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NEW YORK, OCTOBER 9, 1915
TAX SYSTEM UNDER INVESTIGATION
The Claims of Real Estate Owners Ably Presented at the
Hearings Betore a Joint Committee of the State Legislature
NO denial of the propositions that
realty is overtaxed and that New
York City is being made to bear more
than its fair share of the State tax was
heard at the hearings before the Joint
Legislative Committee on Taxation in
the Assembly hall of the Merchants'
Association this week.
All the evils of which property own¬
ers have complained in recent years were
directly or indirectly admitted to exist
by Mayor Mitchel, Comptroller Pren¬
dergast and State Ta.x Commissioner
Saxe at the outset of the investigation,
and were confirmed with statistics and
personal testimony by a considerable
number of prominent representatives of
realty interests during the remainder of
the week. The need of additional rev¬
enue was abundantly demonstrated.
Possible Sources of New Revenue.
Early in the proceedings the discus¬
sions turned to discovering ways and
means of obtaining new revenue, and
Commissioner Saxe recommended low,
fiat rates on specified personal property,
and cited the bank stock law of one per
cent, as an example of scientific taxa¬
tion. He also approved of license and
occupation taxes and improved corpora¬
tion taxes, but in his opinion the people
are not ready for an income tax.
Comptroller Prendergast and a num¬
ber of other witnesses spoke in favor of
the income tax as a means of raising at
least some of the additional revenue that
must be raised. All agreed that the
present personal property tax law is in¬
Real Estate Interests Testify.
A very strong representation was
made before the committee by real es¬
tate interests, under the leadership of
Secretary Helms of the Advisory Coun¬
cil. Advance questions had been re¬
ceived from the Legislative Committee
(see Record and Guide, Sept. 25) and
qualified persons had been selected to
answer them. The result of careful
preparation and selection was a most
effective series of testimonies in behalf
of real property interests.
Those who testified were Birch Helms,
Allan Robinson, Alfred Marling, Elmer
A. Coulter (representing the Vincent
Astor properties), C. A. Cone (of the
Douglas Robinson, Charles S. Brown
Co.), Hon. Cyrus C. Miller, J. Clarence
Davies, Robert E. Simon, Edward Mc¬
Dougall, Cornelius Kolff, Henry Bloch,
Max Morgenthau, VVilliam N, Greeve,
and Stewart Browne.
Mr. Helms was asked for the facts as
to the burden of taxation borne by real
estate, as compared with other forms of
property, and how this comparative bur¬
den compares with taxation in the past.
In answer Mr. Helms placed before each
member of the committee a number of
tables of statistics showing the tax
levies on real and personal property in
this city and State, and the tax rates
in the present and past, and read orally
into the record the principal items. The
committee thus obtained actual figures
to work on. Some of the tables are
Real estate in this city is valued
at $7,517,594,300. Real estate out¬
side of the city is valued at $3,628,-
676,712. Here in the city we are
valued up to the limit, 100 per cent.
In the rest of the State values are
placed at from 20 to 60 per cent,
of the real values.
If valuations were right we
would not be paying 68 per cent,
of the tax. Valuations should be
made uniform throughout the
State, and the first step in this
direction is to place local asses¬
sors under the State Tax Commis¬
The Comptroller's estimate of
the budgets of the next four years
is as follows: For 1916, $215,173,-
141; for 1917, $216,735,996; for
1918, $224,392,561; for 1919, $239,-
The testimony adduced showed that
since 1898 personal estate in New York
City had decreased from $511,000,000 to
$340,000,000 in 1914, while real estate as¬
sessments had increased from $1,800,000,-
000 to $8,000,000,000. A similar compari¬
son was made for the amount of tax levy
and collections upon real estate and per¬
sonal property in New York City.
