HJ A.. 1B 543254 R EPORT ON THE TAX LEVIES OF THE CITY OF NEW YORK FOR THE YEARS.1899 TO 1914, INCLUSIVE PRESENTED TO THE BOARD OF ESTIMATE AND APPORTIONMENT BY WILLIAM A. PRENDERGAST COMPTROLLER DEPARTMENT OF FINANCE BUREAU OF MUNICIPAL INVESTIGATION AND STATS' I [I: JANUARY, 1916......I... i 1-1.."I., ...~'~~~~~~~ _..... _ - --... |.. I....... _ _ _ _ _ _ i i. _. _ ' ' ' '- * "'- ' *. ' i i! '!!! _i, I_ II I II I I II II I II IIIIi!! 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BN ]BRQW(Nf PRINTING BINDING EW YO 90966-16-500 DEPARTMENT OF FINANCE THE CITY OF NEW YORK BUREAU OF AMUNICIPAL INVESTIGATION AND STATISTICS. December 28, 1915. To the Board of Estimate and Apportionment, The City of New York: Gentlemen-In order to ascertain accurately the total amount of deficiencies in taxes levied upon real and personal property, arising since January 1, 1898, the date of consolidation, an exhaustive examination was begun early in 1914, involving an analysis of the tax accounts for all levies from 1899 to and including 1913, as shown on the books in the several borough offices under the immediate jurisdiction of the Receiver of Taxes and the Collector of Assessments and Arrears. On October 29, 1914, in partial compliance with your resolution of February 4th, 1910, there was submitted to your board a report covering all deficiencies in the product of taxes which had arisen since consolidation, together with all reservations and provisions for funding the same. To show the extent and nature of these deficiencies, there was included in this report an analytical statement showing in connection with each levy under review: (a) the amount of the levy, (b) the net collections, (c) the deficiencies, according to character, and (d) the uncollected balance at December 31, 1913, this information being subdivided as between real estate taxes and personal taxes. Owing to the lack of time and because of a faulty system of account keeping in vogue prior to 1907, it was not possible to obtain an analysis of these tax levies in which the taxes included under the heading of real estate were segregated into the three component classes of (1) real estate (lands and buildings), (2) real estate of corporations and (3) special franchises. Soon after the submission of this report, in order to comply more fully with your resolution of February 4th, 1910, as large a force of accountants as could be effectively utilized was assigned to the work of segregating the real estate taxes. The examination was extended to include the tax levy for the year 1914, and the analysis of the prior levies was brought down to December 31 of that year. The results of this inquiry are presented in the summary tables, marked "A" to "G," and in the accompanying statements, marked "I" to "XVI." An outline of the general plan and design of the main tables, together with an explanation of the several elements included therein, is set forth in the succeeding paragraph. TABLES OF TAX LEVIES FROM 1899 TO 1914. In order that the final results of this inquiry might adequately and completely disclose every important aspect relative to the imposition and subsequent liquidation of each tax levy from 1899 to 1914, it was found necessary to analyze the transactions relating thereto into the following elements:.* ^ *^ ti 4 (1) As to the imposition: (a) the amount of the tax levy, by year of imposition. (2) As to disposition and liquidation: (a) the amount of taxes collected, less refunds and over and double payments. (b) The amount of taxes rendered uncollectible and therefore not realized, by reason of: (1) Discounts or rebates allowed to taxpayers in consideration of the prompt payment of taxes. (2) Remissions and cancellations of invalid taxes, and (3) Deductions from special franchise taxes allowed under the provisions of section 48 of the tax law. (c) The amount remaining uncollected at December 31, 1914, if any. In addition these elements have been collated and classified with respect to the following constituent and collateral subdivisions: (1) According to general character of property against which tax was levied. (2) According to borough in which tax was raised. (3) According to the year in which transaction was made. An outline of the structure of these tables and the nature of the facts relating to each levy that the respective parts are designed to exhibit are shown in the following plan concerning the classification of the several elements, viz: Part 1-Classification according to general character of property against which tax was levied, viz: (a) Real Estate (Lands and Buildings); (b) Real Estate of Corporations; (c) Special Franchises; (d) Personal Property. Part 2-Classification according to boroughs. Part 3-Classification according to general character of taxable property and according to borough, being a consolidation of the facts shown separately in Parts 1 and 2. In addition to these three parts, there are appended to the main table for each levy, two supplementary tables supporting, amplifying and recapitulating the facts shown in Part 1, as follows: Part la-Showing all transactions from date of imposition to December 31, 1914, classified according to general character of taxable property, and further analyzed according to year in which transactions were made. Part lb-Recapitulation, combining the several classes of tax shown in the preceding table (la), and summarizing the transactions of the entire levy according to year of occurrence. For statistical purposes and to facilitate comparison, tables expressing the ratios of the several elements to one another have been subjoined to the summary tables, as follows: (1) Showing the percentage of each class of tax to the whole levy; (2) Showing the percentage of each levy raised in each borough; (3) Showing the percentage of taxes collected, for each class of tax and for each borough; (4) Showing the percentage of taxes lost by reason of discounts allowed, cancellations of invalid taxes, and deductions from special franchise taxes under section 48 of the tax law; (5) Showing the percentage of each class of tax remaining uncollected at December 31, 1914. 