Nothing from Nothing Leaves ...?
[Reprinted from The Freeman, June, 1939]
Some years ago a friend of mine was telling me how much he disliked
the very sound of the word compromise. "Suppose I want to live in
Boston and my wife wants to live in New York," he illustrated. "Well-shall
we compromise by living in Bridgeport?"
The Graded Tax Bills which for about a year have been before the New
York City Council, and which received a public hearing on Thursday,
April 20, 1939, were certainly a compromise with principle. They
provided that over a ten-year period city taxes should gradually be
shifted from improvements to land values, until finally 90 per cent of
the municipal taxation should be on land. It was calculated that these
laws would result ultimately in the confiscation by the city, for
purposes of taxation, of approximately sixty per cent of ground rent,
leaving forty per cent available for the land speculators to play
with. At present the city collects perhaps a third of the ground rent.
The real estate interests of the city obviously preferred the present
taxation compromise to the one embodied in the Belous-Quinn Graded Tax
Bills. Their attitude reflected the fact that Manhattan Island is
largely underdeveloped, the land being worth more than the buildings
resting on it, in the aggregate. And so, these interests presented
frank and active opposition to -the bills, under the leadership of Mr.
George L. Alien, representing the Real Estate Boards of Manhattan,
Bronx, Brooklyn, Queens, and Richmond Boroughs. If the arguments of
Mr. Alien and his associates (as I shall later suggest) involved
occasional contradictions, still they obviously impressed the Finance
Committee of the City Council, which under the chairmanship of Joseph
Kinsley sat at the public hearing on the bills.
The city newspapers followed the lead of the Real Estate Boards in
their general attitude concerning the bills. What little publicity
they gave to the hearing was mainly advance publicity of an editorial
character, pointing out alleged defects in the proposed taxation plan.
The traditional red herring was dragged across the trail in the shape
of the statement that the public utility companies would be the main
beneficiaries under the proposed changes, since the value of their
buildings and improvements materially exceeds the value of the land
they own. A typical newspaper comment was that of the New York Sun of
Thursday, April 20, which began its news story, "The old Henry
George single tax, a pet with theorists who like to dabble with the
fourth dimension, got a severe kicking around at a meeting before the
Committee on Finance of the City Council today."
Favoring the bills, under the leadership of William Quasha, was a
long list of representatives of civic organizations, including Walter
Fairchild, Chairman of the Graded Tax Committee, William Jay
Schieffelin, Chairman of the Citizens' Union, Harold Buttenheim,
Editor of the American City, Helen Banning, Vice-President of the
Community Councils, and numerous others.
The arguments given in favor of the Belous-Quinn Graded Tax Bills
were their demonstrable effects on industry, housing, unemployment,
and poverty. Through untaxing buildings and improvements, it was
urged, building would be encouraged. Old structures on valuable land
would be demolished to make way for modern buildings. Vacant land
would be improved, with consequent increase of employment and
betterment of living conditions for the mass of the people. Such a
tax, it was contended, met all the requirements of equity, was easily
collected, and would function to the furtherance of social progress.
The opponents of the bills warned the councilmen that the effect
would be materially to decrease the price of land in the city, but in
spite of this fact they insisted there would be even greater crowding,
since landlords, to avoid the. paying of the higher land taxes, would
use as small an area as possible for building, thus denying light and
air to unfortunate tenants. In spite of lowered land prices also, the
bills' opponents predicted that Federal housing projects would cost
much more, since land owners would be compelled to recoup themselves
for the heavier taxes they had been compelled to pay. And finally,
these real estate experts complained, increased land taxation would be
inequitable, since it could not be borne by the present holders of
vacant land yielding no revenue but held in the hope of a speculative
rise in value. Such people would tend to be wiped out.
Rents in lower-price apartments, it was alleged, would have to be
raised 52.25 per room per month, since most of these apartments are
located in practically worthless buildings, all the value lying in the
land. And on the other hand, the utility companies would benefit as
before mentioned. It was notable that no representative of a public
utility company appeared in favor of the bills which allegedly would
so benefit them. And no tenant appeared to protest the threat of a
rent rise under a tax which all economists agree cannot be passed on
to the consumer.
There was a hearty burst of applause at the mention of the name of
Henry George, but this was quickly suppressed by the chairman.
The hearing on the Belous-Quinn Graded Tax Bills was brief, since it
had to he fitted into an afternoon with another hearing to consider
the laying of further sales taxes, possibly on food, to derive revenue
for necessary civic purposes. At this second hearing Mr. Lancaster M.
Greene, trustee of the HGSSS, spoke, deprecating the possible effect
of such a tax on food as discouraging further the consumption of this
necessity of life.
Those Georgists who advocate staying aloof from politics seem to have
one great advantage over their politically-minded brethren, in that
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added when located]