Columbia University Libraries Digital Collections: The Real Estate Record

Please note: this text may be incomplete. For more information about this OCR, view About OCR text.

R REAL ESTATE B UILDERS §)-wnE)[i 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)