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Real estate record and builders' guide: [v. 99, no. 2562: Articles]: April 21, 1917

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REAL ESTATE AND CCopyright, 1917, by The Record and Guide Co.) NEW YORK, APRIL 21, 1917 LEGISLATION TO EQUALIZE STATE TAXATION Excerpts from Report of Bureau of Municipal Investi¬ gation and Statistics of the Department of Finance 'T'WO bills, each having for its princi- ■^ pal purpose the imposition of a re¬ cording tax on all instruments that may¬ be recorded under the laws of this State, other than those now taxed un¬ der the provisions of Article 11, relating to the ta.xation of mortgages, have been introduced into the Legislature by Sena¬ tor Emerson, at the request of the State Tax Commission. These bills, the first introduced under date of January 22, 1917, and known as Introductory No. 152, and the second, introduced on March 14, 1917, and known as Intro¬ ductory No. 948, are now before the Sen¬ ate Committee on Taxation and Re- tienchment for consideration and report. The first bill, Introductory No. 152, imposes, amon.g other things, a tax of twenty-five cents on each and every con¬ veyance, other than deeds and leases, recorded on and after July 1, 1917, and a similar tax of twenty-five cents on each $100 or fraction thereof of the actual consideration, after deducting the value of encumbrances, expressed in deeds and leases. The bill also makes failure to express the actual consideration in every conveyance a misdemeanor. This bill was introduced into the Legislature as a preliminary measure. Certain features contained in it, particu¬ larly the provision requiring the expres¬ sion of the actual consideration in every conveyance, were known to be objec¬ tionable to certain real estate interests. It was drafted chiefly to serve as the basis for the framing of a new bill which would meet substantially the objections of the interests referred to. No offers of compromise, however, were made by these real estate interests; therefore, there was nothing left for the Tax Commission to do but to proceed with its plans. It accordingly obtained the introduction into the Legislature of a second bill, known as Senate Intro¬ ductory No. 948, which seeks to impose a tax of twenty-five cents on all instru¬ ments offered for recording, except deeds and leases, on which is imposed a tax of ten cents per $100 or fraction thereof of the equity conveyed, that is, the actual consideration less the value of encum¬ brances. The bill further provides that where the actual consideration is not ex¬ pressed in the conveyance it must be contained in a sworn statement to be filed with the recording officer at the time such conveyance is offered for record. Both bills contained similar provisions respecting the distribution of taxes col¬ lected, viz.: that after providing for cer¬ tain expenses of collection, one-half of the revenue shall be paid to the State and the remaining one-half to the county. Subdivision 8 of proposed section 247 provides that where the consideration expressed in the conveyance is nominal the amount of the actual consideration or value expressed in the sworn state¬ ment filed in accordance with the pro¬ visions of this bill shall be accessible to the State Tax Cominission, or its duly authorized representatives in the per¬ formance of its duties as prescribed by law. It is not always easy to obtain reliable information concerning- the consideration inypjvgd ip the transfer of real property. By R. B. McINTYRE, Supervising Statistician. This element is essential in computations seeking to determine the average rates at which real property is assessed. The State Tax Commission requires for a proper exercise of at least two important functions performed by it reliable data concerning the varying rates at which real property is assessed in the several counties and other subdivisions of gov¬ ernment in this State, viz.: (1) the prepa¬ ration of the tentative equalization table on the basis of which the direct State Tax is apportioned, and (2) the equaliza¬ tion of special franchise assessments. Soon after the present Ta.x Commis¬ sion took office in 1915 an examination of the records and files of the State Tax Department was made. Briefly reviewed, it was found that although the law re¬ quired the State Board of Equalization, of which the State Tax Commissioners were members, to prepare and adopt an¬ nually an equalization table on the basis of which the Direct State Tax shall be apportioned among the several counties of the State, no systematic scheme or plan was in operation for procuring re¬ liable information relating to the aver¬ age rate at which real property was as¬ sessed in the several counties of the State. Not only was the data found to be insufficient in volume to afford a proper basis on which to predicate a statement of average