All we have to do with here is a system which exempts buildings from taxation and places the civic taxation on the land. This, we are told, is not only an equitable system of taxation, but one particularly favorable to the poorer man, and those less able to carry its common burden.

To what extent will this claim bear investigation. The assessment value of buildings for 1914 is $76,215,783. On these millions no taxes will be paid. To what extent does this exemption benefit the poor and the rich man respectively? An analysis of building permits should provide the answer. From January to October, inclusive, 1913, they were as follows: Permits for (1) rooming houses, $1,216,179; (2), factories and warehouses, $1,833,008; (3) offices and stores, $5,249,996; (4) private houses, $1,589,257. The first three classes will have to be credited to the well-to-do section of our population. They aggregate $8,299,183. Of the $1,589,257 expended on private houses, let us assume that two-thirds of the total was expended by the wealthier classes. In that case, $529,752 was expended on dwellings by the poorer classes and $1,059,504 by the well-to-do. The total exempted from taxation, therefore, would be $9,988,440, of which the poor man's total exemption would be $529,753. In other words, about seventeen-eighteenths of the exemption is in favor of the wealthier classes, and one-eighteenth in favor of those not so well provided. Applying this ratio to the total exemptions of buildings for 1914 we find that while the poorer man is exempted on $4,234,209 improvements, the wealthier classes escape taxation on $71,981,574. Let us carry the comparison still farther, using the same ratio. The system of totally exempting buildings from taxation has been in vogue since 1910. The grand aggregate of "improvements" exempted since then amounts to $267,172,837. Out of this grand aggregate the poorer man secured exemption on $14,842,935.38 in buildings, while the exemption of the wealthier classes amounted to $242,329,897.62! This system of taxation is called the poor man's boon! We hear nothing about the rich man's boon.

Let us look at it in another way. Under this system the lot which supports the modest residence or store, or no building at all, for that matter, must pay the same tax as the adjoining piece of ground, carrying a sixteenstory sky-scraper. The one may bring in little or no revenue. If reserved as a garden or lawn it must bring in nothing, and bear the cost of up-keep. The neighboring sky-scraper is a city in miniature. The rents are high and only those who are well-to-do can occupy its palatial offices. A bank and a trust company may use the ground floor, paying a prince's ransom by way of rental and the other floors are allotted to insurance companies, financial agents, loan companies, and professional men. In the sky-scraper is hived practically all the great money-making agencies of the city. Not one of these pays a cent of civic taxation on the building. If the structure is centrally situated and fully occupied, the landlord can count on anywhere from 25 to 40 per cent annual profit. Yet he pays no tax on his money-making "improvement." For his fire protection, police protection and other civic services he contributes not a sou. His neighbor with the vacant lot, which requires neither fire nor police protection, nor many other civic services, pays equally with him into the civic exchequer. One of the four great maxims, or axioms of political economists the world over, is that taxation shall be equal. "The subjects of every state," they say, "ought to contribute to the support of the government, as nearly as possible in proportion to their respective abilities; that is,

in proportion to the revenue which they respectively enjoy under the protection of the state. In the observations of neglect of this maxim consists what is called the equality or inequality of taxation." Why have we departed from this principle? The excuse given is that all taxes should fall on the land because of the "unearned increment." Let us see how this applies. There can be no question that the man who can afford to build a fourteen-story structure multiplies the size of his land by fourteen. From an earning standpoint he multiplies it by eight or ten, as against the earning power of a one-story building. The increment becomes eight or ten times as large. A great deal of the increment is earned by the investment of his capital, but a great deal of it is unearned and a great deal of it is adventitious, owing its value to central situation, traffic and the very same influences which add "unearned increment" to the land. If anyone imagines that the capitalist earns nothing but interest on the cost of his bricks and mortar, let him put up for a week at a west-end hotel, or rent a suite of rooms in a fashionable apartment block. Why should not the unearned increment pay in the one case as in the other?

One of the great advantages claimed for the exemption of "improvements" is that it ensures a compact city. This is evidently the view of the building inspector. "The most prominent feature in connection with the building returns of Vancouver," he says, "is shown when the area covered is compared with other cities.

