The New York herald., 1922-04-02
ny J. ,IoNTEFIoRE LEVY.

The law exempting real estate from
taxation has just been further extended.
Millions of dollars will be spent for
building construction on the strength Of
1t. The public should be warned that
the constitutionality OF this law is In
doubt. A similar statute was recently
declared unconstitutional by the New
Jersey Supreme Court
This law may be attacked under the
provision of the constitutions OF the
United States and New York State. for
bidding the deprivation of any person
of his property without due process of
law. 1t Is argued the tax exemption
decreases the value OF t. ~ houses or
non-exempt property. because their taxes
are increased to pay for the upkeep of
the tax-exempt houses. II can readily
be seen that a substantial increase in the
tax rate might destroy an owners equity
in his property. The decrease in net
income affects the capital valuation.
The tax exemption law did not reduce
rents. The owners of the new houses
can legally exact any rent they can get.
The law does not in any way limit or
restrict them. This law raised the rents
for. the majority Of the other tenants by
increasing the taxes Of their houses: this
necessitated the raising Of the rents to
maintain the property.
The amendment to the State Constitu-
ton (Article Ill. Section IS. passed in
1901) forbdding the passing of any
private or local bill. granting to any
person, firm or corporation, an exemp-
tion from taxation on real or personal
property affects the statutes validity.
This provision Is similar to Article
W., Section 7. paragraph vi. OF the New
Jersey Constitution, under which the
New Jersey court invalidated the New
Jersey tax exemption statute.
The reasoning of that Court can best
be described by its own language, as
follows:
.The argument Of the relator Is that
this is not a proper classification suffi-
cicnt to comply with the constitutional
requirements in that 1t does not include
all OF a class. that Is all buildings used
for dwelling purposes but only exempts
from taxation such buildings as are of
that kind erected during the prescribed
period. A considerable portion of the
argument of the respondent Is based
upon an asserted right of the State to
exempt property from taxation. That
claim may be granted for the purpose
OF argument, and under it the Legisla-
ture would have the power to exempt
from taxation all buildings erected or
used for dwelling purposes, but the diff
ficulty with the situation is that the
statute does not exempt all buildings
erected for dwelling purposes but such
buildings as may be erected within the
given period. so that a building COM
pleted on the last day of September,
1920 although erected for dwelling pur-
poses. would not be exempted. while
another dwelling finished on the last
day Of September, 1922. would be ex-
empted from the payment of taxes for
the balance of the five years provided
by the statute. We think this classified
tion Is arbitrary and amounts to special
legislation in violation Of the constitu-
tional prohibition.
1T would hardly be argued that the
Legislature could lawfully segregate for
the purpose OF taxation at a higher rate
all dwellings erected within the pre-
scribed period, because for such build
ings, being necessary for housing pur-
poses, higher rent could be obtained.
for manifestly such classification would
be arbitrary. The established rule in
this State in classifying property for