chise assessments made for 1900, the first year the law was in force, there still remains undisposed of the assessments against twenty-two corporations, firms or individuals, representing aggregate assessments of $19,962,911. Of the assessments made in 1901, the second year of the Special Franchise Tax Law, assessments aggregating $107,876,317 still are pending and the taxes due upon this amount remain unpaid. For the third and for the subsequent years of the Special Franchise Tax Law, the records show a steadily increasing number of assessments being contested in the courts, with the total of unpaid taxes due upon these assessments constantly increasing. The members of this Board are deeply impressed with the necessity for the enactment of such changes in the law as are necessary to end the scandal which the above figures describe, and we respectfully call to the attention of the Legislature the recommendations upon this subject made in the annual report of this Board for the year 1906. The Special Franchise assessments for the year 1907, as made by this Board, aggregated $555,308,797, an increase of $127,357,338 over 1906. These comprised 6,395 separate assessments against 1,830 corporations, firms and individuals, certified. to 971 tax districts. Eigthy per cent. of these values are found in the city of New York. MORTGAGE TAX EXAMINERS. The State Board of Tax Commissioners is charged by statute with the duty of supervising the administration of the Mortgage Tax Law, and adequate facilities should be provided therefor. During the year ending July 1, 1906, while the original mortgage tax act of 1905 was in force, 122,828 mortgages and mortgage statements were filed with the various recording officers in the sixty-one counties of the State. From July 1, 1906, to July 1, 1907, there were 153,815 mortgages and mortgage statements filed. From July 1, 1907, to January 1, 1908, the number filed is estimated at 75,000, making a total of 351,643 mortgages recorded and mortgage tax statements filed up to that date. Under the Mortgage Tax Law recording officers are required to collect the taxes imposed by the statute and to account therefor. Whether or not they are properly discharging their duties is a matter which can only be determined by a thorough examination and checking-up of their work. Up to the present time no such examination has been made of this large number of mortgages owing to the lack of a proper force to do the work. The Mortgage Tax Law is yielding an annual revenue of approximately $5,000,000, one-half of which goes into the State treasury while the other half is distributed locally. This large sum is collected by the recording officers in the various counties without any adequate supervision or examination either of their books or records by any one representing the State, which has such great financial interest in the proper execution of the law. Such a condition would not be permitted to exist in private business affairs. Without an adequate force to make the examination indicated, it is impossible to tell whether or not all of the taxes are being collected; whether or not the computations are being correctly made, or whether or not a proper accounting is made of the monies received. To acquire this knowledge means the examination of the record of every mortgage and statement in connection with the tax register which is required to be kept by the recording officers, to see whether or not the computation of the tax has been properly made, whether or not the total amounts collected for each month are correct, and a determination of whether or not the proper amount is being turned over to the county treasurer or city chamberlain. This Board has sufficient knowledge of the situation to know that mistakes constantly occur; that mortgages properly taxable have been recorded without the payment of the tax; that insufficient sums have been collected in some instances, that erroneous computations are frequent and that occasional mistakes occur in accounting for the monies collected. We believe the importance of the Mortgage Tax Law demands adequate supervision and this cannot be accomplished unless the Legislature provides proper assistance for making the necessary examinations. STATISTICIAN. The time is at hand when the field of statistical information should be broadened, and matters of great importance which will form the ground-work and basis of future legislation, as affects the operation and future effect of revenue laws should be inquired into and made available for such purpose. With the State revenues provided for from indirect sources, the great problem of the future is that of local municipal taxation. The indebtedness of many of the cities of our State has practically reached the constitutional limit, and this without adequate provision for liquidation and payment. To pave the way for future improvements and for the payment of this indebtedness, the Legislature must, in the near future, make provision, and this can only be done by means of taxation. The time has come when the Legislature must deal with this subject, and must deal with the problem of the separation of local and State revenue. To enable it to act intelligently, the Legislature should be possessed of knowledge respecting the amount and extent of local revenues raised by taxation, their application, and the extent and character of the indebtedness of the several municipalities. In this connection we direct the attention of the