Copyright
Robert Murray Haig.

Some probable effects of the exemption of improvements from taxation in the city of New York. A report prepared for the Committee on Taxation of the City of New York online

. (page 2 of 21)
Online LibraryRobert Murray HaigSome probable effects of the exemption of improvements from taxation in the city of New York. A report prepared for the Committee on Taxation of the City of New York → online text (page 2 of 21)
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Improvements Land Total

Manhattan J45,390,936 $47,387,950 $92,778,886

Bronx 21,331,975 21,755,325 43,087.300

Brooklyn 8,198,205 13,229.155 21.427,360

Queens " 13.326,165 13,228,075 26.554.240

Richmond*.'. 1.400.615 1,406.575 2.807,190

Aggregate $89,647,896 $97,007,080 $186,654,976

* Cf. infra, p, 16.

t Unless specifically stated, the assessment values and the tax rates used in this study are for
the year 1914. These were the latest available when the data were gathered.

15



It will be seen from the table that any piece of real estate in Man-
hattan, for example, will pay greater taxes for general city purposes
under the new plan if the building represents less than 38.53 per cent,
of the total value of the parcel. The same parcel will pay greater county
taxes if the building represents less than 34.06 per cent, of the total value
of both land and building.

In cases where county taxes will be increased and general city taxes
decreased, the net result may be determined by applying the tax rates
and comparing the amounts of the increases and decreases. But this is
a slow process. If it is desired to learn merely whether the total taxes
are increased or decreased, without reference to the amounts of such
increases or decreases, the end can be accompHshed by comparing the
ratios of the particular parcels with a composite ratio, made up from the
general city ratio and the county ratio. The general city taxes are much
heavier than the county taxes. Consequently the dividing line between
the parcels whose taxes would increase and those whose parcels w'ould
decrease lies much nearer the general city ratio than the county ratio.
Its exact position is determined by the relative size of the tax levies for
city and county purposes.*

The standard composite ratios are as follows :

Standard Composite Ratios for the Various Subdivisions of New York City (a)

Improvements Land

Manhattan 38.34 : 61.66

Bronx 38.71 : 61.29

Brooklyn 39.44 : 60.56

Queens 38.49 : 61.51

Richmond 39.51 : 60.49

(a) These ratios are computed on the assumption that the tax rate on buildings is to be made
half of that on land. If the tax rate on buildings were reduced to one per cent., these figures would
be altered slightly, in no case so much as to affect unit figures.

These ratios take into consideration all the important peculiarities
of the boroughs, their differing tax rates and state of development. To
determine, therefore, whether the taxes on a particular parcel of real
estate in any borough will be increased or decreased by the adoption of
the plan to reduce the tax on buildingsf it is only necessary to compare
the relationship of assessed building value to assessed land value in that
parcel with the standard composite ratio for that borough. Thus, in
Manhattan, for example, any parcel in which the land is worth more



* The proportion used is as follows: the levy for city purposes in the county is to the levy for
county purposes as X is to the difference between the terms of the standard city ratio and the
standard county ratio. X in this case represents an amount which may be added to the proper terms
in the county or city ratios to form a new composite ratio. The matter is complicated by the fact
that the city taxes charged to the property in the various counties vary with the extent to which the
tax on buildings is reduced. This factor is of too slight importance, however, to affect the com-
posite ratios seriously.

■j- To fifty per cent, of that on land, although the ratios are almost identically the same in case
the ratio on buildings is reduced to one per cent, of that on land.

16



than 61.66 per cent, of the total value of the parcel will pay greater
taxes and vice versa. The variation in the standard composite ratios
for the various boroughs is relatively slight. The land factor is most
important in Manhattan (61.66 per cent.) and of least importance in
Richmond (60.49 per cent.), the difference between the extremes being
slightly over one per cent. (1.17 per cent.).



