REAL   ESTATE







BUILDERS





AND







NEW YORK, JUNE 28, 1913





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I          OBVIOUS NEXT STEPS FOR TAXPAYERS





Real  Estate  as  Ncav  York's  Principal  Source  of Revenue—Modernize  Metho(i  of
Selecting Public Servants—Why a New Charter is Needed—Home Rule Necessary.





--------Article IV, Part II.--------

By HENRY BRUERE, Director, Bureau of Municipal Research.

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E.-KCH taxpayers' pronunciamento on
civic matters combines a demand for
economy Avith a complaint against, tlie
growing- taxation of real estate. Com¬
plaints and protests have yet been un¬
availing. Taxes on land have increased
from $67,927,925 in 1903, to $144,658,762,
in 1912. Land taxes are New York
City's chief revenue reliance and doubt¬
less they will continue so. For the past
ten years an average of 74 per cent, of
the budget total has been levied against
real estate. As long as the cost of gov¬
ernment continues to increase, it is safe
to assume that at least there will be no
important reduction in the total ta.x col¬
lected from real estate.
The Income Tax a German Alternative.

In contrast with New York, the bud¬
gets of the great German cities show
that most of their revenues comes from
sources other than land taxation. In
Hamburg, for example, in 1910, only
$6,250,000 (Mess. 25,000,000) of the $19,-
250,000 (Mess. 77,000,000) total r'evenucs
were collected from the land ta-x. In
Frankfurt, in 1911, $1,250,000 (Mess. 5.-
000,000) out of a total of $6,250,000
(Mess. 25,000,000) were collected from
land  ta.xes.

There are few taxpayers or rentpay¬
ers who would prefer the substitution of
the income tax for present land taxa¬
tion as a means of supplying- funds for
municipal purposes. But income taxa¬
tion is a chief source of revenue of the
great German cities. Citing Frankfurt
and Hamburg again, in 1910, 58 per cent,
of the total revenue in the first city,
and in 1911, 60 per cent, in the second,
was  collected  from  incomes.

Income taxation is a logical means of
obtaining funds to defray the cost of
city government, if the principle govern¬
ing taxation is the ability of taxpayers
to pay. But for i-nunicipal purposes,
taxation of land makes the stronger
equitable appeal, because land values
not onlj' reflect the benefit of municipal
.services, but are themselves the pecu¬
liar product of community growth. The
average non-land owning citizen of New
York will prefer to continue paying
:axes in the disguised form of rent to
the more direct method of the income
tax.

German Cities Make Money as Well as
Spend It.
'ponderance of land taxation in the
mt     :ipal economy is a  result  of a  city
b"=   .ess   policy   which   taxpayers   them¬
's have willed.    Revenue statements

I          rman cities often show a surplus
der. d from the operation of public
utilities. German cities are to this ex-
tf       '^n  the  business  of  inaking  money.

II   ,s a commonplace that taxpayers in
Gerrnany are the advocates of municipal





Non-partisan Government

Until taxpayers Insist ihat the
method of selecting the men who
are to administer public business Is
modernized, the efficiency program
Is likely to suffer periodic political
obstruction. Good administration is
more likely to be obtained from a
government directly responsible to
the people than from a government
responsible to political bosses, self-
constituted committees, however
well-intentioned, or to one or another
dominating or Influential personality.
Direct and non-partisan primaries
and non-partisan elections will help
mightily in modernizing New York
City's government.

HENRV BRUERE.





ownership of their utilities, because they
have always been accustomed to a city
government competent to organize and
operate them. New York's taxpayers
very largely still regard any extension
of public operation of public utilities as
fraught  with   danger.

Assui-ning that there had existed the
efficient, business-like government that
New York is now striving for, it would
long ago have been regarded mere con-
mon sense for the municipality to de¬
rive whatever legitimate profit it could
from public utility services, and not
merely take over, as in the case of the
Staten Island ferry, only those utilities
which   are   commercially   forlorn   hopes.

When perpetual franchises are forever
revoked, and the city acquires control
of its natural common services, tax¬
payers will doubtless be prepared to
compel their efficient operation by the
city and for the city. For the time be¬
ing, however, reduction in taxation by
means of public service revenues is out
of   the   question.

Lesser Alternatives.

Tlie large revenue alternatives of the
income tax and public ownership profits
being out of the question, there are left
lesser ones which merit attention. Ir¬
respective of the propriety of land taxa¬
tion it is good public policy to develop
other proper sources of revenue. Two
years ago a revenue commission was ap¬
pointed to inquire into possible new
sources of revenue. They made their
report in January, 1913. The commis¬
sion   suggested   soine   new   sources,   but





the bulk of their report has to do with
further development of old sources.
Some taxpayers protested against one
of the commission's recommendations,
that for a land value increment tax, but
no organized taxpayers support has been
given to other recommendations con¬
cerning which there is little chance of
controversy.

Revenue Commission's Suggestions.

In the si-\ months that have passed
since the commission reported, action
has been taken on only one recommen¬
dation. The Legislature has authorized
the establishment of a fund from the
sale of real estate owned by the city,
!)ut no longer required to be used in
purchasing other real estate. There is
some question whether it would ever
1)6 wise for the city to give up land once
acquired, provided it made it its busi¬
ness to put all vacant city land to some
profitable   use.

At present, land can be purchased by
the city only for public use and used
only for public purposes (except dock
lands and lands under water and prop¬
erty awaiting use for the purpose for
which   the  city  acquired  it).

Recommendations not yet acted upon
and which taxpayers will hardly op¬
pose,  are  the  following:

1.  Annual payment for the privilege of
erecting and maintaining billboards and
signs on private property.

The very reasonable proposal is made
that the square footage of bill boards,
sign boards and electric signs be taxed
at the rate of 2 per cent, per annum on
an assessed valuation of 1 per cent, of
the front foot value of the land occu¬
pied. This tax will either bring a sub¬
stantial revenue, or discourage the pres¬
ent plague of offensive, uncontrolled
billboard  advertising.

2.  Adequate payment for the use of
vault spaces under sidewalks. An an¬
nual charge, as made in Chicago and
demanded by comi-non sense, is proposed
instead of the present ridiculously low
once-for-all  payment.

3.  Ta-xing franchises irrespective of
other payments. Sec. 48 of the tax law
which the commission proposes should
be repealed, according to the report,
"has whittled away a source of income
to which the city is justly entitled." It
permits corporations to deduct from the
levy made upon their franchises, pay¬
ments  made  under franchise  provisions.

4.  Sale of privileges at public auction.
.\ practice that not only increases rev¬
enue but interferes with political favor¬
itism in disposing of park concessions
and  other privilege  rights.

5.  .\n extended use of water meters
-\ business-like method of collecting wa¬
ter   revenues   and   the   only    means     of