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May 7, 19lo
RECORD AND GUIDE
969
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BlfSnfeSS Alto ThEUIES Of GEjtRfil I;iTEH.EST .^
PRICE PER YEAR IN ADVANCE EIGHT DOLLARS
Conuaualcatlons should be addressed to
C. W; SWEET
Published EVerp Saturdap
By THE RECORD AND GTJIDE CO.
president, CLINTON W. SWEET Treasurer, P. W. DODGE
Vice-Prea. Se Genl. Mgr.. H. W. DESMOND Secretary, F. T. MILLER
Noa. 11 to 15 East 24th Street, New York Cltr
(Telephone, Madisoa Square, 4430 to 4433.)
"Entered at the Post Office at New York, N. Y., as s(coiid-class matter.-
Copyrighted, 1910, by The Record Se Guide Co.
Vol. LXXXV.
MAY 7, 1910.
No. 2199
THE taxpayers of New York would do well to realize that
during the next ten or fifteen years they will in all
probability be confronted by an agitation looking in the di¬
rection of a new and very disagreeable form of real estate
taxation. In the more progressive industrial communities
all over the world experiments are now being made for the
purpose of appropriating for the state or the municipality
the unearned increment of urban land value. The fight over
the English Budget has advertised the fact that in the Brit¬
ish Isles the state in its search for new sources of taxa¬
tion has finally settled upon the unearned increment of the
land. In Germany fifteen out of the forty-one cities with a
population of over 100,000 have adopted the increment-tax,
and at least forty-one smaller towns have followed suit. In
the great majority of cases this new form of taxation has
been adopted during the past five years; and wherever it
has been adopted it has apparently been successful. The
movement is spreading so rapidly that it is likely to be¬
come a regular form of urban taxation, and the total rev¬
enue derived from it is so considerable that the Imperial
Government is now turning a covetous eye towards the same
source of income. In the two largest cities in which the
tax has been collected for several years, viz., Cologne and
Frankfort, the yield constitutes about flve per cent, of the
total revenue from taxation; but the tax is peculiar in that
it returns a much" larger sum in one year than another.
Cities which adopt the tax usually underestimate the prob¬
able revenue, so as to be on the safe side and use any sur¬
plus for the reduction of the debt. The tendency is al¬
most universal to tax increases in the value of vaeant land
more highly than increases in the value of improved land.
In almost all cases the tax is graduated, and a higher rate
applied to large than to small increases in value. Of course,
attempts are made to evade the tax by a transfer of indi¬
vidual holdings to an association, consisting of the partici¬
pating individuals, and inasmuch as the association is im¬
mortal, the property, so long as it remains in the association,
escapes the increment tax. But this method of evasion is
being met by the assessment of the tax on the property of
associations or corporations, whenever there is any change in
the membership of the associated or incorporated body. The
increasing popularity of the tax is all the more remarkable,
because in Germany the owners of real estate usually exer¬
cise a much more exclusive control over municipal govern¬
ment than they do in this country or in England.
OWNERS of real estate should consider these facts care¬
fully, because there is every reason to believe that in
the course of time an agitation for the adoption of the tax
will be started in the large American cities. Such an agi¬
tation will be the Inevitable result of the spread and popu¬
larization of radical economic ideas; and it will derive
strength from the practical necessity of municipal revenue.
If it were ever adopted in New York its effect upon local
real estate conditions would be revolutionary. New York
probably more than any city in the world has heen the para¬
dise of the real estate speculator and operator, of the man
who buys real estate not for the purpose of imppoving it
but for the purpose of appropriating a probable increase in
value. There are thousands of men in this city whose whole
livelihood and the turn-over of their capital depend upon
their ability to guess what classes of real estate will be worth
in a few years more than they are now selling for. An in¬
crement-tax, whatever its ultimate effect upon real estate
values and the local ecouomic situation, would make real
estate speculation unprofitable, and would do away with the
demand for real property derived from this source. On the
other hand, it would probably be beneficial to the owners ot
real estate in those parts of the city in which values have
any tendency to be stationary. At the present time the
owner of a parcel of reai estate that does not increase in
price is obliged to pay a constantly augmenting rate of tax¬
ation, which has a tendency actually to diminish the capital
value of his property. Again, the owner of a piece of real
estate that is rapidly increasing in value scarcely feels his
larger taxes. No doubt they tend to diminish the value of
his property by just so much, but the diminution is only
a small percentage of the actual increase. The increment-
tax, of course, seeks to shift the burden of any increase in
taxation from dead to live real estate. The real estate tax
tends to become stationary and the city comes to depend for
its increase in ^e^enue upon the appropriation of those prof¬
its in improving sections which now go chiefly to real estate
speculators. The tax, consequently, has many arguments in
its favor, and the owners of real eslate, if they wish to
avoid it, may as well prepare for a hard fight. It consti¬
tutes the least objectionable application of the principles of
the single tax on land that as yet has been devised; and
New York City is populated not by land-owners but by ten¬
ants. The taxpayers should not forget that not so long ago
Henry George was almost elected Mayor of the city.
ONE cannot help but admire the quiet and ingenious per¬
sistence with which the McAdoo Tunnel system has
been gradually made an important factor in the local tran¬
sit situation of Manhattan. When the plans of the company
were first announced, its terminal was to be situated at Hud¬
son and Christopher streets. The next step was to propose an
extension up Sixth Avenue to 33d Street, and this extension
looked reasonable, because it would he very beneficial to the
department stores and theatres in Manhattan, while at the
same time it would not develop any considerable local traffic.
Then came the proposal to extend the Sixth Avenue line to
42d Street and east to the Grand Central Station. This
again looked reasonable, because it would provide a very
much improved connection between the New Jersey suburbs
and those north of the Harlem. When this franchise was
granted very little attention was called to the fact that the
extension would now develop a large amount of purely local
traffic, because it would provide Grand Central passengers
with the most convenient existing method of reaching the
rapidly growing business district, centering around Greeley
Square, But the amount of local traffic developed by this
extension will he small compared to the value of the Man¬
hattan franchise, for which application will next be made.
There is every indication that the Tunnel Company will soon
seek to connect its Cortlandt Street Terminal with its Sixth
Aveuue line. That such a connection would he extremely
useful there can be no doubt. Its peculiar value would con¬
sist of the convenience it would be to the old wholesale busi¬
ness district west of Broadway, a district which has not been
benefited by any of the recent improvements in the means
of communication. But when the proposal for such an ex¬
tension is actually made it must be remembered that the new
line would develop more local traffic in Manhattan than it
would connecting suburban traffic. It would constitute a
local transit line of almost unique value because it would
run through a congested business section, and would pick up
an unusually large proportion of short-distance fares. More¬
over, it would compete for such fares with the lower Seventh
Avenue subway (if that subway is ever built) and would
diminish the vain© thereof.
IN view of the considerations mentioned above, the Public
Service Commission should not grant a franchise for the
proposed connecting tunnel except under certain conditions.
In the first place, the contract should recognize the probabil¬
ity that a large amount of profitable local traffic should be
developed and should guarantee that the city obtained its
share of these receipts. In the second place, such a line
should not be built until after the Seventh Avenue subway
has obtained a fair start, A Seventh Avenue subway will
constitute a far more useful addition to the means of com¬
munication of the whole city than would a line connecting
the Cortlandt Street McAdoo Terminal with the northern
extension of the same system; and if there is any chance of
obtaining a lower West Side subway along Seventh Avenue
the proposed connecting line should not be allowed to inters