5 Each table, therefore, consists of three main parts and two supplementary parts, each part exhibiting a particular phase or combination of two or more phases, and the table as a whole presenting a complete picture of the progress of each tax levy in all its important aspects, in analytical and summary form, from the time of its imposition to December 31, 1914. The summary statements A and B contain the same information as those numbered from I to XVI, but with the levies of the sixteen years assembled in order to exhibit the transactions of all the years in one total as affecting the different classes of taxes, as well as the operation in each of the several boroughs. The summary tables C, D, E, and F are designed upon the same general principles as those previously described, but instead of exhibiting the entire action of each levy the transactions affecting all levies are set forth according to the year in which they took place. Each of these four summary tables has reference to one of the several classes of the general tax. Table G. shows in recapitulated form the total of the four classes of taxes levied and the combined transactions affecting all levies segregated according to year of occurrence. FACTS CONCERNING THE LEVY AND COLLECTION OF TAXES. Although the act of the legislature consolidating the various communities now comprising The City of New York became operative January 1, 1898, no general tax levy covering the five boroughs constituting the greater City was imposed until the latter part of the year 1899, for the expenses of that year. The year 1899 has since become a natural and convenient dividing line for transactions affecting tax levies, for the reason that facts relating to each tax levy imposed since 1899 are comparable, having been imposed upon the same area of land and under practically similar conditions. The former municipalities comprised within the present boroughs of Brooklyn, Queens and Richmond levied taxes in advance. Therefore the taxes for the year 1898 were levied in 1898 only in the Boroughs of Manhattan and The Bronx, which together constituted the former City of New York. SUMMARY STATEMENT OF TOTAL TAXES LEVIED FROM 1899 TO 1914, AND NET COLLECTIONS THEREON TO DECEMBER 31, 1914. (A) Classified According to General Character of Taxable Property. Per Cent. of Per Cent. Per Cent. Specific of Net of Net Class of Collections CollecAmount Tax to Net of Each tions of Levied. Total Collections. Class to Each Amount Total Class to of Taxes Net Col- Taxes Levied. lections. Levied. Real Estate (Lands and Buildings)....$1,500,317,270 42 85.24 $1,454,449,207 05 90.12 96.94 Real Estate of Corporations.......... 24,614,113 56 1.40 20,209,258 08 1.25 82.10 Special Franchise... 94,546,583 16 5.37 56,193,312 34 3.48 59.43 Total Real Estate $1,619,477,967 14 92.01 $1,530,851,777 47 94.85 94.53 Personal Property.. 140,678,030 87 7.99 83,089,436 67 5.15 59.07 $1,760,155,998 01 100.00 $1,613,941,214 14 100.00 91.70 6 (B) Classified According to Boroughs. Per Cent. Per Cent. of Net of Net Per Cent. Collec- Collecof Borough tions from tions Amount Levies Net Each from Levied. to Total Collections. Borough Each Levies. to Total Borough Net to Taxes Collections. Levied. Manhattan.......... $1,207,000,058 78 68.57 $1,116,411,150 53 69.17 92.50 The Bronx.......... 107,203,445 67 6.09 97,543,617 70 6.04 90.99 Brooklyn............ 352,302,201 59 20.02 317,607,979 81 19.68 90.15 Queens............. 75,260,787 30 4.28 66,307,435 59 4.11 88.12 Richmond........... 18,389,504 67 1.04 16,071,030 51 1.00 87.39 $1,760,155,998 01 100.00 $1,613,941,214 14 100.00 91.70 The total amount of taxes levied on real and personal property for the years 1899 to 1914 aggregates $1,760,155,998.01. Of this sum, $1,619,477,967.14 was levied on real estate, which includes land and buildings, real estate of corporations and special franchises, and $140,678,030.87 was levied on personal property. Thus, of the general property taxes levied during the period under review, 92.01 per cent. were laid upon real estate and 7.99 per cent. on personal property. When viewed from the standpoint of actual collections resulting from these levies, the ratios obtained are somewhat different. The total net collections to December 31, 1914, on account of all taxes levied upon real and personal property from 1899 to 1914 aggregated $1,613,941,214.14. Of this amount, $1,530,851,777.47, or 94.85 per cent., were collections on account of real estate taxes, and $83,089,436.67, or 5.15 per cent., were collections on account of personal taxes. Comparing specific collections with specific levies, we find that in connection with real estate taxes 94.53 per cent. of the taxes levied were collected to December 31, 1914, while, during the same period, only 59.07 per cent. of the personal taxes were collected. During the same period the budget, as adopted, increased from $95,209,959.84 in 1899 to $192,995,551 in 1914, an increase of 102.70 per cent. The fact that the tax levy did not increase as rapidly as did the budget is accounted for by the relatively great increase in the receipts of the general fund. It might be here explained that in determining the amount to be raised by taxation on the general property within the city limits, the law provides that the estimated revenues of the general fund shall be deducted from the amount of the budget, giving as the amount of the tax levy the difference between the amount of the budget and the estimated receipts of the general fund. In the tax levies prior to 1907 it was customary to add to the sum determined to be raised by taxation an amount equal to 2 per cent. of such tax levies to cover deficiencies in the product, although during those years the charter allowed three per cent. of the aggregate amount of the tax to be included to provide for deficiencies. For 1907 and subsequent years deficiencies in the product of tax levies were provided for by inclusion in the budget. In order, therefore, to make the 1899 budget comparable with the budget of 1914 it is necessary to add to the 1899 budget, as adopted, the amount included in the tax levy of that year to cover deficiencies in the product of tax levies. The revenues of the general fund increased from $9,026,191.26 in 1899 to $43,235,935.35 in 1914, an increase of over 379.06 per cent. This increase is most largely 7 accounted for by the enactment of a law in 1903, which permitted the surplus revenues of the Sinking Fund for the Redemption of the City Debt (No. 1) to be invested in general fund bonds, the proceeds of which were paid into the general fund for the reduction of taxation. Since the assets other than those invested in general fund bonds will be sufficient to meet all liabilities of the said sinking fund, the general fund bonds held by it will be cancelled at maturity. Comparing the amount of the tax levy at the beginning of the period under review, viz., 1899, with the amount of the tax levy at the end of the period, viz., 1914, we find that it has increased from $86,180,076.53 in 1899, to $150,503,514.53 in 1914, an increase of 74.64 per cent. Following is a statement of comparison showing the several elements of the tax levy of 1899 and of 1914, together with the related percentage of increase or decrease: Statement of Comparison, Tax Levy of 1899 and Tax Levy of 1914. Showing the Elements of Each Tax Levy Classified (A) According to General Character of Taxable Property, and (B) According to Borough, Together with the Percentages of Increase and Decrease. Percentage Levy of 1899. Levy of 1914. of Increase or *Decrease. (A) According to Class of Tax — Real Estate (Lands and Buildings)... $70,422,015 41 $133,831,562 06 90.04 Real Estate of Corporations.......... 