REAL   ESTATE







BUILDERS





AND







NEW YORK, JULY 12, 1913





A REVIEW OF RECENT STATE TAX LEGISLATION I





The Secured Debt Law Stands—Excess Condemnation to be Submitted to
Popular Vote Again—A Concession to Builders—Inheritance Tax Exemptions





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THE special session of the Legisla¬
ture now in session will have
to take up State finances and taxation.
From fifteen to seventeen million dol¬
lars must be provided by legislation, or
the State treasury will face a deficit.

The regular session ended May 3, and
the Governor has disposed of all bills.
A summary of tax laws proposed and
enacted, and bills vetoed, is contained in
a bulletin on tax legislation just issued
by Secretary A. C. Pleydell of the New
York Ta.x Reform Association. Local
or administrative measures not of gen¬
eral interest are not included. More
than two hundred bills were introduced
relating to taxation. Governor Sulzer
vetoed a bill enacted at the regular
session, imposing a direct State
tax which would have yielded about
$10,000,000. He also vetoed a bill ap¬
propriating six million dollars to meet
interest payments. Both of these
amounts will have to be provided for by
the special session.

The various special taxes yielded in
the last fiscal year (1911-12) about forty
million dollars, and are estimated to
yield the same amount for the present
fiscal year (1912-13). Last year a direct
State tax of eleven million dollars was
imposed, making a total revenue for
1912-13 of fifty-one million dollars,
which will be sufficient to meet the ap¬
propriations made last year. This year
the appropriations are about two and a
half million larger, and there is an equal
amount needed to meet the increased
sinking fund charges (interest and prin¬
cipal), while the revenue from special
taxes will probably be about the same.

Secured Debt Tax.

A bill to repeal this tax was introduced
at the request of State Tax Commis¬
sioner Schwab and passed the Senate at
the regular session. Mr. Schwab has
commenced a campaign to secure the
passage of this repealer at the special
session. Secretary Pleydell's view of
the matter is contained in the follow¬
ing   paragraph:

"The secured debt ta.x enacted in 1911
provides a fair revenue at a reasonable
rate from a class of securities that gen¬
erally escaped assessment, but in a few
instances when found by the assessor
were taxed at a confiscatory rate. The
law was the result of several years'
work by this Association, being the de¬
velopment of a bill introduced at our
request in 1904 as a companion measure
to the mortgage recording tax. To re¬
peal this law would mean a return to the
old farce and injustice of trying to
reach bonds under the general prop¬
erty  tax."

A bill to extend the secured debt tax
so as to include securities that cannot
now be registered either under that law
or the mortgage recording tax, passed
both   houses   but   was   vetoed  by   the





Governor.   The   following   other   legisla¬
tion  is   noted  in   the  report:

Taxation of Tangible Personal Property

Two bills were introduced providing
for the taxation of tanglible personal
property of corporations in the district
where located, without any ofifset for
debt. Several hearings were given on
these measures. The Tax Reform As¬
sociation opposed them as being against
the well-established policy of the State,
and as being unconstitutional if applied
only to corporations and not to indi¬
viduals or firms. They were not re¬
ported.

A bill was introduced on behalf of
the State Board of Tax Commissioners
greatly increasing their powers and, in
eflfect, authorizing them to establish a
listing system. This was opposed by the
association before the Senate tax com¬
mittee and in the press. The bill was
not  reported.

Laws Enacted.

Practically all domestic corporations
and some foreign corporations are af¬
fected by an amendment to the stock
transfer tax which provides that "every
association, company or corporation
tliat shall keep or cause to be kept
within the State of New York a place
for the sale, transfer or delivery of its
stock, shall within ten days after this
act shall take effect" (July 1) file in
the office of the State Comptroller a
certificate giving the names of the per¬
sons conducting the business or, if a
corporation, the place of business and
when and where incorporated.

Failure to file such certificate is a
misdemeanor involving ' a penalty of
from one hundred to five hundred dol¬
lars or imprisonment for not more than
six  months,  or  both.

By the same section, every person,
firm, company, association or corpora¬
tion engaged in whole or in part in
making sales or agreements to sell
shares of stock or conducting a stock
brokerage business, must also register,
under a similar penalty.

The stock transfer tax has also been
amended to provide that where shares
are issued without designated monetary
value, the tax shall be at the rate of 2
cents per share.

Excess   Condemnation,   Constitutional
Amendment.

.\ proposed amendment of section 7
of article 1 of the Constitution was
passed for the second time, and will be
voted on hy the people in November.
The amendment makes two additions to
the section. The first provides that
when private property is taken for pub¬
lic use the compensation may be ascer¬
tained "by the Supreme Court with or
without a jury, but not with a referee."
This   is   in   addition   to   the   present   re¬





quirement of a jury or three commis¬
sioners, and is intended to reduce the
cost of such proceedings. The second
change adds the following in regard to
"excess condemnation": "The legisla¬
ture may authorize cities to take more
land and property than is needed for
actual construction in the laying out,
widening, extending or relocating parks,
public places, highways or streets; pro¬
vided, however, that the additional land
and property so authorized to be taken
shall be no more than sufficient to form
suitable building sites abutting on such
park, public place, highway or street.
After so much of the land and property
has been appropriated for such park,
public place, highway or street as
is needed therefor, the remainder may
Ije sold or leased." The Conference of
Mayors of the cities of the State, held
at Binghamton last month adopted res¬
olutions approving this amendment.
The portion referring to excess con¬
demnation has been revised and the
area that can be taken is limited. This
change meets the chief objection to the
former  amendment.

Amendments in general similar to the
above were submitted separately at the
1911 election and carried in the City
of New York, but were defeated by the
adverse vote in other sections of the
State.

Revision  of the  Tax  Law.

The Governor approved an item in¬
troduced in the supply bill in the last
days of the session, and which provides
that he shall appoint a commission of
five "to act with the State Board of Tax
Commissioners in preparing a codifica¬
tion and revision of the tax law" and
other laws relating to taxation. The
Board is authorized to employ "experts
and other employees" to facilitate the
work, $25,000 being appropriated for ex¬
penses.

Buildings  Under  Construction.

The New York City charter has been
amended to provide that "a building in
course of construction, commenced
since the preceding first day of October
and not ready for occupany, shall not
be assessed." (New section 89-a, by Ch.
324). Heretofore buildings unfinished
on assessment day (October 1) were as¬
sessed at an estimate of their value as
partially completed. This was a diffi¬
cult problem for the assessors and the
valuation of necessity was an arbitrary
estimate.

This change in the law will encourage
new buildings, especially where they are
to replace old buildings bringing in a
rental. In a city where values are as high
as in New York, owners of old build¬
ings naturally hesitate when reconstruc¬
tion means not only loss of rental but
a heavy outlay for taxes during rebuild¬
ing. Part of this outlay will now be
saved by the exemption of the building