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Robert Murray Haig.

The exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York online

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revenue is needed. The citizens, particularly the working people, are turn-
ing against the single tax.

Various Public Officials and Private Citizens.

A high city official:

Strictly speaking the single tax does not exist in Vancouver since
other sources of revenue still are utilized. The elimination of the tax
on buildings was an attack directed at the speculator. The town was
cursed with non-resident owners of land who had bought with the
idea of holding the land for a rise in value. Moreover, the vacant
lots were a public nuisance and a source of danger to law-abiding
citizens. The plan offered an opportunity to penalize the man who held
unimproved property and to favor the man who built upon his lot.
There is now some agitation to replace the tax on buildings, but I
have heard of no one who would assess buildings, at more than twenty-
five per cent, of their value. The fire and police arguments are those
which are chiefly used in support of the new proposal. I favor the
present system. It seems fair to me that land should bear a dispro-
portionately large share of the burden as compared with property in
general. " God made the land and man made the building." How-
ever, not many citizens of the Canadian Northwest think of the land
as being God's.

A city official :

The single tax has stimulated building and has been a good thing
for the tenant.

A city official ; a single taxer :

The scheme has worked very well in Vancouver in times of pros-
perity. How it will fare during the present adverse conditions is still
an open question.
An assistant in the office of a public official :

The present system of taxation has not stimulated building nor
does it operate to aid the poor man.
A high official in the city government :

My personal opinion is that it was a mistake to remove the twenty-
five per cent, assessment of buildings in 1910. At that time I was not



215

in favor of making the move but now that the tax on buildings is
entirely removed I would prefer not to return to the old system if it
can be helped. Constant change is not a good thing and such a move
would look like " backing water."

A prominent city official :

I favor taxing buildings at twenty-five per cent. I can see no
reason why the city should have to spend fifteen or twenty thousand
dollars for a new piece of fire appartus for the especial benefit of a
half dozen skyscrapers and yet be unable to collect a cent from them
in taxes.

A provincial official :

The single tax is a bad system because it works an injustice upon
the man who is not in a position to improve his lot. If two men
have lots side by side and one has ready money or credit and is able
to build and the other man has not and cannot build, the construction
of the building by the first man lessens the opportunity of the other
man. Moreover, after the building is constructed, the first man has
a revenue out of which he can meet his taxes while the second man
must pay precisely the same taxes as the first.

A minor city official :

The single tax, as it operates in a city with a well-developed
business section, does not not appeal to me favorably. The system
operates to tax the working man indirectly through the exemption of
downtown buildings and this is very undesirable.

A conservative and capable administrator in the city's service:

Improvements should be exempt to some degree but should be
taxed at least enough to pay for the expenses of the fire department.
I find myself interested in the suggestion that workingmen's homes be
exempted and the skyscrapers assessed. The elimination of the tax
on buildings is not a great incentive to building.

A city official :

The single tax has had the effect of stimulating building both by
attracting persons to build through the decreased carrying charge
and by compelling them to build through the heavier charge which is
levied upon the land. A great many homes have been built which would
not have been built had it not been for the single tax. The system
also furnishes a method of getting at the land speculator and has had
the effect of discouraging speculation to some extent. The working
man has not been unfavorably affected but of course the capitalist
who owns a large skyscraper and pays no taxes get a greater benefit
than the working man.

A real estate man of high standing:

There has never been a general demand for the single tax in
Vancouver. It has not been a vital question. The system has operated
to place an immense burden upon the owner of vacant property.
As a consequence it is very difficult to carry such property. There
is no doubt that the town is at present much over-built. Vancouver
is in the midst of a depression for which the war furnishes us a very
good excuse. The council will probably return to the assessment of
buildings next year. At least twenty-five per cent, of the value of
buildings will be taxed at that time, I believe. This will be forced upon



216

the council by the fact that the pubHc will not endure a heavier tax
rate. It will probably be impossible to increase real estate assessments
and the only course left open is to increase the base by the addition
of some building value.

A prominent real estate man:

I was formerly a single taxer, but I find that my views as to the
merit of the system are rapidly changing. One thing which influences
me is the object lesson furnished by the large number of high buildings
which are being constructed. These are the direct cause of consider-
able expenditure and I see no reason why they should not pay at least
for the police and some other expenses. Doubtless the single tax has
stimulated building but it is probable that it has also over-stimulated it.

An expert accountant:

The single tax has worked very well on the whole and I like it
because it has curbed speculation to some degree, which is greatly to
be desired in Vancouver.

The manager of a concern which loans much money for building operations
in Vancouver:

The single tax stimulates building and curbs speculation. It
may even have over-stimulated building somewhat, but it has not done
so to a great degree. It operates to encourage building by removing
taxes as one of the more or less uncertain elements which a man
has to allow for and to take into account when undertaking a building
enterprise. The system has had no unfavorable effect upon the source
of loanable funds.

