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 Cornell University Library 
 HJ4591.N53 A5 
 Taxation of personal property In New Yor 
 
 3 1924 030 220 028^ 
 olin O^efs 
 
 TAXATION OF PERSONAL PROPERTY 
 
 In New York State 
 From 1880 to 1913 
 
 REPORT OF A SUB-COMMITTEE 
 
 OF THE 
 
 Board of Taxes and Assessments 
 
 CITY OF NEW YORK 
 
 EDWARD KAUFMANN, 
 DANIEL S/McELROY, 
 
 Sub-- Committee. 
 
 DEPARTMENT OF TAXES AND ASSESSMENTS 
 "^ CITY OF NEW YORK 
 
 1 9'l 3 
 
 E.V, 
 

 / 
 
 
 Taxes are imposed on persons and property in the State of New York under the provisions of State 
 law, operating throughout the entire State. There are in many city charters and village charters certain 
 administrative provisions which affect the date of assessment or the manner of protest or appeal or some 
 similar administrative act. But the liability to taxation is uniform throughout the State because it is 
 found in one general act, known as the Tax Law. 
 
 The fact that this general act is administered by local officials has led some persons to believe that 
 their local officials have discretion to impose taxes or exempt from taxation, which is not the fact. 
 
 Since 1880 the policy of the State of New York towards the taxation of personal property has been 
 to classify such property and to impose a special tax upon each separate class. As each class has been de- 
 fined in the tax law and subjected to its special tax, it has been withdrawn from liability to the general 
 property tax. This has caused the assessed total of personal property subject to the general property tax to 
 shrink in amount. Many persons, seeing only this shrinking total, have assumed that other personal prop- 
 erty has been exempted from taxation. 
 
 The object of this report is: 
 
 1. To point out the large revenue derived in the State of New York from these special taxes on 
 classified property. 
 
 2. To show that a larger revenue is derived from these special taxes than could be had by attempting 
 to reach such classified property by the personal property tax, either at the current local rates or at a low 
 rate such as three mills. 
 
 3. To show that under the classified tax policy of New York State the proportion of taxes paid by 
 real estate has been greatly decreased and the proportion derived from the other sources greatly increased. 
 
 4. To show that the passage of the Secured Debt Law has not resulted in any loss of revenue, but 
 has been new found revenue. 
 
 I. 
 
 THE ENORMOUS REVENUE DERIVED FROM SPECIAL TAXES ON CLASSIFIED PERSONAL 
 
 PROPERTY IN THE STATE OF NEW YORK 
 
 Indirect Taxes Annually Collected in State of New York 
 
 1. Corporation Taxes produced $10,349,164 76 
 
 This is equivalent to a tax of 2% on $517,458,238.00 
 
 or a tax of 3 mills on 3,449,721,555.00 
 
 2. Tax on Organisation of Corporations produced $472,959.81 
 
 This is equivalent to a tax of 2% on 23,647,990.00 
 
 or a tax of 3 mills on 157,'653!233.00 
 
 3. Inheritance Tax produced $12,153,188.84 
 
 This is equivalent to a tax of 2% on 607,659,442.00 
 
 or a tax of 3 mills on 4,05l',062i946.00 
 
 4. Stock Transfer Tax produced $3,653,037.24 
 
 This is equivalent to a tax of 2% on 182,651,862.00 
 
 or a tax of 3 mills on 1,217,679,080.00 
 
 5. Secured Debt Tax produced $1,411,567.60 
 
 This is equivalent to a tax of 2% on 70,578,380.00 
 
 or a tax of 3 mills on 437,189,200.00 
 
 6. Mortgage Recording Tax produced $3,704,648 . 90 
 
 This is equivalent to a tax of 2% on 185,232,445.00 
 
 or a tax of 3 mills on 1,234,882,966.00 
 
7. Tax on Motor Vehicles produced $1,053,762.25 
 
 This is equivalent to a tax of 2% on $52,688,112.00 
 
 or a tax of 3 mills on 351,254,083.00 
 
 8. Bank Tax produced $4,528,705 .85 
 
 This is equivalent to a tax of 2% on 226,435,297.00 
 
 or a tax of 3 mills on 1,509,565,283.00 
 
 Total of above indirect taxes produced $37,327,026.25 
 
 This is equivalent to a tax of 2% on 1,866,351,312.00 
 
 or a tax of 3 mills on 12,443,342,083.00 
 
 Note — The total assessed value of all real estate in the State of New York is $10,561,501,373. 
 
