1
REAL. ESTATE
AND
NEW YORK, MARCH 7, 1914
viv}i:
SIGNIFICANCE OF THE NEW TAX THEORIES
How Attempts at Universal Philanthropy Are Increasing Living
Costs — Tenement, Minimum Wage and Single-Tax Legislation.
By ROBERT W. THOMPSON, Jr. *
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HEAVY tax burdens imposed upon
real estate in New York have been
operating most unjustly upon a large
class of investors whose savings are in
this form of investment.
The total bonded debt of the city of
New York was $1,263,693,904,61 on the
31st day of December, 1913. Deducting
from this the corporate stock, notes, as¬
sessment bonds and general fund bonds
held by sinking funds, the net amount of
this debt held by the public is shown as
follows:
Corporate stock, corporate
stock notes and assess¬
ment bonds ...........$898,013,401.88
Special revenue bonds.... 36,225,475,03
During the year 1913 the total revenue
receipts of the city aggregated $203,-
405,943.38, of which sum the taxes col¬
lected during the year aggregated $148,-
556,847.55. These tax collections con¬
sisted of $134,192,431.12 from taxes levied
on lands and buildings; $6,730,062.46 from
special franchise taxes; $3,636,908.53 from
taxes on real estate of corporations, and
$3,997,445.44 from personal property
taxes.
In the report of the Comptroller the
expenditures during 1913 are briefly de¬
scribed as consisting of $7,947,031.96 paid
as direct taxes to the State of New York;
$135,625,710.47 in current administrative
and operating expense. There was $45,-
721,775.67 paid for interest on the city
debt, of which $9,518,093.51 was paid
into the city sinking funds and $3d,203,-
682.16 was paid to outside holders of the
city's securities. The outlays for public
improvements aggregated $103,605,512.21.
The significance of these figures can only
be understood by comparing the annual
budgets for past years.
Under public improvements are in¬
cluded monies paid in meeting the cost
of construction of the Catskill Water
Supply, Rapid Transit construction, dock
improvements, construction of new Mu¬
nicipal Building, acquiring the site for
the new court house in Manhattan, build¬
ing of and extensions to school-houses
and the carrying out of many other im¬
provements to which the city is com¬
mitted.
It will be found that assessed valua¬
tions (of real estate) have risen from
$2,463,135,687 in 1897 to $8,049,859,912 in
1914 in an endeavor to provide funds,
and the alarming increase in taxation is
inevitably bringing property owners face
to face with a crisis.
Effects of Socialistic Government.
The reasons for this increase are not
difficult to discover. We are becoming
more socialistic in our ideas, and vast
sums are required to meet new needs.
Throughout the country generally in our
cities the making, sweeping, lighting and
repairing of streets, roads and bridges,
sewerage systems in all their complex¬
ity, museums, parks, art galleries, libra¬
ries, concert halls, markets, lire-engines,
ferries, public baths, harbors, piers,
wharves, docks, hospitals, dispensaries,
schools and universities, have all been
•Ot Thompson, Warren St Pelgram, o2 Wail St,
brought under collective management.
The municipality is acting socialistically
and communistically to a degree which
few Americans realize. There are also
many evidences of municipal extrava¬
gance and waste, as well as notable in¬
stances of official corruption,
A renewal of agitation in the Legis¬
lature for an increment tax reminds us
that the question of taxation, like every
other economic one, is essentially a ques¬
tion of pure theory and its practical ap¬
plication.
Fair-minded men, recognizing that
sound legislation can never be based on
fallacies, will not subscribe to the new
tax theories without an honest and intel¬
ligent investigation of the situation; but
public opinion will to some extent be
influenced by those who do not perceive
the eflfect of unwise legislation.
Laws must be tested in their actual
operation before they can be called good
ones. It is an unfortunate fact, however,
that the simplest of tax laws may give
rise to complications and inequalities
when it comes to administration, and the
adoption of mistaken tax theories must
inevitably be followed by disastrous ef¬
fects and widespread dissatisfaction. The
expenses of government cannot be es¬
caped, but the burden should be equit¬
ably distributed. That this burden has
been increasing instead of diminishing is
beyond dispute.