The manager of a bank:

The system is not good and another year will see it changed. It
puts an unwarranted load upon the man with unimproved property.
This load is very oppressive in dull times. In boom times it is not
felt. The system helps the boom along by encouraging building. " It
certainly helps to build up the town quickly but it would be just as
well not to put so much hot air into the boom balloon."

A prominent banker :

The present system is not good because it has over-stimulated
building. There is no doubt that the town is over-built at present
and the tax system is certainly partly to blame for this condition. Land
owners had heavy taxes to pay and, in their eagerness to get a revenue,
built too much.

The head of a large wholesale grocery firm :

On the whole the plan has worked out satisfactorily. It does
stimulate building and has probably over-stimulated it because people
in their eagerness to get revenue have put up buildings in excess of
demand. But the system furnishes a weapon for reaching the man
who holds vacant real estate for a rise in value and that is a very
desirable thing.

A prosperous, wholesale grocer :

The system is not an unmixed blessing. It does encourage building
and curb speculation to some extent ; but on the other hand it penalizes
the man who wants a garden. I myself had a large yard but felt I
could not afford to pay the taxes charged on it and so sold it. More-
over, it unduly favors a man who owns a large building.



217

The manager of a large department store :

The system has operated to encourage building and to fill up the
vacant land, particularly in the business section. It has certainly not
meant any reduction in rent to us.
An official in a trade organization :

The present system was adopted at the psychological moment and
building did go on at a tremendous pace, but it would have gone on
just the same without the change in the tax system. There is nothing
at all to this building-stimulus argument. The tax on buildings will
be reinstated soon and I favor such a move. The fire protection
argument is sound.
The head of the financial department of a large business corporation :

The present system is not ideal. There are certain expenses which
have no connection with land and which should not be charged to land.
Some compromise should be figured out under which some expenses
should be charged to improvements.
A barrister whose ability is unquestioned :

The single taxers in Vancouver used to appeal to the prosperityN
argument in support of the policy in this city. They do not do that any j
more. The single tax has nothing to do with the prosperity of the
city. It does stimulate building, but it is an unhealthy stimulation.
Statistics show that the number of unrented offices in Vancouver at the
present time is extremely large. The normal opportunity afforded by
business is all the stimulus to building which should be desired. V
The single tax means greater congestion. It is a great luxury /
to have a garden beside my house. The effect of the tax is " to plug j
up " all the holes in the town and " leave no breathing spaces." The *
sentiment against the single tax in Vancouver is growing. All the
papers except the World are opposed to the single tax. The laboring
classes are far from unanimous on the subject, as is shown by the testi-
mony of the labor officials before the Commission on the High Cost of i
Living in June, 1914.

An official in the consular service :

Having been called upon recently to make a report on the single
tax in Vancouver, I believe as a result of my investigations, that im-
provements will be taxed again within two years. The people who
own land have all they can carry now. The city needs more money
and the aldermen will have to go where they can get it.

A prominent labor leader:

The single tax has really never been enough of an issue to interest
the laboring class deeply. Most of them favor it, but this is because
they do not understand what it is doing to them. From the point of
view of benefit to the workingman the system is a fallacy. This is be-
cause of the relation which exists between the value of land and value
of buildings in the business and the residence sections. The value of
the buildings is greater than the value of the land in the business sec-
tions and is about equal to the value of the land in the residence section.
Therefore " the workingman is stuck." Moreover the workingman is
unfavorably affected by the way in which the local improvements are
paid for. In the older sections some of these were paid for out of
general revenues, while in the outlying districts where the workingmen
have bought property, they are being paid for on a frontage basis. It is
ridiculous that a big building should pay no more taxes than a little



218

one when a big one brings in five or ten times as much revenue as a
little one. Does it stimulate building? Not a bit! Never-
theless, it may possibly have some influence in making some of the
business blocks higher than they otherwise would be. ( 1 )

A labor leader :

Workmen are not particularly interested in the tax situation. The
system has had little effect one way or the other upon their interests.

A labor leader :

The tax has certainly not operated to improve the condition of the
workingman. It has not increased wages. There has been a great deal
of building, but the building activity has attracted so many workingmen
that an over-supply of labor has resulted. Carpenters still receive the
same wages which they received in 1907 in spite of the fact that the cost
of living has meanwhile increased enormously. Such workingmen as
have tried to take advantage of the single tax now find that the little
houses which they have built have become millstones about their necks.
With the collapse of the building boom the opportunity to work has
been taken away and it is impossible for the men to make the pay-
ments on their houses. This is partly their own fault in that many
of them assumed heavier obligations than they could rationally expect
to carry. Many workingmen, for instance, have bought extra lots for
speculative purposes. The single tax had the effect of temporarily ex-
pediting building operations. This gave an impression of prosperity
which was false and this reacted to cause an over-valuation of land. This
high price of land has reacted to the disadvantage of the city in its
attempts to secure the location of industries. The really wise man is
the one who got rid of his real estate before this dull season began.

