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Real estate record and builders' guide: [v. 91, no. 2363]: June 29, 1913

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REAL ESTATE BUILDERS AND NEW YORK, JUNE 28, 1913 pillllllllllllllllllllillillllil 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. liillllilllllilllllllillllllllillllllllllllll , illllllllllillliillilllilllllllll 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