Giving Life to the
Property Tax Shift (PTS)
by Jeffery J. Smith and Kris
Nelson of The Geonomy Society
1611 SE Nehalem St, #2; Portland OR 97202 USA
For Redefining Progress, 1998 December
BACKGROUND -- PROBLEMS & REFORMS
2: INCENTIVE DESCRIPTION -- REAL WORLD EXAMPLES
3: POLICY IMPLICATIONS -- RESULTS & THORNY ISSUES
4: POLITICAL ISSUES -- PROSPECTS & STRATEGIES
SECTION 5: RP'S
ROLE AND FIT
A: Possible Timeline
B: Phase-by-Phase Budget
D: Contact Groups
1: BACKGROUND -- PROBLEMS & REFORMS Economic
Problems to Solve | Environmental
Problems to Solve | Political
Problems to Solve | Equity
Problems to Solve | Previous
Reform Attempts that Failed | Our
SECTION 2: INCENTIVE DESCRIPTION --
REAL WORLD EXAMPLES History -- Past Political
Victories | History -- Past Economic Successes | Present -- Recent Political
Victories | Present -- Recent Economic Successes | Australia's
Experience | New
Zealand's Experience | Pennsylvania's
Experience | Partial
Applications -- Abatements | Partial Applications -- Assessment Precision | Fundamentals
-- How to Implement | Reassessment
3: POLICY IMPLICATIONS --
RESULTS & THORNY ISSUES PTS
Improves the Economy | PTS Improves Sustainability | PTS Improves
Equity | PTS Improves Politics | Thorny Issues -- Economic | Thorny Issues
-- Environmental | Winners & Losers | Thorny Issues -- Equity | Thorny Issues
-- Political | Transition to Taxing Only Land
4: POLITICAL ISSUES --
PROSPECTS & STRATEGIES Out
With the Old Failed Policy | Political
Situation -- Constituencies who Make PTS Viable | Political
Situation -- Opponents who Might Switch | Future Prospects -- Windows of
Opportunity | Which Strategy Wins the Masses? | Top Priority
-- Engaging Semantics | Unavoidable Showdown -- Resolving Fear of Loss
SECTION 5: RP's
ROLE AND FIT Missions
Overlap -- Alignment with RP's Purpose | Advancing Previous RP Work | Resource
Incentive Program Match and Scope | Research Needs | How to
Popularize -- Long-term Multifaceted Program | Work Load and
RP's Role | Funding Requirements | Authors' Potential Role
6: OTHER SUPPORT Georgists | Environmentalists | Libertarians and Friends
SECTION 1: BACKGROUND -- PROBLEMS & REFORMS
John Muir is right. "Tug on any one
thing and find it connected to everything else in the universe." Tug
on the property tax and find it connected to urban slums, farmland
loss, political favoritism, and unearned equity with disrupted
neighborhood tenure. Echoing Thoreau, the more familiar reforms have
failed to address this many-headed hydra at its root. To think that the
root could be chopped by a mere shift in the property tax base -- from
buildings to land -- must seem like the epitome of unfounded faith. Yet
the evidence shows that state and local tax activists do have a
powerful, if subtle, tool at their disposal. The "stick" spurring
efficient use of land is a higher tax rate upon land, up to even the
site's full annual value. The "carrot" rewarding efficient use of land
is a lower or zero tax rate upon improvements.
Economic Problems to Solve
Taxing built-value penalizes construction
maintenance of buildings. This deadweight loss on the local economy
constrains housing supply and raises land values, driving speculation.
Fewer people can then own parcels for homes and businesses, and debt
Environmental Problems to Solve
regions) provide resources as urbs (cities)
provide services. Yet neither does so efficiently now. Allowed by a
present property tax that takes aim at buildings while treading lightly
on sites, owners of sites and resources both overextract and withhold
appropriate land from use, speculating on a higher future return.
Vacant and underused sites waste on the average about 22 percent of
city surface. Using land less than optimally means more land must be
used. Clark County, Washington, combines the empty storefronts,
vacant lots, run-down buildings in Vancouver, the county seat, with one
of the fastest growth rates in the nation. The inflated prices are
hardly affordable by governments intending to purchase open space;
hence parks are smaller and fewer.
Political Problems to Solve
To manage growth, counties adopt boundaries
and other restraints -- which are neither effective nor politically
stable. The once "green" Oregon legislature, for instance, in '95 and
'97 (controlled by Republicans) passed over ten bills to drastically
weaken long-established land use laws. Also under siege is the
property tax, formerly the largest source of public revenue in the US
(back when the federal and state governments were much smaller). Voters
in many states have passed caps and rate reductions, spurring a search
for alternative revenue sources.
Equity Problems to Solve
America is rapidly turning back the clock;
are on the path to becoming a two-class society struggling on a ravaged
planet. For the first time since European settlers carved out their own
country, tenants outnumber owners. Farm workers outnumber farm owners.
Growers under dictatorial contracts to food processors outnumber
farmers still calling their own shots. Tenants, as in Portland, Oregon,
outnumber homeowners. That gulf widens dramatically when defining
owners as those not under a mortgage. In communities of rapid turnover,
crime invades along with government corruption.
Previous Reform Attempts that Failed
To bolster their local economies and fatten
their tax base, local governments compete to attract large new
employers. Hoping to recoup down the road when businesses pay full
property taxes, elected officials offer such inducements as five-year
abatements and low system development charges. Yet each locality must
outdo others' incentives. Enterprise zones and tax privileges amount to
major subsidies that would otherwise generate substantial tax revenues.
Already, Washington, Oregon, and other states employ a nonregulatory
means to reward preservation of unbuilt-upon land. They assess farm and
resource lands at current use rather than at market value to avoid
pressuring owners to develop. However, as long as demand for land
persists, and the more central locations are not offered in the market,
then the temptation before farmers to sell out to developers also
Our Different Idea
To send a clear message to new businesses
that their growth will not be unnecessarily impeded, government can
permanently shift taxes off sales, income, and buildings and onto land.
Since taxing land lowers its cost, business could pay this greater land
tax from what otherwise would be spent on purchasing land. This higher
land levy would remain affordable as long as owners use their land
Developers argue that abundant land lowers its price and thus the
property tax burden. While true, newly-available land need not be
current open space. Without baring the countryside to new development,
both land price and the property tax can be lowered. The price of land
drops when the tax rate on land is raised. And yet this higher rate, if
coupled with a lower or absent rate on buildings, does not swell the
property tax burden of most residents. Indeed, this property tax shift
(PTS) is progressive, providing relief for most residents. And
taxing land, society impels owners who had been speculatively
withholding or underutilizing theirs to develop or offer their parcels
for development. Hence the newly-available land comes from recycled
sites, not from open space.
The PTS not only lowers the price of land, it also lowers the cost of
buildings. Untaxing structures, besides reducing their cost, also
augments their supply. More buildings means lower prices and rents. As
the prices of both buildings and land drop, more people are able to
purchase a home, apartment, or condominium.
Ethically, the PTS simplifies the revenue system, leaving fewer
decisions to be made by politicians in favor of their backers. All the
essential facts are open to public scrutiny: the land's owner, value,
use, and levy. And since mere speculation would no longer be
profitable, owners would have less monetary motive to try to unduly
influence the political process.
SECTION 2: INCENTIVE DESCRIPTION -- REAL WORLD
The application of the PTS -- both
historically and currently -- paints a picture of a reform powerful
enough to win the world we all want.
History -- Past Political Victories
If past is prologue, the political situation in
which geonomics could win adoption is almost any imaginable. The
property tax shift has been adopted by voters, by enlightened elected
officials, by lobbied elected officials, by enlightened despots, and by
self-serving dictators. Ironically, while the aim of the officials
elected democratically (more or less) was to improve the economy, the
goal of the tyrants was to improve equity -- which was not too hard as
peasants had no where to go but up.
About a 100 years ago, California adopted the land tax for a while. The
legislature allowed irrigation districts to fund dam and canal
construction by taxing the resultant rise in land value. This
legislation was the fruit of the effort of one legislator, C. Wright,
who left teaching school to run for office, pass his bill, then
returned to teaching. As voters, farmers were beginning to have more
representation than rich ranchers. Then the idea of a Single Tax on
land values, made popular by writer Henry George,
Unfortunately, once the irrigation improvements were paid for, the land
tax was allowed to languish, as speculators regained political control.
Earlier this century, George's ideas were still popular and
respectable. Both Presidents Wilson and Franklin Roosevelt had
Georgists in their cabinets. Al Smith (who once lost to FDR), while
governor of New York, allowed New York City to exempt new buildings for
ten years (the 1920s).
Other times the officials were hoping to do things right from the
beginning, as in Australia, New Zealand, and Singapore. Yet as these
settlements grew urbanized and the logic of taxing land grew fuzzy, all
three of these repealed their land tax at the federal level, one state
in Australia gave it up, and Singapore abandoned it all together.
However, land speculators have had less luck in replacing the land tax
at the local level, where the voter/government relationship is more
Elsewhere, the land tax has been implemented by dictators. When Chiang
Kai-shek took refuge on Formosa, he could retreat no farther -- behind
him lay nothing but open ocean. To win the support of the peasantry on
that feudal and impoverished island, he borrowed a page from his
mentor, Sun Yat-sen, who was a follower of Henry George, the noted
advocate of the Single Tax on land. To break up the few landed estates
which had extended across the entire isle, the Nationalists taxed
A more enlightened despot was Frederick, a Danish prince who in 1790,
physiocracy was all the rage (the Toms Jefferson and Paine were
physiocrats) overthrew the king, his uncle, in order to tax land. Ever
since, Denmark has enjoyed the highest rate of owner-occupied farms in
Advocates can learn from failure, too. Around the beginning of the 20th
century, three idealistic leaders tried to implement a land tax. In
Mexico, Francisco I. Madero was murdered (by the US backed side). In
Russia, Alexander Kerensky was deposed by more aggressive reformers.
And in England, Lloyd George was thwarted first by the last vote of any
political import by the House of Lords (to vote that day, senile and
deranged noblemen were wheeled into Parliament from the asylums ringing
London) and last by World War One. Eventho' the tax had at last passed,
it was never implemented due to the absence of a decent assessment
which was not performed owing to the exigencies of war.
Elsewhere in Latin America, in Argentina in the 1840s, President
Rivadavia, proposed physiocracy and in Guatemala in the Reagan years,
President Cerezo advocated a land tax. Both were deposed by their
respective armies. Neither leader included a tax reduction, but there's
no way to know if that would have made a difference. Yet it's probably
best to promote the shift rather than advocate the raise of one tax.
Historically, victories by land taxers and property tax shifters over
landholders have been rare. They occurred when either the people
understood the proposal or someone in a position of power did. Plus, at
issue was either equity or the economy or both, so that people were
attuned to new proposals.
History -- Past Economic Successes
A century ago, many farmers and miners went
without water because cattlemen like Henry Miller owned 1,000,000 acres
in California. Miller could drive his herds from Mexico to Oregon and
spend every night on his own land. In 1886 Mill won full rights to the
water of the Kern River. To correct this aggrandizement, the state
allowed communities to create by popular vote irrigation districts to
build dams and canals and pay for them by taxing the increase in land
value. Once irrigated, land was too valuable to use for grazing, and
the tax made it too costly for hoarding. So cattlemen sold off fields
to farmers and at prices the farmers could afford. In ten years, the
land rent tax turned the Central Valley into over 7,000 independent
farms. Over the next decades, those treeless, semi-arid plains became
the garden of America.