2,383,822 75 3,339,684 26 40.09 Special Franchises.................. t.......... 7,248,956 94 t45.86 Total Real Estate................ $72,805,838 16 $144,420,203 26 98.36 Personal Property................... 13,374,238 37 6,083,311 27 *54.51 $86,180,076 53 $150.503,514 53 74.64 (B) According to BoroughsManhattan.......................... $62,814,741 81 $96,778,936 70 54.07 The Bronx......................... 3,236,607 56 11,759,491 12 232.12 Brooklyn........................... 15,459,721 79 31.472,676 10 103.57 Queens............................. 3,600,792 88 8,902,777 94 146.96 Richmond........................... 1,068,212 49 1,589,632 67 48.81 $86,180,076 53 $150.503,514 53 74.64 tComparison of special franchises made with levy of 1900, which was the first year in which special franchises were taxed. The amount of this levy for the year 1900 was $4,969,748 58. From the foregoing tabulation, it will be seen that the tax levy on real estate increased from $72,805,838.16 in 1899 to $144,420,203.26 in 1914, an increase of 98.36 per cent. In the same period the tax levy on personal property decreased from $13,374,238.37 in 1899 to $6,083,311.27 in 1914, a decrease of 54.51 per cent. Much of the decrease in the yearly levy of personal taxes has been due to legislation eliminating from the classes of property formerly taxable under the general property tax law the following: mortgages, shares of national and state banks and trust companies, and evidences of secured debts. Of the three classes of property defined by law as real estate, the tax levy on lands and buildings shows the greatest increase, viz., 90.04 per cent. When viewed from the standpoint of borough divisions, the tax levy for the Borough of The Bronx shows the greatest increase, viz., 232.12 per cent., while the 8 tax levy for the Borough of Richmond shows the smallest increase, viz., 48.81 per cent. DISCOUNTS. Discounts are rebates or deductions from the gross tax allowed to the taxpayer in consideration of the prepayment of taxes. These discounts are losses in the product of the tax levy and create deficiencies which were provided for in the same manner as uncollectible taxes, pursuant to chapters 208 and 209 of the Laws of 1906. The total loss in the levies through discounts allowed to taxpayers in consideration of the prompt payment of taxes during the period from 1899 to 1914, inclusive, aggregates $4,985,002.37. This sum represents approximately 39-100 of one per cent. of the total taxes levied for the years during which these discounts were allowed. Of this amount, $4,096,451.63 was allowed during the nine years from 1899 to 1907, and represents over 51-100 of one per cent. of the total taxes levied during these years. From 1908 to 1911, inclusive, no discounts were allowed, the charter having been amended early in 1908, abolishing the allowance of discounts. The practice of allowing discounts for the prepayment of taxes was resumed in 1912, when the present plan of providing for the payment of the tax levy in two equal installments was put into operation as a means of effecting a saving in interest costs to the city. For the three years ended 1914 the discounts allowed to the taxpayers for the prepayment of taxes aggregate $888,550.74, or 19-100 of one per cent. of the total taxes levied during these three years. -Prior to 1912 taxes for the current year became due and payable on the first Monday in October. Prior to 1908, personal and real estate taxes paid during October were entitled to a discount or rebate for prompt payment, which was calculated at the rate of six per cent. per annum from the date of payment in October to the first day of the succeeding December. During the month of November payments were subject neither to discount nor penalty. To taxes paid during the month of December a penalty of one per cent. was added, while taxes paid after the 31st day of December were subject to an interest charge calculated at the rate of seven per cent. per annum from the first Monday in October to the date of payment. The enactment of chapter 447 of the Laws of 1908 amended sections 914 to 917 of the Greater New York Charter and abolished the allowance of discounts. From 1908 to 1911 taxes were due and payable, as before, on the first Monday in October, and all payments made before the first day of November were subject to neither discount nor penalty. Payments of taxes made after the first day of November were subject to an interest charge calculated at the rate of seven per cent. per annum from the first Monday in October to the date of payment. It will be noted that although taxes became due and payable on the first Monday in October, expenditures for the current year began immediately after the first day of that year. Hence, in order to finance itself, the city was compelled to borrow onl short-term revenue bonds to meet current expenses. These bonds were issued in anticipation of the collection of taxes. The city therefore starts the fiscal year on January 1 with practically no money, and aside from the miscellaneous receipts of the General Fund, receives no money until the collection of the current tax levy is begun. Inasmuch as no funds were available to meet the expenses of the current year until the revenue from taxes was received, the borrowings of the city in theory approximated the expenses for the first nine months of the year. This kind of financing called for a considerable interest expense on account of the large sums of money the city was thus compelled to borrow. The enactment of chapter 455 of the Laws of 1911 amended the charter with respect to the levy and collection of taxes, substituting for the annual levy of taxes due and payable on the first Monday in October of the year for which the taxes are raised, a provision which permitted the levy and collection of taxes in semi-annual 9 installments. Under the provisions of this law the date upon which taxes became due and payable was