17



II. EFFECTS IN THE CITY AS A WHOLE UNDER
CERTAIN ASSUMED CONDITIONS

Attention may now be turned to a consideration of the effects of
transferring the tax to land. What will be the results of the change?
Where will the tax bills be greater and where smaller and how great
will the changes be? It should be borne in mind that the statements now
to be made concerning the effects assume that the additional tax on land
values will not have the effect of diminishing the assessed values. Later
the probable readjustments in values will be taken into consideration.*

A. EFFECTS UPON THE TAX BURDENS OF THE BOROUGHS
The first point to be determined is the effect of the proposed plan
upon the distribution of the taxes among the various boroughs of the
city.t The accompanying map shows the boundaries of these sub-
divisions. Which will pay the greater and which will pay the smaller
taxes under the plan?

(1). Increases and Decreases

As has been seen|, the proposed plan leaves the distribution of county
expenses untouched. Presumably they will be neither reduced nor in-
creased. It is only in the distribution of the general city expenses among
the boroughs that a change will result. In what direction these changes
will occur can be readily determined by a comparison of the standard
ratios for the boroughs with that of the city in general. The standard
ratios are :

Standard Ratios for the City of New York and for the Boroughs

Improvements Land
City of New York 38.5 : 61.5

Manhattan 34. 1 : 65. 9

Bronx 43.4 : 56.6

Brooklyn 50.0 : 50.0

Queens 37.9 : 62.1

Richmond 47. 8 : 62. 2

The boroughs which have a larger percentage of land than the city
in general (61.5 per cent.) are, strangely enough, Manhattan and
Queens.** This indicates that these two boroughs would be charged
with a larger share of the city's general expenses than at present. The
taxes in the other boroughs would be lightened.

* Cf. infra, p. 121 et se.q.

t The boroughs and counties are coterminous.
% Cf. nupra, pp. 14-15.

** Manhattan is the most highly improved of the boroughs in proportion to its area, while
Queens, Richmond alone excepted, is the most poorly improved.

18




MAP
Showing the: 5 Boroughs

OF THE

City of New York





BOROUGH


AREA 1


In Acres


In Sq. Miles


MANHATTAN


14038


21.93


THE BRONX


26017


40.65


BROOKLYN


49680


77.62


QUEENS


75111


117.36


RICHMOND


36600


57.19


TOTAL


201446


314.75



How much the increases and decreases in the various boroughs
would be, is a question whose answer involves somewhat elaborate calcu-
lations. But since valuable data as to the probable effects upon tax
rates and the weight of the burden upon the various classes of property
in the tax base are at the same time obtained, the process may be profit-
ably carried through.

(2). The Assessed Values

The assessed values of taxable property in the City of New York in
1914, arranged as they would be, were the proposed plan adopted, are
presented in the following table :

Assessed Values of Property Grouped in Accordance with the Specifications of
THE Plan to Untax Buildings



Group One-
Personal
Property

and

Special

Franchises



Group Two —

Land,

including

Land

of

Corporations



Group Three —
Improvements,

including
Improvements

of
Corporations



Total



Manhattan (New

York Co.) $569,962,364

Bronx 31,908,958

Brooklyn (Kings Co.) 117,557,703

Queens 21,361,189

Richmond 3,925,657

Aggregate $744,715,871



$3,209,337,610

357,871,385

797,088,314

293,906,195

41,655,683



$1,657,719,056

274,612,870

795,825,978

179,334,522

38,087,988



$5,437,019,030

664,393,213

1,710,471,995

494,601,906

83,669,328



$4,699,859,187 $2,945,580,414 $8,390,155,472



(3). The Tax Rates

The tax rates would be more complicated than at present. The
tax payer to-day is quoted a single figure for each borough — a rate
secured by adding the county rate for that borough to the general city
rate. Under the proposed plan there would be three tax rates for each
borough: (1) one for personal property, which, presumably, would
be the same as the rate under the present system; (2) a rate on land,
higher than the first ; and (3) a rate on buildings lower than the first and
one-half or one one-hundredth of the second, depending upon which plan
was in force. The tax rates which would result from adoption of the
plans under the assumed conditions* are set forth in the accompany-
ing table.f The rate on personal property would remain everywhere
the same as at present. If the tax rate on buildings were halved, the
rate on land in Manhattan would increase approximately twenty-
three per cent, (to 2.20) and if the tax on buildings were reduced to
one one-hundredth, the rate on land would increase sixty-one per cent,
(to 2.86). The rate on land in the Bronx would be less than the Man-
hattan rate. The rates in the other three boroughs would be higher, the