Several countries have taxed land on the national level. On the other
side of the Pacific Rim, Australia, New Zealand, and Taiwan levied a
federal land tax for a while. Repeating the success of California,
Taiwan was able to redistribute huge plantations into many family-sized
farms. Recently, in an attempt to control their skyrocketing location
values, both Japan and Korea have begun to tax land, though only at low
Taiwan instituted land taxation during the 1940s to redistribute land
and increase food production. Prior to the arrival of the Nationalist
Party, most of the island's people were landless peasants and were
afflicted with hunger. Less than 20 families monopolized the entire
island. So the new Nationalist government implemented its "land to the
tiller program," which taxed farm land according to its value. Soon the
large plantation owners found themselves paying out about as much in
taxes as they were getting back as rent. Being a middleman was no
longer worth the bother, so they sold off their excess to farmers at
prices the peasants could afford, which, according to the World Bank,
lay the foundation for subsequent rapid development. Working on their
own land, new owners felt inspired to work harder. They produced more,
kept more, and lived better. Twenty years later, Taiwan had growth
rates of 10% per annum in their GDP and 20% in their industry, while
from 1950 to 1970 population growth dropped 40% and hunger ceased.
Denmark, during the 1950s, tried to move toward a land tax nationwide.
In 1957 the tiny Georgist Justice Party won a few seats and was
accepted into the ruling coalition. Land speculators feared that the
rest of parliament would go along with shifting taxes toward land. So
investors shifted their portfolios from speculation to production. One
year later, inflation had gone from 5% to below 1% ; bank interest
dropped from 6.25% to 5%. By 1960, 100,000 unemployed had found jobs in
a country of just five million people. Nevertheless, next election, the
landowners spent enough money to sway public opinion and removed the
Justice Party from parliament. Speculation was safe again. Inflation
quickly climbed back up to 5% and by 1964 reached 8%. From 1960 to
1981, land prices skyrocketed, increasing 19-fold while prices of goods
and services increased merely fourfold.
Present -- Recent Political Victories
For fans of democracy, the most recent victory
the PTS came about via the initiative. The votes were cast in Allentown
(Pennsylvania is one of the few states that permits separate rates for
land and buildings). A key local leader knew of the success that
Pittsburgh, Harrisburg, and other Pennsylvania towns had had with the
PTS and had the clout to make the shift part of a total revision of the
city charter. When the revision passed, propertied opponents put the
repeal of the PTS on the ballot separately. Advocates of the split
conducted a typical grassroots campaign of phone banking while
opponents relied on paid advertisements. Altho' the dollars spent
during the campaign heavily favored repeal, the voters heavily favored
keeping their new fiscal toy.
Abroad, during the last year or two, a few jurisdictions have turned to
taxing land. Estonian officials felt that they had little choice; all
other taxes are too difficult to collect. If a government is willing to
evict owners who fail to pay, the land tax is easy to collect. Unlike
wealth, land can not be moved or hidden and its owner must step forward
to retain hers (sic) possession. Colombia, whose cities are swamped by
squatters, has granted mayors the power to negotiate a land tax with
individual land owners in the hope that a higher charge will stimulate
development of underutilized sites, generating more affordable housing.
Cape Town, South Africa, quit the regular property tax in favor of a
land levy. Altho' sited on one of the world's major shipping lanes,
Cape Town's development had always lagged behind the inland
Johannesburg, an abandoned mining town that prospered in part from
levying only locations and not any improvements. Not knowing what to
expect in the aftermath of apartheid, Cape Town's civic leaders wanted
to ease the transition to a sound, integrated economy.
Present -- Recent Economic Successes
Cities with either a phased-in two-rate
land-weighted system, as in Pennsylvania, or with a full land tax, as
in Australia and New Zealand, have consistently shown that:
- Taxes on the majority of owner-occupied and
rental homes were reduced.
- The steep escalation of housing prices
and rents experienced by most US cities was averted in the two-rate
cities as housing supplies increased.
- Construction and rehabilitation of homes,
stores, and offices increased.
- Central business districts drew more private
investment and were renewed.
- More efficient land use followed
putting the city's idle lots and under-used buildings into productive
use; reducing the pressure for urban sprawl.
Australia has operated under various forms
site value taxation for nearly a century. Many studies have estimated
the improved rates of construction, housing, rise in wages, and even
expanded agricultural lands under land value taxation in Australia. Two
cities fully exempt buildings. Canberra, the nation's capitol, exists
on public land and leases lots. Sydney taxes land, not buildings.
Neither one recovers all the land's annual market value and rely on
some revenue from the federal government. Yet their lower-income areas
appear much more livable than the dilapidated ghettos of many US
cities. In the two most populous states, Victoria and New South Wales,
revenues from land taxes increased significantly in the eighties. In
Victoria revenues nearly doubled and in NSW, they nearly tripled from
1984 to 1990, accounting for inflation.
In 1951 the federal government also taxed land. All states except
Victoria still have a land tax in some form. Over the last two decades,
the percentage of government revenue collected in land rent at all
levels was estimated to drop from 6.3 percent to 3.7 percent. In the
recent decade, under influence of wealthy interests most states have
diluted the land tax.
Following this trend away from capturing unearned land values,
municipal revenue from property rates has fallen to 50 percent of the
budget. One city, Hervey Bay, Queensland, now collects only about 20
percent of its revenues from site-values. Fixed charges or fees for
particular purposes have gained popularity instead, including a minimum
rate for all properties in some instances. Nationwide, all levels of
government collected $148 billion in 1993-94. One estimate suggested
that the present uncollected annual rental revenue in Australia would
be about $40 billion, depending on the capitalization rate used.
Despite this drift away from site rent, especially among
municipalities, a two-volume report commissioned by the Brisbane City
Council in 1989 found significant advantages to taxing land. Comparing
it to taxes on "heads" (the poll tax), sales, income, improved property
value, and license fees, the research committee unanimously rated
"rating" (the Aussie term for taxing property whether land or building)
as best. They stated, "In
principle, the unimproved value of land is a logical and appropriate
basis for revenue raising irrespective of the level of government." They
noted that land taxes are virtually impossible to evade, tap every member
of the community, are simple and inexpensive to administer, and
its compliance costs for citizens are minimal.
New Zealand's Experience
Kiwiland has used the land tax for over
years, political pressures along with economic swings have whittled it
down to 0.4 percent of the federal budget in 1989. That year it became
a political football. Since 1896, the federal government had
independently recorded the market values of the land, the improvements,
and the composite or capital value. In 1989, federal authorities
reassessed land during a sharp rise in commercial values, primarily in
Auckland (which doesn't collect land rent); but they actually collected
the revenues a year later when land values suddenly fell. Genuine
inability to pay ensued.
The previous ruling party, the National Party,
raised the rate on
commercial land as it exempted all rural land. That gave a nice tax cut
to 1,300 of the richest people in New Zealand. Where sites were
underdeveloped, perhaps due to the ineffective level of the land tax,
too few site users could manage to pay the tax. The resulting hardship
reinforced the ruling Labour Party's right-wing proposals for
abolishing the land tax and replacing it with taxes on goods, services,
and users. More recently, since 1991 the land tax as such is considered
a dinosaur on a national scale, although some 90 percent of the
municipalities employ land-value rating (rates are levied on the rental
value a property as assessed by the city council annually). Since
Wellington has adopted capital value rating (the regular property tax),
its renewal has faltered. Most recently the concept of "resource
rental" is floated in national debates as a substitute for taxes on
land and capital assets.
W.W.II, when its steel industry plummeted,
Pittsburgh widened its two-to-one land-building ratio. The city watched
60 new buildings and skyscrapers, valued at $700 million then, stand up
in industrial areas. This privately financed renewal brought 16,000 new
jobs to an area that had employed 4,000. Then-Mayor David Lawrence,
noting the power of the stick, said the higher rate on land "discouraged
hoarding of vacant land for speculation." His successor, Mayor
Joseph Barr, noting the carrot effect, explained, "Fine
structures erected through private investment as part of the renewal
program benefited by the lower tax rate on buildings." When many
decaying cities were seeking federal aid, Pittsburgh's Golden Triangle
brought the city national fame.
In 1951 the Pennsylvania legislature granted all
cities the two-rate
choice, omitting any ratio limits. Over two decades later in 1975,
Harrisburg, the capitol, shifted its property tax landward. The value
of its private real estate grew from $212 million in 1981, when it was
cited as the second most distressed city in the nation, to over $880
million in 1994. Its mayor during much of this recovery, Stephen Reed,
noted another benefit: "Many
states try to save farmland by buying development rights. That's
expensive. Without spending a dime, we can achieve the same goal with a
two-tier tax. Unused urban land is what pushes development into open
spaces. This tax, by assuring better use of unused land in cities and
suburbs, will discourage the gobbling up of farms."
Ailing, small towns in distressed Appalachia passed
the shift in the
eighties: McKeesport, New Castle, Duquesne, Washington, Aliquippa,
Clairton, Oil City. In 1990 Titusville chimed in. A year later
Coatesville, DuBois, Hazleton, and Lock Haven followed. In 1996, after
repeated vetoes by the mayor, Allentown came on board with its 100,000
residents. That makes 16 municipalities with the two-rate property tax.
All of them are growing by densification unlike many of their neighbors.
In 1992, Uniontown reversed its adoption of the
PTS. (It was one of the
towns one of these co-authors lobbied. It seems he may have pushed to
hard. They accepted a higher initial rate which spurred a backlash
which scuttled the whole program. Damn eagerness!) Like many others in
the region, this city of 12,000 needed help; 80 percent of downtown
sites were empty. Their big mistake was to introduce the two-rate
reform under 34 year-old assessments which underestimated the value of
lots with abandoned structures. The few retailers left were hit with a
drastic increase. Moreover, officials did not give out public
information in advance. When people got their tax bills, they were
angered and uninformed, causing the city council to revoke the shift.
While the 1951 law abolished ratio limits, it has
been used only to
increase the land portion. In 1979, Pittsburgh moved to a three-to-one
ratio and in a few years moved to six-to-one. Six others have chosen
five-to-one. In 1995 Washington, 30 miles from Pittsburgh, shifted to
taxing land 11 times higher than buildings; Aliquippa to 16-to-one.
These spreads are diluted by overlapping counties
and school districts
which still levy property taxes of one rate. When the city, county, and
school taxes are figured in, Pittsburgh is dampened to a 2.5-to-one
ratio. To address this lack of uniformity, the legislature granted
permission to school districts and boroughs the option to split their
rates. So far, only two noncity jurisdictions have taken advantage of
this option, totally 18 jurisdictions, including Pittsburgh, that have
opted for a higher rate on land and a lower one on buildings. Across
the Delaware River in New Jersey, officials recently held a public
hearing on the PTS.
Partial Applications -- Abatements
With first Spanish and then Mexican
control, much California land had been pueblo,
or public. Though very little of that pueblo land remains, some of it
is still quite valuable. In the 1960s, various towns sitting on San
Diego Bay designated their water fronts as the Port District. The Port
Authority collects hundreds of millions of dollars of land rents each
year and is one of few local government agencies with a consistently
positive cash flow. Where does that cash flow to? While not into any
bloated bank accounts of private owners, by law it can not flow back to
the "pueblo." Instead, it must be spent by the Port Authority who tend
to take numerous trade missions to exotic destinations and redecorate
their offices each year.
Benefits of the PTS have also been achieved with
building tax abatements and by simply obeying assessment laws.
