Richard Reisch on Reforming the Building Tax

Richard Reisch’s interventions in the ninth session of the inquiry into building-tax reform, held on 1 December 1903 and published in 1904, examine how tax relief would move through the housing economy. The document preserves successive questions, objections, and rejoinders within an official hearing. Its coherence lies in Reisch’s insistence that a statutory reduction does not establish who ultimately benefits: landowners, builders, existing houseowners, and tenants occupy different positions. He repeatedly tests expert testimony against capitalization, investment incentives, the timing of relief, and evidence of actual improvements.

Reisch begins by correcting the discussion of Viennese houseowners’ indebtedness. He recalls that Dr. Schwarz had addressed it and that Professor von Myrbach had identified exceptionally heavy mortgage debt as a principal source of their difficulties. The underlying problem is a mismatch between the interest demanded on mortgage capital and the return obtainable from immovable property. This acknowledgment matters: Reisch’s subsequent objections to tax concessions do not depend on denying owners’ financial distress. They concern whether particular reforms would remedy that distress while delivering their promised wider effects.

He next disputes an explanation of rising aggregate rents based on Vienna’s reduction of the Zinsheller between 1901 and 1903. The reduction accompanied a four-percentage-point increase in municipal surcharges on the house-rent tax and, he argues, served to offset that increase. A change in one charge cannot therefore explain outcomes without considering the accompanying fiscal changes. His method is to reconstruct the combined burden before attributing economic consequences to an isolated measure.

The central exchange concerns the relation between tax reductions, building-site prices, and construction. An expert has predicted both higher site values and substantially greater building activity. Reisch challenges the compatibility of those predictions:

Nun vermag ich eigentlich nicht abzusehen, wodurch diese Steigerung der Bautätigkeit bewirkt werden sollte, wenn der Vorteil der Steuerherabsetzung sogleich in den Werten der Baustellen seinen Ausdruck gefunden hat; denn dann muß sich ja meines Erachtens das zum Baue eines Hauses erforderliche Kapital erhöhen, da der Bauführer für die Baustelle einen höheren Betrag auslegen muß und es wird daher dem Bauführer dann nichts mehr von dem Vorteile der Steuerherabsetzung erübrigen.

English translation: Now I cannot really see what would bring about this increase in building activity if the benefit of the tax reduction has immediately found expression in building-site values; for then, in my view, the capital required to build a house must increase, since the builder must pay a higher amount for the site, and the builder will consequently retain none of the benefit of the tax reduction.

The distinction is between increasing an asset’s price and increasing the prospective builder’s return. If the seller receives the capitalized value of future tax savings, the purchaser’s larger initial outlay absorbs the concession. In subsequent rejoinders, Reisch presses the temporal difficulty: an initial rise in site values can remove the very profit incentive supposedly needed to generate competition and bring prices down again. He is demanding an explanation of how the proposed adjustment would begin, rather than treating increased construction as an automatic consequence of lower taxation.

A later intervention combines evidentiary caution with attention to the distribution of relief. Reisch asks whether an asserted decline in Salzburg building values can be demonstrated statistically. If it can, he proposes examining increases in provincial and municipal surcharges, which he describes as jointly raising the tax burden by forty percent. The question separates verification of the decline from explanation of its causes.

He then contrasts substantial, immediate relief with gradual reductions. Against an expert’s preference for a prolonged recovery process, he argues that small successive concessions would likely remain with houseowners: each increment could appear too slight to warrant reducing rents. His objection to the Kontingentierungsprojekt, a quota-based taxation proposal, adds a timing problem. If relief could be granted only retrospectively, on the basis of the preceding year’s results, owners would have little reason to lower current rents in anticipation of an uncertain future reduction. The scale, predictability, and timing of relief thus determine whether it reaches tenants. A fragmentary exchange on question 13 also disputes whether a reduced rent would actually be collected, but the preserved intervention breaks off before Reisch completes his alternative account.

The final exchanges address Baufreijahre, the initial tax-exemption years granted to new buildings. Reisch questions both their asserted sanitary benefits and the claim that replacing them with a reduced tax rate would uniquely depress older property values. For the latter argument, he compares concessions of equivalent calculated value:

Wenn die gegenwärtig bestehenden Baufreijahre den Wert der alten Häuser nicht drücken, so könnte meines Erachtens ein für die neuerbauten Häuser eingeführter ermäßigter Steuerfuß den Wert der alten Häuser auch nicht drücken.

English translation: If the currently existing tax-exemption years do not depress the value of old houses, then, in my view, a reduced tax rate introduced for newly built houses could not depress the value of old houses either.

The conceptual move is to compare the economic value of differently scheduled concessions rather than assume that their legal forms produce fundamentally different competitive effects. His sanitary argument similarly challenges an unsupported causal attribution. Longstanding exemptions had not eliminated unhealthy housing, and technical advances should not simply be credited to them:

Die Fortschritte der Technik wären ganz gewiß ebenso eingetreten, wenn die Baufreijahre nicht bestanden hätten, wie wir das im Auslande sehen, welches diese Institution nicht kennt.

English translation: Advances in technology would quite certainly have occurred just the same if the tax-exemption years had not existed, as we see abroad, where this institution is unknown.

Reisch closes by observing that even new buildings often fail to meet sanitary requirements. Across these interventions, the reform question becomes one of demonstrable mechanisms: whether concessions alter returns, whether savings reach tenants, and whether fiscal privileges actually improve housing. The document’s significance lies in this sustained scrutiny of the passage from tax relief to its claimed social benefits.