 In addition to the revenue shown above from special taxes, personal property, not classified and spc 
 cially taxed, was assessed in the State of New York for $462,300,841. 
 
 Of this amount $104,377,718 was outside of The City of New York. 
 
 An average tax rate of 2% on this would produce $2,087,554.00 
 
 In The City of New York the assessment was $357,923,123 and the tax rate of 1 83/100% 
 
 on this would produce 6,185,744.00 
 
 Total $8,273,298.00 
 
 Special Indirect Taxes 37,327,026 . 00 
 
 $45,600,324.00 
 
 This total of $45,600,000 is produced annually by taxes that have been substituted for the personal 
 property assessment. 
 
 Is it conceivable that any sum approaching $45,600,000 could be obtained from the ordinary per- 
 sonal property assessment if these special taxes were repealed, and all personal property were again made 
 subject to the general property tax? 
 
 At a 2% rate it would require $2,280,016,400 to produce such a revenue. And the largest personal 
 assessment ever known in the State was only $800,000,000. 
 
 At a 3 mill rate it would require $15,200,108,000 (over fifteen billion dollars) to produce such a 
 revenue. 
 
 Yet these special taxes produce $37,327,026 without any difficulty in administration, and without the 
 perjury, friction and ill-feeling which must attend any attempt at a listing system, whether the tax be 
 burdensome or light. 
 
 Proportion of Personal Taxes to Real Estate Taxes 
 
 If we assume a tax rate of 2% it will require $1,866,351,312 
 
 to produce the $37,327,026 now produced by the Special Indirect Taxes. Add to that the 
 
 present assessed value of personal property subject to the personal property tax 462,300,841 
 
 Total _. $2,528,652,153 
 
 Total assessed value of real estate is $10,561,501,373 
 
 Hence the value of personal property on the equivalent of a 2% tax rate is 25% of the value of real 
 estate, or 20% of the total of real and personal. 
 
 This may seem small, yet in 1880, before New York began its system of classified personal property 
 taxes the proportion of personal to the total of real and personal was ooly 12.70%. So that the result 
 of the inauguration of the present New York tax system has been nearly to double the proportion of per- 
 sonal to the total of real and personal. 
 
 12.70% of the present total of real and personal would be $1,400,022,880. Yet the indirect taxes on 
 personal property produced the equivalent of a 2% tax on $1,866,351,312, and we still have $462,300,841 
 of personal property on our rolls ! Hence any attempt to suggest that the imposing of special taxes has 
 resulted in the exemption of personal property is simply ridiculous. 
 
II. 
 
 HOW MUCH PERSONAL PROPERTY, TANGIBLE AND INTANGIBLE, OWNED BY CITI- 
 ZENS OF THE STATE OF NEW YORK, COULD BE MADE SUBJECT TO A GEN- 
 ERAL PROPERTY TAX, IF ALL SPECIAL TAXES WERE REPEALED? 
 
 The amount of personal property owned by citizens of the State of New York is a matter of guess- 
 work. No statistics are available. Inferences, however, may be drawn from such data as is available. 
 
