New York City's 1921–1931 Tax Exemption for New Housing

Summary

From 1921 through 1931, New York City exempted newly built dwellings — but not the land under them — from local property taxation, under a state enabling law (New York Laws of 1920, ch. 949, effective September 27, 1920) adopted by city ordinance on February 25, 1921. The exemption ran until January 1, 1932, capped at $1,000 per living room, up to $5,000 for a one-family house, $10,000 for a two-family house, or $5,000 per unit in a multifamily building. Governor Al Smith called the special legislative session behind the enabling law, responding to an acute postwar housing shortage — a conservative estimate put the city's apartment deficit at 45,000 units. The 1920s became, by a wide margin, the largest building-permit decade in city history: more than 740,000 housing units were built between 1920 and 1929, and roughly 22% of New York's current housing stock dates from that decade.

This page draws on two layers. The closest thing to a contemporaneous official assessment is Mary Conyngton, "Effect of the Tax-Exemption Ordinance in New York City on Housing," Monthly Labor Review 14(4) (April 1922), pp. 23–32 — a U.S. Bureau of Labor Statistics report written about a year in, using building-department permit data, public domain, read in full from an Internet Archive scan (JSTOR's record, jstor.org/stable/41828206, was access-blocked). The second layer is Mason Gaffney, "The Resurgence of New York City After 1920: Al Smith's 1920 Tax Reform Law and Its Aftermath" (UC Riverside working paper, rev. 2001), a Georgist historical-quantitative retrospective read in full, which names the law "the Al Smith Law." A modern retrospective (economist Jason Barr's blog post "The Housing Twenties," buildingtheskyline.org, 2024) and a Citizens Housing & Planning Council of New York note revisiting a 1960 CHPC report supplied boom-scale figures; neither is peer-reviewed, and no peer-reviewed modern econometric study isolating the exemption's causal share was located in this pass.

The Core Argument / Findings

Conyngton's report is the most quantitatively grounded contemporaneous source. In the four weeks after the ordinance took effect, applications were filed for 1,616 one- and two-family dwellings and 1,025 tenements, versus 1,411 and 190 in the same 1920 weeks. For the full year, the city's total permitted building value rose 58%, but housing's share of it rose from 27% to 59% — the value of new housing permits specifically rose 246%. She compares this to cities without an exemption: Philadelphia's housing-permit value was only 3.1% higher in 1921 than 1920, and Boston, despite a 172% increase, permitted housing for only 878 families — fewer than Richmond, New York's smallest borough, which alone permitted for 2,594. She concludes "natural causes alone would not account for the situation in New York City, and that a large part of the phenomenal increase in housing activity must be ascribed to the tax remission," against critics who blamed falling material costs and easier credit alone.

Gaffney's retrospective instead compares 1920–1940 population growth: New York City grew 32.7%, versus 13.8% for other major New York State cities (Albany, Syracuse, Rochester, Buffalo), 7.3% for mid-Atlantic cities (Boston, Providence, New Haven, Philadelphia, Baltimore), and 2.8% for New York's New Jersey neighbors (Jersey City, Newark, Paterson). He treats the gap as consistent with, not proof of, the exemption's effect: "a sequence is not always a consequence, and in the multivariate world of economics, 'proofs' are always subject to doubt and open to challenge." He also relays, without independently verifying, Edward Polak's 1924 account of a sevenfold rise in construction outlays in 1921–23 versus 1918–20, and quotes George R. Geiger's 1933 The Philosophy of Henry George asserting "there is little doubt that the tremendous building boom in the years immediately following 1920 was a direct result of that exemption" while noting Geiger supplies no data. Gaffney is explicit that "literature on this episode is disappointingly sparse."

Relation to the Georgist Case

This episode is the closest large-US-city analog to the Georgist prescription of untaxing buildings while continuing to tax land: the exemption applied to new construction only, land value stayed fully on the rolls, and Conyngton notes it "greatly increased the taxable value of the land, which is not included in the exemption." Gaffney adds a relevant detail: over the same years assessor Lawson Purdy — a former Manhattan Single Tax Club officer — shifted assessment practice toward valuing land first at full market value and treating building value as a residual, which, combined with the exemption, moved the city's effective tax burden further onto land in exactly this period. Gaffney frames the law as belonging to the same political family as contemporaneous Georgist-influenced reforms in Cleveland, Toledo, Detroit, and Milwaukee, crediting organized single-tax clubs — the legacy of Henry George's 1886 and 1897 New York mayoral campaigns — as a driving political force behind it.

Set against the wiki's split-rate taxation increases construction page, this episode is far larger in scale than that page's core evidence (Pittsburgh, Pennsylvania, Finland) but far less rigorously isolated causally: Oates & Schwab's Pittsburgh study builds a 15-city comparison panel around one dateable 1979–80 tax-rate change, and nothing comparable exists here.