A shoemaker :

The single tax has helped to build up the residential districts and
in such districts I believe it has worked out with substantial justice.
Nevertheless, buildings should be taxed. If a man is rich and has big
buildings he should be taxed more than the " poor devil."

Manager of a charitable organization :

Although I own much vacant property I still think that the single
tax is a good thing because it makes it hard for men who are exactly
in my position. It brings pressure to bear upon the man who holds
vacant land out of use, and this practice is a great evil in Vancouver.
I do not feel able to pass judgment as to the effect upon the working-
man.

A minister and social worker :

I take the general position that values which are not worked for
and earned by labor may without injustice be taxed more heavily than
other values. The man who merely sits down and receives dividends
at the community's expense should not object to yielding a fairly large
part of them in the form of taxes. I would venture no statement as
to the effect of the single tax upon the interests of the workingman
or as to the sentiment among the working classes on the subject of the
tax. The whole problem is very complicated and I feel that I am not

(1) The investigator talked with five members of the Typographical Union
and with seven members of the Carpenters and Joiners' Union. They agreed that
there was not much interest in the tax system among laboring men. They agreed
moreover that probably more than one-half of the working men are in favor of the
system as it stands at present.



219

prepared to make a proper analysis of the facts. I believe that there
is truth in the argument that the man with the yard is penalized for
providing at his own expense a beauty spot for the city.

The principal of an educational institution:

On the whole I favor the system, but it is quite evident that it is
neither a panacea nor a plague. It does operate to stimulate building
and to penalize the speculator. It makes it very difficult for a man who
chances to own unimproved property during times of depression like
the present and this is perhaps unjust. It is impossible to build under
present conditions in Vancouver and some of the owners of unimproved
property are in desperate straits. There is no evidence in Vancouver
of an adverse effect on land values. I would not be surprised to see
a return to the old system soon. If a return is made it will be because
of the antipathy of the people to a high tax rate. They think that a
high tax rate is very bad advertising. I believe that the partial exemp-
tion of buildings from taxation in New York would mean a stimulation
of building in the suburbs and that this would tend to relieve con-
gestion in the slums.

A newspaper editor:

The single tax has greatly stimulated building. It is the direct
cause of the construction of many of the skyscrapers and of all other
types of desirable building, yet it has nothing to do with stimulating
the building of apartments. Through stimulating buildings the system
has operated to reduce rents. Although there has never been a clear-
cut issue made of the system in a general election I believe that public
sentiment is at present strongly in favor of the single tax. A new
community can make the change to the single-tax basis with much less
difficulty than an old community, and New York should take care lest
it make too rapid a change. Ten per cent, a year reduction of the tax
on buildings is entirely reasonable, however. I expect to see the city
charter changed very soon so that the power of the council to alter the
tax base will be taken away.

A newspaper editor :

I am strongly in favor of the retention of the system and think
that the opposition to it is negligible. It has built the city and has made
it difficult for the man who holds vacant land for a rise in value. There
is nothing in the claim that fire protection should be paid for by the
building. The skyscrapers are really easier to protect from fire than
the shacks which they often replace. It is impossible to protect more
than the first seven stories anyway. Moreover, the large buildings
usually pay for their own additional fire protection to some extent
through hiring of special watchmen and through the supply of special
fire apparatus within the building.

A newspaper reporter :

The whole tax system is such a farce that it is not worth discuss-
ing.

A newspaper reporter :

The tax rate on land is as high as it can be without injuring the
reputation of the city. It would be very disadvantageous to make the
tax rate any higher than it is at present. Moreover, the land is assessed
at as high a rate as it is advisable to assess it. More money is needed
to maintain the city government. It can be secured by a return to the



220

tax on buildings and this return will soon be made. The present sys-
tem, in my opinion, operates to the injury of the workingman.
The editor of a newspaper:

I am avowedly an opportunist. The single tax is not a great moral
question. A few years ago during the era of rising prices it was a very
good thing but I am not so sure about it at present. It has encouraged
building, but this is not an unmixed blessing, for now the city is un-
doubtedly over-built. There has been no effect upon speculation trace-
able to the tax. The gains from speculation in real estate have been so
large as to minimize the penalty of any additional tax which has been
imposed. The system seems likely to become oppressive soon and, if
it does, dissatisfaction will become very strong. I would oppose a
change back to the old system at the present because I believe that, since
they have the single tax, they should take more time to test it out. A
relatively poor system is better than a constantly changing one.

