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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-
â– ^ 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.)