The Washington herald., 1915-12-12

ers. Of which the Chairman Of the Com
mftfee sustaining the half and half
plan was President.
We're the tax rates suggest adopt
I'd. the tax bill on the Emerson Street
property would drop from
land ................... 1aSl
improvements ...-.......... 1s.eo
water tax. ax.................. SEQ
Total .................... s5s.s4
land .-....-............. t7.sS
improvements exempt 1900. o.eo.
water tax abolished. ..... eco
Reduction .......... SIGls
What this would mean to the tens
OF thousands Of clerks and wage earn
ers Of the District In similar circum-
stances. gross reduction Of over 81
100000 In taxation on their homes,
whether owned or rented. IL worthy Of
serious consideration. But the Star
and other advocates Of the half and
half' plan never admit the truth Of
this simple proposition They have
made the welkin ring with their de-
the tax burden of the small home own
ers of the District"
The Landlord's Invested Capital
Pays No Tax.
Those who claim that the landed inter.
ests in the District are heavily taxed,
overlook this simple but obvious prin-
ciDle of land value taxation: The land
owner pays no taxes whatever on his cap
itsl invested in land. unless his land tan
Is Increased above what II was at the time
Of the investment without increase in
the value Of the property. In case Of
l.
In the value Of the land. he pays taxes
on his capital invested only to the ex-
tent Of that increase. Assuming that
assessment was at full value at the time
of investment any subsequent increase
Of assessment should arise from Increased
value I'm the property. He Is, therefore,
still untaxed on his invested capital.
and Is merely being taxed on his profits
in that increased value Of the land which
lies above and beyond his original in
vestment The truth of this statement
bee ONES plain when it Is realized that
the selling value Of land Is in fact the
selling value of its holders equity. after
the taxes have been charged of. the
purchase price being thereby regulated
and limited. The higher the proportion
Of tax to gross rental value. the less the
next rental value. which is capitalized
Into selling value. and therefore the lo&er
the seiilng value
For this reason a tax rate based on
selling value Of land, even when the
selling value is honestly assessed, Ii less
productive than the same tax rate based
on true value. which Is the capitaliza-
ton Of gross rental value. For the tax
alton on selling value Is based on the
value of a remainder-an equity-whfle
the tax rate on true value is based on
gross rental value-on the full estate.
On the other hand a tax rate based
either on cost or selling value Of an
Improvement is over-taxation. for in that
Improvement, house for instance every
item has been enhanced IN cost by a
whole chain Of prior taxation on mate
rial and manufacture and by high frei9ht
rates, which in the end have artincially
increased the cost and therefore the
selling value OF the house perhaps 50 Der
cent.
Does 1t not become plain. then. that
tax rate Of $50 on selling value of land
| against $50 on selling value Of improve
/ ments is serious discrimination in IA
vor Of land holding and against improve
ments? Therefore in favor Of land specu-
lation and against building? In favor Of
| holding land idle and against its active
| use? And the higher the tax rate tho
| greater the discrimination In favor Of
landholding and against improvements?
| LandholdinE . LeEalised Privilege.
The more nearly the tax approaches its
rental value the more difacult It becomes
\ to hold it idle against the home-making
needs of the community. House-building
| is benefit. the ramifcations Of which
| extend in every direction The higher
the tax on improvements, on their ma
| terial and their occupation when built
the more costly and difficult II becomes
| to build and own or rent. and the greater
the restraint on industry and trade.
Have We not, in low land value taxa
| tion one simple and direct reason why
| three-fourths Of the privately owned
| areas of the District are unimproved? II
has paid better to hold them out of use,
| and profit by the unearned increase in
] value than to invest in buildings. Ground
| values.-selling values-have increased IN
the District over $500. 1000 since 1850.
Who has pocketed this great fortune? -
Have We not here. in high improvement
| taxation coupled with low land value
| taxation. the exact and simple explana-
tion of the shabby buildings which line
the business streets of Washington? And
| the fact that the homes of the District
are poorly built and crowded? That our
| alleys are slums with an infant death
l rate higher than in almost any industrial
| city of the country. despite sanitary
| regulations. fine pavements. sewers and
water supply? And yet We have the
| paradox of thousands Of empty houses.
| The improvement tax falls on the tenant.
the user; the land tax falls on the land
lord and lessons the value Of his privi-
lege of monopoly without, however. ma
| terialIy lessening the rental value. which
| is its community value.
The same line Of reasoning sustains
irrefutably the principle that q subsidy.
no matter how cunninsly devised to
| benefit the tenant. passes through him
to the ground landlord. The tenant may
catch the fish but the landlord owns the
shore. The Federal "half and half sub
sidy is expended for public benefit But
do not the recipients. the five thousand
| employees of the District Government and
the rest spend their receipts in rent. In
| interest. in actual investment in land, IN
| living exepnses? Where can q dollar be
| expended in the District without adding
| its weight to the sustention and incre-
ment of ground values? And since the
| Federal Subsidy Is q clear and unearned
grant its benefit goes clear and un-
diminished to the owners Of District
I land.
| Values of the Governnent's Lands.
| The constant claim by advocates OF
the half and half plan" that the Gov
ernment's large land holdings and oe-
casiona1 condemnations and withdraw
a1. ~ louds for n,,hlfr use IeSsen the