Present Agitation for Change

The interviews quoted above make it very plain that there is under way
at the present time a strong movement in favor of abandoning the single tax
and returning to the system of taxing buildings. The force back of this
movement finds its strength in varied sources. The most important of these
is doubtless the general financial situation in the city. ( 1 ) The eagerness to
avoid a higher tax rate is probably responsible for the greater share of the
sentiment which exists to-day in favor of returning to the old plan.

Another source in which the movement finds strength is the position of
persons who own vacant land which, under present conditions, it is impos-
sible to improve. No more buildings are needed in Vancouver at present
and it is considered unfair by some that owners of vacant land should con-
tinue to be penalized for not improving their property when to improve it
is economically impossible under present conditions.

Part of the opposition to the present system comes from those who have
watched with misgiving the increase in the number of skyscrapers in the
city, with the increased expense for fire and police protection and sewer
reconstruction which they inevitably bring with them. An argument which
appeals to the small property owner is the one which points out the supposed
unfairness of charging to the land alone the expenses of buying a water
tower which is necessary only for the protection of a few high buildings.

To the sources of opposition enumerated should be added the antagonism
of certain real estate men who formerly favored the system, who feel that
during times of prosperity the single tax is a good system but during times
when real estate movement is slow it is not. This opposition is largely
confined to those real estate men who were surprised by the depression with
a large amount of unimproved real estate on hand.

Some opposition is present among the laboring men, due to the supposed
discrimination against the owner of a small piece of property and due to the
larger percentage of building value compared with land value in the business

(1) Cf. supra, p. 176.



221

section as compared with the residential section. By taking a few excep-
tional cases in the city a good case can apparently be made out in support
of this view ; but an analysis of the general figures and the testimony of real
estate men as to the value of improvements as compared with land in various
sections tends to support a view that at the present time probably the average
small propery owner, far from being discriminated against by the system,
is really favored by it ; that is, to return to the old system would mean that
the small property owner would pay a larger share of taxes than at present.
It is necessary in considering this question of the vacant land in the city to
bear in mind that it would pay a much less share to the support of the city
government under the old system of taxation. Moreover, the building in-
spector estimates that approximately fifty per cent, of the land in Vancouver
is still unimproved.

The assessment figures for 1914 by wards furnish material which tends
to show that there is little in the claim that the small householder at the
present time pays heavier taxes than he would under the old system.

STATEMENT SHOWING REVISED TOTALS OF ASSESSMENT ROLLS

FOR 1914

Value of Value of

Improvements. Land. Total.

First Ward. High class residence
property $12,739,750 00 $19,600,940 00 $32,340,690 00

Second Ward. Business property.. 21,762,020 00 43,949,520 00 65,711,540 00

Third Ward. Water front— approxi-
mately half business and half resi-
dence property 7,183,770 00 20,878,805 00 28,062,575 00

Fourth Ward. Middle class property 11,864,988 00 25,042,180 00 36,907,168 00

Fifth Ward. Middle class property. 7,713,790 00 12,286,920 00 20,000,710 00

Sixth Ward. Property of mixed
character — some fine residence
property and some workingmen's
homes 12,302,705 00 18,849,355 00 31,152,060 00

Seventh Ward. Suburban property
recently developed 1,303,285 00 7,354,630 00 8,657,915 00

Eighth Ward. Suburban property
recently developed 1,329,435 00 2,494,310 00 3,823,745 00

Total $76,199,743 00 $150,456,660 00 $226,656,403 00

As has been pointed out (1), the original relations between the value
of land and value of the building for the property bought by the typical
man of relatively small income, is about $1,500 in building to $700 in
land. In a city where land values have been growing as in Vancouver,
this relationship remains constant only a very short time, and the value of
the building under normal conditions forms a progressively smaller propor-
tion of the total value of the property. Probably the typical relationship
between land and building for both old and new pieces of property is 50 per
cent, land to 50 per cent, building. Indeed, this proportion is so common

(1) Cf. supra, p. 195.



222

that it has become almost an adage in Vancouver that the ideal relationship
of improvement to land is half and half. But assessment figures given in
the above table show that in Ward Two, which is quite strictly a business
ward, the value of improvements is approximately half the value of the
land and therefore only one-third of the total value of the property. In
all of the strictly residential wards the value of buildings shows a higher
proportion to the value of land, with the exception of Ward Seven, which
is a suburban ward where there is much vacant property.

It follows from these facts that there is little comfort to be found in
the assessment figures for the person who believes that the average property
owner is being discriminated against by a system which untaxes buildings.
It is possible that such a situation may develop when the relative importance



Online LibraryRobert Murray HaigThe exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York → online text (page 23 of 31)