advanced from the first Monday in October to the first day of May, with respect to taxes upon all personal property and one-half of all taxes upon real estate, the second or final half of the real estate tax being due and payable on the first day of November. In order to encourage the prepayment of the second half of the tax upon real estate this law revived the practice of allowing discounts for the prepayment of taxes. It permits the deduction of a discount at the rate of four per cent. per annum from the date of payment to November 1 on all payments on real estate of the second or final half of the tax when such payment is made between the first day of May and the first day of November. All personal property taxes are due and payable May 1 and no discounts are allowed. All taxes or portions remaining unpaid after the first days of June and December, respectively, are subject to a charge for interest at the rate of seven per cent. per annum, calculated from the date on which the respective parts became due and payable to the date of payment. As a result the city now begins to receive its revenue from the tax levy approximately five months earlier than it did under the scheme in vogue prior to 1912. The borrowings of the city through the sale of short-term revenue bonds, issued in anticipation of the collection of taxes, have been greatly reduced, and as a consequence a great reduction in the interest cost has been effected. CANCELLATIONS. Cancellations may be made by order of the court, by Comptroller's order and through remission by the Board of Taxes and Assessments. The Commissioners of the Sinking Fund are authorized by section 221A of the Charter to cancel taxes levied against certain classes of real estate, but when such action is taken it is supplemented by a Comptroller's order, so that when entered it takes that form. Section 248 of the Charter was amended by the 1915 Legislature so as to permit the Board of Estimate and Apportionment to authorize the cancellation of uncollectible personal taxes. There have been no cancellations under this new law up to the present time, but it is expected that the Board of Estimate and Apportionment will be requested to authorize the elimination of a considerable amount of personal taxes in the near future. Section 897 of the charter invests the Board of Taxes and Assessments with power to remit or reduce any tax assessed upon real or personal property. This board may remit or reduce a tax upon real property if it is found erroneous or excessive, but may remit or reduce a tax on personal property only under certain prescribed conditions, clerical errors or inability of the person aggrieved to appear while the record of assessed valuation is open for correction, through illness or absence from the city. Remissions of taxes which have been made by the Board of Taxes and Assessments are included under the heading "Cancellations" in the analysis of general tax levies' appended hereto. Property of the United States and of the State of New York; and property of the City of New York held for a public use; the real property of religious or eleemosynary corporations or associations, and some other classes of property are exempted from taxation for general purposes by section 2 of the tax law. A tax is frequently levied, through error, improper description or otherwise, against exempt property, and it being clearly invalid, the Comptroller may direct its cancellation. Section 906 of the charter contains a provision as to when a certiorari to review or correct any final determination of the Board of Taxes and Assessments shall be allowed by the Supreme Court or any justice thereof. Under this provision property owners who are not satisfied with the valuation of their property as determined by the Board of Taxes and Assessments appeal to the court for correction. If the court decides that the assessment is incorrect an order is issued directing its reduction and the amount of the corresponding tax is a cancellation. 10 The public service corporations have secured material reductions of their special franchise taxes by court order. During the earlier years of the special franchise taxes, ordinary real estate was assessed at less than its full value and the courts decided that special franchises should be assessed at the same proportion of their value that prevailed in the case of other real estate. This decision has compelled the cancellation of several million dollars of special franchise taxes. ORDINARY REAL ESTATE. The greatest portion of taxes levied since consolidation has been assessed upon the "ordinary real estate," which is also designated as Real Estate (Lands and Buildings), in order to distinguish it from the "Real Estate of Corporations" and "Special Franchises." This class of property has been assessed with 85.24 per cent. of all the general taxes levied from 1899 to 1914. The aggregate net collections from all classes of taxes beginning with the levy of 1899 to and including December 31, 1914, was $1,613,941,214.14, of which the ordinary real estate paid 90.12 per cent., or $1,454,449,207.05. From the following statement of real estate taxes levied from 1899 to 1914, classified according to boroughs, it will be seen that 67.75 per cent. of the total taxes levied fall upon the Borough of Manhattan, and that 68.39 per cent. of the total net collections are paid by that borough. In each of the other boroughs the percentage of the amount collected is less than the borough's proportion of the total amount levied. Comparing the borough collections with the borough levies, the proportion collected in Manhattan is greater than that of any other borough, 97.87 per cent. of the total amount of taxes levied upon real estate (lands and buildings) having been collected in Manhattan, and the next highest percentage indicated being in Brooklyn, where 96.27 per cent. was collected. In this respect the poorest showing is in the Borough of Queens, where only 90.81 per cent. of the taxes levied upon real estate (lands and buildings) was collected. Summary Statement of Real Estate (Land and Buildings) Taxes-Levies, 1899 to 1914, Classified According to Boroughs, Showing Net Collections Thereof to December 31, 1914. Per Cent. Per Cent. Per Cent. of of of Borough Net Borough Borough Amount Levied, Levies Collections Collections Collec1899 to 1914. to to December to tions to Total 31,1914. Total. Borough Levies. Collections, Levies. Manhattan...... $1,016,409,477 02 67.75 $994,763,816 90 68.39 97.87 The Bronx...... 93,343,443 04 6.22 88,108,315 27 6.06 94.40 Brooklyn....... 