|Wealth and Want|
|... because democracy alone is not enough to produce widely shared prosperity.|
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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. ...
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 in.
The boom lasted until builders saw the decade-long window closing. The law was not extended or expanded.
To arrest urban decay in the seventies,
reformers tried temporary
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."
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper