provided, that in no case shall such tax be less than [one dollar] ten dollars. Such tax shall be due and payable upon the incorporation of such cor- poration or upon the increase of its capital stock. Except in the case of a railroad corporation neither the secretary of state nor county clerk shall file any certificate of incorporation or article of association, or give any certificate to any such corporation or association until he is furnished a receipt for such tax from the state treasurer, and no stock corporation shall have or exercise any corporate franchise or powers, or carry on business in this state until such tax shall have been paid. And in case of a decrease of capital stock, upon which the tax required by law has been paid, and a subsequent increase thereof, a tax shall be paid only upon so much of such increase as exceeds the amount of capital stock upon which a tax has been before paid. In case of the consolidation of existing corporations into a corporation, such new corporation shall be required to pay the tax hereinbefore provided for only upon the amount of its capital stock in excess of the aggregate amount of capital stock of said corporations. This section shall not apply to state and national banks or to [139] 140 Report of Special Tax Commission. building, mutual loan, accumulating fund and co-operative asso- ciations. A railroad corporation need not pay such, tax at the time of filing its certificate of incorporation, but shall pay the same before the railroad commissioner shall grant a certificate, as required by the railroad law, authorizing the construction of the road as proposed in its articles of association, and such certificate shall not be granted by the board of railroad commissioners until it is furnished with a receipt for such tax from the state treasurer. § 2. Section -one hundred and eighty-two of the tax law is hereby amended so as to read as follows : § 182. Franchise tax on corporations. — For the privilege of doing business or exercising its corporate franchises in this state, every corporation, joint stock company, or association, doing busi- ness in this state, shall pay to the state treasurer annually, in advance, an annual tax to be computed upon the basis of the amount of its capital stock employed during the preceding year within this state, and upon each dollar of such amount. The meas- ure of the amount of the capital stock employed in this state shall be such a portion of the issued capital stock at par as the gross assets employed in any business within this state bear to the gross assets wherever employed in business. For purposes of tax- ation, the capital df a corporation invested in the stock of another corporation shall be deemed to be assets located where the physical property represented by such stock is located. If the dividends upon the capital stock amount to six or more than six per centum, upon the par value of the capital stock, dur- ing any year ending with the thirty-first day of October, the tax shall be at the rate of one-quarter of, a mill for each one per centum of dividends made or declared upon the par value of the capital stock during said year. If sueh dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend wus de- clared, and (1) The assets do not exceed the liabilities, exclusive of capital stock, [or (2) The average price at which such stock sold during said year did not equal or exceed its par value, or (3) If no dividend was declared.] Then each dollar of the amount of capital stock employed in this state, determined as hereinbefore provided, shall be taxed at Hie rate of three-fourths of one milL Rkpobt of Special Tax Commission. 141 If such dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend was declared, and (1) The assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or (2) The average price at which such stock sold during said year is equal to or greater than the par value of the capital stock. Then the amount of capital stock, determined as hereinbefore provided, to be employed in this state shall be taxed at the rate of one and one-half mills on each dollar of the valuation of the capital stock employed in this state, but such valuation shall not be less than (1) The par value of such stock, (2) The value based upon the difference between the assets and liabilities, exclusive of capital stock, (3) The average price at which such stock sold during said year, Whichever of the three last named valuations shall be highest. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend was declared, and (1) The assets exceed the liabilities, exclusive of capital stock, by an amount less than the par value of the capital stock, and (2) If no stock was sold, or if the average price at which such stock sold during said year did not equal or exceed its par value. Then the amount of capital stock determined as hereinbefore pro- vided, shall be taxed at the rate of three-fourths of one mill on each dollar of the valuation thereof; but If such dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend was declared, and (1) The assets exceed the liabilities, exclusive of capital stock, by an amount less than the par value of the capital stock, and (2) The average price at which the stock sold during said year was equal to or greater than the par value of the capital stock. Then the amount of capital stock, determined as hereinbefore provided, to be employed in this state shall be taxed at the rate of one and one-half mills on each dollar of the valuation thereof; but such valuation shall not be less than (1) The par value of such stock, 142 Eepoet of Special Tax Commission. (2) The average price at which such stock sold during the said year, Whichever of the two last named valuations shall be highest. If such corporation, joint stock company or association shall have more than one kind of capital stock, and upon one of such kinds of stock a dividend or dividends amounting to six, or more than six per centum upon the par value thereof, has been made or declared, and upon the other no dividend has been made or declared, or the dividend or dividends made or declared thereon amount to less than six per centum upon the par value thereof, then the tax shall be at the rate of one-quarter of a mill for each one per centum of dividends made or declared upon the capital stock upon the par value of which the dividend or dividends made or declared amount to six or more than six per centum, and in addition thereto a tax shall be charged upon the capital stock. (1) Upon which no dividend was made or declared, or (2) Upon which the dividend or dividends made or declared did not amount to six per centum on the par value, At the rate as hereinbefore provided for the taxation of capital stock upon which no dividend was made or declared, or upon which the dividend or dividends made or declared did not amount to six per centum on the par value. § 3. Section one hundred and eighty-three of the tax law is hereby amended so as to read as follows : § 183. Certain corporations exempt from tax on capital stock. — Banks, savings banks, institutions for savings, [title guaranty,] insurance [or surety] corporations, every trust company in- corporated, organized or formed under, by or pursuant to a law of this state, and any company authorized to do a trust com- pany business, solely or in connection with any other business, under a general or special law of this State, laundry corporations, manufacturing corporations, to the extent only of the capital actually employed in this state in manufacturing and in the sale of the product of such manufacturing, mining corporations, wholly engaged in mining ores within this state, agricultural and horticultural societies or associations, and corporations, joint stock companies or associations owning or operating elevated rail- roads or surface railroads not operated by steam, or formed for supplying water or gas for electric or steam heating, lighting or power purposes, and liable to a tax under sections one hundred and eighty-five and one hundred and eighty-six of this chapi-er. Repobt of Special Tax Commission. 143 shall be exempt from the payment of the taxes prescribed by section one hundred and eighty-two of this chapter. But such a laundrying, manufacturing or mining corporation shall not be exempted from the payment of such tax, unless at least forty per centum of the capital stock of such corporation is invested in property in this state and used by it in its laundrying, manufac- turing or mining business in this state. § 4. Section one hundred and eighty-four of the tax law is hereby amended to as to read as follows : § 184. Additional franchise tax on transportation and transmis- sion corporations and associations. — Every corporation and joint stock association formed for steam surface railroad, canal, steam- boat, ferry, express, navigation, pipe-line, transfer, baggage ex- press, telegraph, telephone, palace car or sleeping car purposes, and all other transportation corporations not liable to taxes under sections one hundred and eighty-five or one hundred and eighty- six of this chapter, shall pay for the privilege of exercising its cor- porate franchises or carrying on its business in such corporate or organized capacity in this state, an annual excise tax or license fee which shall be equal to '[five-tenths of] one and one-half per centum upon its gross earnings within the state, which shall in- clude its gross earnings from its transportation or transmission business originating and terminating within this state, but shall not include earnings derived from business of an interstate char- acter. All settlements for such taxes heretofore based by the comp- troller upon gross earnings excluding earnings from interstate business, have been ratified and confirmed, except that the ac- counts for taxation under section six of chapter three hundred and nixty-one of the laws of eighteen hundred and eighty-one, for the years eighteen hundred and ninety-two and eighteen hundred and ninety-three, shall be settled and adjusted by the comptroller by excluding the earnings of an interstate character as provided by this section. The state treasurer shall, immediately upon its re- ceipt by him, pay over and deliver two-thirds of the amount of any such tax to the treasurer of any city or incorporated village or to the supervisor of any town in which may he located the company so making such payment, which moneys shall be applied by such city, village or town to reduce the annual tax thereof; the re- maining one-third shall be paid into the treasury of the state. § 5. Section one hundred and eighty-five of the tax law ia hereby amended so as to read as follows: 144 ' Eepoet of Special Tax Commission. § 185. Franchise tax on elevated railroads or surface railroads not operated by steam. — Every corporation, joint stock company or association owning or operating any elevated railroad or surface railroad not operated by steam shall pay to the state for the privilege of exercising its corporate franchise or carrying on its business in such corporate or organized capacity within this state, an annual tax which shall be one and one-half per centum upon its gross earnings from all sources within this state, [and three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capi- tal employed by such corporation, joint stock company or associa- tion.] Any such railroad corporation whose property is leased to another railroad corporation shall '[°hly be required under this section to] pay a tax of three per centum upon the dividends declared and paid in excess of four per centum upon the amount of its capital stock. The state treasurer shall, immediately upon its receipt by him, pay over and deliver two-thirds of the amount of any such tax to the treasurer of any city or incorporated village or to the Supervisors of any town in which may be located the company so making such payments, which moneys shall be applied by such city, village or town to reduce the annual tax thereof; the remaining one-third shall be paid immediately into the treasury of the state. § 6. Section one hundred and eighty-six of the tax law is hereby amended so as to read as follows: § 186. Franchise tax on water works companies, gas companies, electric or steam heating, lighting and power companies. — Every corporation, joint stock company or association, formed for supply- ing water or gas, or for electric or steam heating, lighting or power purposes, shall pay to the state for the privilege of exer- cising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, an annual tax which shall be [five-tenths of] equal to one and one-half per centum upon its gross earnings from all sources within this state, [and three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capital employed by such corporation, joint stock company or association.] The state treasurer shall, immediately upon its receipt by him, pay over and deliver two-thirds of the amount of any such tax to the treasurer of any city or incorporated village or to the supervisor of any town in which may be located the Ebpokt of Special Tax Commission. 