rate at which real property was assessed in the several counties, but also much of the data on file was, on examination, determined to be useless for the purposes of equaliza¬ tion. Data Compiled. In order to assist the new State Tax Commission to obtain reliable informa¬ tion concerning average rates of assess- inent in the several counties of the State, this Bureau undertook in 1915 to com¬ pile data relating to the average rates of assessment then obtaining in the six counties having the largest assessed valuations. This work, consisting chiefly of rates of assessments determined by a comparison of the 1914 assessed valua¬ tions with the appraisals of property mortgaged to savings banks and insur¬ ance companies, was completed in co¬ operation with the State Tax Commis¬ sion, and served a very useful purpose in connection with the preparation of the 1915 equalization table. The enactment of the Federal Emer¬ gency War Tax Act in the last days of 1914 created a new source from which reliable data useful for equalization pur¬ poses could be compiled. It enabled the Commission to obtain assessment data based on a comparison of current selling prices with assessed valuations. The practical effect of the act was to require all conveyances to bear revenue stamps at the rate of fifty cents for each $500 or fractional part of the equity conveyed. The amount of the equity conveyed was easily approximated from the value of the stamps affi-xed to the conveyance, and by adding to the sum so obtained the amount of the mort.gages and other encumbrances outstanding against the subject matter of the sale, an amount representing approximately the value for which the property was sold was thus obtained. The Emergency War Tax Act was re¬ pealed in the early part of September, 1916. Therefore, after that date, except in the case of foreclosure, executor's or forced sales, there will be left no efficient and inexpensive way to determine the current value of other property sold, since the affixing of revenue stamps in¬ dicative of the value of the equity con¬ veyed will not be required. Recourse will have to be had to the records of insurance companies and sav¬ ings banks which make mortgage loans on real property. It is doubtful, even if it were possible to obtain this data in sufficient volume, whether the results may be considered more than relatively indicative of actual conditions with re¬ spect to the assessment of real property. Certainly, data compiled from a single source cannot for the ourposes of equal¬ ization be considered conclusive. Therefore, unless some new source is provided to renlace that which was abol¬ ished by the repeal of the War Tax Act, aflfording a reasonable cost in time and money, a sufficient supply of assessment data necessary to enable the State Tax Commission to perform efficiently its statutory functions relating to the equal¬ ization of assessiTients, past experience confirms the belief that the administra¬ tion of this reauirement of the Tax Law will be seriously hampered. Last year this Bureau siibmitted for the guidance of the State Tax Commis¬ sion and the State Board of Equaliza¬ tion data showing the average rates of assessment on real property in nine large counties. This data was based on a com¬ parison of sales prices for the year 1915 with current assessed valuations. These selling prices were computed from the value of the stamps affi.xed to the con¬ veyance, together with the value of out¬ standing encumbrances. This year advantage is being taken of such conveyances bearing revenue stamps as were filed before the repeal of the Emergency War Tax Act. This will cover sales records for the first ei.ght months of the year 1916. It is thought that the data gathered from this source will not be sufticient for the purpose of equalization, therefore supplementary data based on a comparison of appraised values of properties mortgaged to sav¬ ings banks with current (1916) assessed valuations are also being compiled. When this work is completed the com¬ pilation of assessment data based on the coinparison of current selling prices, computed on the basis of the value of revenue stamps affixed to conveyances, and assessed valuations will have to be discontinued for the lack of material. Much good work has been accom¬ plished by the present State Tax Com¬ mission toward obtaining a more equita¬ ble equalization table for the apportion¬ ment of the Direct State Tax. There seems to be little question in the minds of those best informed on .State finances that, in the absence of radical t:.x meas¬ ures producing substantial additional revenues, there will be need for the levy¬ ing of a direct state tax for several years to come. It is of the utmost importance to the taxpavers of the City of New York that the Direct State Tax be equitably appor¬ tioned. The first essential for an equita- (Continued on page 549.)