"From returns at hand I find per square mile of area, Vancouver leads every city on the continent of America." This is his proud boast. It is in order now for some one to point with approval to the huddled condition of London before the fire, or to hold up the most crowded quarters of Canton as a model to the world. This alone should condemn the system. That it has the effect claimed for it, no one can deny. The taxes on gardens, lawns and open spaces are prohibitory. Everything must be built up. Every open gap must be closed. We must have a compact city. Rather than expand our area let us build 200 feet in the air and immure our wives and children in apartment blocks and deprive them as far as possible of every beautiful and healthful natural surrounding. At the same time we are likely to have some trouble in escaping from the conclusion that a crowded wooden city is a standing invitation to fire, and a menace to the health and enjoyment of its population. The cry for open spaces is a necessary result of the stupid policy pursued, Park sites and improvements have already cost $1,260,600, notwithstanding that we have in Stanley park a recreation ground said to be equal in value to the national debt.

To some of socialistic tendency the policy of heaping taxes on the land appeals on the ground that it will force the land owner to let go his hold and cheapen the price of real estate. We have been pursuing the policy of partial or total exemption of improvements and transferring taxes, partially or wholly, to the land since 1895, so that there has been plenty of time to see the results of the experiment. The assessment rose from $76,881,820 in 1910 by leaps and bounds to $150,629,410 for the present year. It does not look as if even all the unjust and exorbitant taxation which has taken place has had the desired effect. Even had it accomplished what was hoped for, it must not be forgotten that heavy taxes imposed for the purpose of confiscation, will fall just as heavily on him who buys as on the vendor who was forced to sell. What benefit is conferred on the poor man by such a system?

In support of the system it has been continually claimed that we have been able to carry it on without increasing the rate of assessment by a single mill. In this there is not a word of truth. From 1895 to 1905 50 per cent of improvements were taxed. From 1906 to 1909 25 per cent were taxed. Since 1910 all have been exempt. When the exemption was 50 per cent the tax went up from 16 to 18 mills. When the exemption was increased to 75 per cent the general rate went up from 18 mills to 20 mills and has remained there ever since. But it is really more than 20 mills. The aggregate is made up as follows:

The gross result is therefore not 20, but 22.22 mills. A discount is allowed of 10 per cent if paid by December 15, but all who cannot pay at that date are taxed at 22.22, not 20 mills. How serious this is is shown by the total in the column of arrears at the close of each year. The arrears this year, I understand, are $767,528, as against $410,136.12 last year and $265,019.90 the year before. As the arrears have nearly doubled each year it is evident that the tax is felt to be extremely oppressive. A total of $767,528, or more than threequarters of a million taxes this year, it appears paid 22.22 mills.

Perhaps the most loudly vaunted claim on behalf of the Vancouver system was that it caused an amount of building expansion and created an era of prosperity unparalleled anywhere on this continent. This triumphal blast has been heard the world over, and no doubt has created in some quarters a desire to follow in Vancouver's footsteps. On another occasion I pointed out that the great prosperity which we enjoyed arose from the same causes which were operating in every city in Canada. Our prosperity was part of the general prosperity, added to by our exceptional situation and equable climate. At the same time I recognized that exemption of buildings from taxation might have considerable effect in inducing a building boom, but could not be counted among the healthy causes of prosperity. So long as our building permits and bank clearings rose by leaps and bounds there were many ready to believe that all was owing to the magic of single tax. It only required a little financial pressure to show how absurd was the pretense and to bring us back to earth. From $13,150,365 in 1910, the building permits bounded up to $17,652,642 in 1911 and $19,388,322 in 1912. All and sundry were challenged to behold the results of "single tax magic." But single tax is still with us yet the building permits for 1913 have fallen to $10,424,448-nearly one-half. Worse than that the permits for December, 1912, were $1,530,365, and for December, 1913, $175,245. The aggregate for the year has been nearly cut in two, while the aggregate for the last month of this year is one-eighth of what it was for the same period last year. Bank clearings have also fallen, though not to a serious extent, and customs receipts have undergone a shrinkage. I point these things out, not with any view of depreciating Vancouver, but simply to establish the position previously taken, that the great causes of stability and progress or the reverse, are entirely independent of the nostrums of "single tax" advocates. To clinch the argument, if that is necessary, it may be pointed out that Winnipeg's building permits for eleven months this year

amounted to $18,000,000 as against $15,106,450 for the full year in 1910, while her bank clearings exceeded those of last year by $97,159,713. Similarly Toronto's bank clearings this last year exceed those of 1912 by $11,000,000, and in Montreal the increase has been $34,648,000. None of these cities enjoyed the wonderful advantages of single tax,

While I admit that exemption from taxation of "improvements" has helped to create a building boom, I repeat that to the extent that this infla. tion has been caused by "single tax" it has been an unhealthy stimulus. I have before me figures showing the extent to which some of the most recent, as well as some of the oldest structures, are occupied, but say nothing with regard to them except that those who have been induced by exemption from taxation to rush up costly structures for which there are at present no adequate demand, have every reason to heap anything but blessings on the devoted heads of all "single tax" boomsters.

