CIHM Microfiche Series (IMonograplis) ICIMH Collection de microfiches (monographies) Canadian Inttituta for Historical IMicroraproductions / institut Canadian da microraproductions historiquas Technical and Bibliographic Notes / Notes techniques et bibliographiques The Institute has attempted to obtain the best original copy available for filming. 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This Ham !• f ilnwd at Mm raduetion ratio ehaeind balow / C« doeummt Mt fiim4 au taux da rMuetion Indiqu* oi-daasous. lOx 14x 18x 22x 26x 30x >/ 12x 16x 20x 24x 28x 32x TiM copy (ilmad h«r« has b««n raproduead thanks to tha s«(M'0*< Be;'-'- ■ ■ ",'.-,,'.•• ♦■ ,. j. .- ' . ' ''-^ ^u i*-^"'-?-' ' ;■ •'■'^ ■''■•» ■ -.';"> ^ ■■^' -i'C-^.'-' -•''■ f^HnIlM H>. ■! VW. :Ai» ITW -ing of taxes, is manifested in the arguments for the so-called singHe tax on land v.Jues. It is not por AitniCAM Acadbit aeooouue life erutbed between the milbtoneii of colkpeiiig knd values tnd rising tax ntee. But while the single liuid tax contpicuoualy faib to reavh the pocket of the aucceflsful land speculator, there is no one whose fin s may be more legitimately laid under heavy tribute for civic needs. As a matter of fact the real prices of land befoine and after a land boom plainly indicate that much the larger proportion of what the shrewd land speculator has dealt in, under the guise of land sales, are simply carefully dressed visions of sudden wealth to be obtained by the transfer of city lots. The lots themselves may have little permanent interest for either party to the apeculatior. Those, however, who have a permanent use for them can obtain them only at the specu- lative nfr% which tliey bear as counters in the game of land specula* tion. One of the most disheartening features in the long period of stagnation and slow recovery, which follows the collapse of a land boom in an over-grown and over-built city, is the legacy of debt and heavy interest charges which is entailed upon the unfortunate citi- sens. Indeed, during the boom period, a great many expenses which should have been met from the annual taxes are paid out of the proceeds of loans. After the boom, however, not only have these charges to be met out of annual taxes, but also the full interest on the millions borrowed, as well as many repairs and minor replacements rendered necessary by imperfect work under inadequate supervision. Thus, after the boom, the annual taxation may be considerably greater than during the period of flush times and special expenditure. The interest charges alone in many of the best boomed cities in Can- ada amount to from one-fourth to one-third of the annual taxes. If provision is being made for a sinking fund, the proportion is of course considerably increased. Now it is commonly found that these great burdens have to be borne in the largest measure, especially if any form of single tax is in operation, not by the successful speculators, who have disposed of the greater part c their land holdings, but by their unfortunate victims, many hom are forced to purchase their lands for resi- dence or otner permanent uses and to pay for them the boom prices, which could not be subsequently recovered. Obviously, what is required is some system of civic taxation which will be as rapid and effective in operation and as generous in Taxatiok and IwufD Valcm I I I r H* levies upon exceptknuil r'^oftti m are the operttione and the g^T of the succeaeful land ■pecolatcr. Clearly abo this wiU not he the slow biennial system of taxation, which sssriniii the property one jrear and collects the taxes the toUowing year. Dunng this time, in cases of the really tjrpical civic boom, such as we have had in numer- ous towns and cities in both the United States and Canada, the prop- erty may have changed hands scores of times; often, in single trans- fers, at an increase in value anywhere from 25 to 100 per cent, or more. Nor can effective taxation of the speculator have reference to any rental value of the properties dealt in, rental valu ; being praet>' ."y non-«xistent during a civic boom. It must be a system whi< ■>. p; . vides for an automatic tax levy at every legal transfer of th !)-">* erty, and which collects the taxes from the purchaser as part oi the price wh- 'h he has agreed to pay for the land. Moreover, the levy must incrc dse in percentage as the scale of profit increases, thus strictly following the central principle of taxing according to ability to pay. Such a system of taxation, however, and the application of the proceeds thereof, must be entirely distinct from the system of annual taxation required to meet the current needs of the municipalities. The situation involves a sharp distinction between two forms of civic expenditure. First, we have the expenditure which provides for the regular annual needs of the citizens under normal conditions of civic life. Secondly, we have the capital expenditure, quite irregular as to the -Periods of the outlay, but wlich is ca' "i f«>r in furnishing a city, frequently all at one time, with a v/ell equi . i plant or seresof plants to meet the modem needs of the citizens This ia distinct from the annual expenditure in main'oinint; ^nd operating the plants, and which falls within the scope o( auuual revenue and expenditure. Thus the provision r ■■ ..'