Robert Meyer: Interventions on Building-Tax Reform

Robert Meyer’s interventions at the fifteenth hearing on building-tax reform, held on 10 December 1903 and published in 1904, record his contributions as chair to an expert inquiry. The document proceeds from procedural exchanges to two substantive discussions: the effects of reducing the tax on rental income, and the design and fiscal consequences of alternative assessment methods. Meyer questions the mechanisms connecting tax relief, construction, rents, and property values. His central concern is that a nominal concession need not produce the intended economic benefit: its effects depend on capitalization, landowners’ responses, assessment practices, and the visibility of the relief.

The first discussion tests the claim that lowering the house-rent tax would increase construction through competition and thereby reduce rents. Meyer asks whether this account adequately includes building land. If the expected benefits raise land prices, developers may no longer obtain sites cheaply enough to expand construction. The issue is therefore not simply whether tax reduction creates an incentive, but which owners capture it and whether their response frustrates the proposed increase in supply.

Meyer sharpens this objection by distinguishing a higher income from a higher return on the capital required to acquire property:

Wenn man das höhere Erträgnis auf den Kapitalswert reflektiert und daher der Kapitalswert um so viel höher anzunehmen ist, so bleibt dann eben nichts mehr übrig für die höhere Verzinsung.

English translation: If the higher yield is reflected in the capital value, so that the capital value must accordingly be taken to be that much higher, then nothing remains for a higher rate of return.

The sentence identifies capitalization as a potential limit to the construction argument. A higher property income cannot automatically be counted both as an increase in asset value and as an enduring improvement in the return available to an investor. Meyer acknowledges that the benefit can be divided between these effects. His objection concerns the assumption that both can be realized together without qualification. Responding to Professor Schwarz’s language of an “impulse,” he asks whether it stimulates prospective builders alone or also owners of building sites. Landowners’ responsiveness is economically consequential, not incidental to the reform.

The second substantial intervention addresses Hofrat von Philippovich. Meyer first asks about the psychological effects of distributing construction-related tax-exemption years across a uniform tax reduction. He places Philippovich’s expectation of vigorous construction beside contrary testimony: Aufspitz had argued that stronger exemption in the initial years might exert a greater influence, while another view held that spreading the concession could inhibit building. Meyer leaves the disagreement open. The structure of the exchange makes the timing and perceived force of relief distinct questions from its calculated amount.

He then turns to owner-occupied buildings and the choice of tax base. Although declining a general criticism of Philippovich’s principles, he challenges an analogy with the business tax:

Da die Erwerbsteuer die Maximalgrenze von 5 bis 6 Prozent kaum überschreitet, so ist sie gegenüber der hohen Gebäudesteuer bedeutend mäßiger.

English translation: Since the business tax scarcely exceeds the maximum level of 5 to 6 percent, it is considerably more moderate than the high building tax.

The difference in rates limits the analogy’s usefulness: an assessment principle cannot be evaluated independently of the burden imposed through it. Meyer also asks whether English taxation ordinarily rests on the rent actually agreed or potentially obtainable, including for owner-occupied buildings. He explicitly cautions that English landownership conditions require care in comparison. Likewise, he treats taxation based on property value and an inferred yield as a proposal requiring practical investigation. Without examining existing administrative practice, one cannot confidently say whether capital-value assessment would raise or lower liabilities.

The final and longest argument concerns averaging rental income over several years. Philippovich interjects that he attaches no importance to choosing precisely five or ten years. Meyer nevertheless develops the ten-year example to expose the fiscal implications of a stabilized base. Drawing on experience in Dalmatia, he argues that average assessments encounter asymmetric pressures: upward revisions are difficult, while demands for reductions following intervening events are hard to resist.

Wir haben schon den Vorschlag gehört, es solle ein Durchschnitt zugrunde gelegt werden und eventuell soll man von diesem Durchschnitt abschreiben. Das ist aber dann schon bedeutend weniger als der Durchschnitt.

English translation: We have already heard the proposal that an average should be taken as the basis and that deductions might then be made from this average. But that is then already considerably less than the average.

Averaging thus ceases to be neutral smoothing when deductions operate predominantly downward. Meyer further argues that fixing assessments for ten years using the preceding decade’s rents would sacrifice future growth from an already backward-looking base. Under his simplifying assumption of steadily increasing rents, that average corresponds to the fifth year of the earlier period: the fiscal effect would therefore resemble a fifteen-year fixing of the base. He underlines the stakes by citing a rise of 21 million in rental-tax revenue between 1890 and 1900.

Meyer’s concluding preference is for using available fiscal resources to reduce the visible tax percentage rather than granting potentially larger but less readily discernible concessions through a stabilized assessment base. The interventions’ significance lies in this conjunction of incidence analysis and administrative scrutiny. They show why tax reform must be judged not merely by its announced reduction, but by who receives the benefit, how assessments evolve, and how clearly the concession appears to taxpayers.