 United States Census 
 
 In the statistics on Wealth, Debt and Taxation in the United States in 1904, the Census Bureau esti- 
 mates the " true value of all property and of specified classes of property as follows " for the State of 
 New York: 
 
 True value 
 
 of real property and improvements $9,151,979,081 
 
 of live stock ^ 189,662,043 
 
 of farm implements and machinery 58,806,300 
 
 of manufacturing machinery, tools and implements 486,774,713 
 
 of gold and silver coin and bullion 412,832,428 
 
 of railroads and their equipment 898,222,000 
 
 of street railways, shipping, water works, etc 1,151,475,505 
 
 of all other, including products of agriculture, manufactures and mining, imported 
 merchandise, clothing and personal adornments, furniture, carriages and 
 
 kindred property 2,419,290,137 
 
 Total $14,769,042,207 
 
 Deduct real property, railroads and street railways, etc 11,201,676,586 
 
 Leaves $3,567,365,621 
 
 But included in this is imported merchandise and some other items which would be practically im- 
 possible of assessment. On the other hand there ha.s been some increase since 1904. Perhaps one item 
 balances the other and leaves the total at the present time unchanged. 
 
 This sum ($3,567,365,621) covers, substantially all tangible personal property because it includes: 
 
 a. Horses, cattle and all live stock. 
 
 b. Carriages and wagons. 
 
 c. Furniture, books and pictures. 
 
 d. Jewelry, clothing and personal effects. 
 
 e. Merchandise and stock in trade. 
 /. Machinery and tools. 
 
 g. Vessels. 
 
 Intangible Personal Property 
 This includes mortgages, bonds and credits generally. 
 
 Mortgages. 
 
 The mortgage recording tax paid last year was upon a total of $740,929,780. Assuming that the 
 average life of a mortgage is five years, the total mortgage indebtedness of the State would be $3,704,- 
 
 648,900. 
 
 Bonds. 
 
 Corporate bonds as a rule are secured by mortgage on real estate and hence are included under mort- 
 gages. Let us assume, however, that the bonds not secured by mortgage or secured on property outside 
 of the State and owned by residents of the State, equal one-half the amount of real estate mortgages and 
 we have $1,852,324,450 as the investment in bonds. 
 
 Credits Generally. 
 
 Under this head are included deposits in banks, book credits, promissory notes, etc. Here we are 
 left to pure conjecture, but assuming $200 per capita (which seems ample) we would have $1,800,000,000. 
 
Summary of Personal Property 
 
 Tangible personal property $3,567,365,621 
 
 Mortgages 3,704,648,900 
 
 Bonds ; 1,852,324,450 
 
 Credits, etc 1,800,000,000 
 
 $10,924,338,971 
 
 Note— The total assessed value of real estate in the State of New York is $10,561,501,373. Yet we 
 are to-day collecting in special taxes $37,327,026.25, which is the equivalent of a tax of 3 
 mills on $12,443,342,083. 
 
 If we were to repeal all our special taxes and should succeed in listing every dollar of this 
 $10,924,338,971 of personal property on the tax rolls, a tax of 3 mills on this sum would be $32,773,016.91, 
 which is $4,754,009.34 less than the present revenue derived from our special taxes. 
 
 And under our present system, in addition to the revenue from special taxes, as above, we have on 
 our local tax rolls the sum of $462,300,841 subject to current local rates. 
 
 But it is inconceivable that with the most rigorous enforcement of the law and the utmost diligence 
 and intelligence on the part of assessors, more than one-half of this total of $10,924,338,971 could be placed 
 on the rolls, in which event a tax at the rate of 3 mills would only produce $16,386,508.45 instead of 
 $37,327,026.25, now produced in special taxes. 
 
 Who Would Pay 
 
 First of all the farmers, for they have $189,662,043 of live stock and $58,806,300 of farm implements 
 and machinery. This would all be open to the view of the assessor and could not escape. And it would be 
 all new found revenue because practically none of the special taxes fall on the farmers now. 
 
 Second, the manufacturers, who have $486,774,713 of manufacturing machinery, tools and imple- 
 ments. These also would be open to the view of the assessor. But note that to-day our taxes on corpora- 
 tions produce $10,349,164.76 and on organization of corporations $472,959.81, a total of $10,822,124.57, or 
 the equivalent of a 3-mill tax on $3,607,374,788. 
 
