The Washington herald., 1921-03-20

than. any other labor product. With
a 2h per cent tax rate on an as
sessment at full value the net rent
must be. about one-third more than
II there were no tx. II the net
rent equals per cent Of the cost
of the building, the tax Is fve-
twelfths of the net rent. At the
present time doubtless there must
be a prospect Of a much higher net
rent than per cent In order to in
duce building, but even IL the net
rent is 10 per cent, the tax is one
fourth of the rent. 1t Is obvious
that the tax Is a very important
factor. II the tax on new dwellings
Is remitted for q term OF years. q
substantial inducement Is offered to
builders. How substantial that in
ducement Is. few people realize.
Loans Hard to Get.
costs $4,000. Before the war the
equal to two-thirds Of the cost Of
the building plus the value of the
land: frequently more. Today the
builder is lucky IL he can obtain q
loan of 50 per cent Of the cost OF
the building. With an exemption
from taxation, the builder could
afford to pay of a loan much more
rapidly than IL he had no such ex-
emption. He could be asked to make
payments on the principal of the
loan equal to the entire savings of
taxes.
Under these circumstances. sup
pose a lender should advance $500
en- a $4,000 house at s per cent In.
terest, and the tax rate is 2h per
cent Tin the city Of New York und
many other places it Is more than
ga per cent?. The borrower might
be required to pay $3.50 plus interest
annually. The interest at 6 per cent
en- $500 is $3.50. The total pay
ment annually would be 500. II
these payments were continued for
seventeen and a half years at the
rate Of 800 a year, the whole mort
gage of $500 would be repaid; in
fifteen years so per cent of the
mortgage would be paid; In ten
years IS per cent would be paid. It
is in the last years that the pay
ments rapidly cut down the princi-
pal. 1 favor an exemption for a
period of at least fifteen years.
think the present emergency war
rants such an exemption.
Emergency Great.
Various objections are raised
which seem to be without weight.
First, 1t Is said that such an ex-
emption will reduce the assessment
roll. 1t will not. No existing prop
erty is exempted. II is true that
some houses would be built even II
there were no exemption. These are
all the houses that would be taxed
il there were no exemption. II the
exemption is effective. then to the
extent to which IL Is effective
houses will be produced that would
not otherwise have been produced.
They will be taxable after the pe-
riod of exemption has passed. In
the meantime. the erection of such
houses will have caused a demand
for land which will increase land
values and so swell the assessment
roll. In any event, the exemption Of
all buildings constructed for human
habitation during the next three
years for a term of fifteen years
will affect very slightly the aggre-
gate Of the assessment roll
1T is said that II is unfair to the
owners of existing buildings to ex-
empt new buildings The owners Of
existing buildings have seen the
value of those buildings doubled by
no act of theirs In many cases the
rent they can obtain is more than
doubled The value of those build
ings will tend to be about what IL
would cost to reproduce them pro-
vided always they are suitable. II
does not seem that there Is any
hardship to these owners of existing
buildings in encouraging the produce
tion of new buildings costing twice
as much.
The emergency is great. The
need Is serious. We should give
every possible encouragement to the
erection of new buildings by private
enterprise by a method which does
not Introduce the dangerous feature
of competition by the government
itself"