During World War One, in New York City construction
nearly ground to a
halt. After the war, housing in the City was in short supply and the
demand for new homes was doing little to relieve the shortage. Then, in
1920, despite fears of revenue losses, the legislature enacted enabling
legislation so that NYC could pass an ordinance that exempted taxes for
ten years on new buildings used only for dwellings. The City continued
to tax land beneath buildings. Within two months of enactment, a
building boom swept the city. Restored neighborhoods and public
improvements generated higher land assessments. Housing became an
attractive investment, civic panic faded, and municipal revenues rolled
The boom lasted until builders saw the decade-long
window closing. The
law was not extended or expanded.
- First, because the law exempted just
new construction, not all housing, it failed to lower rents for middle
and low-income tenants.
- Second, the real estate industry argued that
government should stay out of "the free market". Yet such a building
tax exemption is more accurately a market correction, not an
interference, since it removes the market disincentive to build.
To arrest urban decay in the seventies, reformers
abatements. Peoria, Illinois, set up an enterprise zone that granted a
ten-year abatement on the value of new or repaired commercial or
industrial buildings. As land values rose, the tax on land was allowed
to keep pace. Within three years, the dollar value of industrial and
commercial construction permits within the zone climbed from eight to
21 percent of the city's total. The maverick business leader behind the
idea, John Kelly, extolled the turnaround: "Enormous
building investments led to a consensus that this abatement of taxes on
new construction is the best development program Peoria ever undertook."
On the down side, abatements usually don't apply to all areas and
ripe for political cronyism. Businesses in older buildings despise
subsidizing tax breaks and new buildings for their competitors.
Abatements tend to be less effective in the housing market. The many
smaller housing developers shy away from the "abatement game" and are
reluctant to risk major projects.
Partial Applications -- Assessment Precision
Another way to mimic a PTS is to follow the
letter of the law in assessing site value for accuracy and currency.
Over the decades, US assessors have consistently undervalued land
relative to improvements. The more poorly the land is utilized, the
lower our officials assess it, despite uniform appraisal laws. This
bias has overemphasized the detrimental half of the tax and crippled
the beneficial part.
Consider Rosslyn, Virginia, across the Potomac
from Washington, DC. In the late forties this part of Arlington was so
rundown it inspired an advisory group to require the state to conduct a
countywide reassessment in 1950. They stipulated that close attention
should be paid to the true market value of sites without regard to use.
Rosslyn valuations jumped; the core 154-acres saw increases from $300
to $2,300 per acre. A five-acre commercial tract jumped from $3,000 to
$196,000 an acre.
How did they soften the blow to property owners?
Soon new enterprises took off, turning
Rosslyn into a district of top-notch hotels, offices, and apartments.
The success was also supported by annual reevaluations. As Rosslyn land
values increased with accurate assessments, the pressure for renewal
remained and removed the profit and incentive of speculation. By 1975
Rosslyn returned $43 million annually to the county and received $13
million in public expenditures.
- First, all new
assessments were mailed at once; owners saw they were treated
- Second, the assessment gurus read the market
most owners; the updated assessments in Arlington rivaled the highest
in quality in the US.
- Third, chief assessor, Francis Austin, saw
himself as an educator, not an enforcer. He assisted owners to make
better land use decisions. Instead of suing, several land owners sold
their lots at healthy profits.
Another outstanding example of simply following
appraisal laws is
Southfield, Michigan. State law required all taxable property to be
appraised at market value. Buildings there in 1960 were assessed at 70
to 80 percent of value and land at five to 10 percent. After Mayor S.
James Clarkson took office on a promise to correct this violation, and
after a fight with the assessor, special interest groups, and the
courts, the city stopped overvaluing new construction and remodels and
began appraising land by its highest and best use. Soon the contrast
with the slums of nearby Detroit were patent. Mayor Clarkson stated
that Detroit taxed land values "next to nil" under Depression era
assumptions. Voters reelected him four times on his promise of fair
assessments. Average homeowners paid 22 percent less in taxes
immediately. Those who held large empty lots in desirable locations saw
huge tax increases but reaped windfall profits from selling or
developing. As Detroiters migrated outward, accurate assessments
enabled Southfield to capture rising land values, bulking up its tax
base by 20 percent a year.
Fundamentals -- How to Implement
the US, the federal government
relied on tariffs, then selling the west, and now the income tax.
States relied on sales and now income taxes. Localities relied on
property taxation. This traditional divvying of the tax base pie is not
embedded in the constitution. During the Civil War, the federal
government enacted both a property tax and an income tax -- and could
do so again.
Some state constitutions prevent the PTS. Decades
initiatives enacted amendments to require the same rate on structures
and sites. To repeal this stricture, a future amendment could be either
a statewide mandate or local option. (The former orders and the latter
allows local jurisdictions to adopt the PTS.) Both Pennsylvania's and a
currently proposed amendment in New Jersey permit municipal, county,
and local districts to adopt differential rate property taxes,
including 100% land taxes.
Some states permit localities or their voters to
districts to fund a particular service such as beautification.
states direct their ADs to collect only the rise in ground rent; others
define assessment charges similar to property taxes, falling on the
combined value of sites and structures. In some states, assessment
charges fall within limitations upon taxes; in other states they don't.
The ideal state for setting up ADs in place of the property tax may be
California whose Prop 13 severely curtailed the property tax yet whose
Supreme Court has given ADs pretty much free reign.
Most jurisdictions already appraise the
value of land and buildings separately (however poorly), a taxing body
could without delay adopt the PTS. Yet to derive maximal benefit from
the PTS, many jurisdictions will have to upgrade their assessments.
In real estate there are two basic tautologies.
- One, land value is
unrealized rent and rent is realized land value.
- Two, the annual rental
income from a parcel is its market price multiplied by the interest
rate, and land price is capitalized land rent (usually over a 30 year
term). Since collecting land rent shrinks, even eliminates, land price,
it becomes necessary to determine annual rent and use that as a basis
for the rate on land.
Where density is low and growth rapid, land price
assessments usually fail to keep up. Yet when land price inflation
decreased from 15% to 10% annually, a land tax rate of 95% would
capture the gain in land value and impact land allocation. Fortunately,
the PTS precludes land price inflation, even lowers land price (tho'
high density areas being developed would likely keep prices high).
Where assessments are inaccurate, the PTS will be
less effective. Under
valued assessments, common on large residential lots in Clark County,
Washington, "produces the undesired outcome of tax reductions
rather than tax increases"
(Gihring, 1996). Room for improvement persists in most regions
nationwide. How much better could today's assessments be, had state
legislatures allowed localities to abolish taxes on buildings all
together? Both the cities of Rosslyn and Southfield did in fact request
just that. In Australia, with its long history of local reliance on
site-values, accurate assessment is more the rule than the exception.
SECTION 3: POLICY IMPLICATIONS -- RESULTS & THORNY
While the results of the PTS are quite
encouraging, the proposal does generate much initial resistance,
especially regarding the loss of rent by landowners. Yet a gradual
shift of the property tax should allay this objection.
PTS Improves the Economy
Land that is higher taxed is lower priced.
Cheaper land reduces buyers' debt. Less demand for loans lowers the
lending rate. Cheaper capital means more investment and more
employment. In Australia, in the province around Melbourne, some towns
levy the regular property tax, others tax only land. Those with the
same rate for sites and structures suffer more bankruptcies; those with
one rate for land enjoy more successful business start-ups.
The PTS encourages investing in high-yield use of parcels.
Developing land generates jobs in construction. As those construction
workers spend their incomes, they generate more business for local
merchants. For the few years that New York exempted buildings in the
1920s, the city boomed more than any other US city. In New Zealand,
over 80% of the towns tax land, not buildings. Before the 70's oil
shock hit, they enjoyed over a decade of employment at 99%.
A stable source of revenue is a virtue in the eyes of any government.
When recession strikes, governments that tax income or property must
borrow more to make ends meet. The disincentives built into ordinary
taxes deepen and prolong the recession. When taxes upon effort are
eased, the economies can recover.
The PTS can cure local recessions. Spurring building, while not
burdening it, keeps a web of regional suppliers, installers,
architects, financiers, and others in greater demand. In the 17 Western
Australian cities in the Perth area that had shifted to land taxation,
new construction increased by 34% from 1971-76, while nine localities
with ordinary property taxes saw a .02% decrease. From 1974-84, a
period marked by recession in the latter half, towns near Melbourne
that tax land alone saw the number of businesses increase by 11%,
whereas cities without land taxation witnessed a drop of 20% (Cord
1998). Similarly, in the early 1990s, Connellsville and Washington,
Pennsylvania, turned to the PTS; both enjoyed more new construction and
housing (CSE 1997). Such examples illustrate the stable growth
unleashed by the PTS.
PTS Improves Sustainability
Good for the economy, the PTS is also good
for the eco-system. Were land levied, the owners of the most valuable
sites would feel most pressure to develop; their sites tend to be
closer to the city center. Hence those owners draw any needed
development, infilling cities, sparing suburbs further encroachment.
Other highly valued sites are those rich in natural resources. Again,
using them more intensely frees up sites of lesser natural endowment.
Thus, besides conserving sites, the PTS also conserves resources.
Higher efficiency makes feasible the goal of sustainability. Going
sustainable must radically alter five basic strands in an economy:
The segment of the economy wasting the most resources
exacerbates the need for mobility while
infilling reduces it. Presently, cars claim 50% of urban surface. Land
dues would motivate owners to put their asphalt devoted to cars to
higher and better uses, ones that serve humans. A higher human density
provides mass transit with more riders so that the system could expand
and automobile dependency contract, letting both city and suburb
- home building,
- resource extraction,
- energy, and
Another resource-consumptive segment of the economy is construction.
Developers now profit from value. Losing that to land dues, they'd seek
a replacement income. They'd be inclined to use cheaper recycled
materials and build homes of higher value, with more insulation, heat
exchangers, light tubes, rain cachements, a front for the street and a
face for the south, fiber-optic wiring for the computerized building,
edible landscaping, etc.
Many building codes mandate certain features (thick insulation, smoke
detectors, etc). All these add-ons raise improvement value which the
polity then taxes. The PTS repeals the penalty for improving
structures. Another current obstacle to more efficient construction is
that renters, unlike owners, have little vested interest in upgrading
the structure. Lower land prices put more people into their own homes.
As owner occupants, people tend to be more motivated to plug heat leaks
and conserve energy, thereby slowing climate change.
Another candidate for least sustainable is factory farming. What makes
mechani-chemical agribusiness financially feasible is the ability to
borrow against pumped up land values. Land dues end land's role as
collateral, leaving growers little choice but to entertain the organic
option. To ease the transition, the locality could disburse collected
rent to residents. Plus, untaxing labor makes it more affordable to
hire a helping hand. And, where cities are compacted, farms can stay
closer to local markets. As Italy discovered centuries ago, nearby open
space keeps fresh food -- whether grown, raised, gathered, or hunted --
readily available to satisfy the quality-sensitive urbanites. Further,
as city folk enjoy more open space and grow closer to nature, they
become a growing informed market, preferring local, organic, tasty, and
Applying the PTS to rural resources has the same conserving effect
as on urban land. Sites yielding resources most easily would be used
more intensely, forcing the abandonment of marginal sites. These sites
could then revert to other uses, such as outdoor recreation or, once
restored, natural habitat for other species. Here, too, the land
dividend helps former loggers and miners adjust and become guides and
foresters. Untaxing labor makes such new jobs more affordable to new
companies. Other labor-intensive enterprises could compete with the
capital-intensive ones. Recycling, which has the barest minimum of
overhead, would grow more profitable as virgin extraction grows less.
PTS Improves Equity
Not only is the PTS efficient, it is also
fair. For ages, people have debated the just basis for taxation:
ability to pay versus benefits received. The property tax shift settles
the argument in favor of both sides.