307,937,245 44 20.52 296,429,315 80 20.38 96.27 Queens.......... 66,759,199 08 4.45 60,621,545 79 4.17 90.81 Richmond....... 15,867,905 84 1.06 14,526,213 29 1.00 91.54 $1,500,317,270 42 100.00 $1,454,449,207 05 100.00 96.94 Not only does the ordinary real estate (lands and buildings) produce the largest portion of revenues raised by taxation in the City of New York, but the relative amount collected as compared with that levied is greater. The collections for the sixteen years ended December 31, 1914, for this class of taxes aggregated $1,454,449, 11 207.05 out of $1,500,317,270.42, the grand total of all the levies. The collections, therefore, comprise 96.94 per cent. of the levies, and as the discounts and cancellations were only 64/100 of one per cent., the balance uncollected at December 31, 1914, is only 2.42 per cent. of the amount of the levies. The following summary statement exhibits the real estate (lands and buildings) taxes levied from 1899 to 1914 in each year, with all the transactions affecting them and the uncollected balances as at December 31, 1914: Summary Statement of Real Estate Taxes (Lands and Buildings), Levies 1899 to 1914, Showing All Transactions from Date of Imposition to December 31, 1914. ~. 1 C) a_ ) o a aAn o a =u c L Ju o L.)~ a' c C.") 0c-c r' oCLa: 0 a ~ a, 0 ua) i 0 a0 1 3c CC i;. U a - o EU U _ C a Pc 4 H 1899.. 1900.. 1901.. 1902.. 1903.. 1904.. 1905.. 1906.. 1907.. 1908.. 1909.. 1910.. 1911.. 1912.. 1913.. 1914..' $70,422,015 41 66,109,359 06 69,985,905 58 70,550,043 48 64,149,021 06 72,220,078 07 73,585,830 65 79,496,876 72 85,580,422 29 99,989,581 80 105,933,728 87 115,080,167 28 124,845,014 59 133,946,733 95 134,590,929 55 133,831,562 06 $69,541,933 40 65,334,549 66 69,186,222 04 69,885,907 36 63,337,896 94 71,126,351 80 72,419,350 81 78,285,383 70 84,283,593 28 98,996,321 20 104,884,587 50 113,644,252 81 122,440,590 94 129,943.520 55 127,781,818 29 113,356,926 77 98.75 98.83 98.86 99.06 98.73 98.49 98.42 98.48 98.48 99.01 99.01 98.75 98.08 97.02 94.94 84.70 $689,600 34 652,662 29 635,953 77 534,592 56 650,739 68 859,366 36 870,062 99 921,041 82 929,532 96 468,653 98 355,533 35 297,306 02 303,022 16 567,789 71 475.319 17 375,304 90.97 $190,481 67.28.99 122,147 11.18.91 163,729 77.23.76 129,543 56.18 1.02 160,384 44.25 1.19 234,359 91.32 1.18 296,416 85.40 1.15 290,451 20.37 1.09 367,296 05.43.47 524,606 62.52.33 693,608 02.66.26 1,138,608 45.99.24 2,101,401 49 1.68.42 3,435,423 69 2.56.35 6,333,792 09 4.71.28 20,099,330 39 15.02 *.64 $36,281,581 31 *2.42 $1,500,317,270 42 $1,454,449,207 05 *96.94 $9,586,482 06 *Average. Except in the last four years shown there is less than one per cent. remaining uncollected of any year's levy. Out of the $36,281,581.31 uncollected for the sixteen years over $33,000,000 applies to the last five years. More than 99 per cent. of the levies for 1902, 1908 and 1909 have been collected, and over 98 per cent. in all the years, except 1912, 1913 and 1914. In course of time and through tax sales it seems safe to assume that the collections will reduce the percentages of uncollected taxes for the latter years to approximately the same percentages shown for the earlier years. REAL ESTATE OF CORPORATIONS. The title "Real Estate of Corporations" includes private rights of way of public service corporations and the improvements thereon. Subdivision 3 of section 2 of the tax law defines the terms "land," "real estate" and "real property" to be: "The land itself above and under water, all buildings and other articles and structures, substructures and superstructures, erected upon, under or above, or affixed to the same; all wharves and piers, including the value of the right to 12 collect wharfage, cranage or dockage thereon; all bridges, all telegraph lines, wires, polesand appurtenances; all supports and inclosures for electrical conductors and other appurtenances upon, above and under ground; all surface, underground or elevated railroads, including the value of all franchises, rights or permission to construct, maintain or operate the same in, under, above, on or through, streets, highways or public places * * *." This section of the tax law directs that a franchise, right, authority or permission in, upon, under or above any street, highway, public place or public waters, as well as the tangible property thereon shall be known for the purpose of taxation as a "special franchise." This leaves the private rights of way of franchise-holding corporations, together with the tangible property thereon for assessment as "real estate of corporations." In 1899 and prior years the taxes on tangible property, which are now levied under the designation "special franchise," were imposed as "real estate of corporations." For 1900, the first year of the levy of a special franchise tax, the amount levied upon real estate of corporations was $679,268.62, as compared with a levy of $2,383,822.75 for the previous year. This reduction was more than offset, however, by the taxes levied upon special franchises, which were $4,969,748.58. The total amount of taxes levied upon the real estate of corporations for the sixteen years from 1899 to 1914 was $24,614,113.56, of which $20,209,258.54 was collected, or 82.10 per cent. of the total levy. The following table shows the transactions in respect to "real estate of corporations taxes" for the levies from 1899 to 1914, to the 31st of December, 1914: Summary Statement of Real Estate of Corporations Taxes, Levies 1899 to 1914, Showing All Transactions from Date of Imposition to December 31, 1914. 0 > 0 = r,_ _ n ~e X 0~ v c 0 a ^-a U 0 0 4 1899.. $2,383,822 75 $1,949,891 84 81.80 $422,935 01 17.74 $10,995 90.46 1900.. 679,268 62 456,599 30 67.23 213,370 61 31.41 9,298 71 1.36 1901.. 721,067 36 473,746 74 65.70 242,257 03 33.60 5,063 59.70 1902.. 704,173 61 454,168 57 64.50 245,127 74 34.81 4,877 30.69 1903.. 418,359 13 386,387 98 92.37 23,771 90 5.68 8,199 25 1.95 1904.. 495,012 08 458,574 32 92.64 21,640 06 4.37 14,797 70 2.99 1905.. 493,042 26 450,089 70 91.29 26,168 13 5.31 16,784 43 3.40 1906.. 759,212 75 502,720 01 66.21 240,254 08 31.65 16,238 66 2.14 1907.. 1,048,897 83 683,740 45 65.19 348,093 19 33.19 17,064 19 1.62 1908.. 1,445,418 58 829,098 58 57 37 601,616 90 41.62 14,703 10 1.01 1909.. 1,289,192 17 1,034,750 98 80.27 233,231 69 18.09 21,209 50 1.64 1910.. 1,555,696 39 1,165,777 67 74.94 311,103 07 19.99 78,815 65 5.07 1911.. 2,881,065 74 2,592,410 74 89.98 193,855 82 6.73 94,799 18 3.29 1912.. 3.109,931 58 2,769.887 67 89.07 217,124 89 6.98 122,919 02 3.95 1913.. 3,290,268 45 2,957,817 50 89.89 43,623 66 1.33 288,827 29 8.78.1914.. 