145 company so making such payment, which moneys shall be applied by such city, village or town to reduce the annual tax thereof; the remaining one-third shall be paid into the treasury of the state. § 7. Section one hundred and eighty-seven of the tax law is hereby amended so as to read as follows: § 187. Franchise tax on insurance corporations. — An an- nual state tax for the privilege of exercising corporate franchises or for carrying on business in their corporate or organized capacity within this state equal to one and one-half per centum on the gross amount of premiums received during the preceding cal- endar year for business done at any time in this state, which gross amount of premiums shall include all premiums received during such preceding calendar year on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsur- ance during such preceding calendar year, and all premiums that are received during such preceding calendar years on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsurance executed, issued or delivered in all years prior to such preceding calendar year, whether such premiums were in the form of money, notes, credits, or any other substitute for money, shall be paid annually into the treasury of the state, in the year nineteen hundred and five on/or before July first, and in all subsequent years, on or before the first day of June by the following corporations: 1. Every domestic insurance corporation, incorporated, organ- ized or formed under, by, or pursuant to a general or special law ; 2. Every insurance corporation, incorporated, organized or formed under, by, or pursuant to the laws of any other state of the United States, and doing business in this state, except a corpora- tion doing a fire insurance business or a marine insurance busi- ness; X 3. Every insurance corporation, incorporated, organized or formed under, by, or pursuant to the laws of any state without the United States, or of any foreign country, except such a corpora- tion doing a life, health or casualty insurance business, and doing business in this state; but the tax on gross premiums of a corpo- ration so incorporated, organized or formed and doing a fire or marine insurance business within the state shall be equal to five- tenths of one per centum. This section does not apply to a fra- ternal beneficiary society, order or association, a corporation for the insurance of domestic animals, a town or county co-oper- 10 146 Repobt of Special Tax Commission. ative insurance corporation, nor to any corporation subject to the supervision of or required by or in pursuance of law to report to the superintendent of banks; but this section does apply to an individual, or partnership, or association of underwriters known as Lloyds in so far as corporations doing the same kind of insur- ance business are subject to its provisions. The taxes imposed by this section shall be in addition to all other fees, licenses or taxes imposed by this or any other law, except that in assessing taxes under the reciprocal provisions of section thirty-three of chapter thirty-eight of the general laws, credit shall be allowed for any taxes paid under this section. The term insurance corporations as used in this article, shall include a corporation, association, joint stock company or association, person, society, aggregation or partnership by whatever name known doing an insurance busi- ness in Ibis state. The state treasurer shall, immediately upon its receipt by him, pay over and deliver two-thirds of the amount of any such tax to the treasurer of any city or incorporated village or to to the supervisor of any town in which may be located the company so making such payment, which moneys shall be applied by such city, village or town to reduce the annual tax thereof; the remaining one-third shall be paid into the treasury of the state. § 8. Section one hundred and eighty-seven-a of the tax law is hereby amended so as to read as follows: § 187-a. Franchise tax on trust companies. — Every trust company incorporated, organized or formed under, by or pursu- ant to a law of this state, and any company authorized to do a trust company's business solely or in connection with any other business, under a general or special law of this state, shall pay to the state annually for the privilege of exercising its corporate franchise or carrying on its business in such corporate or organ- ized capacity, an annual tax which shall be equal to one and one- half per centum on [the amount of its capital stock, surplus, and undivided profits.] 1 a sum to be ascertained by adding the face value of its capital stock and the amount of its surplus and un- divided profits, and deducting therefrom the assessed value of its real estate occupied by the said trust company for the purposes of its business. The state treasurer shall, immediately upon its receipt by him, pay over and deliver two-thirds of the amount of any such tax to the treasurer of any city or incorporated village or to the supervisor of any town in which may be located the trust company so making such payment, which moneys shall be Eepoet of Special Tax Commission. 147 applied by such city, village or town to reduce the annual tax thereof j the remaining one-third shall be paid into the treasury of the state. [Any corporation taxed under this section for the year ending June thirteenth, nineteen hundred and one, shall be credited by the comptroller -with one-third of the amount of taxes paid by it into the state treasury under the provisions of section one hundred and eighty-two of the tax law for the year ending October thirty-first nineteeen hundred.] § 9. Section one hundred and eighty-seven-b of the tax law is hereby amended so as to read as follows : § 187-b. Franchise tax on savings banks. — Every savings bank incorporated, organized or formed under, by or pursuant to a law of this state, shall pay to the state annually for the privi- lege of exercising its corporate franchise or carrying on its busi- ness in such corporate or organized capacity, an annual tax which shall be equal to one and one-half per centum on the par value of its surplus, and undivided earnings. The state treasurer shall, immediately upon its receipt by him, pay over and deliver two- thirds of the amount of any such tax to the treasurer of any city or incorporated village or to the supervisor of any town in which may be located the savings bank so making such payment, which moneys shall be applied by such city, village or town to reduce the annual tax thereof; the remaining one-third shall be paid into the treasury of the state. § 10. Section one hundred and ninety of the tax law is hereby amended so as to read as follows: § 190. Value of stock to be appraised. — If the dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend was declared, and (1) The assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or (2) The average price at which such stock sold during said year is equal to or greater than the par value of the capital stock, Then the president, treasurer or secretary of the company lia- ble to pay a tax under the provisions of section one hundred and eighty-two of this chapter shall, under oath, between the first and fifteenth days of November in each year, estimate and ap- praise the capital stock of such company at a value, which [value] shall not be less, [however,] than 148 Eepoet of Special Tax Commission. (1) The average price at which such stock sold during said year, (2) The value based upon the difference between the assets and liabilities, exclusive of capital stock, (3) The par value thereof, Whichever of the three last named valuations shall be highest. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, or if no dividend was declared, and (1) The assets exceed the liabilities, exclusive of capital stock, by an amount less than the par value of the capital stock, and (2) The average price at which the stock sold during said year was equal to or greater than the par value of the capital stock, Then the president, treasurer, secretary of the company liable to pay a tax under the provisions of section one hundred and eighty-two of tfyis chapter, shall, under oath, between the first and fifteenth days of November in each year, estimate and ap- praise the capital stock of such company at a value which shall not be less than (1) The par value of such stock, (2) The average price at which such stock sold during said year, Whichever of the two last named valuations shall be highest. And shall forward the same to the comptroller with the report provided for in the last section. If the comptroller is not satisfied with the valuation so made and returned, he is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and interest to be paid the state. § 11. Section one hundred and ninety-four of the tax law is hereby amended so as to read as follows: § 194. Payment of tax, and plenty for failure. — A tax imposed by sections one hundred and eighty-two or one hundred and eighty-six of this chapter, shall be due and payable into the state treasury on or before the fifteenth day of January in each year. A tax imposed by section one hundred and eighty-four of this chapter on a transportation or transmission corporation, or by section one hundred and eighty-five, on elevated or surface rail- roads not operated by steam, shall be due and payable into the state treasury on or before the first day of August in each year. A tax imposed by section one hundred and eighty-seven of this Repobt of Special Tax Commission. 