First, land "dues"
liturgy, or some combination of the forgoing), especially when coupled
with an untaxing of homes, jobs, and enterprises, are inherently
Second, land dues are scaled according to site values.
Site values measure not what an owner puts into the "common kitty" but
what one takes out. A prime location has the most advantages; it's the
one enjoying the best that society and nature have to offer. For owners
to enjoy those locations exclusively, and to pay more for doing so, is
Eventho' almost everyone would worry about paying more tax, the PTS is
inherently progressive. Studies of the towns in Pennsylvania that have
shifted some tax from buildings to land show that about 75% come out
ahead (nearly the entire bottom four quintiles of income earners), 20%
break even and 5% pay more (together a bit larger than the top quintile
of income recipients), who are usually absentee owners.
First-time home buyers make out like bandits. They'd pay a higher
land dues to their community but lower total taxes to government, a
lower price to the seller, and a lower mortgage to the lender. Is it
fair that one group should benefit so prodigiously? Yes. In many US
cities, renters now outnumber owners. High rates of tenancy, as shown
in Goldschmidt's 1940s study of the Central California towns Arvin and
Dinuba, engender apathy and indifference, which are bad for democracy,
community involvement, street safety, and environmental protection. The
sooner young families can become homeowners, the better off all members
of society will be.
Presently, when land prices rise (or the land tax), owners charge more
to buyers and renters. After a PTS, the higher rate on land makes
owners eager for customers. Plus, there'd be more owners in
competition, as former speculators become new developers. Thus the PTS
stabilize prices, saving money for small businesses and those in the
lower income brackets.
PTS Improves Politics
The PTS reduces the profit from land,
land use less of a political football. Developers will have less money
to spend on distorting the democratic process. Then society can more
easily resolve land use issues.
Thorny Issues -- Economic
Tho' the levy upon site values is an
immensely powerful tool for social advance, having benefited every
jurisdiction that tried it, the proposal does meet initial resistance.
However, since the shift is such a powerful tool for development,
serious objections (those that can be substantiated) have focused less
on the shift's economic merit. Instead, challenges have been made on
grounds of equity and sustainability.
Thorny Issues -- Environmental
Owners paying higher land dues feel
to develop their land in order to pay their dues, and development is
already blighting many suburbs and farmland. Won't the PTS force
premature or excessive development, losing open space and ecologically
sensitive areas? Environmentalists should understand that development
is actually needed to spare land. Using some land more intensely means
using other land not at all. The PTS stimulates construction in the
most intensely-used locations; compact urban form leaves more
surrounding countryside pristine. Since about one-fifth of urban areas
are vacant or underused land, and half is devoted to cars, there's
plenty of room in cities for growth. While suburban commercial centers
compete with downtown for redevelopment, each new building, whether for
business or residents, must find tenants.
Higher density is the expected result of the PTS, yet many people
oppose higher density. However, the noxious component is not a higher
density of population but of automobiles, creating congestion, noise,
noxious smells, and danger. The PTS, by clearing out the infestation of
vehicles, makes human habitats more livable and the added people
Without coercion or remote planning, the PTS improves our settlement
patterns. Regulations and zoning, some assume, might be vitiated or
obviated, become obsolete. Instead, the PTS makes it easier for
regulations and zoning to do their job. Since the land tax lowers land
price, buying land for parks and reserves is more easily afforded. The
loss in revenue from removing the newly public lands from the tax rolls
would be offset somewhat by the corresponding rise in value of sites
near the protected open space. Creating green spaces raises the density
of already developed land, and thus its value. Furthermore, land dues
reduce the profit from land development, making it a less attractive
investment, and land use decisions of less economic consequence. After
a while, people with deep pockets would turn to investments that,
post-shift, would be untaxed. Reserving land for recreational or
natural uses becomes less contentious; people could more easily
determine an optimum proportion of green space to developed space.
Redirecting land rent from owner to government might merely pass the
motive to exploit from owner to state, possibly the next implacable
force against conservation. However, while an individual must use their
own land most intensely to maximize profit, a government must optimize
land use to maximize its land tax base. That is, land value thruout the
jurisdiction is lower when there is border-to-border development;
overall values are higher when some space is kept open. From the
government's point of view, there's more rent to be collected when
highest and best use includes nonuse.
Winners & Losers
Might the PTS fall heavily on low-income
holders and elderly homeowners? The land-rich, money-poor old widow
could suffer if society were to levy sites. Eventho' the vast majority
of poor people would come out ahead, there probably will be the rare
exception. To deal with "the widow on a valuable lot", the new policy
could include deferments.
Just as some poor could pay more, some rich could pay less, such as the
owners of a skyscraper that'd be the highest (literally) and best use
of a site. While a PTS could be a tax break for a few, the intent of
the shift is not so much to whittle away fortunes as it is to promote
prosperity, equity, and sustainability. Were society to attain such
goals, letting some fortunes escape unscathed is a small price to pay.
Also, putting a site to best use, while profitable, also benefits the
community by providing convenient employment, bringing money into the
local economy, and by precluding less efficient development, such as
Since the shift is progressive, then the rich are footing the bill for
everyone else. To answer this charge that one group will pay more
(those who can afford it), proponents could note that the amount one
pays is scaled according to the value of what one takes -- a parcel of
nature. The payment is for exclusive use to our common heritage. Those
who exclude the rest from the best must expect to pay the most.
An obvious loser is a resource extractor such as an Oregon timber
harvester (Weyerhauser is the biggest landowner in the state). All the
rent that society now allows them to retain, they'd lose. Perhaps there
is a silver lining to corporate mergers and diversification and
interlocking stock holding; the huge corporations holding resources
would have other profitable lines to turn to.
An obvious winner, balancing the losses of the extractor, are the
service-providing companies located off the beaten path, like a
neighborhood cafe. After centuries of just getting by, smaller
enterprises would gain by competing on a level playing field. What
they'd gain (that is, retain) is the fruit of their labor. Conversely,
what big business would lose is the commonwealth generated by all.
What determines one's new bottom line is how intensely one uses land.
Thorny Issues -- Equity
- The PTS raises the tax burden on low intensity
users of land, such as:
slum lords, car dealers, speculators sitting on unused land, mall
owners and probably their tenants, and farmers on land near a city's
limits, assessed according to potential use, and not granted
- On the other hand, owners of homes, condos,
neighborhood-based, pedestrian-friendly businesses, and industrial
facilities generally use land intensively. The PTS would save them
money, although only slightly for home owners, based on studies of King
and Clark Counties, WA (Gihring, 1994, 1996).
- Agricultural parcels far
removed from suburban areas, given very low value, may also come out
What's won or lost is a value generated by
society. That is, land rises in value
These factors driving land value are not improvements
lone owners but by the entire community. The closest correlation to
land value is density and no one person creates that. Hence the site
value levy merely puts public values in the public treasury for public
benefit, as untaxing homes, sales, and income leaves
privately-generated values in private pockets.
- where a new resource is
discovered (during a gold rush, more money is made by land developers
than by prospectors),
- where population grows (see the Sun Belt and
- where technology advances (witness the land
in the various Silicon Valleys, Forests, etc),
- where infrastructure
expands (e.g., near a new road or sewer), and
- where society cooperates
(e.g., in communities that organize street fairs, neighborhood watches,
"Home equity" (actually, site equity), the only equity most people
have, would be consumed by the land dues. Eventho' the complete geonomic
tax shift would let people improve their homes, increase their incomes,
expand their businesses, and augment their savings without increasing
their tax liability, homeowners would still lose their "home equity."
Proponents need to lead off with the bottom line and underscore the
fact that even with lost equity, numbers show a vast majority would pay
less were taxes shifted. Those savings could be invested in stocks or
bonds for an equivalent return. And were the new policy to include a
per capita rebate, then the geonomic package would merely convert one's
expected equity into a certain annuity. Instead of cashing in one big
lump sum later, residents would be cashing in smaller amounts all along.
Thorny Issues -- Political
In PTS, the T stands for tax. Taxes, at
are grudgingly accepted as "the price of civilization". The property
tax, a threat to home ownership, is roundly disliked. Rather than
recognize the two different taxes rolled up in the property tax, most
reformers and most electorates simply choose to cap the property tax
rate (and thereby inflate the price of land). To parry the anti-tax
fervor, it is possible to rename the proposal as a "sprawl tax" (as
does Alan Thein Durning in Tax Shift). This name suggests the
new charge would counter a negative condition. It's also possible to
formulate the proposal as a user fee. A jurisdiction could raise the
fee for deeds and collect it annually, as states do for titles to
vehicles, and thereby technically avoid being a tax.
The proposal is often seen as a tax on land, on one's private property,
the under girding of one's home, "everyman's castle." The associations
with land are
so positive, and the connotations of tax are so negative, that the
proposal feels to the public like a threat to one's own niche in the
universe. One way to try to defuse this emotional reaction is to
replace "land" with terms such as "site" and "location." Also,
proponents can insert the word "value" which is not only more accurate,
it's also more abstract, softening the emotional blow.
People prefer "the devil they know." People may not like their
burden, but they sure don't want to risk letting it go any higher. Yet
the proposal is to increase the land tax rate or deed fee. Plus, a levy
on site value, in the many growing jurisdictions, constitutes a higher
charge on something growing -- site values. To prevent "inflating
residents out of their homes", the proposal could either
(a) exempt the
first $20,000 or so of site value, ensuring that the poorest landowners
pay at most a modicum, or
PTS proponents could
present their proposal as an even lower cap on improvements, down even
to zero, with an equivalent quasi-cap on locations, above which any
surplus collected rent would automatically be rebated to residents on a
per capita basis. This higher rate on land may be made even more
sellable than a lower one were the PTS hitched to a reduction of taxes
on income or sales, too.
(b) rebate some rent (collected site value)
once some threshold is reached, say when the land dues owed by the
poorest quintile equal, say, 5% of average local income. (The actual
trigger figure needs more thorough calculating.)
The PTS is social engineering, an attempt to
manipulate behavior. Yet
all taxes spur a different response from taxpayers. Hence legislators
offer credits, deductions, exemptions, deferments, abatements, and
assess property at current use versus market value. Which is the real
distortion of free choice? The present practice of privatizing
publicly-generated land values or the proposed policy of sharing rent
while respecting earnings?
Transition to Taxing Only Land
Starting in 1914, Pittsburgh and Scranton
introduced "the graded tax." Over a decade they phased in a higher rate
on land until it was twice the rate on buildings. Doing so gradually
allowed residents and businesses time to adapt, giving the PTS
political acceptability. Tho' this delayed benefits, land speculators
offered little opposition since they did not face the sudden effects of
the full shift. Such an approach is still prudent today.
On the other hand, the shifting the property tax can be rapid and
orderly. Economies and societies do endure price shocks, such as the
doubling of gas pump prices in the early 70s. Yet to avoid that
resultant acrimony, the PTS could be phased in gradually. Over five
years, tax rates could change 20% per year.
- Year One, the levy upon
sites, resources, and government granted privileges (e.g., utility
franchises, medical licenses, taxi medallions) would increase by 20% of
uncollected annual value. All other taxes would fall by 20%, or
policymakers could exempt the bottom quintile form taxes.
- Year Two, if
all goes well, 40% of natural value would be collected while other
taxes would fall 40%. Years Three and Four, the process continues.
Year Five, if all goes well, all natural value is collected while all
other taxes are eliminated. If government projects a shortfall in
revenue, the process could be drawn out.