Nuances and Limits

The central caveat is causal attribution. The 1920s were a nationwide US residential construction boom — postwar catch-up, urbanization, credit expansion — and New York's surge sits inside that larger wave. Resolved (2026-07-18, T2 verification): the canonical national comparison series is David L. Wickens and Ray R. Foster, Non-Farm Residential Construction, 1920–1936 (NBER Bulletin 65, September 1937) — the estimates the BLS itself later adopted as its official interwar housing-start series. Their Table 1 puts new non-farm dwelling units built for the entire United States at 247,000 (1920), 449,000 (1921), 716,000 (1922), 871,000 (1923), 893,000 (1924), a national peak of 937,000 (1925), 849,000 (1926), 810,000 (1927), 753,000 (1928), and 509,000 (1929) — 7,035,000 units nationally across the decade (their Table 4), a near-quadrupling from 1920 to the 1925 peak, then a decline that began before the exemption expired in 1931. Set against that, New York City's own >740,000 units over the same ten years (see Summary) amounts to roughly 10.5% of the nation's entire non-farm housing production concentrated in one city — a useful scale check. This confirms New York's boom sat inside a genuine nationwide surge, but the national series alone cannot by itself isolate the exemption's causal share, or New York's specific deviation, from the concurrent national boom the series documents (the national count, too, peaked in 1925 and fell sharply from 1926) — Conyngton's cross-city comparisons (Philadelphia, Boston, above) remain the more direct evidence for New York outpacing peer cities within the same national wave. Barr's modern treatment emphasizes New York-specific factors other than the exemption — permissive 1916 zoning codes, the absence of rent control after the emergency tenant laws lapsed, and abundant developable outer-borough land — and does not treat the exemption as the leading explanation. Conyngton's own rebuttal to contemporary skeptics — cross-city permit comparisons — is suggestive, observational evidence, not a matched quasi-experimental design of the kind the Pittsburgh literature later achieved. Gaffney's population comparison carries its own wrinkle: Manhattan actually lost population from 1920 to 1940, with growth concentrated in the outer boroughs — plausibly because the $5,000 cap bound less tightly against Manhattan's higher costs — a pattern he does not fully resolve.

Conyngton's own verdict is also more measured than the boom statistics alone suggest: writing in early 1922, she concludes the exemption "has not solved the housing problem of New York, it has not brought down rents to a point within reach of the average workingman, and it has not been as successful as was hoped in promoting the building of individual homes by people of moderate means" — most exempted construction was speculative-contractor building, not owner-occupied — while crediting it with "a tremendous impetus to housing work" and a rise in taxable land values. Readers citing this episode for construction volume are on firmer ground than readers citing it for near-term affordability effects.

Bears On

• Benefit: Split-rate taxation increases urban construction — a large-scale historical parallel to that page's core claim (untaxing buildings while land stays taxed, followed by a construction surge), but weaker evidentiary weight than that page's Pennsylvania and Finnish studies: no matched comparison-city panel isolates the exemption's causal share from the concurrent national boom. This page is not currently listed in that page's supported_by frontmatter.

See Also

• Split-rate taxation
• Split-rate taxation increases urban construction
• Oates & Schwab: The Impact of Urban Land Taxation (Pittsburgh)
• New York City
• Henry George

Sources

1. Mary Conyngton (1922), "Effect of the Tax-Exemption Ordinance in New York City on Housing," Monthly Labor Review, U.S. Bureau of Labor Statistics, 14(4): 23–32. Internet Archive full scan (public domain; JSTOR record was access-blocked in this pass) — used for the statutory text, exemption caps, 1921 permit statistics, Philadelphia/Boston comparisons, and the balanced closing assessment.
2. Mason Gaffney (rev. 2001), "The Resurgence of New York City After 1920: Al Smith's 1920 Tax Reform Law and Its Aftermath," University of California, Riverside, Department of Economics. Free PDF — used for the enabling-law citation (NY Laws of 1920, ch. 949), the political history (Al Smith, the single-tax clubs, Lawson Purdy), the 1920–1940 population-growth comparison, and the Manhattan caveat.
3. Jason Barr (2024), "The Housing Twenties: New York's Biggest Building Boom and Its Lessons for Today," Building the Skyline (Skynomics Blog). buildingtheskyline.org/housing-twenties — used for modern decade-level totals and the alternative structural explanations Barr's analysis emphasizes over the tax exemption. Author is an economist (Rutgers–Newark); a blog post, not peer-reviewed.
4. Citizens' Housing and Planning Council of New York, Inc., Committee on Tax Policies (Albert Pleydell, Study Director; Elizabeth Wood, Associate Director; preface by Walter Rybeck), How Tax Exemption Broke the Housing Deadlock in New York City: A Report of a Study of the Post World War I Housing Shortage and the Various Efforts to Overcome It, May 1960. Sponsored under a grant from the Robert Schalkenbach Foundation (the Georgist foundation) — a fact not previously noted on this page. Full 1960 report scan, chpcny.org (re-posted by CHPC in 2024; title page and front matter read directly and OCR'd this session, 2026-07-18, T2 verification — the report's 218 pages were not read in full, only its title/attribution front matter) — used for the >760,000-unit decade total and ~22%-of-current-stock figure cited via CHPC's 2024 blog note revisiting the report.
5. David L. Wickens and Ray R. Foster (1937), "Non-Farm Residential Construction, 1920-1936," National Bureau of Economic Research, Bulletin 65 (September 15, 1937). PDF — used for the national annual non-farm dwelling-unit totals, 1920–1929, cited in Nuances and Limits as the comparison series against New York City's own decade figures.
6. Russil Wvong (2025), "NYC: A Huge Housing Boom in the 1920s," More Housing (Substack). morehousing.substack.com/p/al-smith — navigation source only; consulted to identify the Gaffney paper, not cited for any claim above.