149 chapter on an insurance corporation shall be due and payable into the state treasury on or before the first day of June in each year. A tax imposed by section one hundred and eighty-seven-a, or one hundred and eighty-seven-b shall be due and payable into the state treasury on or before the first day of September in each year. A tax imposed by section one hundred and eighty-eight of this chapter on a foreign banker shall be due and payable into the state treasury on or before February first in each year. If such tax in any case is not paid -within thirty days after the same be- comes due, or if the report of any such corporation is not made within the time required by this article, the corporation, associa- tion, joint stock company, person or partnership, liable to pay the tax, shall pay into the state treasury in addition to the amount of such tax, a sum equal to five per centum thereof, and one per centum additional for each month the tax remains unpaid, which sum shall be added to the tax and paid or collected therewith. Every corporation, association, joint stock company, person or partnership failing to make the annual report required by this article, or failing to make any special report required by the comptroller, within any reasonable time to be specified by him, shall forfeit to the people of the state the sum of one hundred dollars for every such failure, and the additional sum of ten dollars for each day that such failure continues. Such tax shall be a lien upon and bind all the real and personal property of the corporation, joint stock company or association liable to pay the same from the time when it is payable until the same is paid in full. The comptroller shall on or Before January fifteenth in each year deliver to the attorney-general a list of all corporations, associa- tions, joint stock companies, persons and partnerships, which or who, have failed to make such reports, and it shall he the duty of the attorney-general immediately to institute actions for the re- covery of such penalties. § 12. Section two hundred of the tax law is hereby amended so as to read as follows : § 200. Action for recovery of taxes; forfeiture of charter of delinquent corporations. — An action '[may] shall be brought by the attorney-general, at the instance of the comptroller, in the name of the state, to recover the amount of any account audited and stated by the comptroller under the provisions of this article. If any such account shall remain unpaid at the expiration of one 150 Repobt of Special Tax Commission. year after notice of the statement thereof has been sent as re quired by this article, [and] the comptroller !ps satisfied that the failure to pay the same is intentional, he] shall so report to the attorney-general, who shall immediately bring an- action, in the name of the people of the state, for the forfeiture of the franchise of any corporation, joint stock company or association failing to make such payment, and if it is found that such failure was in- tentional, judgment shall be rendered in such action for the for- feiture of its franchise and for its dissolution, and thereafter such franchise shall be annulled. § 13. Section two hundred and three of the tax law is hereby amended so as to read as follows : § 203. Application of taxes.-^- Except as provided by sections one hundred and eighty-four, one hundred and eighty-five, one hundred and eighty-six, one hundred and eighty-seven, one hun- dred and eighty-seven-a, and one hundred and eighty-seven-b, the taxes imposed by this article and the revenue thereof shall be appli- cable to the general fund of the treasury and to the payment of all claims and demands which are a lawful charge thereon. § 14. This act shall take effect immediately. TAXATION OF CORPORATIONS FOR LOCAL PURPOSES. AN ACT To revise and amend the tax law relative to the taxation of cor- porations for local purposes. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Section 4 of the tax law is hereby amended so as to read as follows: § 4. Exemption from taxation. — The property hereinafter mentioned shall be exempt from taxation only as hereinafter pro- vided;. 1. Property of the United States. 2. Property of this state, other than its wild or forest lands in the forest preserve, shall be exempt from taxation for state pur- poses, but all lands owned by the state, other than its wild or forest lands in the forest preserves, shall be liable to taxation for all other than state purposes, excluding from the valuation thereof all buildings or other improvements thereon. 3. Property of a municipal corporation of the state held for public use, except the portion of such property not within the corporation. 4. The lands in any Indian reservation owned by the Indian nation, tribe or band occupying them. 5. All property exempt by law from execution, other than an exempt homestead. But real property purchased with the pro- ceeds of a pension granted by the United States for military or naval services, and owned and occupied by the pensioner, or by his wife or widow, is subject to taxation as herein provided. Such property shall be assessed in the same manner as other real prop- erty in the tax districts. At the meeting of the assessors to hear the complaints concerning assessments, a verified application for the exemption of such real property from taxation may be pre- sented to them by or on behalf of the owner thereof, which appli- cation must show the facts on which the exemption is claimed, including the amount of pension money used in or toward the [151] 152 Report of Special Tax Commission. purchase of such property. If the assessors are satisfied that the applicant is entitled to the exemption, and that the amount oi' pension money used in the purchase of such property equals or exceeds the assessed valuation thereof, they shall enter the word " exempt " upon the assessment roll opposite the description of such property. If the amount of such pension money used in the purchase of the property is less than the assessed valuation, they shall enter upon the assessment roll the words " exempt to the extent of dollars " (naming the amount), and thereupon such real property, to the extent of the exemption entered by the assessors, shall be exempt from state, county and general munici- pal taxation, but shall be taxable for local school purposes, and for the construction and maintenance of streets and highways. If no application for exemption be granted, the property shall be subject to taxation for all purposes. The entries above required shall be made and continued in each assessment of the property so long as it is exempt from taxation for any purpose. The provision herein, relating to the assessment and exemption of property purchased with a pension, apply and shall be enforced in each municipal corporation authorized to levy taxes. 6. Bonds of this state to be hereafter issued by the comptroller to carry out the provisions of chapter seventy-nine of the laws ©f eighteen hundred and ninety-five, and bonds of a municipal cor- poration heretofore issued for the purpose of paying up or retiring the bonded indebtedness of such corporation, or hereafter issued for any purpose. 7. The real and personal property of a corporation or associa- tion organized exclusively for the moral or mental improvement of men or women, or for religious, bible, tract, charitable, benevo- lent, missionary, hospital, infirmary, educational, scientific, liter- ary, library, patriotic or historical or cemetery purposes, or for the enforcement of laws relating to children or animals, or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes^;], [and the per- sonal property of any such corporation shall be exempt from taxa- tion. J But no such corporation or association shall be entitled to any such exemption if any stockholder, officer, member or employee thereof shall receive or may be lawfully entitled to receive any pecuniary profit from the operation thereof, except roasonable compensation for services in effecting one or more of such purposes, or as proper beneficiaries of its strictly charitable Kbpobt of Special Tax Commission. 153 purposes; or if the organization thereof, for any such avowed purposes, be a guise or pretense for directly or indirectly making any other pecuniary profit for such corporation or association, or for any of its members or employees, or if it be not in good faith organized or conducted exclusively for one or more of such pur poses. The real property of any such corporation or association entitled to such exemption held by it exclusively for one or more of such purposes and from which no rents, profits or income are derived, shall be so exempt, though not in actual use therefore by reason of the absence of suitable buildings or improvements thereon, if the construction of such buildings or improvements is in progress, [or is in good faith contemplated by such corpora- tion or association;] or if such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more of such purposes shall be erected upon said premises or some part thereof. The real property of any such corporation not so used exclusively for carrying out thereupon one or more of such purposes, but leased or otherwise used for other purposes, shall not be exempt, but if a portion only of any lot or building of any such corporation or association is used exclusively for carrying out thereupon one or more such purposes of any such corporation or association, then such lot or building shall be so exempt only to the extent of the value of the portion so used, and the remaining or other portion shall be subject to taxation; provided, however, that a lot or building owned, and actually used for hospital purposes, by a free public hospital, depending for maintenance and support upon voluntary charity shall not be taxed as to a portion thereof leased or otherwise used for the purposes of income, when such income is necessary for, and is actually applied to, the maintenance and support of such hospital, and further provided that the real property of any fraternal corporation, association or body created to build and maintain a building or buildings for its meeting or meetings of the general assembly of its members, or subordinate bodies of such fraternity and for the accommodation of other fraternal bodies or associa- tions the entire net income of which real property is exclusively applied or to be used to build, furnish and maintain an asylum, or asylums, a home or homes, a school or schools for the free educa- tion or relief of the members of such fraternity, or for the relief, support and care of worthy and indigent members of the frater- 154 Ebpoet of Special Tax Commission. nity, their wives, widows or orphans, shall be exempt from taxa- tion. Property held by any officer of a religious denomination shall beentitied to the same exemptions, subject to the same con- ditions and exceptions, as property held by a religious corpora- tion. 8. Keal property of an incorporated association of present or former volunteer firemen, actually and exclusively used and oc- cupied by such corporation and not exceeding in value fifteen thousand dollars. 9. All dwelling-houses and lots of religious corporations while actually used by the officiating clergymen thereof, as places of residence by such clergymen, but the total amount of such exemp- tion to any one religious corporation shall not exceed two thou- sand dollars. Such exemption shall be in addition to that pro- vided by subdivision seven of this section. 10. The real property of an agricultural society permanently used by it for exhibition grounds. 11. The real property of a minister of the gospel or priest who is regularly engaged in performing his duties as such, or permanently disabled, by impaired health from the performance of such duties, or over seventy-five years of age, and the personal property of such minister or priest, but the total amount of such exemption on account of both real and personal property shall not exceed fifteen hundred dollars. 12. All vessels registered at any port in this state and owned by an American citizen, or association, or by any corporation-, incorporated under the laws of the state of New York, engaged in ocean commerce between any port in the United States and any foreign port, are exempted from all taxation in this state, for [state and] local purposes; and all such corporations, all of whose vessels are employed between foreign ports and ports in the United States, are exempted from all taxation in this state, for [state and] local purposes; [upon their capital stock, fran- chises and earnings, tmtil and including December thirty-first, nineteen hundred and twenty-two.] 13. A bond, mortgage, note, contract, account or other demand, belonging to any person not a resident of this state, sent to or deposited in this state for collection; the products of another state, owned by a non-resident of this state and consigned to his agent in this state for sale on commission for the benefit of the owner; moneys of a non-resident in this state, under the control Rbpoet of Special Tax Commission. 155 or in the possession of his agent in this state, when transmitted to such agent for the purpose of investment or otherwise. 