New-York tribune., 1912-03-04
A REPLY TO PROF. sELIGMAN
Arguments in Favor of Halving the
Tax Rate on Buildings.
,a Editor of The Tribune.


To the Editor Of The Tribune.
Sir: Will you grant space Tor a priei
reply from the Business Mems Committee
on Having the Tax Rate on Buildings 10
Professor Selgman's letter regarding the
sullivan Brooks bill?
Is Il not strange that Professor Selig-
man contends that 50 many terrible results
will ensue from the enactment OF the
Sullivan Brooks bill and then calls II the
"forerunnef" Of the single tax? He I'M
plies that the people will insist, in the event
OF his predictions coming true, on further
legislation to ruin the city.
(a) Ii Is true as he states, that houses
are erected to-day in New York on building
loans" That fact does not. however JUS
tify his deduction that slight increase IN
the tax rate on land will appreciaoly re-
duce the value of land. nor the further de-
duction that a lower value OF land VIII com
pel the builder ito pay higher rate oi
interest for the money needed to erect
houses" The price of the building Is mere
ly the cost of construction. Money IS DOR
rowed Just as cheaply on small dwelling
houses IN Philadelphia where land Value
is very small part OF the total value OF
the property. as for tenement property IN
New York His affirmation on this point
he qualities with the statement that the
builder "is likely to lose through higher
interest rate" what he Acknowledges ne
gains through n lower tax rate
Take the case, however. Of a builder who
wishes 10 purchase lot for n building
Admitting. for the sake Of argument, that
the slightly higher tax rate on land
would reduce the value of land even
10 a small extent. he would save the re-
duaion I'm the price of land az an initial
investment, and also annually save the In
terest on that reduction i'm the price paid
for the land. lie would also have an an
nual saving in taxes on lot assessed Tor
81 600 and building thereon assessed for
81. OOO his taxes in 1911 would have been
on the land S17 30, on the building Sol 20
II the tax rate on buildings had been halt
that on land I'm 1911, or 81 06 per 500 or
assessed value of buildings, the tax on the
building would have been S3l So on the
land S21 90, n total OF S53-that is, SIG 20.
or about one-fourth, less than the taxes on
his property. with the uniform rate OF tax
alton on land and buildings.
Oh Professor Seigman also says The
small builder who Is just able TO erect his
house through great sacrifice looks forward
TO the future TO recoup him through an In
crease in the value Of land Later In his
letter Professor SelIgman says the argu-
,nent would be far different IL the unearned
increment tax were under consideration.
In other words. Professor Selgman adyo-
Gates taking from the small owner some OF
what little increase there IS In his lana
without any return. " the $1,000 lot in
creased per cent I'm year and 20 per
cent OF this increase were taken by Land
increment tax the super tax would be
S12 so. while with the Sullivan Brooks bill
the total saving to this small house owner
would have been about Sl7; that is, tho
sullivan Brooks bill would hardly apprecl-
ably diminish the increase in the value or
the poor mans lot, but would leave him
nearly $50 better OFF than any substantial
land increment tax.
He declared that 1t would be difficult to
borrow money TO construct buildings, never
theiess 'lt would be likely 10 increase the
tendency 20 erect high tenements In tie
slumsy etc Where will they get the money
to do this II his former argument Is sound?
Professor Selgman INDUCES in tho usual
talk about "conhscation" but fails to point
out how taxation of land vdiues Is confisca-
ton or why land owners should be singled
out as the one class OF property owners
whose profits should be guaranteed by gov
ernment.
With reference to the contraction OF the
borrowing capacity of the city because he
fears land values will be reduced, it Is clear
that the increase In building. which he fears
will ensue will more than offset any pos
sible but improbable decrease In assessed
land values and that the borrowing ca
pacity of the city will be increased. Both
old and new buildings will continue to be
assessed at their full value for taxation and
maintain the borrowing capacity of the city.
A 2 per cent tax rate upon the assessed
value OF ordinary land and buildings In 1911
(s72t1,325,769) would have yielded last
wear st44226.515 3S, or nearly $2O,OO0,OOO
more than the actual levy upon the assessed
value of ordinary land and buildings.
II is instructive to note that where
lower rate OF taxation on buildings than
on land has been tried II has worked sue
cessfuly, and that this principle OF partly
removing discrimination against industry Is
s,reading widely. In Vancouver, h. c.,
this principle has been gradually put into
effect during the last fifteen years and with
good results. Victoria, Prince Rupert,
Nanaimo and Winnipeg are following the
lead
Seattle is unable. with her outworn sys-
tenn of taxing buildings at the same rate
az land, to meet the competition Of Van
couyer. with its industry and housing un-
taxed. and will therefore In March have
a referendum vote to abolish all taxes on
buildings.
yancouver's success has been so marked
that the Royal Commission on Taxation Of