TAXATION: Gift Horses

Tax-hungry New Jersey has a propensity for pulling the teeth of gift horses (see p. 73). One victim was opulent Standard Oil Co.of New Jersey (assets: $2,044,635,000). Hit with a $300,000,000 assessment on its intangible property by Newark in 1935, the company got it reduced to $50,000,000, paid a $2,000,000 personal property tax, promptly moved its books and records to Linden. There town fathers slapped on a $75,000,000 “omitted assessment.” Standard paid a $1,000,000 tax and began looking for still another home.

Two years ago it found one: neat, elm-shaded Flemington (pop.: 2,700), site of the notorious Hauptmann trial. With a consistent assessment policy, a tax rate that seldom fluctuated, little debt, conservative little Flemington, near New Jersey’s western border, looked good to harassed Standard. Into the tiny law office of sedate, greying George K. Large (Princeton ’99; former country judge) went a huge new safe to hold the oil firm’s records of incorporation. Up went the town’s ratables as Standard was assessed $45,000,000 in personal property, paid a $301,500 tax. Down dropped the 1938 tax rate from $3.91 to 67¢ per $100.

Tickled pink were Flemingtonians. Not only was their personal property rate for State and county lowered but their town tax almost disappeared—shrank from $1.15 to 10¢. Santa Claus had come to town out of season. The good word got around. Great Western Sugar Co. (assets: $82,402,000) heard it, blinked at the 67¢ tax rate, pulled up stakes in Plainfield. Into Judge Large’s office, a block from the courthouse, went Great Western’s new safe and papers—and the place got crowded.

Last week things got out of hand in his office. Two more corporate safes were on their way to him. Busy rearranging his office to squeeze them in, he was thinking of moving to new quarters. The newcomers: big United Shoe Machinery Corp. (assets: $124,468,000), formerly of Paterson, and Montana Power Co. (assets: $152,093,000), formerly of Newark. What their arrival would do to the dwindling property tax rate (now 81¢; town 8¢) Flemingtonians could only guess. Maybe the town tax would melt away altogether. Busily turning their new-found tax savings into fresh coats of paint; landscaping, new roofs, etc., the town was rewarded for not being tax greedy. For Flemington’s tax rate was 31¢ below any other New Jersey municipality—and still going down.