14. The deposits in any bank for savings which are due de- positors, to an amount not exceeding one thousand dollars belong- ing to any one person, [the accumulations in any domestic life insurance corporation, held for the exclusive benefit of the in- sured, other than real estate and stocks, now liable for taxation ;] the accumulations of any incorporated co-operative loan associa- tion upon the shares of such association held by any person ; and personal property of any corporation, person, company or asso- ciation transacting the business of fire, casualty or surety insur- ance in this state, ■ equal in value to the unearned premiums required by the laws of this state, or the regulations of its insur- ance department, to be charged as a liability. 15. Moneys collected in the course of the business of any cor- poration, association or society doing a life or casualty insurance business or both, upon the co-operative or assessment plan, and which are to be used for the payment of assessments, or for death losses or for benefits to disabled members. 16. The owner or holder of stock in an incorporated company liable" to taxation on its capital, shall not be taxed as an indi- vidual, for such stock. [17. The personal property in excess of one hundred thousand dollars of a mutual life insurance corporation incorporated in this state before April tenth, eighteen hundred and forty-nine.] 18. Property real, from which no income is derived, and prop- erty personal, situated within any city of the first class and be- longing to the medical society of any county, which county is either wholly or partly within such city and which society was heretofore incorporated under the provisions of chapter ninety- four, laws of eighteen hundred and thirteen, entitled "An Act to incorporate medical societies for the purpose of regulating the practice of physic and surgery in this State," provided that such property is used for the purposes of such a society and not other- wise, and provided that such exemption of property for any so- ciety in the counties of Kings or New York, shall not exceed one hundred and fifty thousand dollars, and in any other county af- fected hereby, shall not exceed fifty thousand dollars. 19. Property real, from which no rent is derived, and personal property, situated within any city of the first class and belonging ro any incorporated pharmaceutical society of any county which is 156 Eepoet of Special Tax Commission. either wholly or partly within such city, which society has hereto- fore been or may hereafter be authorized and empowered by act of the legislature to establish and which has established or may hereafter establish, a college of pharmacy in such city; provided that such property is used for the purposes of such college and not otherwise, and provided also that the exemption of sueh prop- erty for any societies in the counties of Kings and New York shall not exceed one hundred thousand dollars and in any other county affected hereby, shall not exceed fifty thousand dollars. § 2. Section 12 of the tax law is hereby amended so as to read as follows; and section 13 of the tax law is hereby repealed: § 12. Taxation of corporate stock. — The capital stock of every company liable to taxation, except such part of it as shall have been excepted in the assessment-roll or shall be exempt by law, to- gether with its surplus profits or reserve funds [exceeding ten per eentum of its capital,] after deducting the assessed value of its real estate, and all shares of stock in other corporations actually owned by such company which are taxable upon their capital stock under the laws of this state shall be assessed at its actual value. [13. Stockholders of bank taxable on shares. — The stock- holders of every bank or banking association organized under the authority of this state, or of the United States, shall be as- sessed and taxed on the value of their shares of stock therein ; said shares shall be included in the valuation of the personal property of such stockholders in the assessment of taxes in the tax district where such bank or banking association is located, and not else- where, whether the said stockholders reside in said tax district or not.] § 3. Section twenty-four of the tax law is hereby amended so as to read as follows : § 24. Bank shares, how assessed. — In assessing the shares of the stock of banks or banking associations organized under the authority of this state or the United States, the assessment and taxation shall not be at a greater rate than is made or assessed upon other monied capital in the hands of individual citizens of this state. The value of each share of stock of each bank and banking association, except such as are in liquidation, shall be ascertained and fixed by adding together the amount of the capital stock, surplus and undivided profits of such bank or banking association and deducting therefrom the assessed value of the real estate of Repokt of Special Tax Commission. 157 such bank or banking association actually occupied for banking purposes, and by dividing the result by the number of outstanding shares of such bank or banking association. The value of each share of stock in each bank or banking association in liquidation shall be ascertained and fixed by dividing the actual assets of such bank or banking association by the number of outstanding shares of such bank or banking association. The rate of 'tax upon the shares of stock of banks and banking associations shall be one and one-half per centum upon the value thereof as ascertained and fixed in the manner hereinbefore provided, and the owners of the stock- of banks and banking associations shall be entitled to no deduction from the taxable value of their shares because of the personal indebtedness of such owners, or for any other reason whatsoever. Complaints in relation to the assessments of the shares of stock of banks and banking associations made under the provisions of this act shall be heard and determined as provided in article two, section thirty-six of the tax law. The said tax shall be in lieu of all other taxes whatsoever for state, county or local purposes upon the said shares of stock, and mortgages, judgments and other choses in action and personal property held or owned by banks or banking associations, the value of which enters into the value of said - shares of stock, shall also be exempt from all other state, county or local taxation. The tax herein imposed shall be levied in the following manner : The board of supervisors of the several counties shall, on or before the fifteenth day of December in each year, ascertain "from an inspection of the assessment-rolls m their respective counties, the number of shares of stock of banks and banking associations in each town, city, village, school and other tax districts, in their several counties, respectively, in which such shares of stock are taxable, the names of the banks issuing the same, respectively, and the assessed value of such shares, as ascer- tained in the manner provided in this act and entered upon the said assessment-rolls, and shall forthwith mail to the president or cashier of each of said banks or banking associations a statement setting forth the amount of its capital stock, surplus and undivided profits, the number of outstanding shares thereof, the value of each share of stock taxable in said county, as ascertained in the manner herein provided, and the aggregate amount of tax to be collected and paid by such bank and banking associations, under the pro- visions of this act. A certified copy of each of said statements shall be sent to the county treasurer. It shall be the duty of every 158 Report of Special Tax Commission. bank or banking association to collect the tax due upon its shares of stock from the several owners of such shares, and to pay the same to the treasurer of the county wherein said hank or banking association is located, and in the city of New York to the receiver of taxes thereof on or before the thirty-first day of December in said year ; and any bank or banking association failing to pay the said tax as herein provided shall be iiable by way of penalty for the gross amount of the taxes due from all owners of the shares of stock, and for an additional amount of one hundred dollars for every day of delay in the payment of said tax. Every bank or banking association so paying the taxes due upon the shares of its' stock shall have a lien on the shares of stock, and on all property of the several share owners in its hands, or which may at any time come into its hands, for reimbursement of the taxes so paid on account of the several shareholders, with legal interest ; and such lien may be enforced in any appropriate manner. One third of the amount of [The] the tax hereby imposed shall be immedi- ately transmitted to the state treasurer for the use of the state, and the balance shall be distributed in the following manner: The board of supervisors of the several counties shall ascertain the tax rate of each of the several towns, city, village, school and other tax districts in their counties, re- spectively, in which the shares of stock of banks and banking associations shall be taxable, which tax rates shall include the proportion of state and county taxes levied in such districts, re- spectively, for the year for which the* tax is imposed, and the proportion of the tax on bank stock to which each of said dis- tricts shall be respectively entitled shall be ascertained, by taking such proportion of the tax upon the shares of stock of banks and banking associations, taxable in such districts respectively, under the provisions of this act as a tax rate of such district shall bear to the aggregate tax rates of all the tax districts in which said shares of stock shall be taxable. The clerk of the several cities, villages and school districts to which any portion of the tax on shares of stock of banks and banking associations is to be distributed under this act shall, in writing and under oath annually, report to the board of supervisors of their re- spective counties, during the first week of the annual session of such board, and the tax rate of such city, village and school dis- trict, for the year prior to the meeting of each such board. The said board of supervisors shall issue their warrant or order to t\ie Eepoet of Special Tax Commission. 159 county treasurer on or before the fifteenth day of December in each year setting forth the number of shares of bank stock taxable in each town, city, village, school, and other district in said county, in which said shares of stock shall be taxable, the tax rate of each of said tax districts, for said year, the proportion of the tax imposed by this act to which each of said districts is entitled, under the provisions hereof,' and commanding him to collect same, and to pay to the proper officer in each of such districts the proportion of such tax to which it is entitled under the provisions of this act. The said county treasurer shall have the same powers to enforce the collection and payment of said tax as are possessed by the officers now charged by law with the collection of taxes, and the said county treasurer shall be en- titled to a commission of one per centum for collecting and pay- ing out said monies, which commission shall be deducted from the gross amount of said tax before the same is distributed. In issuing their warrants to the collectors of taxes, the board of supervisors shall omit therefrom assessments of and taxes upon the shares of stock of banks and banking associations. All as- sessments of the shares of banks and banking associations made on or after January first, nineteen hundred and one, and prior to the passage of this act, shall be null and void, and new assessments thereof shall be made agreeable to the provisions of this act. Provided, that in the city of New York, the statement of the bank assessment and tax herein provided for shall be made by the board of tax commissioners of said city, on or before the fifteenth day of December in each year, and by them forthwith mailed to the respective banks and banking associations located in said city, and a certified copy thereof sent to the receiver of taxes of said city. The tax shall be paid by the respective banks in said city to the receiver of taxes on or before the thirty-first day of December in said year, and said tax shall be collected by the said receiver of taxes and shall be by him paid into the treasury of said city to the credit of the general fund thereof. This act is not to be construed as an exemption of the real estate of banks or banking 1 associations from taxation. §4. Section 27 of the tax law is hereby amended so as to read as follows: § 27. Reports of corporations. — The president or T'other] a proper officer, designated in writing by the president, of every moneyed or stock corporation deriving an income or profit from 160 Report of Special Tax Commission. its capital or otherwise shall, on or before June fifteenth, in each year, deliver to one of the assessors of the tax district in which the company is liable to be taxed, and, if such tax district is in a county embracing a portion of the forest preserves, to the comp- troller of the state, a written statement specifying: 1. The real property, if any, owned by such company, the tax district in which the same is situated, and, unless a railroad cor- poration, the sums actually paid therefor. 