In conclusion let me call attention to the fact that the civic assessor has increased the land assessment from $144,974,525 in 1913 to $150,629,410 in 1914, an advance of $5,654,885. It is difficult to speculate as to the facts which justify this increase. Rents have decreased, in some cases very considerably. According to the assessor's own report our population has fallen off to some extent. Real estate is firmly held, but no one outside of the assessor's office will be foolish enough to claim that it has increased in value. At the same time the inability of owners to meet the taxes is becoming more marked each year. The total of arrears at the close of 1909 was $150,231.20; 1910, $179,296.74; 1911, $265,019.90; 1912, $410,136.12, and 1913, $767,528.00, nearly onefourth of the entire tax levy for the year. It is only a question of time until there will be a general upheaval in Vancouver against this system of artificial and forced assessments of small property owners and householders to afford taxing the million-dollar sky-scrapers and apartment blocks, and against the foolish faddists who never cease in their endeavor to warp the mind of the laboring man into believing that this sort of thing is for his benefit. "Single tax," as we have it in Vancouver, is a boon to the rich and a burden on the shoulders of the poor. Its humbugging nostrums will not bear serious investigation. Besides being oppressive and unjust, it is useless for the purposes it is said to serve. It is high time to wipe out "single tax" and to return to

honest methods.

Robert E. Smith, Roseburg, Oregon; Oregon Rational Tax
Reform Association.

(Address before State Tax Conference, Seattle, May, 1914.)

I might say in the beginning that I am neither a tax expert nor a student of economics. I am a farmer.

I wish to call your attention to the fact that all of the remarks that have been made here today have been in regard to the conditions which apply to the city. Not a word has been said as to the merits or demerits of single tax as a taxing system for farm property. Single tax is a tax on land only. And the man who will be most affected by its adoption is he who has the most land. We all know that the farmer has the most land. It would seem, there

fore, that if the students of taxation were honestly interested in the effects of the single tax they would first consider how it will affect the man who occupies and uses land for the gaining of his livelihood. Not being a student of political economy, I cannot speak accurately as to conditions at the present time, but when I went to the farm school we were taught that there should be three men in the country to one in the city. At that time that condition almost obtained. Although that was less than twenty years ago, conditions have changed very materially. While I have no definite figures, I know in a general way that now the majority of the population is in the city. There must be some reason for this great exodus from the farm and influx to the city. There must be some reason why our young men and young women do not care to stay on the farm.

To those of us who are identified with farm life the answer is not far to seek. It is not that there are better living conditions in the city. It is not that social conditions are of any higher order; neither is it the lure of the great "White Way." It is simply because the successful farmer of today must work from twelve to sixteen hours every day in the year, and when taxpaying time comes he donates the fruits of his year's labor to the state in the way of taxes. Do you blame our boys and girls for choosing to take their chances in the city rather than remaining on the farm when economic conditions are such as these? Granting the fact that it requires three men in the country to support the one man in the city, would it not be better to see how we can improve our farming conditions by the application of sound economic principles rather than aggravating the present instable conditions by the application of a freak socialistic theory which will make paupers of us all.

The reason that I was asked to speak here today is probably on account of my connection with an association known as the Oregon Rational Tax Reform Association. This is an association which was formed by farmers and is largely composed of farmers. It was formed because of an insistent belief among the farmers, which I believe to be correct, that under the general property tax as now administered the farmer is discriminated against. It was in order to have a little more justice in taxation and possibly to dodge some of our taxes not our just taxes, but the unjust portion of our taxesthat this association was formed. We realized, however, that farm taxation only forms one part of the taxing system of the state, and if we were to improve the present system of farm taxation we must consider all phases of the entire taxing system of the state; that we should make an honest effort to construct a rational, fair and equitable system of taxation for all men and all classes of property. We were not and are not asking for special privileges, but for our just rights; not for favors but for fair play. We concede that in any question which so vitally affects all men, all men should be considered. We, therefore, made, and are making, an earnest study of city taxation as well as the taxation of rural property.

I made the statement last winter to a number of members of the association that I believed that there were certain good things in the single tax as applied to the city. It was all wrong as applied to the country, but possibly all right as applied to the city. These features of single tax which appealed to me as a fair system for municipal taxation were: First, that it promoted building; second, that it did not permit a man to have the value of his land enhanced through the enterprise and industry of another; and thirdly, it discouraged