Laborfest: Vienna Solved Housing Crisis

For more on public financing of housing in Vienna, 1918-1938, see
https://en.wikipedia.org/wiki/Red_Vienna
The Bolshevik Revolution of 1917 creating the Soviet Union, which 100th anniversary we commemorate next year, ended World War 1, and activated revolutionary struggles around the world, especially Europe. Germany attempted a socialist revolution led by workers and soldiers, forcing the Kaiser to flee to Holland on November 9, 1918. The Austro-Hungarian empire became the small country of Austria, today 8 million people, and the socialists were able to implement public financing with various tax the rich methods, building hundreds of thousands of affordable units for the workingclass. From the above website:

In 1919, the federal parliament passed the Housing Requirement Act (Wohnanforderungsgesetz) to enhance the efficiency of existing housing structures. Low private demand for building land and low building costs proved favourable for the city administration's extensive public housing planning.

From 1925 (the year in which a strong Schilling currency replaced the devalued Krone) to 1934, more than 60,000 new flats were built in so-called Gemeindebau ("community construction") buildings. Large blocks were situated around green courts, for instance at the Karl-Marx-Hof (one of the hot spots in the civil war of 1934) and the George-Washington-Hof. The tenants of the new flats were chosen on the basis of a ranking system in which e.g. persons with handicaps got extra points to be chosen earlier. Forty percent of building costs were taken from the proceeds of the Vienna Housing Tax, the rest from the proceeds of the Vienna Luxury Tax and from federal funds. Using public money to cover building costs allowed the rents for these flats to be kept very low: for a worker's household, rent took 4 percent of household income; in private buildings it had been 30 percent. If tenants became ill or unemployed, rent payments could be postponed.
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The above website refers to other social reforms in a context which is instructive:
Social and health services[edit]

Parents got a "clothes package" for each baby so that "no child in Vienna has to be wrapped in a newspaper." Kindergartens, afternoon homes and children's spas were opened to enable mothers to return to their jobs and get children off the streets. Medical services were provided free of charge. Vacation grounds, recreational holidays, public baths and spas and sports facilities were offered to enhance fitness. As Julius Tandler, city councillor for social and health services, put it: “What we spend for youth homes we will save on prisons. What we spend for the care of pregnant women and babies we will save in hospitals for mental illnesses.” Municipal expenditure for social services was tripled in comparison to pre-war efforts. Infant mortality dropped below the Austrian average, while cases of tuberculosis dropped by 50%. Affordable tariffs for gas and electricity and for refuse collection, all run by the municipality, helped to improve health standards.

Financial policies[edit]

The Social Democrats introduced new taxes by state law, which were collected in addition to federal taxes (critics called them "Breitner Taxes" after Hugo Breitner, city councillor for finance). These taxes were imposed on luxury: on riding-horses, large private cars, servants in private households, and hotel rooms. (To demonstrate the practical effect of these new taxes, the municipality published a list of social institutions that could be financed by the servants tax the Vienna branch of the Rothschild family had to pay.)

Another new tax, the Wohnbausteuer (Housing Construction Tax), was also structured as a progressive tax, i.e. levied in rising percentages. The income from this tax was used to finance the municipality's extensive housing programme. Therefore, many Gemeindebauten today still bear the inscription: Erbaut aus den Mitteln der Wohnbausteuer (built from the proceeds of the Housing Construction Tax).

As a result of the municipality's investment activity, the rate of unemployment in Vienna dropped in relation to the rest of Austria and to Germany. All investments were financed directly by taxes, not by credits. Thus the city administration stayed independent of creditors and did not have to pay interest on bonds.