Assessment Districts

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. ...

In the US, the federal government traditionally 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 ago, speculator-led 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 establish assessment districts to fund a particular service such as beautification. Some 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. ...

A big problem needs a big solution which in turn needs a 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. Read the whole article

Wealth and Want
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