4 Je IS, TAXATION AND THE PUBLIC WELFARE By Wm. Pierbepont White, Utica, N. A Tax Conference has much to consider, particularly when it is of State-wide importance. Every schoolboy knows that the assessed valuation, both real and personal, of the State of New York is about ten billions of dollars, and that the greater the assessed valuation the less the tax ratio to obtain the same revenues for governmental purposes. Every school- boy also knows that the State of New York is a most prodi- gious tax gatherer, and from indirect sources for State pur- poses is in receipt of a revenue of between thirty-five and thirty-seven millions per annum. i Tax Levying Bodies In addition to the State expenses, every county has its own government which raises taxes on the property situated within each county, which are expended for county purposes. Every township has its form of government and raises its revenues for the expenses of its government upon the prop- erty situated within the borders of the town. Every city l5 ^as its expenses and levies taxes on the property situated in the city limits. Every village has its expenses and levies the 4' taxes for its government upon the property situated within the village limits. Then in addition to these departments we have the school districts and school trustees levying taxes ' J upon the property situated in the school districts, and ex- ^ pended for the purposes of education and school maintenance. This is saying nothing of the contribution of the State as a whole for its portion of the federal revenues for the main- tenance of the United States. 2 A Prodigious Tax Gathering In 1908 the assessed property in the State of Hew York contributed by direct taxation the following amounts for the following purposes : State tax for stenographers $349,767 00 Town tax for town government 6,808,162 00 Village tax, for village government 7,455,125 00 County tax, for county government 15,341,249 00 Local school tax for school expenses 40,831,851 00 City tax, for city government 159,971,059 00 Total $230,757,216 00 State revenues, indirect sources 30,828,532 00 Total $261,585,748 00 Internal revenue payments to federal gov- ernment 36,000,000 00 Total $297,585,748 00 This, with our population of approximately 9,000,000, would make a cost per capita of $33 for each man, woman, and child in the State to contribute annually in taxes. But as the State and national revenues are indirect and amount to $66,000,000, by far the greater portion of the taxation is in the direct class and is received from the ten billions of assessed valuation. If the entire taxes, both direct and in- direct, were raised by a direct tax this would call for a con- tribution from the assessed valuation of the State of about $30 per thousand, or 3 per cent. The amount of taxation is so large that we should take steps to either have a more economical administration, or if that is impossible, then to provide by intelligent legislation the steps necessary to create additional assets in the State, so that by doubling the State’s assets and holding expenses the same the tax would be re- duced from $30 to $15 on the thousand, and the tax burden i 3 cut in two, and the same efficient administrations maintained which we have to-day. Uniform Accounting It is certain that the uniform accountings for the city, county, village, town and school districts which are being put into operation under our statutes will bring about a very much more efficient administration in the disbursement of our taxes. Growth of Population and Wealth Since 1860 the population of this state has increased 134 per cent, that is, from 3,800,000 people to a little over 9,000,000 people. In the same period -of 50 years our tax- able wealth has increased 606 per cent, rising from $1,419,- 000,000 to a little over $10,000,000,000. This immense in- crease in population and wealth calls for a corresponding in- crease in the tax contributions and particularly for the State’s share in the construction and maintenance of her waterways and the construction and maintenance of her highways. State’s Canal and Highway Policies For nearly one hundred years the construction and main- tenance of the Erie canal and its enlargement has been the recognized policy for the upbuilding of the commercial interests of this state. Eor ten years it has also become the recognized policy of this State to build and maintain a system of State highways for the upbuilding of the values of the farms and the bringing of their product more cheaply to market. The State of Hew York has therefore under way in the construction of the Barge canal, and the completion of the highway system, the steps necessary to make this State the Mecca of population and wealth, seeking employment on the farms and in manufacturing enterprises. To these two steps should now he added a revision of her tax laws in order that the taxes levied upon corporations employing labor should be less burdensome or at least no greater than the amount of taxes paid by similar industries under similar 4 