>. adequai » vie water supply, the construc- tion of a well plann<> ' > stem of diainage and sewage disposal, the grading and paving of streets, the provisions for squares and parks, the necessary equipment for file protection, the erection of public buildings, such as civic buildings, schools, etc., represent a very great outlay which is quite independent of the annual expenditure in main- taining and operating these civic institution^. At present this capital outlay is provided in the shape of huge municipal loans, the subse- quent interest on which absorbs from one-fourth to one-third of the annual taxes in many Canadian towns and cities. Thb Annaub of the Amsbican Acadbut In a slowly growing city these expenditures extend over a very considerable period and if a sinking fund is provided for, it may be possible to secure the extinction of one loan on capital account before another requires to be effected. This, however, is a very rare experi- ence among modem cities on this continent. Many towns and cities have suddenly grown up under the stir^ulus of a speculative fever and have been forced to incur enormous debts within a very brief period, and their capital outlays take place when prices and wages are at high water mark. This means that the capital expenditure is coincident with and commonly due to the very land booms which furnish such enormous gains for the successful land speculators. A study of the various stages in the growth of a city boom reveals the interesting fact that once the future city is launched on an active period of expansion, (a movement commonly arranged by a group of shrewd and courageous speculators who manage to attract consider- able capital from outside sources), the influx of population which ia attracted soon creates more work for itself than for its employers. In other words, it requires more workmen in the building and allied trades to build houses to accommodate the workmen themselves than are required to erect buildings for their employers. Further, the incoming army of workmen provides customers for a large body of merchants and middlemen and their employees and dependents, who in turn nmst all be provided with houses and places of business, again augmenting the numbers to be employed in the building trades. Another class of citizens must provide material and implements for building, and for the equipment and furnishing of these buildings. So the circle continues to widen through agencies of every kind, including bankers, lawyers, doctors, clergymen, teachers, with all the buildings and equipment which they require to carry on their businesses and professions. At the head of this procession, the original apostles of faith in indefinite expansion, stimulating every form of civic expenditure and of private and corporate investment, are the shrewd and couragous land speculators, reaping phenomena) harvests of profit, and, as becomes men of far-sighted instincts, not envious of the lesser prophets who follow in their wake, imitating their methods and fre- quently furnishing them with customers. As experience indicates, a rapid expansion in civic debt goes hand in hand with a rapid expansion in city building and the growth Taxation and Land VAiiUBs of population, while an active land speculation accompanies and stimulates both. Now all that is required to transfer a large pro- portion of these speculative gains from the rapidly expanding bank account of a successful land speculator to the cofTers of the city treasury, is to provide, somewhat after the plan adopted in Britain, the necessary legal authority and comparatively simple administra- tive machinery. Provision ought to be made that the value of each piece of land shall be assessed, as early in its economic career as pos- sible, at its actual market value. Thereafter at the period of each legal sale of the land, when the buyer pays more than its registered value or its value at the last transfer, a certain percentage of the increased value shall be first paid into the civic treasury, and the remainder to the seller as may be agreed upon. The percentage to be thus taken by the municipality shall be graded according to an appointed scale, increasing with an increase in the rate of profit and shortness of time since the previous sale. The price at which each sale takes place shall be registered with the title of the land and will thus be made known to the subsequent purchasers when looking up the title. The registered price at the last transfer would be the basis of information to the purchaser as to