Governments can rely on land rents, not on property,
as a stable source
of revenue thruout the business cycle. Such reliable revenue flows
should give governments the confidence to alleviate hardship with
various reductions, eventho' doing so would reduce revenue. Ways to
ease the transition include monthly or quarterly payments, discounts
for early payments, rebates of income or sales taxes, and a cap on how
fast land dues may rise. Ways to lift the burden from those unable to
A Least-Cost Strategy
- exemptions for the elderly over a declining
until sale or bequest of property,
- deferral for the certified
- partial exemptions for farmers at a set amount,
- purchase-and-demolition reimbursement, and
- moving cost-sharing.
The cost of shifting the property tax, with
or without a land dividend, is negligible. Other than erasing or
lowering the tax rate on buildings and raising the rate on locations, a
mere matter of reprinting the codes, there is no cost. The assessment
and billing mechanisms are already in place. Some jurisdictions will
need to update their cadastre, which should be done routinely anyway.
For this policy to come to fruition (once adopted), little else is
required. The main administrative issues are two:
(1) maintain an
up-to-date and accurate assessment of all parcels, urban and rural, and
(2) increase the period of mailing land dues notices -- and any land
dividend -- from yearly to monthly.
How long would it take for the PTS to take effect? A clue comes from
Johannesburg, South Africa. That city taxes land, not buildings, and
has the fastest site recycling rate in the world, a little over 20
years. That means, within a few decades of shifting the property tax,
cities could be rebuilt by market-based incentives to human-scale,
becoming relatively car-free. At last civilization could realize its
promise to humanity.
SECTION 4: POLITICAL ISSUES -- PROSPECTS & STRATEGIES
Out With the Old Failed Policy
The failed policy that the PTS would
is the present property tax. This is actually two taxes in one, one on
land and another on improvements. The tax on improvements penalizes
owners for improving. This negative incentive does its greatest damage
at the margin, where profit is slim. There, rather than pay a higher
tax, owners let buildings dilapidate into slums. The lack of much tax
on land keeps overhead on speculators affordable. This negative
incentive lets owners under-utilize prime sites, even withhold them
from use entirely. Kept from prime sites, development sprawls outward.
Sprawl inflates the values of suburban and rural land. Leap-frog
development raises a few spikes in a land value map that soon pull up
values everywhere, increasing the property tax burden of owners of
previously developed sites, unless the tax is capped. The resultant
sprawl also raises enormously the cost of extending infrastructure and
makes auto-dependency a given.
The PTS reverses all these negative consequences.
Another failed practice is assessment. Now assessors
building and land values and slip into evaluating by current use which
is often less than potential use. They also undervalue large lots,
vacant lots, parking lots, and underused locations. Value that should
have been assigned to the location they attribute to the building, a
capital asset which for income tax avoidance can be rapidly
depreciated, benefiting the wealthiest land owners. Thus the property
tax is made regressive.
- Rather than burden
construction, taxing only land spares it.
- Rather than spread
development (hooking us on cars), taxing land concentrates it
(providing a market for mass transit).
- Rather than inflate land price,
a land tax squashes it.
- Rather than enrich the owners of prime sites or
itself, a land-taxing government could rebate some collected site rent
as a dividend, perhaps in the form of a Housing Voucher, making home
Assessing property is more laborious, infrequent, and less accurate
than simply assessing land. Freed from tallying changes in
improvements, assessors could calculate market values of locations from
actual sales or leases. Plus, assessors can turn to modern technology.
Computer aided mass appraisal (CAMA),
now accepted, facilitates annual
assessments of all properties. The simpler the assessment process, the
fairer and more progressive the taxation.
Political Situation -- Constituencies who
Make PTS Viable
Since the PTS is little known and on the
surface appears to cost residents, its support is in general sparse.
Yet there groups who already endorse the PTS and others who, upon
hearing the right message, would be likely to lend their support.
Targeting such groups should be the first step in the PTS movement. Who
are the potential allies?
There is an incipient groundswell within the green movement. Two new
books, Tax Shift from Northwest Environmental Watch and The
Natural Wealth of Nations from
Worldwatch, argue for the PTS, since it encourages more rational and
efficient use of sites and resources. This makes life easier for
planners. Environmentally-conscious areas, such as New England,
Wisconsin/Minnesota, and the Pacific Coast, could incorporate PTS into
their larger growth management strategy.
As more religious groups embrace the sanctity of the Earth and the
morality of sharing her worth, their openness to the PTS grows.
Already, prominent authors among the green religious vanguard -- John
Cobb and Matthew Fox -- have endorsed PTS.
Affordable housing is high on the list of urban advocates. President
Bush's Commission on Housing endorsed the PTS, as did Jack Kemp in his
book, American Renaissance. Given
such support from conservatives, one might expect even more from
liberals yet such has not been forthcoming. Housing advocates tend to
eschew a deeper analysis in favor of demanding subsidies (not an
unusual strategy in the political arena). However, as government costs
rise (notably for prisons and medicare), subsidies for weaker
constituencies do fall. Already, housing advocates are finding
themselves in need of a substitute source of funds, which a Housing
Voucher could provide. An alliance between cutting-edge urban advocates
and environmentalists would realize the heretofore unattainable dream
of progressives of left and green unity.
People trying to revitalize mainstreet won Allentown. Since the need is
widespread, so are such people everywhere around the country. In
minority ghettoes, the Rust Belt, and rural areas -- wherever the youth
and the workforce are fleeing for better opportunity elsewhere --
activists struggle to energize their local economies. The PTS would do
this plus staunch the hemorrhaging of local land values to distant
Mortgage lending rates are a subtle way of disguising
rent as interest, of turning buyers into temporary yet serial tenants
(since people move so often and the first five years of mortgage
payment is nearly pure interest). Land dues are a way to keep locally
generated social values circulating in the local community.
Laborists might appreciate the fact that renewing and infilling
generates jobs in construction initially and in the new structures
ultimately. Places that used a PTS to some degree -- New York, New
Zealand, Denmark -- all upped employment.
Most parents hope their state will find stable and sufficient sources
of revenue for schools. In most states, the school unions pack a hard
punch in legislative forums. And tax caps are forcing them to seek an
alternative to the ordinary and failed property tax.
Retirees represent a high percentage of home and condo owners. They
stand to receive a tax cut after a PTS. Plus many elderly are
idealistic, generous, and active in political movements.
Libertarians rival greens as
the most ready to hear the PTS message.
The PTS is a plank in the platform of the state parties of Virginia and
of Maryland (the home state of this writer whose friends are the party
activists responsible for these planks). Why? Not only is it possible
to draw public revenue from public values (instead of from private
ones), it is also possible to collect this rent with fees rather than
with taxes. For instance, land rent, the largest type of public value,
could be collected not via a land tax but via a deed fee; that is, from
a higher and periodic charge for registering and defending titles to
sites and resources. These two potentials of the PTS -- exempting
private values and eschewing taxation -- win support from the more
Fiscal conservatives, too, could find a feature to cheer. The PTS
generally reduces the number of government assessors, arbitrators, and
staff by 40 percent. Computer Aided Mass Appraisal (CAMA) also saves
Two other groups who have yet to fly the PTS banner but who stand to
gain substantially are small businesses and service businesses (often
the same). For a small business (this writer used to work in his
father's), taxes are a double levy -- the tax owed and the fee for the
accountant. Big companies have an easier time absorbing the costs of
recording, verifying, and paying taxes. The simplification of taxation
inherent in the PTS could appeal to small business people.
The other potentially supportive businesses -- service providers -- do
not consume much in the way of resources or prime locations. Even
service providers on valuable sites, were they to pay more, could still
come out ahead in the better business climate of zero taxes on sales,
on paid wages, on customers' income, and of less onerous mortgage.
Presently taxes and mortgages consume about 65% of the average worker's
income, drastically reducing discretionary spending.
Political Situation -- Opponents who
The vanguard group for tax shifters, the
broad environmental movement, conflicts with two American values:
private property (altho' why absentee owners need privacy is unclear)
and land speculation. The land tax in particular directly confronts
these two values left over from the days of westward expansion. As the
PTS wins adherents and looms as a threat to speculators, mortgagors, et
al, the potential losers become vocal.
While the PTS may seem to pit land sellers versus land buyers, it need
not. Coupled with an untaxing of homes, sales, and income, and with a
Housing Voucher, the PTS could benefit both sellers and buyers.
Sellers, usually of higher income, would benefit more from untaxing
capital. Buyers, usually of lower income, would benefit more from a tax
upon never-produced land, which would lower the price.
Despite the fact that the shift would improve their bottom line, many
homeowners would worry that just the opposite would occur. It'd be an
easy matter for the actual losers -- developers, Realtors, banks, et al
-- to stoke those worries. Investors in land will, as they always have,
fiercely and financially oppose the PTS every step of the way until an
overwhelming majority supports the policy -- as in Allentown. Hence an
intensive campaign is needed to move from the cutting-edge, thru
critical mass, to a majority.
It may be possible to mollify some potential opponents. Speculators and
holders of underused sites, particularly in high value areas, are the
most likely "losers". Efforts to educate this sector, prior to
politicizing the public, may prevent loud opposition. The lesson from
Southfield, Australia, and most two-rate cities in Pennsylvania is
that, post PTS, land values in urban areas increase. Although higher
values mean higher taxes, they also mean a higher potential profit. The
owner could put up an income-earning structure or sell out at a higher
Developers might learn to like the PTS, since financial loss does not
For these four reasons, developers could break
- First, tho' the land tax would preclude a huge
profit from a few sales, it would also, by unplugging effective demand
for housing, create many more sales of smaller profit.
- Second, instead
of profiting from locational values, they could make more money --
untaxed -- by adding value, such as total weatherization, heat pumps,
light tubes, built-in wiring for the cyber-house, etc.
- Third, to buy
land, developers would not need to go so deeply into debt.
- Fourth, by
building on central sites, they could drastically reduce their systems
development charges, which, were they pegged to full costs, would be up
to $30,000 in Oregon.
Realtors, too, may remain on the sidelines. Tho' housing prices will
decline, more owners will afford the cost of entry. The volume of home
sales climbs after the PTS.
Convincing those already benefiting by unjust rules won't be easy. Down
Under, wealthy corporations threaten the traditional land tax.
Australian writer Julie Smith warned that:
appropriation of development rights, the major element in the value of
land, is politically difficult. Since urban land is so valuable, and
particular locations command semimonopolistic prices, public efforts to
capture full land rental values are compromised by corruption and
favoritism. The influence and capabilities of democratic political
institutions ... are crumbling under the force of vested corporate
interests and the increasing integration of the world economy. Modern
governments cannot cope effectively with the problems our society
These same potent interests are likely to line up
against PTS in America, too.
- governments are unresponsive to the needs of
disadvantaged groups, yet responsive to demands by strong private
interests which they helped entrench;
- political parties are powerless
to resist pluralist and corporatist influences;
- distinctive public
interests are not articulated or are applied by ineffective or
irresponsible bureaucracies beholden to powerful interests."
While beneficiaries have a hard time envisioning their gains, losers
have an easy time calculating their losses. The big loser is not
homeowners; while losing equity, they keep all earnings untaxed. Nor is
it realtors, while losing their few big sales, they gain many smaller
ones. Nor is it developers; while paying higher infrastructure fees,
they'd pay less for prime land. No,
the big losers would be banks who'd
have to readjust to pre-World War II levels of lending rates. As
probably won't want to give up their unearned income, advocates of PTS
will need to use moral arguments (as in the struggle against slavery)
to gain public support and use practical arguments to pry realtors,
developers, service businesses, and small businesses aside, thereby
Future Prospects -- Windows of Opportunity
As the ancient Chinese character has it,
crisis is danger plus opportunity. As civilizations draw ever closer to
a new two-class society on a battered planet, the windows of
opportunity for the PTS are not closing but opening wider. Our
worsening environment, especially traffic and sprawl, is pushing more
people toward environmental reforms (polls say). As a green reform, the
PTS can stand on both ethical and practical grounds, winning support
from both sides of the aisle. Skyrocketing housing costs, too, worry
many, yet the problem yields to the PTS (history shows).