3,339,684 26 3,043.596 03 91 14 12,441 03.37 283,647 20 8.49 $24,614,113 56 $20,209,258 08 *82.10 $3,396,614 81 *13.80 $1,008,240 67 *4.10 *Average. 13 There was uncollected at December 31, 1914, only 4.10 per cent. of the total amount of real estate of corporations taxes levied for the sixteen years under consideration. The amount remaining uncollected is $1,008,240.67, of which $790,192.69 applies to the years 1911, 1912, 1913 and 1914, which will be considerably reduced by future collections, together, possibly, with some cancellations. The following summary statement of the Real Estate of Corporations taxes shows the net collections on all levies from 1899 to December 31, 1914, classified according to boroughs. It will be noted from this statement that the Borough of The Bronx produces 25.83 per cent. of the total taxes levied on the real estate of corporations. Only 6.44 per cent. of the personal taxes, 4.77 per cent. of the special franchise taxes, and 6.22 per cent. of the taxes on ordinary real estate (lands and buildings) are assessed upon property in that borough. Summary Statement of Real Estate of Corporations Taxes, Levies 1899 to 1914, Classified According to Boroughs, Showing Net Collections Thereof to December 31, 1914. Per Cent. Per Cent. Per Cent. of of of Borough Net Borough Borough Borough. Amount Levied. Levies Collections Collections Collec1899 to 1914. to to December to tions to Total 31, 1914. Total. Borough Levies. Collections, Levies. Manhattan....... $10,194,996 74 41.42 $7,547,480 90 37.35 74.03 The Bronx........ 6,357,259 85 25.83 5,880,194 66 29.10 92.50 Brooklyn......... 4,157,497 35 16.90 3,258,968 88 16.13 78.39 Queens........... 3,269,746 13 13.28 2,921,741 00 14.45 89.35 Richmond........ 634,613 49 2.57 600,873 10 2.97 94.69 $24,614,113 56 100.00 $20,209,258 54 100.00 82.10 SPECIAL FRANCHISES. Subdivision 3 of section 2 of the General Tax Law defines a special franchise as the right, authority or permission to construct, maintain or operate in, under, above, on or through a public highway a structure intended for public use, and the franchise is deemed to include the value of the tangible property so situated. Special franchises were made taxable property for the first time in the history of the state by the enactment of chapter 712 of the Laws of 1899. Prior to the passage of the law corporations and others operating a public utility through a public highway were taxed only on the value of the tangible property used in connection with the operation of such public utility. By the enactment of the special franchise tax law the state board of tax commissioners was empowered "to annually fix and determine the valuation of each special franchise subject to assessment in each city, town or village" of the state and transmit it to the local taxing authorities for inclusion in the tax rolls of the district. In fixing the value of the special franchise the state board of tax commissioners was directed by law to include the value of both tangible and intangible property. Section 48 of the law further defined special franchises as "real property" and directed that all sums in the nature of a tax paid by the owner of the special franchise to a municipality be deducted from the amount of the tax due and payable under the provisions of this act. The first assessment under the new law was made in 1900, and the report of the state board of tax commissioners showed an increase of $135,000,000 over and above 14 the taxable property theretofore assessed by the local department of taxes and assessments. The increase was due mainly to the value of the intangible franchise, which prior to the enactment of the franchise tax law was exempt from local taxation. In order to test the validity of the tax and the constitutionality of the law several of the public service corporations operating in the city obtained separate writs of certiorari to review the respective assessments. This was the beginning of a long and persistent opposition waged by the corporations through the several courts of the state, and carried for final determination to the Supreme Court of the United States. The granting of the writs of certiorari to review the assessments resulted in an order in each proceeding appointing a referee to take and report to the Supreme Court of the State such evidence upon the several issues raised by the companies contesting the validity of the tax and attacking the constitutionality of the law as might be adduced before him, with his findings of fact and conclusions of law thereon. The referee, Judge Earl, after taking many pages of evidence, made separate and complete findings of fact appropriate to each proceeding and reached the legal conclusion in each case "that chapter 712 of the Laws of 1899 is a valid and constitutional enactment, practicable and operative, and that it gave authority to the defendants (State Board of Tax Commissioners) to assess the relators' (companies') special franchise for the purpose of taxation; that the relator had a hearing and due process of law before the defendants upon the review of the assessment * * * and was not deprived of any of its legal or constitutional rights; that it was lawful to assess as one franchise the franchise right, authority or permission which the relator had in the streets of New York and which it operated as one system; that to equalize its assessment with the assessment of other real property in the City of New York the relator is entitled to a deduction," the amount being named in each proceeding, "and that the assessment as thus reduced must be taken as the value of the relators' special franchise for the purposes of assessment and taxation under the act." The Supreme Court of the State adopted the finding both of fact and law, as made by the referee. The companies at once appealed to the Appellate Division of the third and fourth departments, which affirmed as to the facts, but reversed as to the law, the decision of the Supreme Court, upon the ground that the statute in question was in violation of the "home rule" provision of the constitution. The State Board of Tax Commissioners thereupon appealed to the Court of Appeals. On April 28, 1903, the Court of Appeals unanimously decided that the order of the Appellate Division should be reversed and the judgment of the Supreme Court affirmed. The Court of Appeals, in addition to overruling the contention that the act is impracticable and incapable of execution, etc., decided that the act does not violate the principle of home rule embodied in the State Constitution, because it creates a new system of taxation, requiring officers with new functions to enforce it, and that tangible property connected with the special franchises is an inseparable part thereof, forming an entity which was never before taxable by local assessors. Declaring that the courts had erred in declining to hold that the act of 1899 was in contravention of the provisions of the Federal Constitution, the companies carried the case to the Supreme Court of the United States, where, on May 29, 1905, the power of the state to tax special franchises was definitely settled and the decision of the Supreme Court of New York affirmed. 