Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 85, no. 2199: May 7, 1910

Text version:

May 7, 19lo RECORD AND GUIDE 969 SSTABOSHED^MART'HSl'^^iaea. .te^TEBTDf^LEsTAre.SuiLDIj/G^crilTECTURE.KoUSQlOlDDEGCH^ATlMl. BlfSnfeSS Alto ThEUIES Of GEjtRfil I;iTEH.EST .^ PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Conuaualcatlons should be addressed to C. W; SWEET Published EVerp Saturdap By THE RECORD AND GTJIDE CO. president, CLINTON W. SWEET Treasurer, P. W. DODGE Vice-Prea. Se Genl. Mgr.. H. W. DESMOND Secretary, F. T. MILLER Noa. 11 to 15 East 24th Street, New York Cltr (Telephone, Madisoa Square, 4430 to 4433.) "Entered at the Post Office at New York, N. Y., as s(coiid-class matter.- Copyrighted, 1910, by The Record Se Guide Co. Vol. LXXXV. MAY 7, 1910. No. 2199 THE taxpayers of New York would do well to realize that during the next ten or fifteen years they will in all probability be confronted by an agitation looking in the di¬ rection of a new and very disagreeable form of real estate taxation. In the more progressive industrial communities all over the world experiments are now being made for the purpose of appropriating for the state or the municipality the unearned increment of urban land value. The fight over the English Budget has advertised the fact that in the Brit¬ ish Isles the state in its search for new sources of taxa¬ tion has finally settled upon the unearned increment of the land. In Germany fifteen out of the forty-one cities with a population of over 100,000 have adopted the increment-tax, and at least forty-one smaller towns have followed suit. In the great majority of cases this new form of taxation has been adopted during the past five years; and wherever it has been adopted it has apparently been successful. The movement is spreading so rapidly that it is likely to be¬ come a regular form of urban taxation, and the total rev¬ enue derived from it is so considerable that the Imperial Government is now turning a covetous eye towards the same source of income. In the two largest cities in which the tax has been collected for several years, viz., Cologne and Frankfort, the yield constitutes about flve per cent, of the total revenue from taxation; but the tax is peculiar in that it returns a much" larger sum in one year than another. Cities which adopt the tax usually underestimate the prob¬ able revenue, so as to be on the safe side and use any sur¬ plus for the reduction of the debt. The tendency is al¬ most universal to tax increases in the value of vaeant land more highly than increases in the value of improved land. In almost all cases the tax is graduated, and a higher rate applied to large than to small increases in value. Of course, attempts are made to evade the tax by a transfer of indi¬ vidual holdings to an association, consisting of the partici¬ pating individuals, and inasmuch as the association is im¬ mortal, the property, so long as it remains in the association, escapes the increment tax. But this method of evasion is being met by the assessment of the tax on the property of associations or corporations, whenever there is any change in the membership of the associated or incorporated body. The increasing popularity of the tax is all the more remarkable, because in Germany the owners of real estate usually exer¬ cise a much more exclusive control over municipal govern¬ ment than they do in this country or in England. OWNERS of real estate should consider these facts care¬ fully, because there is every reason to believe that in the course of time an agitation for the adoption of the tax will be started in the large American cities. Such an agi¬ tation will be the Inevitable result of the spread and popu¬ larization of radical economic ideas; and it will derive strength from the practical necessity of municipal revenue. If it were ever adopted in New York its effect upon local real estate conditions would be revolutionary. New York probably more than any city in the world has heen the para¬ dise of the real estate speculator and operator, of the man who buys real estate not for the purpose of imppoving it but for the purpose of appropriating a probable increase in value. There are thousands of men in this city whose whole livelihood and the turn-over of their capital depend upon their ability to guess what classes of real estate will be worth in a few years more than they are now selling for. An in¬ crement-tax, whatever its ultimate effect upon real estate values and the local ecouomic situation, would make real estate speculation unprofitable, and would do away with the demand for real property derived from this source. On the other hand, it would probably be beneficial to the owners ot real estate in those parts of the city in which values have any tendency to be stationary. At the present time the owner of a parcel of reai estate that does not increase in price is obliged to pay a constantly augmenting rate of tax¬ ation, which has a tendency actually to diminish the capital value of his property. Again, the owner of a piece of real estate that is rapidly increasing in value scarcely feels his larger taxes. No doubt they tend to diminish the value of his property by just so much, but the diminution is only a small percentage of the actual increase. The increment- tax, of course, seeks to shift the burden of any increase in taxation from dead to live real estate. The real estate tax tends to become stationary and the city comes to depend for its increase in ^e^enue upon the appropriation of those prof¬ its in improving sections which now go chiefly to real estate speculators. The tax, consequently, has many arguments in its favor, and the owners of real eslate, if they wish to avoid it, may as well prepare for a hard fight. It consti¬ tutes the least objectionable application of the principles of the single tax on land that as yet has been devised; and New York City is populated not by land-owners but by ten¬ ants. The taxpayers should not forget that not so long ago Henry George was almost elected Mayor of the city. ONE cannot help but admire the quiet and ingenious per¬ sistence with which the McAdoo Tunnel system has been gradually made an important factor in the local tran¬ sit situation of Manhattan. When the plans of the company were first announced, its terminal was to be situated at Hud¬ son and Christopher streets. The next step was to propose an extension up Sixth Avenue to 33d Street, and this extension looked reasonable, because it would he very beneficial to the department stores and theatres in Manhattan, while at the same time it would not develop any considerable local traffic. Then came the proposal to extend the Sixth Avenue line to 42d Street and east to the Grand Central Station. This again looked reasonable, because it would provide a very much improved connection between the New Jersey suburbs and those north of the Harlem. When this franchise was granted very little attention was called to the fact that the extension would now develop a large amount of purely local traffic, because it would provide Grand Central passengers with the most convenient existing method of reaching the rapidly growing business district, centering around Greeley Square, But the amount of local traffic developed by this extension will he small compared to the value of the Man¬ hattan franchise, for which application will next be made. There is every indication that the Tunnel Company will soon seek to connect its Cortlandt Street Terminal with its Sixth Aveuue line. That such a connection would he extremely useful there can be no doubt. Its peculiar value would con¬ sist of the convenience it would be to the old wholesale busi¬ ness district west of Broadway, a district which has not been benefited by any of the recent improvements in the means of communication. But when the proposal for such an ex¬ tension is actually made it must be remembered that the new line would develop more local traffic in Manhattan than it would connecting suburban traffic. It would constitute a local transit line of almost unique value because it would run through a congested business section, and would pick up an unusually large proportion of short-distance fares. More¬ over, it would compete for such fares with the lower Seventh Avenue subway (if that subway is ever built) and would diminish the vain© thereof. IN view of the considerations mentioned above, the Public Service Commission should not grant a franchise for the proposed connecting tunnel except under certain conditions. In the first place, the contract should recognize the probabil¬ ity that a large amount of profitable local traffic should be developed and should guarantee that the city obtained its share of these receipts. In the second place, such a line should not be built until after the Seventh Avenue subway has obtained a fair start, A Seventh Avenue subway will constitute a far more useful addition to the means of com¬ munication of the whole city than would a line connecting the Cortlandt Street McAdoo Terminal with the northern extension of the same system; and if there is any chance of obtaining a lower West Side subway along Seventh Avenue the proposed connecting line should not be allowed to inters