Population slosh -- the sprawl of suburbs
the desertion of downtowns and small towns -- is a problem topping
recent opinion polls. The material motive to relocate (and to a degree
to reproduce), to have more income, things, and security, loses steam
under a geonomic regime. Collecting and disbursing natural rent across
an entire jurisdiction lets residents live where they love, love where
Youth crime and alienation, detritus in the wake of dead communities,
are more attention-grabbing problems. Both are ameliorated by
widespread and secure home ownership and more free time for working
parents, two essentials for functional families and functional
communities. A Housing Voucher offers hope along both these lines. Even
without the voucher, the land taxing city of Pittsburgh enjoys by far
the lowest crime rate of any major US city.
Rising government costs with deteriorating government services is
another growing problem claiming our attention. On this issue, tax
shifters can make common cause with those striving to cut bureaucratic
overhead and corporate welfare (as is done by FOE on the national level
in Washington, DC). As people feel overwhelmed by so many seemingly
divergent problems, they seek an analysis -- and prognosis -- that ties
these issues together and applies to them one of Thoreau's chop at the
root -- a role made for the PTS.
With these general windows of opportunity are specific ones: the many
and ongoing conferences on environmental, economic, and social issues,
the many and ongoing meetings of groups seeking speakers (e.g., Lions),
the public hearings, radio and TV talk shows, the newsletters of
Which Strategy Wins the Masses?
In the past, the land tax was able to win
support from various constituencies. Today, the PTS could appeal to
those same segments of the population plus to the bell-weather
environmental movement. Initially, proponents could target the
issue-oriented people already most sympathetic, then move to groups
about ready to show support, then scatter seed amid the public at
large. Thus, begin with environmentalists, including planners, then
downtown revitalizers (as in Pennsylvania), housing advocates next,
then libertarians, moving on to small and service businesses, wrapping
up with working mothers and (other) single parents who are the first to
feel the pangs from our worsening time famine. Ultimately, proponents
would use mass media to reach the general public.
A new proposal that reaches critical mass -- a solid base of support
among activists, sympathy for the concept among the broader public, and
favorable press coverage -- can win as a politician-led bill (like most
legislation). The task becomes finding the legislative leadership. A
more advanced proposal that enjoys majority backing in opinion polls
could also win via an initiative, a lobbying effort, or as a key
campaign issue. The task is to organize a political campaign.
The former strategy -- enrolling a politician -- is easier, yet may not
be open to PTS advocates, and not from a lack of elected supporters.
Because active constituencies push the PTS, and bottom line, the vast
majority come out ahead, the movement already has some elected
officials in Washington, DC, and in several states. Yet by themselves
it's unlikely these statesmen could overcome opposition from entrenched
interests now hogging most rents. To counteract opponents, proponents
must rally the public, which could mean an initiative campaign. The
workload of such a campaign can be lightened in some states which let
the legislature avoid voting the policy up or down and instead put it
on the ballot.
Top Priority -- Engaging Semantics
While the PTS is already gaining attention,
there are issues which, were they addressed, would facilitate the
spread of the idea.
Were people to struggle and win the PTS, the gain for
each member of
the disorganized majority would be minimal while the loss for the
defensive elite would be great. The policy would be more of an issue
for its opponents than for its intended beneficiaries. To sweeten the
pot beyond cutting taxes, geonomic policy could include a rebate of
rent as some sort of land dividend. A winning description for the
dividend might be "Housing Voucher." For an overwhelming majority,
their land dividend would be greater than their land dues. Not
would they be comfortable paying money to government, they'd encourage
others to. Imagine tax compliance becoming a new virtue, increasing
public trust in government.
- One issue is external to the movement, lying in
broader society. People consider land
speculation, reaping megaprofits
from fast-developing areas, as something normal. Most people
realize that there is a commonwealth of socially-generated economic
values apart from values individually-generated. Understanding who
creates land value is crucial to the success of the PTS. While
not be an issue that lends itself easily to a mass educating campaign,
some effort to raise public awareness of its own assets must be made.
In doing so, advocates would learn how best to present the distinction
between what's ours and what's not.
- The other issue that needs to be tended to early on is internal
movement. That is, the terms that package the policy often push the
wrong buttons, such as "land tax". Because the land tax works and works
well, it is tempting to use the phrase. For instance, high-taxed,
low-priced land would shrink the debt now weighing down the economy.
Growing debts -- both public and private -- continually and worseningly
harry workers and taxpayers. Yet many people will never follow the
explanation far enough if the policy is presented as a land tax.
Coupling collection of land rent with a reduction of taxes on labor and
capital, especially homes, might be more persuasive. Calling this
policy a "Property Tax Shift" might let proponents get a foot in the
Leading with the land dividend and
following with the land dues
(instead of vice versa) may counter our short attention span.
for the PTS alone demands a bit more attention than voters, accustomed
to sound bytes, may be willing to give. Given our pressing time famine,
the offer of a dividend, of money in the pocket, may pique the interest
of voters concerned with the loss of leisure, family life, and
Unavoidable Showdown -- Resolving Fear of Loss
In the final analysis, can those who would
redefine progress and other social reformers avoid the issue of what to
do with the immensity of Earth's worth? No. The present policy of low
land taxes and the movement to abolish all taxes on landed property
assume that Earth is ours for the exploiting. It is a mindset that must
be contradicted and laid to rest -- as was the justification for
slavery -- if environmental and planetary values are ever to ascend to
the same level as property rights. The profit from speculation or
over-extraction withers away when land dues are put in place.
The old notion of not just owning but belonging to Earth needs
resurrecting if all that needs doing is to be done. Envision the tasks
A big problem needs a big solution which in turn needs
matching shift of our prevailing paradigm. Geonomics -- advocating that
we share the social value of sites and natural resources and untax
earnings -- does just that.
- recycling 100%,
- de-automobilizing society,
- plugging the
leaks in local economies,
- putting nature in cities and cities in
- growing food without chemicals, heavy equipment,
without the plow (if permaculturists are correct),
- converting from
fossil fuels and the "oiligarchy" to renewable energy and grassroots
5: RP'S ROLE AND FIT
Missions Overlap -- Alignment with
Redefining Progress pursues a balance of three
All three of these objectives are brought closer
by reforming the flow of public revenue. Hence RP works to raise public
awareness of the tax shift option.
- an economy that works,
- the environment in good health, and
- social equity for all.
Cutting-edge environmental activists urge taxing bads like pesticides
and untaxing goods like income. The logic behind the proposal is so
transparent, it almost argues itself. Yet of the various green tax
shifts, the one that gives "greens" the biggest bang for their buck is
the one that is also the least known and, were it known, the most
contentious. RP exists in part to present powerful new ideas, such as
the Property Tax Shift, in disarming, assimilable ways. Hence this
What makes the PTS so revolutionary in more ways than one? Follow this
Confucian chain. To cut pollution, cut thru-put. To cut thru-put, cut
demand. To cut demand, use land most efficiently, reducing travel
distances. To spur efficient land use, charge for holding land. Now
head back to this logical chain's beginning. Having to pay dues, owners
then put sites to best use, compacting downs, conserving resources,
thereby cutting thru-put and byproducts such as pollution.
Sprawl keeps us addicted to cars, the worst of polluters. The gratis
profit attached to land makes development too rewarding, makes
politics too difficult. Hence efficient land use is the most powerful
environmental reform, and the property tax shift the most crucial of
the green tax shifts. By spurring development, it puts the economy into
action. By drawing development to appropriate locations, it sustains
the ecosystem. By adding affordable housing, while perhaps paying a
land dividend, it extends equity.
It is amazing that one shift could do so much. Yet it does more that's
right up RP's alley. It accomplishes efficiency not via mandates but
via true-cost price signals. Leaving publicly-generated rents in
private pockets rewards speculation, inflating the price of land.
Putting public rents in the public treasury merely charges owners for
the social infrastructure that serves their parcel. As the PTS improves
everyone's lot, people can appreciate land as the source of both life
Advancing Previous RP Work
It is surprising that RP's book, Tax Waste,
did not address taxing wasteful use of land. However much taxing bads
reduces pollution and depletion, a significant amount must remain as
long as land is used wastefully. Extending the green tax shift to the
property tax, so that sites bear a higher levy and buildings are
exempted, would penalize sprawl and concentrate development. As compact
urban form conserves resources, it also reduces the "upstream"
depletion and the "downstream" pollution.
Resource Incentive Program Match and Scope
Just as prices in general leave out the
replacement costs of resources such as water, air, forests, and soil,
so does the property tax in particular undervalue, indeed misvalue,
land. By missing much rent, a low-rate property tax inflates price and
under-charges for social services. It also rewards speculative
withholding in already developed areas, causing leap-frog development
into resource lands. Charging for these costs (via a higher rate for
holding land) would tend to preclude them.
Our society considers ground water to be part of the commons. Ground
rent, via a land dividend, could likewise become part of the commons.
Receiving a share of site rent should inspire recipients to protect
sites and resources, the source of this added income.
While wasting resources is endemic, wasting sites might be even more
so. Unsustainable land use plagues every area in the US, making the
geographic breadth of the PTS undertaking vast. Since land use policies
are primarily made by the numerous states and localities, the scope of
opportunity is almost unbounded.
Although much data on the PTS are available,
more is needed. People want to know the effects on their area.
Their curiosity offers advocates an opportunity to become respected
authorities who can be counted on to provide credible, repeatable
information. A PTS Program should conduct studies to answer these
frequently asked questions:
line, who are the winners and losers? A colleague
found out for King and Clark Counties, Washington. His work revealed
the shifts in tax burden under various ratios of land-to-building rates
by percentage and economic sector. In Oregon, we plan to find out for
Salem (120k pop.), since government leaders would likely see the
results; for Portland, the largest city and the bulk of the state's
voters; for a city such as Coos Bay (20k), where fishing and logging
have declined; for a city such as Medford (80k) or Bend (50k), where
growth has ballooned, causing air quality problems.
2. How much ground rent
is available? For either social services or general rebates or both?
3. Is ownership of land value
concentrated? More so than other wealth? It's hard to unveil the
largest landowners who own land under different names or corporations,
or together with partners and family members. Best guesses tend to
underestimate the concentration. One study of a Pennsylvania town
15,000 found that 1.5 percent of landowners owned 53 percent of the
land value. Under a land tax, they would pay 53 percent of the revenue.
4. How much of the
central business district (CBD) is owned by
argument for a hotel tax is that it taxes out-of-state
visitors who don't vote (locally). Yet in North Carolina, for example,
nine of the ten largest private landowners are headquartered
out-of-state. In Los Angeles, more than half of the CBD is owned
abroad. In all of LA, an even greater amount of land is held by
absentee Americans due to chain stores owning land there but being
based elsewhere. Easy political targets for PTS?
5. Will the PTS profit CBD
redevelopers? Will it attract investment,
jobs? Select ten un- or under-developed sites, have a realtor identify
their most profitable use, then compare what the most profitable
development would pay under a same rate property tax versus under a
land value tax.
6. Has the PTS promoted
new construction? Compare the number and
value of building permits issued for three years before a town's switch
to three years after. Over the years, some 400 such case studies have
been conducted worldwide. To date, not one has shown a decline in new
7. Has the PTS put
vacant and underutilized sites to better use?