15 Summary Statement of Special Franchise Taxes, Levies 1900 to 1914, Classified According to Boroughs, Shozkqing Net Collections Thereof to December 31, 1914. Per Cent. Per Cent. Per Cent. of of of Borough Net Borough Borough Borough. Amount Levied, Levies Collections Collections Collec1900 to 1914. to to December to tions to Total 31,1914. Total Net Borough Levies. Collections. Levies. Manhattan........ $67,084,678 56 70.95 $41,733,052 54 74.27 62.22 The Bronx....... 4,511,603 38 4.77 2,737,676 77 4.88 60.68 Brooklyn......... 19,522,538 81 20.65 9,514,642 18 16.92 48.74 Queens........... 2,842,164 30 3.01 1,898,929 66 3.38 66.81 Richmond........ 585,598 11.62 309,011 19.55 52.77 Total....... $94,546,583 16 100.00 $56,193,312 34 100.00 59.43 The following statement exhibits in summary form the transactions of all the levies of special franchise taxes from 1900, the first year of the levy of such taxes, to December 31, 1914. The total of discounts and cancellations, $27,285,210.13, includes $10,851,264.80 deducted pursuant to the provisions of section 48 of the law, because the corporations assessed had paid that amount for some other purpose, and under the law were held by the courts to have credit for it toward their special franchise taxes. These deductions are shown under a special heading in the main tables appended hereto. Summary Statement of Special Franchise Taxes, Levies 1900 to 1914, Shozwing all Transactions from Date of Imposition to December 31, 1914.; ^> 0(L> w 0 Y Q o D- -* D _ 5 a.cU: v C e o ~ ~; I S ~ 1900.... $4,969,748 58 $2,676,255 01 53.85 $2,028,307 62 40.82 $265,185 95 5.33 1901.... 4,925,291 84 2,535,381 50 51.48 2,308,004 91 46.86 81,905 43 1.66 1902.... 5,049,106 47 2,587,204 00 51.24 2,403,071 20 47.60 58,831 27 1.16 1903.... 3,360,543 42 2,256,769 12 67.16 1,065,572 88 31.71 38,201 42 1.13 1904.... 3,837,072 69 2,636,034 33 68.69 1,160,436 93 30.25 40,601 43 1.06 1905.... 4,546,986 43 2,994,727 19 65.87 1,516,839 60 33.36 35,419 64.77 1906.... 5,394,041 11 3,469,898 19 64.33 1,877,394 53 34.81 46,748 39.86 1907.... 7,005,982 97 3,975,051 26 56.74 2,669,775 77 38.11 361,155 94 5.15 1908.... 8,017,257 50 4,620,239 16 57.63 2,898,216 24 36.15 498,802 10 6.22 1909.... 8,022,692 92 4,836,514 92 60.29 3,060,546 18 38.15 125,631 82 1.56 1910.... 8,249,097 11 4,531,843 22 54.94 1,926,009 95 23.35 1,791,243 94 21.71 1911.... 8,325,934 55 4,963,035 09 59.61 1,643,686 63 19.74 1,719,212 83 20.65 1912.... 7,602,095 47 5,155,994 16 67.82 758,344 88 9.97 1,687,756 43 22.21 1913.... 7,991,775 16 4,815,443 34 60.26 982,522 98 12.29 2,193,808 84 27.45 1914.... 7,248,956 94 4,138,921 85 57.10 986,479 83 13.61 2,123,555 26 29.29 $94,546,583 16 $56,193,312 34 *59.43 $27,285,210 13 *28.86 $11,068,060 69 *11.71 *Average. 16 The following table classifies under appropriate headings each of the total discounts, cancellations and deductions under section 48 of the tax law, as shown in the preceding table: Summary Statement of the Discounts, Cancellations and Deductions Under Section 48 of the Tax Law, Affecting Special Franchise Taxes, from Date of Imposition to December 31, 1914. Total Year Deductions Discounts, of Discounts. Cancellations. Under Cancellations Levy. Section 48, and Tax Law. Deductions. 1900.................. $134 25 $1,753,691 32 $274,482 05 $2,028,307 62 1901................. 61 34 1,757,035 13 550,908 44 2,308,004 91 1902.................. 130 23 1,837,558 76 565,382 21 2,403,071 20 1903.................. 1,091 56 524,541 02 539,940 30 1,065,572 88 1904.................. 1,765 40 597,987 45 560,684 08 1,160,436 93 1905.................. 3,837 73 913,969 32 599,032 55 1,516,839 60 1906.................. 873 88 1,228,506 97 648,013 68 1,877,394 53 1907.................. 6,527 13 1,906,478 24 756,770 40 2,669775 77 1908.......................... 2,017,44390 880,77234 2,898,21624 1909.......................... 2,077,676 06 982,870 12 3,060,546 18 1910.......................... 997,017 52 928,992 43 1,926,009 95 1911........................ 664,326 18 979,360 45 1,643,686 63 1912.................. 19,239 31 91,744 18 647,361 39 758,344 88 1913.................. 14,594 07.......... 967,928 91 982,522 98 1914.................. 17,714 38.......... 968,765 45 986,479 83 Totals......... $65,969 28 $16,367,976 05 $10,851,264 80 $27,285,210 13 Out of the total levies upon special franchises of $94,546,583.16, the net collections amounted to $56,193,312.34, or 59.43 per cent., and on December 31, 1914, there remained uncollected $11,068,060.69. Of this balance uncollected, $9,515,577.30 is applicable to the last five years and constitutes 85.97 per cent. of the total. PERSONAL TAXES. An important feature connected with an analysis of the tax levies, and one which merits the careful attention of those interested therein, is the experience of The City of New York in connection with the imposition and subsequent collection of taxes on personal property. The securing of reliable detailed data concerning the results of the taxation of personal property has not always been easy of accomplishment. To students of taxation and to others interested in the operation of the personal property tax and its productiveness, the statements and tables submitted herewith are likely to arouse special interest, in view of the fact that herein are exhibited, in analytical and in summary form, much valuable data concerning the city's experience with the personal property tax, covering a period of sixteen years, viz., 1899 to 1914, inclusive. As pointed out in a preceding paragraph, the total taxes levied on personal property during the sixteen-year period under review aggregated $140,678,030.87, which sum represents over 7.99 per cent. of all the general property taxes levied during this period. In the following statement there is presented a comparison of the relative proportion of real property taxes levied with the relative proportion of personal property taxes levied in each of the five boroughs during the years from 1899 to 1914. Reference