* Cf. supra, p. 18.

t From the total levy in each case was subtracted the amount charged against Group One. The
remainder was made one term of an equation, the other of which was the assessed value of
land (Group One) multiplied by X plus the assessed value of buildings multiplied by one-half X
or one one-hundredth X (as the case might be). The result was the rate on land. The rate on build-
ings was one-half or one one-hundredth of this amount.



20



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23



B. EFFECTS UPON THE TAX BURDEN OF VARIOUS TYPES
OF PROPERTY

One more point calls for consideration at this place : viz., the effect
of the proposed changes upon the amounts of taxes charged to the
various types of property which enter into the composition of the tax
base. With the aid of the graph these effects become apparent.

PORTION OF TOTAL TAXES CARRIED BY VARIOUS ELEMENTS OF THE

TAX BASE UNDER THE PRESENT SYSTEM AND UNDER THE

PROPOSED PLANS TO UNTAX IMPROVEMENTS

PRESENT SYSTEM



Pi


LAND
84- MILLIONS


IMPROVEMENTS
52.8 MILLIONS



RATE ON IMPROVEMENTS ONE-HALF RATE ON LAND



pi


LAND
104.1 MILLIONS


IMPROVEMENTS
32.8 MILLIONS



RATE ON IMPROVEMENTS ONE- ONE-HUNDREDTH RATE ON LAND




Personal property would, under the assumed conditions, continue
to pay the same amount as before. The share of land would increase
from 84 to 104 millions, if the rate on buildings were halved, and to 136
millions, if the full plan were adopted. These increases, of course, are
accompanied by exactly corresponding decreases in the share of general
city taxes payable by buildings.

C. SUMMARY



It is seen, then, that, under the assumed conditions of unvarying
values in the tax base, the adoption of the plan to untax buildings would
result in a redistribution of general city expenses among the boroughs.

24



The taxes of Manhattan would be considerably increased and those of
Brooklyn considerably decreased. Taxes in Queens would be very
slightly increased and in the Bronx and in Richmond, slightly decreased.
Tax rates on land would, under the plan to halve the rate on improve-
ments, increase by amounts ranging from 42 points (Manhattan and
the Bronx) to 47 points (Richmond). Under the plan to reduce the tax
on buildings to one one-hundredth of the rate on land, the land rate
would increase 109 points in Manhattan and the Bronx, 111 points in Queens,
118 points in Brooklyn and 122 points in Richmond. The rates on improve-
ments in the case of the first plan would be approximately two-thirds of
the present rates and under the full plan would be negligible.

In the city at large, the adoption of the first plan* would increase
the amount noW paid by land owners as taxes from 84 millions to 104
millions. The adoption of the full planf means the increase of this
sum to 136 millions.



* By this is meant the plan to reduce the tax on buildings to one-half the tax on land.
t This is the reduction of the tax on buildings to one one-hundredth the tax on land.



25



III. THE EFFECTS IN MANHATTAN UNDER
CERTAIN ASSUMED CONDITIONS*

The increase in general city taxes which would fall to the share of
Manhattan has already been discussed. f The effects within the borough
will next be traced.

A. TAX RATES

The following graph| presents the results which may be anticipated
upon the Manhattan tax rates in case the proposed plans to untax build-
ings are adopted.

MANHATTAN
RATES UPON THE VARIOUS CLASSES OF PROPERTY UNDER THE PRES-
ENT SYSTEM AND UNDER THE PROPOSED PLANS TO UNTAX
BUILDINGS



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Online LibraryRobert Murray HaigSome probable effects of the exemption of improvements from taxation in the city of New York. A report prepared for the Committee on Taxation of the City of New York → online text (page 2 of 21)