 Third, the merchants, whose stock of goods would be open to the view of the assessor. 
 
 Fourth, the householders, whose furniture, clothing, books, silverware, pictures, jewelry, horses, 
 carriages, automobiles, etc., would all be subject to appraisal and assessment by the assessor. 
 
 Fifth, the investors in bonds, mortgages and notes, who would be as diligent as possible in concealing 
 such possessions from the assessor. 
 
 Note that under the mortgage recording tax and the secured debt law the investors in such securities 
 now liave to pay a tax on such securities. 
 
 The result then would be that farmers, manufacturers, merchants and householders would all pay 
 more under such a system and that the owners of bonds, mortgages and notes would be left as they are now, 
 unless they voluntarily listed their securities with the assessor. 
 
 And the further result would be that if every farmer, manufacturer, merchant and householder paid 
 on all his tangible property, and investors listed all their bonds, mortgages and notes, a tax of 3 mills on all 
 this would produce $32,773,061.91 instead of $45,600,324 under the present system. 
 
 III. 
 DIVISION OF TAX BURDEN AS BETWEEN REAL ESTATE AND PERSONAL ESTATE 
 
 Prior to 1880 the classified tax system of the State had not been inaugurated. Apart from the inci- 
 dental revenue from fees, fines and sales of State land, etc., the revenue of the State was derived from the 
 direct State tax on the assessed value of real and personal estate in the several counties. 
 
 The report of the State Board of Tax Commissioners shows that in 1880 the assessed value of real 
 estate in the entire State was ,$2,340,335,690. In the same year the assessed value of personal estate in the 
 entire State was $340,921,916. That is to say, real estate comprised 87% of the total and personalty 
 only 13%. 
 
 In 1913 in the City of New York the total budget of the City was $192,711,441.16. Of this sum 
 $41,581,991.46 was derived from the revenues of the General Fund and $5,913,295.26 was the total tax 
 
assessed against personal property, leaving as the total tax to be assessed and levied on real estate the sum 
 of $144,216,154.44. This is only 75% of the total budget of the City, so that in so far as city taxes alone 
 are considered, the tax burden on real estate had fallen from 87% to 75% in the period from 1880 to 1913. 
 
 In this total of $41,581,991.46, constituting the revenue of the General Fund, is included the tax on 
 bank shares, the City's half of the excise tax, the City's half of the mortgage recording tax, the market rev- 
 enues, the excess of water rents and dock rents and all the other sources of city revenue which have been 
 so carefully looked after and gathered up during these years. 
 
 But for the year ending September 30, 1912, the State budget was $50,036,406.08, and of this sum 
 only $6,326,823.13 was raised by a direct State tax on the assessed value of real and personal estate. The 
 balance of the State revenue, viz. $43,709,582.95, was derived from the indirect taxes, hereinbefore de- 
 scribed, as forming part of the classified tax system of the State of New York. 
 
 In that year the equalized total assessed value of the real and personal property in the City of New York 
 was $7,168,909,422.01. The total of such assessed value for the State was $10,121,277,461.48, and the City 
 of New York thus had 70% of such assessed value. Seventy per cent, of $43,709,582.95 (the total revenue 
 of the State from sources other than the direct tax on real and personal property) is $30,596,708.06, which 
 represents the 70% of the City of New York. 
 
 If the State of New York had not developed this system of classified indirect taxes on property to 
 supply its State treasury, it would have been necessary to raise the entire $50,036,406.08 by direct State tax, 
 instead of only $6,326,823.13, as was the fact. In this event the City of New York would have been called 
 upon to pay $30,596,708.06 more than it did for the year ending September 30, 1912. 
 