conditions in other parts of the Union, in order that we may add two or three thousand industries to those we already have in the State. What is meant by this is readily shown by the following table, prepared by H. Lawrence White from the tenth census reports : Value Capital of farm invested in property manufacturing 1850 $650,000,000 $99,000,000 1860 936,000,000 172,000,000 1870 1,494,000,000 366,000,000 1880 1,216,000,000 514,000,000 1890 1,139,000,000 1,130,000,000 1900 1,069, 000', 000 1,651,000,000 Value Value of of farm manufactured products products 1850 Not given $237,000,000 1860 Not given 378,000,000 1870 $253,000,000 785,000,000 1880 178,000,000 1,080,000,000 1890 161, 000,000 1,711,000,000 1900 245,000,000 2,175,000,000 Build Values m the State One can readily see from these tables that the farm prop- erty in the fifty years has increased 64 per cent, while the investments in manufacturing properties have increased 1567 per cent. The value of farm products at the beginning and end of the periods mentioned are substantially the same, but the growth of the value of manufactured products has been tremendous. The deduction, therefore, is that New York’s policy of developing the Barge canal will increase the number of manufacturing plants in the State more rapidly than any other step that can be taken, and the development of her highways will carry these values to the present in- accessible parts of the State ; but to do this more rapidly there should be a study of the question of taxation so as to make this State the Mecca of manufacturing corporations,. 5 as the taxable wealth these industries bring to a community far outstrips the increase in farm values. No one taking up this subject for the first time should attempt to understand it without a thorough understanding of the geographical situation and conditions of the State of New York. The Transcontinental Pass Nearest to Sea Level New York State controls within her borders, by means of the Hudson river and Mohawk valley, the transcontinental pass across the Appalachian Mountain system that is nearest to sea level. For this reason commerce must always come through this valley in ever increasing volumes on ac- count of the low transportation rates. On account of these low transportation rates, facilitated by the location of the Barge canal, the most ideal water and rail location for the receipt and distribution of manufactured products is to be found with the State of New York. Northern New York a Peninsula That third of the State lying north of the line from Oswego to Utica and Utica to Albany is situated, so far as railroad facilities are concerned, like a peninsula; and on account of Lake Champlain on the east and Lake Ontario on the west is unable to have any east and west railroad transportation and is therefore only capable of north and south development. No Real East and West Railroads in Southern New York All that two-thirds of the State lying south of the Mohawk valley and the Erie canal is not capable of real east and west railroad development because of the fact that the valleys run in northerly and southerly directions and are not capable of developing an east and west service. No train service is better in the State of New York than the service through the Hudson and Mohawk valleys. No train service is more tedious than that northerly and southerly service connecting with the east and west service. The above is the geographical G situation of this State and must be thoroughly comprehended in any study of its economical development. Values Concentrated in Narrow Strip Approximately 90 per cent of New York State’s ten bil- lions of assessed valuation lies in the cities of New York and Buffalo and within a territory five miles wide on either side of the center line of the Hudson river to Albany, and of the Erie canal from Albany to Buffalo. Table of Population and Values New York city and all canal and Hudson river counties 33 counties not on canal or Hudson river Population 1910 Assessed Valuation 1908 7,570,988 $8,916,153,337 1,542,626 749,965,344 Total 9,113,614 $9,666,118,681 Population Concentrated in Narrow Strip Approximately 80 per cent of New York State’s nine mil- lions of population secure their livelihood in the area just above described. The problem is to provide in the State of New York ample, healthy and remunerative occupation for the population in this restricted area and also healthy and remunerative occupation for the agricultural districts on either side. Man Follows tiie Pay Roll Wealth and population do not come first to a community, but are brought there by the establishment of an industry with a pay-roll. Men desiring employment seek the pay- roll, and wealth thus developed from this pay-roll creates taxable values, for the pay-roll is used to build homes, schools, churches, then streets are paved and municipal government follows, with the lighting of the streets, fire departments and police protection. Every village, every city, every locality, grows only when it secures additions to its