2. The capital stock actually paid in and secured to be paid in excepting therefrom the sums paid for real property and the amount of such capital stock held by the state and by any incor- porated literary or charitable institution, and 3. The tax district in which the principal office of the company is situated or in case it has no principal office, the tax district in which its operations are carried on. Such statment shall be verified by the officer making the same to the effect that it is in all respects just and true. Such state- ments shall be and each of them is hereby declared to be a confi- dential communication, and the contents thereof are not to be disclosed by the assessors nor by any other person whomsoever, excepting in the courts and in judicial proceedings, when the contents of such statements, or evidence in regard thereto, may become competent. Any disclosure of the contents of any such statement by any person, contrary to the provisions of this act, is hereby declared to be a misdemeanor, and punishable as such. [If such statement is not made within twenty days after the fif- teenth day of June, or is insufficient, evasive or defective, the as- sessors may compel the corporation to make a proper statement by mandamus.] § 4. Section twenty-eight of the tax law is hereby amended so as to read as follows: § 28. Penalty for omission to make statement — It shall be the duty of the board of assessors of each tax district of the state and of the comptroller to transmit to the attorney-general between the fifteenth days of June and July of each year a list of all corporations having their principal office within such tax district, which are required by section twenty-seven to make and deliver the reports therein provided for and. which have failed so to do. [In case of neglect to furnish such statement within thirty days after the time above provided the] The company sc neglecting shall forfeit to lie people of this state for each state- Repobt of Special Tax Commission. 101 merit so omitted to be furnished the sum of two hundred and fifty dollars. [And it shall he the duty of the attorney-general to prose- cute for such penalty upon information which shall be furnished him by the comptroller. Upon such statement being furnished, and the costs of the suit being paid the comptroller if he shall be satisfied that such omission was not wilful, may in his discretion discontinue such suit.] Actions to recover such penalties shall be commenced by the attorney general in the name of the people of the State of New York against all such companies on or before October first next succeeding such failure, and if it is found that such failure was intentional, judgment shall be rendered in such action for the recovery of such penalties. The neglect of any such corporation to make and deliver such report for two successive years shall render such corporation liable to forfeit its corporate existence and the attorney-general shall on or before November first in each year commence actions against such corporations for such forfeiture, and if it is found that such neglect was intentional, judgment shall be rendered in such action for the forfeiture of the franchise and for the dissolution of such corporation, and thereafter such franchise shall be annulled. Such actions and the trials thereof and any appeals taken from judgments therein, shall be preferred in all courts over all other actions except such as involve titles to office or the validity of an appointment of the state or one of the counties thereof into senate and assembly' districts. § 5. Section 28-a of the tax law is hereby amended so as to read as follows : § 28-a County clerks to furnish data respecting corpora- tions. Between the first and fifteenth days of June in the year 190[6]7, the county clerk in each county of the state '[excepting counties containing a city of the second class and counties wholly situate within the corporate limits of a city] shall prepare from the records in his office and mail to each of the town clerks in his said county and to the board of assessors of any city wholly or partly situated in said county a certificate containing the name)[s] of every stock corporation incorporated within the five years next preceding the first day of June, nineteen hundred and [six] seven, whose principal business office or chief place of business is designated in its certificate of incorporation as being in such city or town or in any village or hamlet therein, together with the 11 162 Eepobt of Special Tax Commission fact of such, designation and the names and addressee of the directors of each such corporation so far as said 6ouuty clerk can discover the same from the certificate of incorporation or from the latest certificate of election of directors of- such corporation filed in his office. Annually thereafter between the first and fifteenth days of June, said county clerk shall furnish to such town clerks cmd boards of assessors the several statements aforesaid contain- ing the above facta with reference to stock corporations whose certificates of incorporation have been filed with him since his last preceding annual statement to said several town clerks. Each town clerk receiving such statement shall forthwith file the same in his office and mail a notice of such filing to each of the assessors of his town. § 6. Section 31 of the tax law is hereby amended so as to read as follows: § 31. Corporations, how assessed. — The assessors shall assess corporations liable to taxation in their respective tax districts upon their assessment rolls in the following manner: 1. In the first column the name of each corporation, and under its name the amount of its capital stock paid in and secured to be paid in ; the amount paid by it for real property then owned by it wherever situated; the amount of all surplus profits or reserve funds '[exceeding ten per centum of their capital] after deducting therefrom the amount of said real property and the amount of its stock, if any, belonging to the state and to incorporated literary and charitable institutions. 2. In the second column the quantity of real property except special franchises owned by such corporation and situated within their tax districts. 3. In the third column the actual value of such real property, except special franchisea 4. In the fourth column the amount of the capital stock paid in and secured to be paid in, and all of such surplus profits or reserve funds as aforesaid, after deducting the sums paid out for all real estate of the company, whenever the same may be situated, and then belonging to it, and the amount of stock, if any, belong- ing to the people of the state and to incorporated literary and charitable associations. 5. In the fifth column the value of any special franchise owned by it as fixed by the state board of tax commissioners. § 7. This act shall take effect immediately. TAXATION OF SPECIAL FRANCHISES. AIT AOT To amend the tax law relative to the taxation of special franchises. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Article two of the tax law is hereby amended by adding a new section thereto to be known as section forty-eight, and to read as follows: § 48. The owner or owners of any special franchise liable for the payment of any assessment of taxes imposed or assessed under the provisions of section forty-two of this act, who shall fail to pay such assesssment or tax within sixty days after such assess- ment or tax becomes payable, or after its validity shall have been finally determined, shall forfeit the right to such special fran- chise, and, after the expiration of such period of sixty days, shall cease to have or exercise the rights thereby conferred. § 2. This act shall take effect immediately. [168] ACT AMENDING THE STOCK TRANSFER TAX. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Article fifteen of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled "An act in relation to taxation constituting chapter twenty-four of the general laws," is hereby amended so as to read as follows: § 315. Amount of tax. — There is hereby imposed and there shall immediately accrue and be collected a tax as herein pro- vided, on all sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares or certificates of stock in any domestic or foreign association, company or corporation, made after the first day of June nineteen hundred and [five] seven, whether made upon or shown by the books of the association, com- pany or corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale whether entitling the holder in any manner to the benefit of such stock, or to secure the future pay- ment of money or the future transfer of any stock on each [share of] one hundred dollars of [face value] the selling price of such stock, or fraction thereof, two cents. It is not intended by this act to impose a tax upon an agreement evidencing the deposit of stock certificates as collateral security for money loaned thereon which stock certificates are not actually sold, nor upon such stock cer- tificates so deposited. The payment of such tax shall be denoted by an adhesive stamp or stamps affixed as follows: In a case where the evidence of transfer is shown only by the books of the company the stamp shall be placed upon such books; and where the change of ownership is by transfer of a certificate the stamp shall be placed upon the certificate; and in cases of an agree- ment to sell or where the transfer is by delivery of the certifi- cate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale to which the stamp provided for by this article shall be affixed ; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers, and no further tax is hereby imposed upon the delivery of the certificate [IM] Repobt of Special Tax Commission. . 165 of stock, or upon the actual issue of a new certificate when the original certificate of stock is accompanied hy the duly stamped memorandum of sale. The comptroller may, upon satisfactory- proof that stamps have been erroneously affixed and canceled in payment of the tax upon a transfer and to the loss of an inno- cent person, refund the amount thereof from appropriations made for necessary expenses under this act, provided the tax justly due is paid upon such transfer. AN ACT TO AMEND THE TAX LAW RELATIVE TO THE TAXA- TION OF PERSONAL PROPERTY. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 36. Hearing of complaints. — The assessors shall meet at the time and place specified in such notice, and hear and de- termine all complaints in relation to such assessment brought before them, and for that purpose they may adjourn from time to time [Such complaints] Any person complaining shall file with the assessors a statement [under oath] specifying the respect in which the assessment complained of is incorrect, which state- ment shall contain a true, correct and accurate list of all property belonging to the person so complaining [which verification must be made] Such statement shall be verified by the person assessed or whose property is assessed or by some person authorized to make such complaint who has knowledge of the facts stated therein. If such complaint relate to the assessment for personal property and a reduction is sought by reason of the indebtedness of the person so assessed, such statement shall also contain a list of all debts owed by the person making such complaint, with the names of the persons to whom such debts are owing, the dates when such debts were contracted, the amounts thereof and the purposes for which they were contracted, together with a statement that no part of such indebtedness was contracted for the purpose of evad- ing taxation on personal property. The assessors may administer oaths, and take testimony and hear proofs in regard to any such complaint and the assessment to which it relates. If not satisfied that such assessment is erroneous, they may require the person assessed or his agent or representative or any other person to ap- pear before them and be examined concerning such complaint, and concerning the value of the property set forth in said list and the indebtedness also contained ■ therein, and to produce any papers relating to such assessment in respect to his property, or the value thereof or his residence for the purpose of taxation. If any such person or his agent or representative shall wilfully neglect or refuse to attend and be so examined or to answer any material question put to him, such person shall not be entitled to any re- duction of his assessment and no assessment against personal prop- [166] Repobt of Special Tax Commission. 167 erty shall be reduced or cancelled unless such statement properly verified shall be first filed with said assessors. False swearing in connection with any reduction claimed shall be deemed to be perjury and shall be punishable as such. Minutes of the examina- tion of every person examined by the assessors upon the hearing of any such complaint shall be taken and filed in the office of the town or city clerk. The assessors shall after said examination fix the value of the personal property of the complainant and for that purpose may increase or diminish the' assessment thereof. § 2. This act shall take effect immediately. RETURN OF SURPLUS ABOVE THE SUM OF TEN MILLION DOLLARS. AN ACT To amend the tax law by providing for a return to the several counties in the state of any surplus in the state treasury above the sum of ten million dollars. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Chapter nine hundred and eight of the laws of one thousand eight hundred and ninety-six, entitled "An act in rela- tion to taxation, constituting chapter twenty-four of the general laws " as amended,, is hereby amended by inserting therein a new article, to be article seventeen and to read as follows: ARTICLE XVII. Retubn of Sueplus Revenues to the Seveeal Counties in the State. § 341. On the first day of July in each year in which the funds in the state treasury applicable to general purposes and not there- tofore specifically appropriated by the legislature nor included in the funds set apart for the establishment of sinking funds phall exceed the sum of ten million dollars, all such sums exceed- ing the sum of ten million dollars, shall be apportioned among and returned to the county treasurers of the several counties of the state, except that as to the counties of New York, Kings, Queens, and Richmond such return shall be made to the city chamberlain of the city of New York. The amount thus returned by the state treasurer shall be appor- tioned among the counties of the state upon the basis of the total revenues derived by the state treasury from the said counties from all sources during the preceding fiscal year, and when returned to and received by the said county treasurers or city chamberlain, shall be and become applicable to the payment of county charges and the reduction of taxation therein, according to law. § 2. This act shall take effect immediately. [168] AN AQT To amend the tax law in relation to the powers and duties of the state board of tax commissioners. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Section one hundred and seventy-one of chapter nine hundred and eight of the laws of eighteen hundred and ninety-six, entitled " An act in relation to taxation, constituting chapter twenty-four of the general laws " as amended, is hereby further amended so as to read as follows : § 171. Powers and duties of state board of tax commissioners. — The state board of tax commissioners shall : First. Investigate and examine, from time to time as to the methods of assessment within the state. Second. Furnish local assessors with such information as may be necessary or proper to aid them in making the assessment thereof. Third. Make such rules and regulations as may be necessary to enforce the provisions of this article and prepare forms for reports and assessment rolls, and furnish same to assessors and other officers at the expense of the state. Fourth. Take testimony and hear proofs, under oath, with reference to any matter within the line of its official duty. Any member of such board may be designated for that purpose. It may require from all state and municipal officers such information as may be necessary for the proper discharge of its duties. Fifth. Hold meetings at an office to be assigned it in one of the state buildings at Albany, at such times as may be fixed by the chairman of the board or by adjournment thereof, or at such other places as it may designate. Sixth. Employ a secretary, prescribe his duties and fix his salary at a sum not to exceed thirty-five hundred dollars per annum; employ not to exceed six special agents who shall be deemed the confidential agents of the board and experts and other needed assistants and prescribe their duties. It shall fix the com- pensation of such employees, which shall not exceed in the aggre- gate the amount annually appropriated by the legislature for that purpose. [169] 170 Eepoet of Speciai/'I'ax Commission. Seventh. Prepare an annual report to the legislature and rec- ommend such changes or amendments to the tax laws as it may deem advisable. Eighth. Perform the other powers and duties conferred upon it by law. Ninth. The state board of tax commissioners in addition to any other reports or statistics that they are required by law to prepare, shall, on or before the first day of January in each year, prepare and collate statistics of revenue and expenditures and of taxes assessed and collected during the preceding year for each tax dis- trict of the state; they shall cause to be prepared by the board of assessors in each tax district of the state, a complete statement of the aggregate annual assessments, for the purposes of taxation, imposed during the preceding year, classifying the assessments under the particular section of the tax law under which the same are taxable. They shall also cause to be prepared annually by each super- visor, board of supervisors, or county treasurer, and also by the chief financial officer of each city, town and village, the aggregate amounts of all taxes levied and collected during the preceding year, and the purpose for which the same are levied, on each class of property subject to taxation, giving in detail the sums collected under the inheritance tax law. The said state board of tax commissioners shall also cause to be prepared by the chief financial officer in each tax distridt, town, county or municipality of the state, a complete and detailed state- ment of the bonded and other indebtedness, sources of revenue other than from taxes and the gross expenditures during the pre- ceding year in said tax district, town, county or municipality. They shall also prepare or cause to be prepared annually a com- plete detailed statement of the amount of gross revenue and ex- penditures for state purposes for the preceding year and the sources ' of such revenue. The neglect or refusal by any person, officer or board of officers, to file a true and correct report in the office of the state board of tax commissioners at the time and in the form re- quired by the said state board, is a misdemeanor and the making and filing of a report containing a wilful misstatement, is a felony; and any person, officer, or board of officers guilty of such misde- meanor or felony shall be punished therefor as provided by law. The local and state officers required to make the above reports in each state department and in each tax district, city, town or Repoet or Special Tax Commission. 171 village of the state, shall prepare the same on blanks, furnished by the state board of tax commissioners and said local officers, state officers or their clerks, shall receive the sum of ten cents per folio ■ for each report so prepared, to be audited by the state comptroller. The state board of tax commissioners shall annually cause to be printed a copy of the reports hereinbefore provided for, or so much thereof as will show the aggregate and detailed amounts in each tax district of the state of assessments made and taxes levied and collected, together with other sources of revenue- and the amount of bonded and other indebtedness and annual expenditures herein provided for. Tenth. The state board of tax commissioners, shall annually examine into and report upon the best means of effecting uni^ formity in the laivs of the various states on the subject of taxation; to represent this state in conventions of like commisioners from other states; to consider and draft bills to be submitted to the legislature of this and other states, and to devise and recommend such other course of action- as shall lead to uniformity of legisla- tion on the subject of taxation; and to represent this state in con- junction with representatives of such other states as may join therein in the endeavor to persuade the congress of the United States to abstain from the enactment of tax laws encroaching upon subjects of taxation properly belonging to the states. Said com- missioners shall make a special report to the governor on these sub- jects before the time fixed for the meeting of the legislature in each year and their report shall be communicated by the governor to the legislature with his recommendations. Section 2. This act shall take effect immediately. AN ACT To amend the tax law in relation to imposing a tax on occupants of habitations. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Chapter nine hundred and eight of the laws of eighteen hun dred and ninety-six, entitled "An act in relation to taxation, con- stituting chapter twenty-four of the general laws " as amended, ie hereby further amended by adding thereto the articles and sec- tions hereinafter set forth. AETICLE XVI. Section 1. On and after the first day of May in the year nine- teen hundred and seven, there shall be annually assessed and col- lected in any city, town, village or tax district of this state, where the personal property of individuals is exempt from taxation under the provisions of section fourteen, of this article, against every occupant of a habitation, a tax at the rates hereinafter named upon the rental value thereof, after deducting a sum by way of exemption as hereinafter mentioned, namely, in cities of the first class the exemption shall be six hundred dollars; in cities of the second class the exemption shall be four hundred dollars; "in cities of the third class and in incorporated villages the exemption shall be two hundred dollars. In every town, except as herein otherwise provided, and in every unincorporated village, in any tax district of the state, the exemption shall be one hundred dol lars. The rate per centum upon which the said tax shall be based in each of the cases above cited shall be three per centum where the rental value is two thousand dollars or less; five per centum upon the rental value in excess of two thousand dollars and up to and including five thousand dollars; ten per centum upon the rental value in excess of five thousand dollars and up to and in- cluding ten thousand dollars ; fifteen per centum upon the rental value in excess of ten thousand dollars and up to and including twenty thousand dollars ; twenty per centum upon the rental value in excess of twenty thousand dollars. § 2. A habitation for the purposes of this article shall mean a building, or that part r> f a building, used as a place of [172} J Repobt of Special Tax Commission. 