Compare the number and acreage of vacant sites in three years prior to
the shift to three years after the shift. Similarly, the change in
money value of vacant site development can be documented. Comparing
this result to neighboring and similar-sized cities would give further
importance to the numbers.
8. Has the PTS over
developed pristine areas? Or did it recycle sites?
9. Has the PTS increased
density? Has it meant more riders for
mass transit? Has it meant lower energy bills for people living in
contiguous apartments and condos?
10. Does the PTS generate new jobs? If
so, in what sectors?
How to Popularize -- Long-term Multifaceted Program
Draft a plan that would set up a domino effect,
with other states copying the initial one. Screening states with a
progressive criteria, list those that have a history of embracing novel
reform, have voted recently to "fix" taxes, have an influential
environmental movement, require a simple majority to modify taxes, have
a smallish, manageable population, have one metro area that can carry
the rest of the state, have a visible spokesperson for the PTS, permit
citizen initiatives, and have reformed campaign financing. Gauging
their legal and constitutional requisites, determine the work load,
timeline, and resources necessary. The ideal states already have PTS
efforts underway. Target a state.
Some promising possibilities are: New Hampshire, New Jersey, Wisconsin,
Minnesota, Oregon, and Washington. New Hampshire already has no tax but
the property tax and is holding hearings to convert that into either a
two-rate or a land tax, as is New Jersey (which also has many other
taxes, too). Wisconsin has in the past entertained PTS bills and is the
home of the progressive college town, Madison, and the Land Tenure
Center. Minnesota has already addressed a CO2 tax and is familiar with
the notion of shifting taxes onto things we don't want. Washington is
the home of NW Environment Watch and the King and Clark Counties PTS
studies. Oregon constantly reconsiders and reforms its taxes, focusing
on its property tax.
Conduct focus groups to determine the best wording. Identify potential
supporters and opposers by calculating who'll pay more, who less. Since
the vast majority receive a tax cut, the number of backers -- both
contributors and volunteers -- could be legion. What can't be done with
a high financed campaign must be made up with thousands of volunteers.
To measure early support, conduct a poll of 75 male and 75 female
Democrats, Republicans, and independents (450 total). Release results,
Lobby elected officials, support their campaigns, making them
ambassadors of the PTS, and field candidates for legislative office.
And/or collect signatures for an initiative drive. If the option of
taxing land higher than improvements were given due attention in this
legislative arena, the legislature may even be moved to refer a
constitutional amendment to the ballot; this may require two or more
sessions of discussion and evaluation, however.
As states shift their property tax, the federal government, heeding our
urging, might follow suit. Leaving land value to localities, the
federal government could collect rent from subsurface resources, from
supra-surface resources (broadcast spectrum, as Peter Barnes, Working
Assets founder urges), from cross-border polluters, and employ tariffs
as a sort of downstream foreign rent collector. Ultimately, the federal
constitution could be amended to require states to collect rent before
taxing private values, thus bringing any remaining recalcitrant states
Work Load and RP's Role
A PTS campaign requires much research, both
academic and activist, such as impact studies, rent totals, focus
groups, and opinion polls. Any or all of these could be an RP
Few enviros, tax shift proponents, even many academics are versed in
Pennsylvania's experiences with property tax shifts. RP could help
thoroughly review the results from Pennsylvania's post-PTS cities and
published the findings as a new book, Property Tax Shift,
similar to Tax Waste, Not Work. Such a policy document might
also include data from abroad and present the various methods for
alleviating hardship cases.
Winning a PTS in one state might cost between
$249,000 to $738,000. Five impact studies alone would require from
$10,000 to $15,000, depending on the size of the cities and the quality
of the assessment data. To publish a small book, budget another
$25-35,000 for four months of research and writing by two co-authors
(without printing and distribution costs, since a desired print run is
Authors' Potential Role
The Geonomy Society has experience in research
and education in the special niche of shifting property taxes towards
land. This growing organization works with both academics and
activists. We know the people who can assist us with matters we haven't
encountered. We'd be happy to share our bag of tricks with you.
Together we could:
We are adding interns and staff as we expand our activities and funding
base. While we are most versed in the politics and opportunities in the
Northwest, we would be adept at applying our experience and knowledge
to any state-level effort to shift the property tax. We look forward to
exploring the many opening doors with RP.
- plan conferences for mobilizing support of the PTS reform;
- consult with organizations wishing to build campaigns for
passing PTS legislation;
- provide expert testimony at PTS hearings and presentations;
- design and conduct impact studies for medium to large cities;
- help research and write a small book like Property Tax
- develop a 30 minute video for presenting to groups' meetings
and at conferences that could both augment and substitute for a verbal
- assist RP on writing proposals, visiting foundations, and
SECTION 6: OTHER SUPPORT
Working on the property tax shift are three
movements: the Georgists, some far-sighted "greens", and some
Jeffersonian libertarians. Each of the three descend from the
philosophy of a different century. The idea of taxing land and nothing
else appears regularly in a century cycle. In the 1600s, Locke,
Spinoza, and William Penn advocated the idea. In the 1700s, the
physiocrats did. Their ranks included Jefferson and Paine, Rousseau and
Voltaire. In the 1800s, J. S. Mill and Henry George did. In this
century, it has been the environmentalists.
Today's Georgists are the remnants of a once
hugely popular movement in this country which peaked about a century
ago. They were inspired by the writing and public speaking of a
self-taught economist, Henry George.
His movement won some victories,
most notably in New York and California, which were temporary, and in
Pennsylvania, which continue until today.
The Georgists consist of a handful of committed individuals and a few
wealthy organizations. The hardworking idealists are scattered across
the globe. They are responsible for the PTSs that have taken place in
recent decades in Pennsylvania, South Africa, Estonia, and elsewhere.
These soloists, known personally by these co-authors, are more than
willing to offer their expertise and data. Some of these activists and
their nonprofit organizations receive support from the few wealthy
The least endowed of the Georgist outfits is the most activist; the
most endowed is the least activist. At the active end of the spectrum
is Common Ground, a
membership political group. Its main activity is
its Letter Lobby, which most recently helped win a legislative hearing
for the PTS in New Hampshire.
At the endowment end of the spectrum is the Lincoln
Foundation with its
$150 million. Until recently, they ignored grassroots politics and
public education and tried networking with "name" institutions and
government agencies. Lately Lincoln has softened its standards,
probably out of concern over a suit filed against them by Georgist
activists. The Lincoln founder, as he clearly stated in his corporate
charter, intended the funds to be spent on promoting the PTS which his
descendants have been negligent in doing. Hence Lincoln now seems more
willing to help than they have been in the past.
In the middle of the Georgist spectrum are the Henry George School and
Schalkenbach Foundation. The school concentrates its
resources on offering free adult ed classes at night which are attended
mainly by immigrants hoping to improve their English and chances for a
job. Schalkenbach concentrates on publishing books and articles and one
scholarly journal by Georgist researchers.
Over the years, all four foundations have been helpful to the Geonomy
Society to various degrees. The big three foundations are leery of
funding any political programs, but do support educational efforts. At
this stage of the PTS movement, much educational groundwork is required
before a political attempt would be victorious. As our organization
grows in the Northwest, and as our efforts show signs of bearing fruit,
we can expect perhaps even greater support in the future.
The second strand in this rope promoting the
are environmentalists. Such support is a recent phenomenon that is
beginning to catch on. Lately there have been endorsements from
Worldwatch, Northwest Environmental Watch whose writers coined the
phrase, "sprawl tax", and the Center for a Sustainable Economy. Earlier
environmental endorsements come from many.
The Schumacher Society, promoters of the minimalist philosophy of E. F.
Schumacher (Small Is Beautiful), in their outreach literature
write: "In his book Progress and
Poverty Henry George shows how the ability to monopolize land
... can create prosperity ... and lead to increased poverty."
The International Society for Ecological Economics (founded by Herman
Daly and Robert Costanza at the University of Maryland), in its
newsletter (1995, April) ran a cover story by Josh Vincent of the Henry
George Foundation titled, "No Left, No Right, Only Green and
George" which asked, "Why not give it a whirl on a larger
The Ralph Nader Study Group on land ownership in California
similar idea, as does Nader's Public Citizen and Nader himself in
private conversations. The Sierra Club of Maryland belongs to a
coalition promoting the PTS. The national Sierra Club in 1985 rewrote
its land use policy statement to include "Tax laws should be
modified to ... prevent low density sprawl." The Energy Foundation,
a fund of the US oiligarchy, the oil-owning families, while
silent about sharing natural rent, suggested (1993 Report, pp 9, 13)
half the PTS: "tax reform could build environmental damages into
the price of fuels" and lift the property tax burden off
alternative energy improvements.
What these groups can do is alert their members and cohorts in the
selected to lend a hand. They can also include our legislative targets
in their own letter lobbies. Perhaps one of their members could serve
on a PTS board or committee.
Among green writers, many prominent voices endorse the PTS. While
writers can not be counted on to be activists, their endorsements do
help win publicity and funding.
Theologian John B. Cobb, Jr. with Herman Daly in their For The
Common Good (1989), wrote (p 256, 328): "(George's)
specific proposal about taxation can be supported on the basis of a
shared rejection of the idea of land as only a commodity... Whereas a
higher tax on buildings encourages holding land unused or allowing
buildings to deteriorate, a higher tax on land encourages efficient use
of the property." With Cobb, two more are green religious
researchers. Matthew Fox, founder of creation spirituality, in A
Spirituality Named Compassion (1979) said, "Henry
George sees his movement as an alternative... By taxing land more than
we do and in a special way, we will be able to tax work and income
derived from it considerably less..."
Doctor of theology John Hart, in The Spirit of the Earth
(p. 144; 1984), wrote "Another possibility for a land tax ... might
be some development and application of the single tax idea of Henry
With support from Margaret Mead, John McConnell (a friend of a friend)
founded the first Earth Day on the vernal equinox (proclaimed by the
City of San Francisco in 1970 and UN Secretary General U Thant in
1971). Since 1980 he has pushed his Earth Bounty Program. "Those
who own land, oil, gold, or other minerals should pay a 2% royalty to a
fund that will provide the homeless a stake in their planet.
Afterwards, distribute royalties equally to shareholders worldwide."
Kirkpatrick Sale, New York Greens founder and a NATION columnist, in
his Human Scale (p 385, 1980): "The Georgist principles
provide a way for a community to secure its financial interest in a
rational economy of usufruct."
Jonathan Porritt in his Seeing Green (1984, p 181): "the
Liberals have given up trying to get across the ideas of Henry George.
And that's a pity ... the only way to break the monopoly of
landownership (is) some form of land tax."
Robert Gilman in his magazine IN CONTEXT (1984 winter; the publication
is now called Yes!) wrote, "George
claimed that his land tax would be sufficient to pay for all the costs
of government. (Yet) the benefits from government programs are
generally unevenly spread. (So instead) distribute (rent) directly to
people as a Common Heritage Dividend (about $4,000 per person per year
in the US)."
Ernest Callenbach, author of Ecotopia, in private
correspondence (1988): "If I'd heard of Georgism before publishing (his
classic), I would have incorporated Georgist tax policies into its
Paul Ekins with Mayer Hillman and Robert Hutchinson in The Gaia
Atlas of Green Economics (1992) (introduction by Dr. Manfred
Max-Neef of Chile who also proposes the new term, geonomics) on
page 151 say, "taxes
need to be shifted away from labor and on to the use of resources and
the environment. One such tax, first proposed by the American reformer
Henry George ... is land value taxation."
