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plus 1/2 mill for each 1% of dividends declared. Personal property of such corporations to be exempted from local taxation for state and local purposes; the localities where such corporations are located to receive three-fourths of the amount collected from such corporations, and one-fourth of the amount collected to be paid into the state treasury.

Under the present law manufacturing corporations actually employing at least 40% of capital in the state in manufacturing are exempted from the state tax. Experience also shows that in many localities manufacturing corporations are favored in the matter of taxation contrary to law. This method will insure uniform treatment of manufacturing corporations throughout the state and will prevent competition in exemption in such cases, an illegal practice now engaged in by localities.

It is estimated that this law will produce approximately $13,000,000, of which the localities would receive about $9,750,000, and the state $3,250,000. It is to be noted that the sum of $9,750,000 which would go to the localities is a greater sum than the total personal property tax collected in the entire state. This tax will work no hardship on manufacturing corporations and will not tend to drive them from the state because the burden will not prove onerous.

Franchise Tax Administrative Amendments.— Minor amendments for the improvement of the administration of the franchise tax will be submitted in detail during the legislative session.

Special Franchise Tax.- Minor amendments of the special franchise tax sections of the tax law for administrative improve ment will also he submitted in detail during the session.

Mortgage Tax Amendments and Recording Tax.— Besides minor administrative amendments for improved administration, which will be submitted later, we recommend extending the principle of the recording tax to all recorded instruments. The rate on all instruments, other than deeds and leases, to be 25 cents flat. In the case of deeds and leases, a tax of 25 cents for each $100, or fraction thereof, computed on the actual consideration, after de ducting therefrom the value of any lien or encumbrance existing and specified in the instrument.

State Equalization.- Section 174 of the tax law to be amended so as to constitute the State Tax Commission the state board of equalization. At present the state board of equalization is composed of the commissioners of the land office, to wit: the lieutenant-governer, the speaker, the secretary of state, the comptroller, the treasurer, the attorney-general and the state engineer and surveyor sitting with the members of the State Tax Commission. None of the commissioners of the land office has any relation whatsoever to the ascertainment of taxable values throughout the state, whereas it is the specific duty of the state tax commissioners to be informed with respect thereto for the purpose of equalizing special franchise assessments with the assessments of other real property in localities all over the state where special franchises are situated, and the tax commissioners must necessarily gather a large mass of statistical information on taxable values; in addition thereto they frequently have before them equalization appeals and reviews in county equalizations.

The tax commissioners are appointive officers, whereas the other members of the state board of equalization are elective, necessitating their running for office every two years.

It is an unfair burden to impose upon elective officials to charge them with judicial duties in respect of the equalization of taxable values throughout the state when they must necessarily engage in frequent political campaigns. By imposing the duty of making the state equalization upon the tax commission, undoubtedly a more equitable and scientific result can be obtained otherwise.

Minor Amendments to the Tax Law Generally.-A number of minor amendments for improving the administration of the tax law generally will also be submitted during the session.

GENERAL RECOMMENDATIONS That the tax law be so amended that statistics of assessments and taxes shall be transmitted to the State Tax Commission immediately after the close of the fiscal year to enable the annual department report to be issued at an earlier date.

That provision be made for an increase in the pay of local assessors; that in no case should such compensation be less than $3.00 per day; and that all expenses properly incurred by them in the work of assessment shall be paid.

That the true consideration in every deed, mortgage and lease be made known to the assessor before such deed, mortgage or lease shall be entitled to be recorded and that the law be so amended as to require such information.

That the value of the land constituting the forest preserve be fixed by legislative enactment, irrespective of what the market value of such land would be without the inhibition imposed upon it by section 7 of article VII of the state constitution.

STRUCTURAL WEAKNESSES AND SUGGESTED REMEDY The inherent weakness of New York's taxation system is the constitutional requirement that the township shall be the tax unit. This makes necessary nearly 3,000 local assessors, a number far too large to produce uniform work of a good quality. It makes extremely difficult the selection of assessors by the test of fitness. It prevents compensation adequate to secure the right kind of men. It designates a term of office too short to enable the assessor to gain either the knowledge or the experience necessary for the production of the best results. It prohibits the supervision necessary to secure uniformity of values. It renders assessors unduly subject to local influence. It results in almost total lack of equipment for good assessment work. Under its provisions the board of supervisors of the county has no power to adjust inequalities between individuals; no equalization can make an imperfect assessment more than approximately correct.

Under this system, against the most grevious injustice, the individual taxpayer has no redress save by tedious and expensive court procedure. It makes necessary too many assessments, too many bills, too many tax collectors. Under it millions of dollars worth of taxable property is escaping taxation absolutely. And it results in an appalling lack of uniformity in the assessment of property throughout the state.

On the other hand the county system would reduce the number of assessing authorities. It would make possible the selection of assessors by the test of fitness. It would provide compensation sufficient to get the right kind of men. It would provide adequate supervision to secure uniformity of value throughout the county and throughout the statu. It would remove the assessor from

undue local influence. It would enable the county adequately to equip the assessor for his work. It would give him opportunity to adjust inequalities between individual taxpayers. It would make assessment valuations the same for all taxation purposes. It would increase the efficiency of the tax system by the establishment of a single levy, a single tax bill and a single payment on the part of the taxpayer. It would eliminate county equalizations with their inequalities and injustice. It would do away with the delay and expense of appeals from county equalization. And in general the substitution of the county for the town as the tax unit would make for efficiency and equity in tax administration.

Evidence accumulates that the county as the tax unit is rapidly coming into favor with the American people. The majority of the states of the union have adopted the county system in some form. Others, where there is no constitutional mandate compelling the town plan but where local sentiment clings to it, have a combination of county and town authorities in one form or another. Testimony in constantly increasing volume is also at hand to show that where this system is in use it is giving far more satisfaction to the taxpayers concerned than does the township system. The city of Greater New York, comprising five counties, administers this department of its government by a single board of taxes and assessments, and as a result of the assessment work of this board, and to secure the equitable distribution of state taxes among all the counties, the state board of equalization during the last five years has removed from the taxable values of property in the five counties in question and placed upon the assessed valuation of the other counties of the state a sum amounting in the aggregate to over two thousand millions of dollars. In 1914 the Legislature responding to local desire in Westchester county, passed a tax administration act applicable to that county alone. In 1915 Nassau county secured a somewhat similar act which went further by abolishing the old town receivers and collectors of taxes and establishing a county receiver of taxes. The county receiver was to collect all state, county, town, village, school district and other taxes levied within the county. These acts applicable to Westchester and Nassau counties were later declared unconstitutional on the ground that they violated the

home rule principle of the state constitution, which secures the right of self-government to the smallest localities.

As a result of its survey of the situation, state and national, and with a serious sense of its responsibility in so doing, the State Tax Commission has proposed an amendment to the fundamental law which will permit the Legislature in its wisdom to determine the tax district area in conformity to the convenience of modern administration of taxation.

The state of New York is in need of a comprehensive tax system. The proposed constitutional amendment, advocated by the tax commission, creates the opportunity for its establishment. The State Tax Commission firmly believes that the ultimate change from the town to the county system will lead to vastly improved conditions in this state by substituting efficiency for inefficiency, economy for waste and equity for inequality and injustice, and we have abiding faith that in due time our citizens will sanction the forward step.

Respectfully submitted,

MARTIN SAXE, President,
WALTER H. KNAPP,
RALPH W. THOMAS,

State Tax Commission.

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