11Z abode by one or more persons forming a single household, and so much of the land and outbuildings about or connected therewith as is used in connection with the house for the purpose of resi- dence, but excluding so much of the building, land and outbuild- ings as is used exclusively for the purposes of trade, business or profession, or for agricultural or other gainful occupation. If different parts of any building are used as places of abode for separate households, the part used by each household shall be deemed a separate habitation, and in any building iised as a hotel, inn, apartment house or lodging house, each room or suite of rooms used as a place of abode for a guest or lodger having no household or for several guests or lodgers together forming a single house- hold, shall be deemed a separate habitation. Each habitation in fi building shall include the parts of the building and all lands and all outbuildings to the exclusive use of which, in connection with such habitation, the occupant is entitled, and the propor- tionate share of all parts of the building, all lands and all out- buildings to the use of which in connection therewith such occu- pant is entitled in common with others, such proportion being determined by the share of use to which each is entitled. Every person shall be deemed an " occupant " or " occupant of a habi- tation " within the meaning of this article who as the head of a household, for a period of three months or more during the year preceding the first day of May of each year, occupies a place of abode within the meaning of this article, either for himself or for his family or dependents or boarders or lodgers. If two or more persons occupy a habitation in common and no one of them is the head of the household, then such tax shall be assessed to each upon such part of his pro rata share of the annual rental value of such habitation as in this article provided. If, during the year such person permanently and in good faith gives up the use of one habitation which he has so occupied and occupies for three months or more prior to the first day of May another habitation situated in the same or in a different city, town, village or tax district of the state, he shall be deemed the occupant of that one nf said habitations which he has last so occupied. § 3. No deductions or exemptions shall be allowed in assessing occupants or habitations under this article except as elsewhere provided in this article, and in the following additional cases: The rental value under this article of property exempt from tax- ation under subdivisions one, two, three, four, seven, eight, nine, 174 Repobt of Special Tax Commission. ten, and eleven of section four of the tax law snail not be subject to a tax under this article. § 4. The assessors in each tax district of this state, where the personal property of individuals is exempt from taxation as pro- vided in section fourteen of this article, before completing the annual assessments of real property in such tax district, shall, in the manner required for giving notice of the completion of such assessments, notify every occupant of a habitation situated in any city, town, village or tax district to furnish to the assessors within the time therein specified a return showing all the habita- tions situated within the tax district of which such person is. an occupant for the year preceding the first day of May, and the annual rental value of each. The assessors shall thereafter de- termine the fair annual rental value of such habitation in such tax district and assess to the occupant of each a tax under the pro- visions of section one of this article. This assessment shall be carried out in the assessment roll or record for malting the annual assessments of real property in the tax district in which such habitation is situated in three separate and additional columns, headed as follows: Description by name Annual rental value Tax on each habita- or otherwise of each and rate of each tax- tion. •habitation of which able habitation. such person is occu- pant on which, a tax is assessed. After said taxes have been assessed as aforesaid, notice thereof shall be given in the manner provided by law for giving notice of the completion of assessments of real and personal property in such tax district. Any person aggrieved by the tax so assessed against him may thereafter apply for a reductiou or remission thereof in the manner provided by law for the hearing of griev- ances in relation to the assessment of real and personal estate in the tax district in which such habitation is situated. § 5. The owner of any building, all or any part of which con- tains a habitation or habitations other than that of which said owner was during the year preceding the first day of May the occupant, shall during the month of May in person or by duly authorized agent make a return to the assessors of the tax district in which such building is situated, specifying every person vhom during said year, ox such part thereof as the owner has owned the v Eepobt of Special Tax Commission. 175 premises, has occupied any habitation in said building as a place of abode for himself or his family or dependents during three months or more. This return shall also include the period of sucli occupation by each, the rental charged for such occupation and the services and accommodations other than the right of occu- pancy furnished in consideration of such rental. If all that part of any such building used for such habitation or habitations has during all of said year or during so much thereof as the owner has owned the same, been leased to or in possession of any other person, such other person shall make the said return. If the person so bound to make such return neglects so to do within the month of May, or within such further time as in case of reason- able excuse for such failure the assessors may fix, the assessors shall, if they believe that such building contains any habitation, subject to a tax under this -article, determine the fair annual rental value of so much of the entire building and land and outbuildings connected therewith as appears to them to be intended for use as a habitation or habitations, and shall assess to the person bound to, make such return, a tax under the provisions of this article. If any person to whom a tax is so assessed shall after the completion of such assessment, but within the time provided by law for the correction of the same in such tax district, satisfy the assessors by his return that he is not liable as aforesaid, he shall thereupon be relieved from the payment of such tax; or, if he shall within the same time make a return specifying as aforesaid every one who has occupied any habitation in said building, there shall be assessed to him in lieu of such tax a tax at the rate and upon the fair rental value, in accordance with the provisions of this article, for each of said habitations upon which it appears that a tax was assessable to some person or occupant. Any person upon whom a tax is assessed under the foregoing provisions of this section, upon payment by him of such tax, when the same is due, or within ten days thereafter, shall receive a rebate of five per cent, of the whole tax and may recover in an action on con- tract from any person who was liable to be taxed as an occupant of any habitation in such building, the full amount of the tax paid, or if more than one person is liable as such occupant, a pro- portional part from each. Any person to whom a tax is assessed under this section, may, if aggrieved, apply for a reduction thoreof as provided in section four; but no person who has not 176 Kepobt of Special Tax Commission. filed a return prior to -the completion of the assessment or within the time required for the correction of the same in said tax dis- trict, shall be entitled to a reduction of said tax. The assessors shall require a supplementary return or returns from any person bound to make a return, giving fuller and further information, and may require suf Tax Commissioners shall appoint not exceeding twenty-five special agents in this State, each of whom shall receive the salary herein prescribed, payable in equal monthly instalments, together with the necessary expenses incurred by the direction of the State Board of Tax Commissioners in the performance of the duties of his offics; or the State Board of Tax Commissioners may, in their discretion, fix a per diem allowance for subsistence, to be audited and allowed at not more than three dollars per day, together with such other necessary expenses as shall be incurred by the special agent in the performance of the duties of his office by direction of the State Board of Tax Commissioners, provided that no per diem allowance for subsistence shall be audited or paid to any special agent for any day or days during whch said special agent shall be engaged in official work in the city, borough village or town in which he resides. Such special agents shall be deemed the confidential agents of the State Board of Tax Commissioners, and shall, under the di- rection of the State Board of Tax Commissioners and as Report of Special Tax Commission. 180 required by them, investigate all matters relating to the ascertain- ment, reporting and collecting of taxes herein provided for. iSuch special agents are hereby authorized and empowered to administer oaths and to take written depositions in the discharge of any of the duties and obligations required of them pursuant to this Act. Each of such special agents shall receive an annual salary of one thousand dollars, until he shall have served one year from the date of his appointment; of one thousand two hundred and fifty dollars for the second year of his service, and thereafter he shall receive an annual salary of one thousand five hundred dollars. But all special agents appointed or employed under the pro- visions of this section, may be removed at any time by the state board of tax commissioners, who may thereupon appoint their successors as provided by law. Such special agents shall examine from time to time, under the direction of the state board of tax commissioners the returns herein provided for on file with the county treasurers of the sev- eral counties of the state and the city chamberlain of the city of New York, and shall have power upon their own motion to issue subpoenas for the examination before any court of record in the county wherein said returns are filed, of any and all persons or corporations whom they shall believe to have knowledge or infor- mation concerning any of the details contained, or required to be set forth, in said returns. In making such examination before said courts, the said special agents may, whenever in the judgment of the state board of tax commissioners it shall be advisable, have the assistance of special .attorneys, to be appointed in such case by the certificate of the state board of tax commissioners, at a com- pensation to be fixed by the said board proportionate to the ser- vices rendered in each case. Upon such examinations the said courts shall have power, and they are hereby required, to cause the production of all books and papers required by said special agent, or his attorney, and whosoever shall refuse to attend before said courts upon such subpoena, or produce such books and papers on the order of said court, or who shall refuse to answer proper or pertinent questions, shall be deemed guilty of contempt of court and punished therefor according to the provisions of the Penal Code. 184 Repobt of Special Tax Commission. Whosoever shall make false answers to any pertinent or proper question upon such examinations, shall be deemed guilty of per- jury and punished therefor according to the provisions of the Penal Code. A