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Real estate record and builders' guide: [v. 96, no. 2482: Articles]: October 9, 1915

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Af^D ^) BUILDERS B NEW YORK, OCTOBER 9, 1915 niiMiiiiiiiiiiiiMiiiii TAX SYSTEM UNDER INVESTIGATION The Claims of Real Estate Owners Ably Presented at the Hearings Betore a Joint Committee of the State Legislature IIH llllilllllllillllllllllll ■Illlll Ililllllli IIIIIIII lllllllillllllllllllllllllllll llllllllllllllllllllllli 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¬ effectual. 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 printed herewith. 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¬ sion. 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,- 545,523. 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