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Vol. CII.





NEW YORK, DECEMBER 28,  1918





No. 26





Greater Tax Returns From Personal Property

President Jacob A. Cantor Explains Working of Present Law and
Suggests Several Plans for Making It More Effective





JACOB A. CANTOR, president of the Board of
Taxes and Assessments, who pointed out last week
in the Record and Guide the reasons why the 1919
tax rate would not e.xceed the rate for 1918, declared
this situation was brought about through the increased
return from the personal property tax. Further dis-
cussing the new policy of his department with relation
to increased personal taxes and the general taxation
situation, Mr. Cantor said to a Record and Guide repre-
sentative:

"Aside from the tax on real estate this department
concerns itself with three principal sources of revenue,
namely, the bank tax, the tax of personalty of corpora-
tion not included in the corporation Tax Law of the
State, and the assessment of personal property. The
assessed valuation of personal property last year
amounted to $251,000,000. I have no doubt but that
when the 1919 assessment has been completed it will
show an increase of $100,000,000 more and that this,
plus the increased assessment on real estate which can
be held at $100,000,000 will, as I said last week, be suf-
ficient to olĩset increases in the Inĸlget and prevent the
tax rate from advancing above the 1918 fĩgure.

"We have examined altogether more than 25,000 tax-
payers, or more than double the number that have ever
been e.xamined heretofore, and we have been successful
iii a large number of these cases through appeals to their
civic pride. As a result of the protection afîorded
to personal property under our laws, a large per-
centage of consents were obtained even though there
was no liabiHty on the part of the person assessed. It
is my belief that if the bills which we had introduced
last year in the Legislature had become laws the per-
sonal propcrty assessments would have been three or
four times greater at the present time.

"One of the chief diffĩculties has been the secured
debt law which takes from the city personal property
locally assessable. The State tax is $2 per thousand
and we find that in the enforcement of the personal tax
law as it now stands, many millions of dollars are taken
from the city and we have only a small per cent. re-
turned under this form of State taxation.

".A,nother difficulty has been the fact that only a nom-
inal indebtedness was deductable but the actual indebt-
edness was not. To illustrate: A note on a bank accom-
panied by collateral security was deductable on its face
value although the ci.illateral was more than enough to
pay all the note. As a rule these loans were obtained
upon non-taxable securities so tliat these securities
could not figure as an asset.

"There is a popular notion that persons can evade the
payment of personal taxes by reinoving intangible prop-
erty out of the state and I havc heard some of the well-
informed men on the subject make this declaration.
The fact is that securities follow the residence of the





taxpayer and we can assess here a resident no matter
where his personal property is located.

"Another difficulty in the way is the one existing rela-
tive to the bond and mortgage where one can deduct
the amount of the bond notwithstanding the fact that
the real estate is amply sufficient to pay the indebted-
ness, so that we find personal property in a great num-
ber of cases wiped out by these bonds and mortgages.
In fact, it has been stated to me and to others that an.
individual will refuse to pay ofif a mortgage, using it as
the means of avoiding payment of personal taxes. It
is true, of course, that while the present method of
assessing personal property is unscientific and unequit-
able it is the best means we have at our command of
levying it.

"If an income tax could be adopted (although from
what I have learned from talks with members of the
I.egislature that seems an impossibility at this time) it
would provide the only equitable means of levying
tr.xes, but we would be up against the same objection
from up State interests to an income tax that there was
last year to the adoption of the listing system. In
these states where an income tax has taken the place
of personal tax it has worked out very advantageously
and the result has been substantial increases in tax re-
turns. Nevertheless, it is difficult for any man to sug-
gest what rates on incomes should be made in order
to realize sufficient funds to assist in meeting expenses
especially in a municipality of such tremendous size as
New York City.

"But I can say this in favor of the income tax: that
figures from states where this law is now in operation
indicate that it requires for its collection no more than
3 per cent. of the total levy. Analysis of the existing
situation leads me to believe that new sources of rev-
enue may be obtained either from the State income tax
br through the strengthening of the present personal
tax law which may be revised by the enactment of the
law calling for a small tax of not less than one per cent.
r.nd providing also for the elimination of many of the
e.xemptions which practically nullify the law at it now
stands,

"Real estate owners will recall that during the last
scssion of the Legislature we had prepared and intro-
duced these bills, which in our judgment would have
added greatly to revenues collected from the personal
tax law, but the Legislature failed notwithstanding our
cfliort to enact thein into law."

The following is a summary of bills introduced:

1. To amend the Tax Law in relation to taxation of
capital stock of corporations.

.Such amendment is to eliminate from Section 12 of
the Tax Law the provision exempting surplus profits or
reserve .funds   of   a   corporation   "exceeding-  ten   per

_    _   (Cpntinufd m pa^e 747)