Legislature to the recommendation made by the Special Tax Commission of this State, submitted in January, 1907, and found on page 39 of their report, in which they say: * * "The members of this Commission regret that a policy pursued in some of our sister states of collecting and preserving statistical information relative to the operation of revenue laws, both state and local, has not been in force in the State of New York. -*We therefore rccommend, for the guidance of the Legislature, the tabulation and preservation of suitable statistics, both state and local, and making it one of the duties of the State Board of Tax Commissioners to collect and publish such information, and making it the duty of the local officials to cause such returns to be made to the State Board." * * The value of statistics depends largely upon their accuracy, and the greatest degree of accuracy can only be obtained by plac ing the responsibility for compilation in the hands of a person competent and qualified to do the work. We recommend that the Legislature authorize the employment of a competent statistician for this Department, to enable this Board to undertake the work of gathering statistics along the lines indicated, which should be made a part of its report. REAL PROPERTY ASSESSMENTS. As defined by section 2 of the Tax Law, there are 977 tax districts in the State. By section 172 of the Tax Law it is made the duty of this Board to "officially visit every county in the State at least once in two years, and inquire into the methods of assessment and taxation, and ascertain whether the assessors faithfully discharge their duties and particularly as to their compliance with this act (the Tax Law) requiring the assessment of all property not exempt from taxation at its full value." As a result of our inquiry and investigation under this section, we find that in only a comparatively small number of tax districts are the assessors honestly endeavoring to comply with the statute by assessing real property at its full value, and that in much the greater number of such districts there is not even a respectable pretense of complying with this plain statutory requirement on the part of assessors. The result is that we find varying bases of assessment through the State, ranging as low as 25 per cent. of the actual value of the property assessed. The principal cause of this clear disregard and flagrant violation of the statute in making assessments, as repeatedly explained to us by local assessors and supervisors, is the fear of its effect in raising the valuation of their city or town on equalization by the board of supervisors. We are repeatedly told by these officials that an increased assessment, or an increase in the ratio of assessment to the full value of the property assessed, means to their tax district a corresponding increase in equalized value, and, as a consequence, an increase in the amount of state and county taxes which it has to pay towards which each individual taxpayer whose assessment is increased is compelled to contribute. As a result of these conditions, local assessors seck to avoid, and do not obey, the mandate of the statute requiring them to assess real property at its full value, and public sentiment in their locality generally upholds them in taking this position. Boards of supervisors are required, by section 50 of the Tax Law, to examine the assessment rolls of the several tax districts of their respective counties and equalize the assessed values among them, to the end that each tax district shall contribute its just share of taxes for state and county purposes, but a board of supervisors is not permitted to change the aggregate valuations of all the tax districts from the aggregate valuation thereof as (with certain exceptions not necessary to mention) made by the assessors. Where, therefore, in a given tax district the ratio of assessment to the full value of the property assessed is increased by the assessors, thereby increasing the aggregate assessed valuation of that tax district, such increase should rightfully be equalized upon all the tax districts of the county, assuming that there has been no change in the ratio of assessments in the other tax districts and that previous equalization has been just. It is the failure to make the proper equalization of this increased assessment (occasioned by increasing the assessment ratio to comply with the statute requiring assessments to be made at full value, but on the contrary compelling the tax district where this increase has occurred to take the whole, or an unjust proportion, of such increase), that gives rise to the evasion of the statute by local assessors. Equalization by boards of supervisors in the respective counties is not made in accordance with any uniform, fixed rule or method, but is usually made by the addition or deduction of gross amounts. With rare exceptions, boards of supervisors do not undertake in a systematic manner to determine and arrive at the ratio of full value at which property is being assessed in the several tax districts of the county from the ratios thus established work out an equalization among the several tax districts which would be mathematically accurate and just. Repeated complaints are made to this Board that the question of equalization is a matter of give and take as a result of combinations formed and frequently of political influence, disregarding the justice and equity thereof as among all the tax districts affected. |