Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-07-20
Higher Land Taxes Would
Tend TO Reduce Rentals

To the Editor Of The Star:
The assertion Of the Building own
ers and Managers Association" that
amy increase in the real estate tax
burden as Mai. Donovan. the auditor.
has suggested may occur in 1885 Is
bound to be reflected in the rents paid
by tenants for houses. apartments and
business structures" needs one I'M
portant qualification. That portion
of any increase In taxes which falls
upon improvements will tend to tn
crease rentals, for 1t can be shifted
from landlord to tenant, but any in
crease in the tax on land values has
the contrary effect. It tends to re-
duce sales value of land and there
fore rental values Of land. and every
economist of standing agrees with this
assertion.
The present reduction in the tax
rate to $50 per hundred Of assessed
value does tend to reduce rentals OF
all properties on which the improve
ments are assessed at a higher figure
than the ground values. even though
the burden on unimproved properties
and inadequately improved properties
Is also reduced to the advantage of
the holders of those classes of prop
erty. But this tendency is more than
offset by the heavy increase in popu-
lation due to the influx of thousands
of Government employees engaged in
the extra governmental activities OF
the new deal. The numerous fore
closures on mortgaged properties, in
Guiding those In which foreclosure
proceedings were avoided by means of
private settlements. generally at or
below amounts of the first mortgages
plus costs, failed to disclose any re-
duction in rents as a result of the
marked shrinkage in values of i'm
provements indicated by these trans.
actions. Should some marked change
in policy of the administration or in
the administration itself take place
whereby the main activities Of the
new deal would be materially reduced
or entirely disappear, there would be
some show Of Washington rents les
Sening.
There is plenty of housing room
in Washington today. The slum clear
ing proposition is the usual red herr
ing, dragged with every incoming ad-
ministration across the trail of the
fundamental fact that too high taxes
on improvements have held back i'm
provements, while too low taxes on
land values have aided the speculative
holding of land against the public
need and public interest.
Failure to allow the deterioration
In improvement values, especially of
middle class and smaller homes to
have proper reflection in assessments.
plus failure to recognize that the
selling value of land itself is the net
capitalization Of land after taxes have
been deducted, is, even under the law
as 1t stands, responsible for too heavy
a burden Of taxation on home owners
and probably for some 10 to Is per
cent too high rentals all around. As
sessments on all the middle class and
smaller class residential improvements
should be scaled anywhere from rs to
90 per cent, while the assessment OF
ground values should rigorously fol-
low the indications of valiIes shown
overwhelmingly by condemnation
Juries whenever either the Federal or
district governments take property. for
public use.
All this can be accomplished with-
out any change in the law, but simplN
ny a change In the policy of the
Board of Assessors.
HERBERT JANvRIN BROWNE.