In 1899 the amount of tax levy on real
estate was $72,000,000, of which $71,600,-
000 was collected; in the same year the
amount of ta.x levy on personal property
was $13,000,000, while only $8,000,000 was
collected. In 1913 the tax levy upon real
estate had increased to $145,000,000, of
which $122,000,000 was collected, while
personal estate had decreased lo $5,000,-
000, of which $3,700,000 was collected.
A thorough comparison of the tax
rates in the several boroughs was pre¬
sented to show that from 1898 there had
been a gradual increase both in State
and city tax rates, while the principal
other sources of revenue in the city, the
ta.x on bank shares, was quoted, which
increased from $1,000,000 to $3,000,000,
most of which was collected; or, in other
words, the city obtained as much from
its tax on bank shares as from the tax
upon personal property in the year 1914.
Similar figures were presented to show
that the assessed value of personal prop¬
erty had decreased in New York State
since 1898 from $548,000,000 to $424,000,-
000 in 1914, while real estate had in¬
creased in assessed value from $4,000,-
000,000 to $11,000,000,000 in 1914.
In this connection it is interesting to
observe that the real estate assessment
in the State has increased from 1898 to
1915 by $6,790,000,000, of which $6,252,-
000,000 is accredited to increase in New
York City, leaving but practically $500,-
000,000 increase up-State.
Thus real estate assessments in New
York City have increased in the ratio of
12:1, compared to up-State assessments.
Of the total direct State tax levied in all
but si.x years since 1898, real estate paid
approximately 9/10 of the tax and per¬
sonal estate 1/10. Of this proportion
New York City paid On an average of
about 68 per cent, of the entire tax. It
was interesting also to note that the.
Secured Debts Ta.x since it has been in
operation has yielded only about $3,407,-
662, while all other indirect taxes re¬
ceived by this State, since 1898, amount¬
ed to only $442,726,748, a large propor¬
tion of which must come from real estate.
Proportion of Income for Taxes.
Eigures were presented to show that
in 1895 about 20 per cent, of the net in¬
come of propertv was paid for taxes; in
1905 about 31 per cent.; in 1914, about 35
per cent., upwards. A great many cases
were cited to prove that a deficit accrued
from certain properties, while a number
of cases were given where over 50 per
cent, of the income went to taxes.
The real estate situation in New York
was briefly described and was compared
to the period prior to the French Revo¬
lution when a large proportion of the
income of small property owners was
contributed for taxes. With an annual
direct tax of $24,000,000, it was proved
that the capital value of real estate would
depreciate 4 per cent, of its present value,
while with tenants now paying all they
possibly can, it would be impossible to
shift the ta.x burden. This would impair
the borrowing capacity and securities of
the city and affect $6,000,000,000 worth
of mortgages held principally by life in¬
surance companies, savings banks, etc.
It was generally admitted that the ef¬
fect of the Mortgage Recording Tax had
been beneficial but that it might be wise
to have it amended so that the exemp¬
tion apply only for a limited period of
years. Many defects in our present sys¬
tem of taxation were emphasized and the
general consensus of opinion seemed to
lavor an income ta.x.
Statement from the Real Estate Board.
The Legislation and Taxation Com¬
mittee of the Real Estate Board of New
York submitted on Wednesday to the
Joint Legislative Committee on Taxation
of which Senator Mills is chairman, a
statement answering in detail the nine¬
teen questions on taxation and real es¬
tate conditions sent out by the State
committee. The board's answers were
compiled by the committee of wiiich
Robert E. Dowling is chairman and
Richard O. Chittick, executive secretary.
The Real Estate Board was represent¬
ed at the hearing on Thursday by Mr.
Dowling and by Laurence M. D. Mc¬
Guire, president, who presented a sup¬
plemental statement, which was listened
to with marked attention.
The filed statement includes nearly a
score of tables of statistics supporting
the arguments of the board.
The most important suggestions made
were: for greater equality in assessments
as between New York City and other
parts of tlie State; some rational basis of
personal property taxation, requiring the
amendment of the general property tax
law so as to secure a low rate on per¬
sonalty but rigid enforcement; a State