pay-rolls, and this additional money draws additional men to the community who seek employment. The State which understands economical development and economic prin- ciples is thus able to legislate intelligently and thus bring within its borders industries having pay-rolls, which will then be followed by the men desiring work, and State wealth is thus created. New Yokk State Slow The western and southern states and even those directly adjoining us are more alive to these economic principles and are studying harder to draw industries and pay-rolls to them, than is the State of New York. Governor Dix says in his message to the Legislature, “ During a score of years prior to 1900 New York increased its manufactured products 100 per cent, Pennsylvania 157 per cent, Illinois 200 per cent, Ohio and Indiana 150 per cent each.” If New York State is desirous of securing the greatest growth she must not only provide water, rail and highway transportation cheaper than it is provided in any other State, but she must adjust her burden of taxation in such a way as to make this State the Mecca of manufacturing enterprises. Tax Laws Must be Revised In order to have New York State outrank all others in securing pay-rolls these principles must be followed. In the first instance, factory sites must be created, better located in regard to shipping facilities than the factory sites in any other State. Taxes must be uniform on all corporations having a pay-roll, and must in no event be burdensome on the industry providing the pay-roll. In order to secure the location of the industry in this State and to prevent those that are already here from moving, the method of taxation would be more attractive than that levied by any other state in the Union. Low freight rates for both incoming and out- going freight must also be assured. The State must be able to offer low rents, good homes, good schools and churches, so i that the people seeking employment may be happy, honor- ? 8 able and self-respecting, with proper educational ambitions for the welfare of their children. How to Attract Wealth from Other Places The State of Hew York will shortly be able to offer be- tween Albany and Buffalo the most available factory sites in the United States. They will be adjacent to water trans- portation on the canal, and will have railroad transportation which parallels the water transportation throughout the State. This permits the industry locating in this area to have the lowest freight rates across the continent or to the seaboard obtainable in the United States. The immense population of the State of Hew York provides a more ac- ceptable opportunity for men to find employment and for industry to find employees than can be found in any other State of the Union. The proper understanding of these facts, plus the proper method of taxation, should draw to the State of Hew York more factories and more employees and build State wealth more rapidly than the same efforts would secure an equal amount of taxable wealth for any other state in the Union. This statement may well be illus- trated by the following table of figures, prepared by H. Lawrence White, showing what 150 factories located on an industrial harbor adjacent to the Barge canal, with ample railroad facilities connecting with the Hew York Central, would mean to the the city of Utica and to the State of Hew York. Using the United States census reports and carefully studying the growth of cities, employees, wages, the value of manufactured product, and the assessed valuation per capita for the cities reported, one is able to state that if one could locate in a city 154 factories, employing one hundred men per factory, and receiving an average wage of only $455 per annum, and bringing to the city an average of six and a fraction persons to each employee, that these 154 factories would increase the population 100,000 people, and increase the assessed valuation of the city $80,000,000, that the an- nual pay-roll would be $7,000,000, and the increase in the 9 manufacturing product $30,000,000; while the increase to the local trade to the local merchants would he $12,000,000. The table is as follows: 15,400 employees. 100,000 increase in population. $7,000,000 increase of annual factory pay-roll. $12,000,000 increase in city retail store trade. $30,000,000 increase in value of manufactured products. $80,000,000 increase of taxable property (full valuation). A study of the average growth of cities leads to the con- clusion that the 100,000 people would require over 10,000 acres upon which to build their homes surrounding the in- dustries in which they secured employment. A slow grow- ing city of 100,000 population would make the above gam in between thirty and forty years, increasing at a rate of 20 per cent to 25 per cent every ten years. A progressive city, increasing at the rate of 35 to 45 per cent in every ten years would make the above gain in between fifteen and twenty-five years. Immense Values Possible If this same development were duplicated in