Evening star., 1937-05-15
TAXES HELD CHECK
TO HOUSING BOOM
Burdens Now Placed on
Real Estate Bear No Re.
Iation to Its Income.

4C VDJCSU4tC VI d COlllplCtC dIlu
satisfactory national housing policy
should be decent housing accommo-
dations for all income groups and
an opportunity for all permanent
employed groups, whatever their in
comes, to own their own homes, in
the opinion of Paul E. Stark OF Madi-
son. Wis. president of the National
Association Of Real Estate Boards.
Such program cannot be carried
out unless the unnecessary burdens
now placed upon real estate are re-
moved" Stark said. "One of the
, greatest is the fact that real estate
tax bears no relation to real estate
income. Taxes take one dollar out of
every four OF gross annual income in
numbers OF cities of the country for
typical residential properties, accord
Ing to estimates from detailed
f1rst-hand study OF 18 cities made by
Government experts in a report now
before Congress. In some cities the
tax for houses reached as high as
so per cent of the gross annual rental
value"
Stark was the principal speaker at
the Convention of Realtors OF the
North Central Region, which Just
closed in Omaha. He is scheduled
to head the list Of speakers at the
Central Atlantic Regional Convention
in New York City May IA and IS.
Many realtors from Washington are
expected to attend the New York
meeting, the first ever held by this
region.
Taxes Affect Rents.
Taxes" he added, are large
factor in rents. To lower housing
costs, tenants should join property
owners in the movement to do away
with our present tax system, under
which the levy on real estate is a
capital tax tending to be conflscatory.
Principal steps needed to have this
tax system abolished are as follows:
L. A limitation on the total tax
rate leviable against real estate.
g. A relationship between the an
nual productivity. income or utility
OF property and its tax.
When you set up such a relation
snip you are going to make it easier
Tor people to own homes"
The tenants rent bill would look
different If the rent of the property
were set up as one item and the
taxes as another, as is done in Eng
land, Herbert U. Nelson, secretary Of
the National Associat ton of Real Es-
tate Boards, comments.
Tax Rates Vary Widely.
There exist no figures on ma
tlonal scale showing how much Of
the gross income of real estate is
paid out in taxes, but an estimate for
typical residential properties in 18
cities, just made from the study
referred to, shows.
In one Of the 18 cities the property
tax (for 1850 was found to take up
b9.9 per cent of the gross rentals in
the case of the average single family
dwelling. The tax on such proper
ties IN over half the cities was over
28 per cent Of the gross rental. The
range for the l8 cities was from II
per cent up to nearly so per cent.
The ratio of property tax to gross
rentals was found by the sampling to
range from II per cent to 48 per cent
for two-family dwellings and from z
per cent to over % per cent for multi
family apartments. The figures are
for 1885 taxes.
The ratios found vary more greatly
than one might expect as between the
cities, Mr.. Nelson comments. It is,
OF course. to be recognized that the
estimates are from a sampling only,
though this was weighed so as to be
as representative as possible.
Consolidation of all tax assessing
bodies in the State and valuation of
real estate for tax purposes on the
basis of income is proposed for Texas
IN bill now before the State Legisla-
ture. Abolition Of the State ad valo.
rem tax is also proposed.
State Laws on Subject.
A bill to amend the Michigan tax
statutes sponsored by the Michigan
Real Estate Association would provide
/. that cash value for tax purposes must
be arrived at by taking into considera-
ton average income of the property
for the preceding three years. Other
States have similar bills in the legisla-
tive mill following the general proposal
OF the National Association OF Real
Estate Boards urging income be the
basis Of capital value of property for
tax purposes.
A bill to limit real estate taxes to
! y per cent Of assessed valuation, ex-
, elusive Of funded debt service, is be-
fore the New York Legislature. The
bill has the active support of the
, Real Estate Association of the State
OF New York, and of many other
groups. Pennsylvania limitation
measure, proposed as an amendment
to the State constitution and already
once approved by the Legislature is
up Tor the necessary second approval
before being submitted TO a referen-
dunn of the people. The PENNSYLVANIA
Real Estate Association is warmly s,1p-
porting the measure
The California Real Estate Associa.
ton, by action Of its board of direc-
tors, approved the proposal for an
overall limit on the tax rate on real
estate OF per cent on a so per cent
value now before the Legislature and
approved also a proposed limitation
on local expenditures.