What History Teaches.
In the British Isles, where conditions
aflfecting taxation have become acute,
and where the burden placed upon landed
proprietors is more heavily felt than here
in prosperous America, the tendency to
increase taxes and to dispense wealth
under plans of State insurance for wage-
earners and in other ways no less direct
is progressing until many thoughtful
people believe that these symptoms of
socialism and governmental weakness
mark a decline in the growth and power
of the British nation.
The student of history knows that as
civilization has advanced, governments
have been called upon to assume new
and more complex functions; the sphere
of action of the State grows larger and
the ends it serves grow more numerous.
The expenses of government likewise
tend to increase. While Lowe in 1822
estimated the yearly net income of the
British people at £251,000,000, the Gov¬
ernment expenses in 1813 and 1814 aver¬
aged £106,000,000, and this did not in¬
clude the cost of schools, churches and
benevolent institutions, but the figures
quoted represent the sum voluntarily de¬
voted to public purposes by Parliament.
Between 1685 and 1841 the population of
the United Kingdom more than trebled
its numbers, but in the same period of
time the outlay of the state increased
forty-fold. _ It is thus to be observed
that there is a natural law of increase in
legitimate expense.
The adherents of Socialism are eager
to hasten this natural movement, while
the Conservative, who believes in the in¬
stitution of private property and the nor¬
mal rewards of thrift and frugality, views
the logical results of this tendency with
some apprehension and alarm.
Economists generally have come to re¬
gard direct attempts made at socialism
and communism as diseases of the body
social which have affected every highly
civilized nation at certain periods of its
existence. If the body be too weak to
react healthfully and curatively, the evil
is very apt to lead to the decline of all
true freedom and order.
At four periods of the world's history
it will be found that socialistic and com-
inunistic ideas have been most wide¬
spread. (1) Among the ancients at the
time of the decline of Greece; (2) at the
time of the degeneration of the Roman
Republic; (3) among the moderns in the
age of the Reformation, (4) and again in
our own day.
To cite examples from Roman history
of these manifestations, the practice of
supporting the populace at the expense
of great candidates or of the state was
developed to a very great extent. The
masses lived very largely by the sale of
their right of suflfrage to the highest bid¬
der. In the social reforms of the young¬
er Gracchus, besides the limitation of
large land ownership the principal points
were the followina-: The sale of wheat
under market price, but only to the in¬
habitants of Rome itself; the construc¬
tion of great highways in Italy, coloniza¬
tion at the expense of the state, and the
increase of soldiers' pay. The socialistic
plans of Rullus went much further. Had
his agrarian laws been put into execution
he would have confiscated very nearly
the entire country in the interest of the
poor and of their demagogues. Rome
twice experienced social revolutions of
the most frightful character.
Keep One Foot On the Ground.
The demand of modern civilization and
its political philosophy is for social jus¬
tice and equality of opportunity at a time
when the conditions of production ap¬
pear to forbid industrial individualism.
Let us keep one foot on the ground and
remember that the real progressive is
not apt to be the one who favors revolu¬
tion.
The institution of private property and
the constitutional safeguards to indi¬
vidual freedom are not to be abolished,
for they are too sacred to men of Anglo-
Saxon blood to be discarded for the doc¬
trine of community of goods, supple¬
mented with the idea of an organization
of labor, or the centralized superintend-'
ence of all production and consumption,
either by the government already exist¬
ing, or by one to be created anew.
"Universal Philanthropy."
We may well ask whether every in¬
centive which now moves man to indus¬
try and frugality is to disappear and
nothing remain but universal philan¬
thropy. This cannot be so long, as the
growth and prosperity of a nation de¬
pend upon the virility of its people and
the interest of the whole depands upon
the interests of the individual citizen.
In the program of social reform for
wage-earners, the aim has been quite
properly to protect them in the continued
enjoyment of their present standards of
living. To {lo this we havg passed fac-