what proportion of the price which he has agreed to pay, he must transfer to the city, and what proportion shall be paid to the seller of the land. Take a hypothet- ical case: — A purchaser, who found that the price which he had agreed to pay for a piece of land was 25 per cent more than the seller had paid for it within a year past, might be required to pay one-third of the increase to the civic treasury and the remainder to its seller. If, however, the profit received were 50 per cent, then he might be re- quired to pay 40 per cent of this profit to the city, and so on according to a graded scale, until, if the profit were 200 or 300 per cent, he might be required to transfer 70 or 80 per cent of it to the civic treasury. If, however, the sale took place not within the year but two or three years after the last sale, the rate should be diminished according to another scale, taking into account interest charges, annual taxation, improvements on the land, etc., which would tend to diminish with time the profits of the sale. Again, if no sale should take place within a given period of five, or possibly ten years, the property should be re-valued and a percentage of the increased value taken on the same basis as to the rate of increase and duration of time as if a sale had taken place at the close of the period. Under this system, while the 8 ThB i\NNAL8 OF THE AMERICAN ACADEMT aggregate gain to the speculator would stUl amoimt to a very attrac- tive profit on his investments, the share coming to the municipality would automatically keep pace with the rise in price, and the rapidity, volimie and profit of the land sales. As already indicated, this form of taxation is intended, on the one hand, to provide for special capital expenditures and not for an- nual revenues; and, on the other, to secure a reasonable share of the special profits from exceptional increases in land values, especially during short periods. One of its chief virtues, from the point of view of ability to pay, is that it taxes high profits only while these profits are being obtained, and especially while they are being rapidly obtained. When, however, speculation ceases and values remain stationary or decline, this special tax automatically ceases also. It takes nothing from any purchaser who makes no profit on his sales or on his holdings. It is, however, during such periods of stagnation, when the various municipalities are not expanding, that their capital expenditure is certain to be correspondingly light. At the same time the annual needs will be met by the annual taxes on real estate and incomes, above a certain rate, from other sources of invested wealth or personal service. Certain minor details would, of course, require to be considered in bringing such a scheme of taxation into general operation; but the simple and direct basis of the tax, the important purpose which it would serve, partly in checking extravagant speculation, and partly in furnishing an indispensable capital fund for civic equipment just at the time and in proportion to the need for capital outlay, ought to commend it to the practical consideration of state and provincial governments in both Canada and the United States. I THE AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE Origin and PiupoM. Th« Academj waa organiied December 14| 1889, to pioflde • national fonun for tlio dtocnaalon c! political and •odal taeBtiona. The Acadenqr doea not take aidea upon controverted qneitlonat but aeeka to aecore and preaent rellablo Information to aailat flie pabUe In forming an Intelligent and accorato opinion. Publlcatlona. The Academj pubUahea annoalfy aiz Icanea of Ita •*Annala" deaUng with the aix moat prominent current eocial and poUt^ cal problema. Bach publication containa from twen^r to twenty-flvt papera upon the aame general rabject The larger nomber of flie papera pnbllihed are solldted hj the Academy; they are aerlona dl»> cnaaioni, not doctrinaire expreaaione of opinion. The Academy publi- cations, now approaching one hundred and fifty In number, give the most comprehenshre account anywhere obtainable of the potttical and social fueations that have be«i before the American people during the paat quarter centuiy. Meetinga. The Academy holds five sdentiflc sessions each year during the winter montba, and it alao has an annual meeting in Apll, extending over two full days and including aiz sessions. The papers of permanent value presented at the meetinga are included in tfie Acadenqf publieationa. Membership. Membersh^ in the Academy may be secured by app^rlog to the Secretary, 36th Street and Woodland Avenue, Phila- delphia. The membersh^ fee is S5.00; life membersh^ fee, tlOO. Members receive all the regular publications ot the Academy, are faivlted to attend and take part in the adentlfic meetinga, and have the privflege of applying to the Publication Board for bformation upon current political and social questions.