 Now let us add to the total City budget of $192,711,441.16 
 
 this sum which it was saved in direct State taxes 30,596,708.06 
 
 and we have $223,308,150.22 
 
 as the total tax burden paid by the citizens of the City of New York as its portion of State and local taxes. 
 Of this total only $144,216,154.44 was borne by real estate, or 65% of the whole. 
 
 Thus in 1913, as a result of the establishment of the classified tax system of the State, the burden 
 of real estate has fallen from 87% to 65%. 
 
 IV. 
 
 THE SECURED DEBT LAW HAS NOT REDUCED REVENUE 
 
 The Secured Debt Law provides for a tax of one-half of one per cent, on certain bonds and other 
 investment securities, and as a means of inducing payment, the offset of debt is withdrawn from any such 
 security which is not registered and stamped. 
 
 Under the old law bonds were theoretically taxable, but rare indeed was the case where an assessor 
 found the owner of bonds who did not owe some debt which could be used as an offset. Now such debts do 
 not avail against the unstamped bonds. 
 
 Thus the revenue under the Secured Debt Law is new-found revenue. As each class of personal 
 property has been classified and placed under a special tax, the total of personal property subject to the 
 general property tax has shrunk and the total of personal property actually assessed has also shrunk. Thus 
 in the State outside of the City of New York the total assessed value of personal property has dropped from 
 $197,000,000 in 1899 to $105,000,000 in 1911. 
 
 In the City of New York the share of taxes from personal property can be measured better by the 
 actual collections than by the assessment. (Up State, the figures of actual collections are not available.) 
 Thus the Receiver of Taxes in the City of New York has collected as follows from personal property assess- 
 ments : 
 
 1906 $4,336,946.95 
 
 1907 , 4,449,614.86 
 
 1908 ; 4,428,421 .42 
 
 1909 4,629,508.95 
 
 1910 4,884,543.85 
 
 1911 4,417,948.31 
 
 1912 4,508,013.88 
 
 In the City of New York until recent years it was the practice to assess each year enormous amounts 
 of personalty on which nothing could be collected, with the result that the finances of the City were disor- 
 ganized. In r905 there were over $30,000,000 of uncollectible arrears of personal taxes, which by Chapter 
 208 of the Laws of 1906, were directed to be funded by the issue of City Bonds. 
 
The Secured Debt Law was put into effect September 1, 1911, and it will be seen that its passage has 
 had no appreciable effect on the receipts from personal assessments, despite the fact that $1,411,000 was col- 
 lected under it the first year and that the revenue for the second year is coming in at the same or a slightly 
 increased rate. 
 
 Incidentally it may be remarked that the personal property tax law has always been enforced in the 
 City of New York with far greater diligence than up state. New York City returns 70% of the real estate 
 values in the State and returns 80% of the personal estate values. 
 
 Practically all of the revenue under the Secured Debt Law has been paid into the New York office 
 of the State Comptroller and presumably has been paid by residents of the City of New York. The amount 
 paid into the State treasury under the Secured debt Law has to that extent reduced the direct State tax, 
 that is to say that the direct State tax would have been greater by $1,411,000 had it not been for the revenue 
 produced under the Secured Debt Law. 
 
 But New York City pays 70% of the State direct tax and hence has received benefit to the amount 
 of 70% of $1,411,000, or $987,700, in the first year. Three million dollars had been received under the 
 Secured Debt Law up to May 1, 1913. Hence, New York City's share has been $2,100,000. 
 
 And every locality in the State has also benefited because the Secured Debt Law has reduced the direct 
 State tax to the extent of 15 cents on each $1,000 on assessed valuation. In every city or town, then, which is 
 equalized at 70%, there is a saving of 20 cents on $1,000 assessed value, or $200 on each $1,000,000 assessed 
 value on the local assessment roll, and all this without diminishing the revenue from personal property 
 assessment. 
 
 2622 13 (B) 2000 
 
XI 
 
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 The original of this book is in 
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 There are no known copyright restrictions in 
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