Molly Ivins wrote (1995 March), "Henry
George must be in his grave spinnin' like a cyclotron. We, the people
at large, make the land more desirable; and then the landowners want us
to pay them because we won't allow them to poison the air or to pollute
the rivers." James Howard Kunstler, former Rolling Stone editor
and contributor to NYT Magazine, in his Home From Nowhere
(1996, p 206), wrote, "Reform
of our property tax ... along the lines advocated by Henry George is a
straightforward means for restoring the economic health of our ailing
towns and cities -- no smoke, no mirrors, no voodoo."
Beyond American borders, there are several key supporters. Ex-British
cabinet economist James Robertson of TOES in his Future Wealth
(pp 105-6; 1989) wrote, "Tax
the site-value of all land in its unimproved state. This tax was first
proposed by the 19th century American economist Henry George. We should
envisage the eventual removal of all taxes on incomes and value added,
savings and financial capital. Taxes will take the form of rents and
charges reasonably paid in exchange either for the use of resources
that would otherwise be available for other people, or for damage
caused to other people." In his 1994 essay, "Benefits &
Taxes", he argues the feasibility of a basic income in lieu of other
entitlements ("enticements" is more like it).
Several Green Parties have endorsed the taxation of land values,
including those of Finland and Scotland (and of Marin County,
California in the 1992 GREEN VOTER GUIDE, p 10; the Cal GP did, too,
until it grew leftward). The Brits' Manifest for a Sustainable
Society (1988) states, "Without this (tax on land),
the economic pressures of the present land system (including land
speculation) will defeat all attempts to remedy ecological and allied
problems." The British Green Party's platform (1986) claims,
should never have been allowed to fall into private hands... it should
now go back to everybody: it should reduce the burden on effort-based
taxes in financing social services and the Basic Income Scheme."
The Irish Green Party's Manifesto (1989) states, "The land
tax, used together with energy and other ('sin') taxes (and
user fees) as
a source of funding of guaranteed basic income, is a means of ensuring
that everyone shares in the wealth of the land by virtue of citizenship."
The rock group Midnight Oil, whose lead singer Peter Garret ran for the
Australian Senate as the nominee of their green party, the anti-nuclear
party, had a popular hit about paying rent. This group had helped
anti-nuclear groups fundraise; maybe they'd be helpful in pulling
together a benefit concert for the property tax shift.
The third leg of this stool supporting the PTS
are some libertarians. The shift is in the planks of the Libertarian
Party Chapters of Pittsburgh, Virginia, and Maryland. The Maryland
members helped lobby the City of Baltimore and the state legislature
when a bill was on the floor. In Portland, the local chair had us give
a presentation to their group. The Heartland Institute in Chicago
proposes the property tax shift in its Policy Faxes sent to
legislators. An alliance with libertarians helps open many doors with
Conservative commentator William
F. Buckley endorses the Georgist
shift. Nobel laureate Milton Friedman does, too. Anthony Downs of the
Brookings Institute had an op-ed in the Washington Post ('96
Oct 6) advocating the shift. Republican Jack Kemp in his American
Renaissance wrote (p 96) "Property
taxes could profitably be revised to fall more heavily on land, rather
than, as at present, penalizing property improvements." Former
President Bush's Commission on Housing Affordability came to the same
conclusion, as did decades ago Michigan Governor George Romney.
Given sufficient support, PTS advocates can weave all these strands
into a concerted movement that will eventually, if not sooner, lead to
sharing Earth's worth in lieu of taxing our efforts.
Advocating the PTS in a state whose
would need amending (to either mandate a statewide shift or allow
cities and counties to shift) might follow this timeline:
- Core advocates form coalition/organization and begin impact
- Invite likely allies -- growth management, transit, housing,
and environmental groups -- to help brainstorm a packaging and a
- Hold a statewide conference on the PTS.
- Secure funding for several impact studies and complete them.
- Pass a bill to study stability and sufficiency of rent under
various rates and economic scenarios; report results to the
legislature, as did Oregon's Tax Shift Commission.
- Plan and conduct focus groups to mould packages for the PTS.
- Recruit support from likely winners.
- Plan and conduct a statewide poll of voters to measure early
|Phase III: Months 12 -- 18
- Address the concerns of opponents immediately.
- Draft a constitutional amendment.
- If legislators failed to act, file an initiative.
- Amass data, testimonies, and anecdotes from places that tax
land or use two-rates.
|Phase IV: Months 18 -- 24
- Continue fund-raising and coalition building and begin
- Mobilize volunteers to write editors, leaflet door-to-door,
phone banking, etc.
- Appeal to intended beneficiaries.
|Phase V: For the next few years, if the version passed is
local option, then:
- Target municipalities where the PTS impact studies have been
- Contact those sectors that stand to pay less under the
- Build a coalition of support that will mobilize to lobby city
- Introduce an ordinance through a council member to shift to
the tax rate landward.
- If the council vetoes the PTS, initiate a local ballot measure.
APPENDIX B -- Budget
|I: Mos. 1 -- 12
| the PTS impact studies @ $2,500 avg. ea.
|Admin. costs (alliance bldg., travel, office, etc.) @
| for 2 @ $1k ea./mo
|<>II: 6-12 mos.
| lobbying @ 5 mos. (travel, phone, office) @ $1k/mo.
| Statewide poll of 1,000 voters (professional)
| Coalition building @500/mo
| Optional: Wages for 2 @$1k ea./mo
| With wages
III: 12-24 mos.
| Draft, file initiative, collect signatures 12-18 mos.@
| Admin./research @500/mo
| Optional: Wages for 2 @$1k ea./mo
| With wages
IV: 4-6 mos.
| Campaign flyers, mailings, radio ads
| Admin. @ $1000/mo
| Optional: Wages for 2 @1k ea./mo
| With wages
V: Assume 2 cities require
organized effort; others to follow on own
|Admin. @500/mo. for 12 mos
|Optional: Wages for 2 @1k ea. for 12 mos
| With wages
APPENDIX C: Bibliography
The American Journal of Economics and Sociology, GENOVESE,
Frank C., Ph.D., Editor-in-chief. Pub-lished quarterly under grants
from the Francis Neilson Fund and the Robert Schalkenbach Founda-tion.
Scholars examine the ideas of Henry George.
American Renaissance. KEMP, Jack.
Corruption of Economics. GAFFNEY, Mason &
HARRISON, Fred. (1995) Available in the US from Schalkenbach in New
York. Missing link: fact-filled history of mainstream economists
twisting their science to beat back fair land tenure.
Economy of Nature. ASHWORTH, William (Oregonian, author
of Late Great Lakes).
(1995) Houghton Miflin. After openly showing organic nature of
economies, shyly concludes with replacing taxes and subsidies with fees
and shares. 333.7
For the Common Good. COBB, John and DALY, Herman.
(1989) Altho' wanders off a bit from organic approach, offering some
statist interventions, it does include taxing land (thanks to
Redefining Prog-ress' own Cliff Cobb). 330.1
Future Wealth. ROBERTSON, James (ex-economist for the
British Cabinet, now of TOES, The Other Economic Summit). (1990) Sound
analysis and conclusion -- tax land use and abuse and pay out shares.
The Gaia Atlas of Green Economics. EKINS, Paul w/Mayer
Hillman, Robert Hutchinson; forward by Dr. Manfred Max-Neef, using
"geonomics". (1992) Cites George and need to tax rent. 363.7057
Home From Nowhere. KUNSTLER, James Howard (acclaimed
critic of architecture and urban design). (1996) Another, a la Frank
Lloyd Wright, to see the sense in taxing location, not improvement.
Human Scale. SALE, Kirk. (1980) Bioregional vision
citing Henry George's call to collect and share the rent from Earth as
a crucial component. 306.3163
Liberating the Early American Dream. ANDERSON, Alfred
(Oregonian; one of few WW II pacifists). (1985) Transaction Books. Most
holistic; least restrained in prescribing what's needed: share earth's
worth, secure our earnings.
The Losses of Nations: Deadweight Politics vs Public Rent
HARRISON, Fred, Editor. (1998) Othila Press, London. Shows the
collateral damage of most taxes but one, the property tax, which may
not be so regressive as thought as it stimulates the generation of
Natural Wealth of Nations: Harnessing the Market for the
ROODMAN, David Malin. (1998) The Worldwatch Environmental Alert Series.
W. W. Norton, New York. Suggests capturing the windfall rent jumps in
Nature, Technology, and Society: Roots of the Current
Environmental Crisis. FERKISS, Victor. (1993) Cites Henry George's
solution among many others.
Politics of Land: Ralph Nader's Study Group Report on Land
Use in California.
FELLMETH, Robert C., Project Director. (1973) Grossman Publishers.
Explains how well-intended laws to curb sprawl backfire and enrich
speculators. Suggests getting the rent.
Power In the Land. HARRISON, Fred. (1983) Lacks
environmental slant but great explanation of what Bionomics
leaves out -- untaxing effort and collecting Earth's worth is key.
Progress and Poverty. GEORGE, Henry. (1879) Available
from Schalkenbach. Classic. Sold more copies in English than Das
Kapital or any other book on economics. Explains why and how the
sin-gle-tax on land is needed. 330
Seeing Green. PORRITT, Jonathan. (1984) Founder of UK
Friends Of the Earth and UK Green Party. States need for land tax. 363.7
A Spirituality Named Compassion. FOX, Matthew. (1979)
Cites H. George and need to restructure owning and by using the taxing
Tax Shift. DURNING, Alan Thein & BAUMAN, Yoram.
Northwest Environment Watch (spun-off from Worldwatch) Report No. 7
(1998, April). First green book to stress total tax reform, even
locally -- untax buildings and tax locations.
The $30,000 Solution SCHULTZ, Robert. (1996) A
detailed plan for a Citizens Dividend. Was unclear if the $30 k was for
an individual or a family of four. Either way, I'll take it.
APPENDIX D: Contact Groups
Center for the Study of Economics, Josh Vincent, Director, 2000
Century Plaza, Suite 238, Columbia, MD 21044; 410/740-1177
Following are ways to contact the groups noted above:
Center for a Sustainable Economy, Scott J. Anders, State
Projects Coordinator, 1731 Connecticut Ave NW, Ste 500, Washington DC
20009; 202/234-9665; fax 202/588-1297; firstname.lastname@example.org
Common Ground -- USA, Nadine Stoner, President, 1118 Central Av,
Beloit, WI 53511; 608/362-7873
The Energy Foundation, 75 Federal St, San Francisco, CA 94107
Henry George School, Oscar Johannsen, President, 121 E. 30th St,
New York, NY 10016; 212/889-8020; fax 212/889-8953
The International Society for Ecological Economics, founded
by Herman Daly and Director Robert Costanza, University of Maryland at
Solomon's Island, MD, 20688
Lincoln Foundation, Vice President Kathryn Lincoln, 1741 E.
Morten Av, Phoenix, AZ 85020; 602/944-7400; fax 602/944-8930
Northwest Environmental Watch, alan Thein Durnnig, Exec.
Dir., 1402 Third Av, Ste 1127, Seattle, WA 98101-2118; 206/447-1880;
fax 447-2270; email@example.com
Robert Schalkenbach Foundation; Ted Gwartney, Exec. Dir., 149
Madison Av, #601, New York, NY 10016-6713; 212/683-6424; fax 683-6454.
The Schumacher Society, Bob Swan, President, Box 76, RD 3, Great
Barrington, MA 01230; 413/538-1737
Sierra Club, Appalachia Chapter, John Baer, contact, 10 Laney
Av, Annapolis, MD 21401.
Worldwatch Institute, Lester Brown, President, 1776
Massachusetts Av, NW, Wash-ington, DC 20036; 800/555-2028; 202/296-7365.