statement of income and sources of income disclosed upon any such examination not theretofore included in said returns, shall be made by the said special agents and immediately filed with the district attorney of the county in which said return shall have been filed, and a duplicate "thereof with the attorney general of the state of New York. § 329. Civil Penalties for Omitting Property frcm Returns, the Recovery Thereof and Criminal Prosecutions. — Within ten days after the filing with the Attorney General of the statements by the special agents, provided for in section 328 of this Act, the Attorney General shall commence actions in the name of the People of the State of New York, against all persons who shall have omitted any income from their returns as set forth in said statements by said special agents, in which actions, if it shall be found that such omissions were willful or intentional, recovery shall be had for ten times the amount of the tax which would have been payable upon the income so omitted, together with the costs of the action. Every District Attorney shall present to the next grand jury convened within his county, after the filing of such statements, complaints against the persons who shall have been shown by said statements so filed with him by said special agents to have been guilty of perjury in verifying their respective returns to the local board of assessors. § 330. Penalties for Failing to Make . Returns. — Whosoever shall fail within ten days after being so required by the assessors of his tax district, to make and file with said assessors, the return by this Act prescribed, shall, if such failure be unintentional, be liable to pay double the amount of tax upon his income which he would have been liable to pay upon a full and true return; but, if such failure be intentional and willful he shall be liable to pay ten times the tax which would have been payable by him' upon such true and full return. Every assessor or tax- commissioner in the tax district wherein such failure to make returns shall occur, shall have power, and it is hereby made his duty, to cause the person so failing to be subpoenaed before any court of record in the county in which said tax district is situated, upon a subpoena to Repobt of Special Tax Commission. 185 be issued by him at any time thereafter, and to examine the person so failing to make such return before said court as to his income. And if, upon such examination, it shall appear to the court that the person so failing to make such return has done so unintentionally, the excuse for such failure being satisfactory to the said court, then the said court shall assess against the said person so failing, double the amount of tax which would have been assessed against him had the facts disclosed upon such examination been truthfully set forth in a proper return by such person. But, if the failure to make such return shall prove to be willful and intentional, to the satisfaction of the said court, then the said court shall assess against the said person a tax ten times the amount which would have been assessed against the said person had the facts disclosed in such examination been truth- fully set forth in the return which ought to have been made by said person. The sums so assessed shall be entered in the next tax-roll of the said tax district against the person so assessed and collected as is otherwise provided in this Act. § 331. Blanks to be Furnished by the State Board of Tax Commissioners. — The State Board of Tax Commissioners shall furnish to the persons and special agents who are required by this article to make and file returns or statements, suitable blanks for carrying out the provisions of this article. § 332. "When To Take Effect— This Act shall take effect im- mediately. AN ACT To revise and amend the tax law relative to the taxation of per- sonal property. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Section three of the tax law is hereby amended so as to read as follows : Section 3. Property liable to taxation. — 'All real property within this state [and all personal property situated or owned within this state] and all incomes received by persons residing or domiciled within this state, the personal property of corpora- tions, all personal property owned by non-residents of the state of New York and situated within the state of New York, and all rents reserved to or for the benefit of persons residing without the state of New York, is. taxable unless exempt from taxation by law. § 2. Section eight of the tax law is hereby amended so as to read as follows: § 8. Place of taxation or property of residents. — Every per- son shall be taxed in the tax district wherein he has resided for the period prescribed by section three hundred and twenty-six of this act next preceding the date when the assessment for taxation is made, or in case such person shall not have been a resident of or domiciled within the state, as provided by section three hun- dred and twenty-six of this act, then he shall be taxed in the tax district wherein he had his office or place of business, as pre- scribed in said section three hundred and twenty-six [where he resides when the assessment for taxation is made for all personal property owned by him, or under his control as agent, trustee, guardian, executor or administrator. Where taxable personal property is in the possession or under the control of two or more agents, trustees, guardians, executors or administrators residing in different tax districts, each shall be taxed for an equal portion of the value of such property so held by them] for all income payable to him, either individually or as agent, trustee, guardian, executor or administrator. Rents reserved in any lease in fee, or for one or more lives or for a term of more than twenty-one years, and chargeable upon real property within the state, shall be taxable to the person entitled to receive the same as [personal] real property in the tax district where such real property upon [186] Repobt of Special Tax Commission. 187 which the rents are chargeable, is situated and for the purposes of the taxation thereof, such person is to be deemed a resident of such tax district. When a person shall have acquired a resi- dence in a tax district and shall have been taxed therein, such residence shall be presumed to continue, for the purposes of taxation, until he shall have acquired another residence in this state,, or shall have removed from this state. [The residence of a person on July first shall be deemed his residence for the pur- pose of assessment and taxation during that year. If he shall have actually and in good faith changed his residence after July first, and before August first in any year from one tax district to another, and shall make proof to the assessors at or before their last meeting for the correction of the assessment-roll of such a change of residence, and that he is assessed in the tax district to which he has removed, his name and the assessment of his per- sonal property shall be stricken from the assessment-roll of the tax district where he resided on July first. J In case of any con- troversy as to the proper place of taxation within the state, of any person, his residence for purposes of taxation may be determined by the state board of tax commissioners, subject to review by the court. § 3. Section twenty-one of the tax law is hereby amended so as to read as follows: § 21. Preparation of assessment-roll. — They shall prepare an assessment-roll containing [six] eight separate columns, and shall, according to the best information in their power, set down : 1. In the first column the names of all the taxable persons in the tax district. 2. In the second column the quantity of real property taxable to each person, with a statement thereof in such form as the commis- sioners of taxes shall prescribe. 3. In the third column the full value of such real property. 4. In the fourth column [the full value of all the taxable per- sonal property owned by each person respectively, after deducting the just debts owing by him]' the amount of the income tax charge- able against any person within said tax district, pursuant to sec- tion three hundred and twenty-six of this article. 5. In the fifth column the value of the taxable rents reserved and chargeable upon lands within the tax district, estimated at a principal sum, the interest of which, at a legal rate per annum, shall produce a sum equal to such annual rents, and if payable in 188 Repoet of Special Tax Commission. any other thing except money, the value of the- rents in money -to be ascertained by them and the value of each rent assessed sepa- rately, and if the name of the person entitled to receive the rent assessed cannot be ascertained by the assessors, it shall be assessed against the tenant in possession of the real property upon which the rents are chargeable. 6. In the sixth column the valup of the special franchise as fixed by the state board of tax commissioners. [7. Such assessment-roll shall contain two additional columns, in one of which shall be inserted the amount of the tax levied against each person named therein, and in the other the date of the payment of such tax.] 7. In the seventh column the amount of tax, other than income tax, levied against the person whose name is written in mid assess- mentrroll opposite said assessment. 8. In the eighth column the date of the payment of such tax. 9. They shall also prepare in a separate part of the roll, under the head of " non-residents," the amount of personal property sitv ated within their tax district owned by non-residents of the state, together with such description thereof as shall clearly identify the property thus assessed. In a separate column they shall set down the full value of such property. In a third column shall be in- serted the amount of the tax levied against said property, and in a fourth column the date of the payment of such tax. § 4. Section fifty-six of the tax law is hereby amended so as to read as follows : § 56. Tax-roll and collector's warrant. — On or before Decem- ber fifteenth in each year the board of supervisors shall annex to the tax-roll a warrant under the seal of the county, signed by the chairman and clerk of the board, commanding the collector of each tax district, to whom the same is directed to collect from the several persons named in said roll the several sums mentioned in the last column thereof, opposite their respective names, and also the several sums mentioned in the fourth column thereof, being the amount of the income tax chargeable against the persons named in said roll, except taxes upon the shares of stock of banks and banking associations, on or before the first day of the following February, and further commanding him to pay over on or before that date all moneys so collected appearing on said roll, to the treasurer of the county, if he be a collector of a city or a division thereof, or if he be a collector of a town : Rjbpoht op Special Tax Commission. 189 1. To the commissioners of highways of the town, such sum as shall have been raised for the support of highways and bridges therein. 2. To the overseers of the poor of the town, such sum as shall have been levied, to be expended by such overseers for the support of the poor therein. 3. To the supervisor of the town, all the moneys levied therein, to defray any other town expenses or charges. 4. To the treasurer of the county, the residue of the money so to be collected. If the law shall direct the taxes levied for any local or special purpose in a city or town, to be paid to any person or officer other than those named in this section, the warrant shall be varied so as to conform to such direction. The warrant shall authorize the collector to levy such taxes by distress and sale, in case of non- payment The corrected assessment-roll, or a fair copy thereof, shall be delivered by the board of supervisors, to the collector of the tax district on or before December fifteenth, in each year. § 5. This act shall take effect immediately. Mmom i