The second number of the bulletin contained the proceedings of the First State Tax Conference of Local Assessors and Sixth State Tax Conference which were held jointly in the city of Albany, January 12 and 13, 1916. The bulletin contained a complete report of the addresses and papers at the conference, together with a complete list of the persons attending.

Bulletin No. 3 is a manual for the instruction of assessors. This was a pioneer in its field so far as New York is concerned and is intended primarily as a book of instruction for the assessment of the various classes of property. It is regarded as one of the most important and helpful publications of the department, and the demand has been so great that a revised edition will be necessary in the not distant future.

The fourth number of the bulletin, issued in October, 1916 contains a complete compilation of the tax laws of the state. This is the first time that such a work has been attempted, and it is supplemented by the exhaustive index which forms a complete guide to tax enactments wherever found in the laws of the state. This bulletin has also been published as an appendix to the annual report of the State Tax Department for the year 1915, a copy of which was sent to the chairman of each board of assessors in the state.

The fifth number of the bulletin is the annual review of local assessments, equalization and statistics and was specially designed for the discussion with local assessors of the questions which necessarily arise in their work. The New York State Tax Bulletin is devoted to questions of taxation as they affect positively the improvement of tax administration, and the paramount idea of the publication is to promote the right spirit of co-operation between the local assessors and the State Tax Department.

EFFICIENCY RATING SYSTEM

The efficiency rating system devised by the deputy commissioner in charge of administration during the year was adopted by the commission after careful consideration. Experience with it will undoubtedly suggest modifications, but the commission

is unanimously of the opinion that, in principle, it is a desirable innovation in departmental administration. While mathematical figures are used to indicate the various weights, it is understood that the system depends largely upon the justice and intelligence of those in the department who are entrusted with executive control.

Under this system each employee will be rated as to his efficiency, in accordance with the following table of relative weights:

The system defines with some exactness initiative, quality, quantity, knowledge, conduct and punctuality, so that each person in the department may understand clearly the significance of each. The ratings are made by the heads of the bureaus and divisions and are filed on or before the 10th day of each month with the deputy commissioner of administration who prepares from the general ratings a separate card for each employee setting forth the rating by months. An appeal may be taken to the State Tax Commission by any employee who is dissatisfied with ratings.

FINANCIAL

Statement showing expenditures for salaries and office expenses in the State Tax Department during the calendar years 1915 and

ANALYSIS OF OFFICE EXPENSES FOR THE YEARS 1915 AND 1916

The increased expenditures for salaries and office expenses for 1916 over similar expenditures for 1915 and prior thereto are due largely to the growth of the work of the department and to the transfer of the corporation tax bureau from the office of the comptroller to this department.

In 1915 the State Tax Department moved out of the temporary quarters provided for it after the fire in 1911 and entered its new offices on the fourth floor of the capitol. These changes necessitated a material increase in expenditures in the last year and a half for new equipment and to replace furniture and equipment damaged and destroyed as the result of such removals.

At the present time there are 98 employees in the department including the 27 cmployees in the corporation tax bureau, as compared with a total of 68 employees April 16, 1915, when the present commission assumed its duties. Then there were 42 exempt positions in the department as compared with 10 at the date of this report.

LEGISLATIVE RECOMMENDATIONS

Pursuant to the provisions of subdivision fourteen of section 171 of the tax law, specifically charging the tax commission with the duty of recommending "such changes or amendments to the tax laws as it may deem advisable", the following is respectfully submitted:

CONSTITUTIONAL AMENDMENT

Proposed Constitutional Tax Article. The attention of the constitutional convention of 1915 was called to the present constitutional limitations upon the legislative power, which prohibit the institution and development of a comprehensive system of taxation for the state, especially with respect to the enlarging of tax districts and for a central tax administration therein. That convention adopted a tax article which was essentially a product. of compromise, but it failed of adoption.

The tax commission, appreciating the vital necessity for constitutional amendment upon the subject, has given further study to the matter, and in the light of experience submits the following: Section 1. The Legislature shall establish a plan of state and local taxation and provide for the complete administration thereof. Local tax officers shall be residents of their respective tax districts which shall be defined by the Legislature and they shall be elected by the electors thereof or appointed by such authorities within the district as the Legislature shall designate for that purpose. The jurisdiction, powers and duties of local tax district officers shall be prescribed by law.

Section 2. Hereafter no exemption from taxation shall be granted except by general laws and upon the affirmative vote of two-thirds of all the members elected to each house.

This proposed article preserves the principle of "home rule” and maintains the local tax officer as a constitutional officer, but places him in a class by himself. It gives him no inherent constitutional powers. This article will permit of reasonable and intelligent centralization by legislative enactment in response to local demand as it may from time to time manifest itself. With such a constitutional provision this state will be able to take its place in line with those states which have set the pace in the improvement of tax administration. Under it a county plan of centralized assessment and collection of taxes will be legally feasible. Furthermore, the proposed article makes possible for the state the development of an intelligent and comprehensive tax system to meet modern conditions of taxable sources. Such legislative enactments as the Westchester county tax act of 1914 and the Nassau county tax act of 1915, which were declared unconstitutional

by the courts, could be legally enacted under this article. Indeed, by the provisions of the proposed article, the Legislature will be free to develop any new method of taxation which may prove desirable in view of the growing demands for governmental revenue and the supreme importance of obtaining it in such a way as to distribute the burden most equitably among persons and corporations and the classes of property best able to sustain it.

STATUTORY AMENDMENTS

Corporation Franchise Tax.-Section 181 of the tax law to be amended so as to remove any and all questions as to the taxation of foreign corporations doing business in this state upon the business done therein, whether such a corporation takes out a license to do business here or not.

Simplified Method for Estimating the Franchise Tax on Corporations. Section 182 of the tax law to be amended so as to clarify the meaning of its terms and to divide corporations into two classes those paying 3% dividends or less or no dividends, and those paying more than 3% dividends. The rate for the first class to be 3/4 of a mill on each dollar of appraised value of capital stock, and for the second class, 1/4 of a mill for each 1% of dividend on the appraised value of capital stock. praised value to be the highest appraisal which would be obtained by an estimate based on (1) the par value of the capital stock, (2) the difference between the assets and liabilities exclusive of capital stock, and (3) the average price of stock sold during the year. The minimum tax in any case to be $10.

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State Franchise Tax on Manufacturing Corporations.-A franchise tax on manufacturing companies is proposed. This is for the purpose of providing a new source of revenue to the state and a better revenue from these corporations for the localities in which they are situated. It is proposed to amend article 9 of the tax law by inserting a new section, to be known as 182-a, to apply to manufacturing corporations, foreign or domestic, employing more than 10% of capital in manufacturing within the state; the tax to be computed at the rate of 2 mills on the par value of issued capital stock and evidences of indebtedness of any character in excess of an amount equal to the issued capital stock,