to this statement shows that, with the exception of the Borough of Manhattan, the total personal taxes levied in each borough are a relatively smaller proportion of the total personal tax levies than the corresponding proportion of real estate taxes levied in such borough during this period. Thus, the Borough of The Bronx, in which 6.44 per cent. of the total real estate tax was levied, contributed only 2.12 per cent. of the personal property tax levied. A similar observation may be 17 made with respect to the Boroughs of Brooklyn, Queens and Richmond. Referring to the situation in the Borough of Manhattan, it may be pointed out that the total real estate levies for the period 1899 to 1914 aggregated $1,039,689,152.32, or 67.53 per cent. of the total real estate levies for the entire city, while the total personal tax levies aggregated $113,310,906.46, or 80.55 per cent. of the total personal taxes levied in the entire city during the same period. Comparative Statement Showing Total Real Estate (All Classes) and Total Personal Property Taxes, Levies 1899 to 1914, Classified according to Boroughs. -0 0.o o. =. = =. Borough. ]' o 'o 0 ^s ~~~ ~ ~ E- 0 ~.-, 0::.-0. — 0 H z 6 PH H C Manhattan......$1,093,689,152 32 67.53 $113,310,906 46 80.55 $1,207,000,058 78 68.57 The Bronx..... 104,212,306 27 6.44 2,991,139 40 2.12 107,203,445 67 6.09 Brooklyn....... 331,617,281 60 20.48 20,684,919 99 14.70 352,302,201 59 20.02 Queens......... 72,871,109 51 4.50 2,389,677 79 1.70 75,260,787 30 4.28 Richmond....... 17,088,117 44 1.05 1,301,387 23.93 18,389,504 67 1.04 Total....... $1, 619,477,967 14 100.00 $140,678,030 87 100.00 $1,760,155,997801 100.00 Perhaps the most discussed feature of the personal property tax has been its relative productiveness. Out of the total personal taxes levied during the 16-year period from 1899 to and including 1914, to-wit, $140,678,030.87, the sum of $83,089,436.67, or 59.07 per cent., was collected to December 31, 1914. Analyzing these collections according to the boroughs in which they were made, it will be observed that the best results, when viewed from the standpoint of relative productiveness, were obtained in the Borough of Manhattan, where, with a total borough levy equal to 80.55 per cent. of the total personal taxes levied for the period under review, the collections equalled 63.87 per cent. of such borough levies. In comparing the collections in the Borough of Manhattan with those in the other boroughs of the City, we find that the Borough of Manhattan has produced more than 87.10 per cent. of the total revenue derived from the imposition of the personal property tax during the past 16 years. A summary of these facts is presented in the following table: Summary Statement of Personal Taxes, Levies 1899 to 1914, Classified According to Boroughs, Showing Net Collections Thereof to December 31, 1914. Per Cent. Per Cent. Per Cent. of of of Borough Net Borough Borough Borough. Amount Levied, Levies Collections Collections Collec1899 to 1914. to to December to tions to Total 31,1914. Total Net Borough Levies. Collections, Levies. Manhattan...... $113,310,906 46 80.55 $72,366,800 65 87.10 63.87 The Bronx...... 2,991,139 40 2.12 817,431 00.98 27.33 Brooklyn....... 20,684,919 99 14.70 8,405,052 95 10.12 40.63 Queens......... 2,389,677 79 1.70 865,219 14 1.04 36.21 Richmond...... 1,301,387 23.93 634,932 93.76 48.79 Total....... $140,678,030 87 100.00 $83,089,436 67 100.00 59.07 18 The following table exhibits in summary form the city's experience in connection with the imposition and subsequent disposition of personal property taxes from 1899 to 1914. As pointed out in a preceding paragraph, it will be noted that 59.07 per cent. of the total personal taxes levied from 1899 to 1914 was collected to December 31, 1914. Of the remaining sum, aggregating nearly 41 per cent. of the total personal taxes levied during this 16-year period, $356,388.80 was lost through discounts or rebates allowed to taxpayers in consideration of the prompt payment of taxes, and personal taxes aggregating $9,566,786.69 were remitted and cancelled because they were invalid and their collection could not be legally enforced. These two amounts represent 7.05 per cent. of the total personal taxes levied during this period. But this figure by no means represents the total loss or deficiency in the product of the personal tax levies imposed during this period, and it will be observed by reference to the statement submitted hereunder that there remained uncollected on the books of the City of New York at December 31, 1914, the large sum of $47,665,218.71, or approximately 33.88 per cent. of all the personal property taxes levied from 1899 to 1914. This sum, with the exception of a relatively small part of the uncollected balance outstanding of the levy of 1914, may be considered as uncollectible and placed in the same category as the $9,923,375.49 herein previously referred to as representing the amount of taxes lost through discounts allowed and the cancellation of invalid taxes. From the foregoing survey, it may be confidently stated that at least 40 per cent. of the total personal property taxes levied from 1899 to 1914 inclusive will prove uncollectible. These uncollectible balances, with other deficiencies in the product of real estate tax levies, have from time to time been provided for either by the issuance of corporate stock, as authorized by chapter 208 of the Laws of 1906, or since 1907 by inclusion in the annual budget, as provided by section 248 of the Greater New York Charter, as amended by chapter 209 of the Laws of 1906. Summary Statement of Personal Taxes, Levies 1899 to 1914, Showing All Transactions from Date of Imposition to December 31, 1914. rtt ~:; 0 =,,, |o 0u 0 CZ CZ 0. < > E Po v ~ )'' ' a v 19039.. $13,374,238 37 $8,482,110 4954,75 63.43 97 51. 06 80 9 1,87703 9.19 3,857,219947 1 39.75 1904...9,516,24066 4,969,87544 52.23 241,11431 2.53 4,305,25091 45.24 1905.. 10,354,826 68 4,691,34771 45.31 1,163,03581 11.23 4,500,44316 43.46 1906.. 8,444,96283 4,379,70189 51.87 734,20073 8.69 3,331,06021 39.44 1907.. 8,312,36693 4,503,43848 54.18 739,62938 8.89 3,069,29907 36.93 1908.. 7,088,82573 4,364,78269 61.58 559,06649 7.88 2,164,97655 30.54 1909.. 7,497,01970 4,555,08919 60.76 552,20517 7.37 2,389,72534 31.87 1910.. 6,589,80914 4,620,98570 70.12 510,28443 7.75 1,458,53901 22.13 1911.. 6,185,74449 4,389,22778 70.96 508,71525 8.22 1,287,80146 20.82 1912.. 6,297,944 75 4,436,406 77 70.44 341,41169 5.42 1,520,126 29 24.14 1901..~~ ~ 1269,3 08 707016. 57,7,764.3 445190 49 19 Tf >, O) 0 - O\ 4,4 - Zo- c o. o To O c >~