Albany, Schenectady, Utica, Pome, Syracuse, Lyons, Batavia, Rochester, and Buffalo, or at any other point, the taxable assets in each of these communities would increase in twenty years $80,000,000 and these ten localities would add to the State’s wealth $800,000,000 in the twenty years. Transportation will Make Farm Values Increase The peculiar geographical situation of the valleys of our State requires that no development of. our industry and population, by locating manufacturing enterprises in this narrow strip of land across the State, should be undertaken unless proportionate benefits can be secured for the agri- cultural interests and the balance of the State. The primary * reason for the State’s undertaking the expenditure of A » 10 $50,000,000 for highway improvement and the creation of a system of highways was for the purpose of bringing values to our undeveloped farm areas and putting our neglected and abandoned farms in touch with the east and west transportation. The State, under the present $50,000,000 highway improvement bond issue, with its contributions from the counties and towns, intends to create a system of main highways of approximately 10,000 miles. This will leave no farm farther than five miles from an improved highway, and then we will have the transportation question of our State handled as follows (figures taken from official records of 1906) : Miles Canals 639 Street railroads (mostly in cities) 1,940 Steam railroads 8,249 Highways 80,000 The State highway department has charge over these 80,000 miles of highway and is constructing with proper speed and attention the main system, having completed some 2,500 miles already, and is also bringing the lateral roads to a greater state of perfection than has ever heretofore been accomplished. These roads, main and lateral, will also make accessible the smaller manufacturing plants whose products will permit a higher freight rate to be charged against it on its way to the consumer. Dense Population Will Make Farm Values Increase The State of Hew York is destined to receive a dense population in the narrow strip ten miles wide extending from Hew York to Buffalo, and to have a larger rural popu- lation by reason of its improved highways leading into the agricultural sections. The dense population in this narrow strip, and the location here of the manufacturing enterprises will also create values in the farm lands throughout the State. Using the census figures of 1900 for comparing the farm 11 values and farm products of New York and Massachusetts, and using the same number of acres to make the comparison more fair, a farm of 100 acres in Massachusetts shows farm products of $1,081 per annum not fed to live stock, where the New York State farm of 100 acres shows $803 of values of farm products not fed to live stock. Therefore, the Massachusetts farmer owning a 100-acre farm is $278 per annum better off than a New York State farmer. Taking the total number of farms in New York State and multiply- ing it by $278, the gain in the value of farm products per annum would mean $63,000,000 more to the New York State farmers, if he could get the Massachusetts price for his farm products. In ten years this increased earning power would amount to over $630,000,000 — approximately the value of all farm property in this State in 18 50 1 . Massachusetts in 1900 had 20 cities with a population of 25,000 people or over, while New York had only 12 cities of the same character. Massachusetts in 1909 had a popu- lation of 348 people to the square mile of area, while New York State had but 152, and if the population of New York City were taken out only 80 people to the square mile of area. The increased earning power of the Massachusetts farms is because of her great industrial population, well dis- tributed in her small thriving cities throughout the State. If the New York State farms were raised to the same value as the Massachusetts farms, as shown by the federal census of 1900, it would increase the values to the New York State farmers over $226,000,000. Massachusetts in 1900 had 74 people to every farm, close at hand to the farm products, whose needs the farmers had to supply. At this same date, New York State had a population, with the population of New York City out, of only 17 people to each farm, to con- sume the farm products, and this is one reason for the differ- ence in value in farm lands in the two states. Canals, Highways, and Better Methods of Taxation New York State should continue her honest and efficient i management in the construction of the Barge canal and the 12 3 0112 061603509 construction of her highway system, and also ask of the Legislature reasonable amendments to the tax laws which shall seek to accomplish the securing of additional taxable assets in each community, while at the same time changing the method of taxation on both real and personal property of all corporations having pay-rolls and employing people, in order that these industries may be made to stay within the borders of the State and others induced to come here.