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Nic Tideman: The Case for Taxing Land I. Taxing Land as Ethics
and Efficiency
II. What is Land? III. The simple efficiency argument for taxing land IV. Taxing Land is Better Than Neutral V. Measuring the Economic Gains from Shifting Taxes to Land VI. The Ethical Case for Taxing Land VII. Answer to Arguments against Taxing Land There is a case for taxing land based on ethical principles and a case for taxing land based on efficiency principles. As a matter of logic, these two cases are separate. Ethical conclusions follow from ethical premises and efficiency conclusions from efficiency principles. However, it is natural for human minds to conflate the two cases. It is easier to believe that something is good if one knows that it is efficient, and it is easier to see that something is efficient if one believes that it is good. Therefore it is important for a discussion of land taxation to address both question of efficiency and questions of ethics. This monograph will first address the efficiency case for taxing land, because that is the less controversial case. The efficiency case for taxing land has two main parts. ... To estimate the magnitudes of the impacts that additional taxes on land would have on an economy, one must have a model of the economy. I report on estimates of the magnitudes of impacts on the U.S. economy of shifting taxes to land, based on a mathematical model that is outlined in the Appendix. The ethical case for taxing land is based on two ethical premises: ... The ethical case for taxing land ends with a discussion of the reasons why recognition of the equal rights of all to land may be essential for world peace. After developing the efficiency argument and the ethical argument for taxing land, I consider a variety of counter-arguments that have been offered against taxing land. For a given level of other taxes, a rise in the rate at which land is taxed causes a fall in the selling price of land. It is sometimes argued that only modest taxes on land are therefore feasible, because as the rate of taxation on land increases and the selling price of land falls, market transactions become increasingly less reliable as indicators of the value of land. ... Another basis on which it is argued that greatly increased taxes on land are infeasible is that if land values were to fall precipitously, the financial system would collapse. ... Apart from questions of feasibility, it is sometimes argued that erosion of land values from taxing land would harm economic efficiency, because it would reduce opportunities for entrepreneurs to use land as collateral for loans to finance their ideas. ... . Another ethical argument that is made against taxing land is that the return to unusual ability is “rent” just as the return to land is rent. ... But before developing any of these arguments, I must discuss what land is. ... As with negative externalities, the fact that labor and capital are not perfectly mobile means that not all of the effects of activities with positive externalities are reflected in land values. And to the extent that labor and capital are affected, negative effects are likely to be more prominent than positive effects. Consider structures. If an existing structure is efficient for the current pattern of surrounding land uses, and if new use of surrounding land raises the value of the land under the structure, then the structure can be expected to thereby become suboptimal. The pre-existing structure is generally not as intensive a use of land as would have been chosen with knowledge of the new activity. Therefore the economic life of the pre-existing structure (the time until it is efficient to demolish it) is shortened by the new activity that increases land value. Even though rent per square foot of built space rises, the rise is not enough to offset the increase in land value, which presumes the newly efficient size for a structure, thereby reducing the amount of the current return that is attributable to the existing structure and pushing the structure toward obsolescence. A similar phenomenon occurs with respect to the personal value that people attach to locations, what might be called ‘location-specific human capital’. If all persons had equal demands for all locations, there would be no location-specific human capital. But incomes, tastes and personal histories differ, leading to differing personal values for locations. Familiarity with a location tends to lead people to attach a special value to it, a value that tends to be lost if the characteristics of the location change. Thus a change in land use that raises surrounding land values will generally reduce the location-specific human capital of the residents of that area. One example of this phenomenon occurs when a neighborhood is ‘gentrified’, and the prior residents of modest means can no longer afford to live there and must seek other housing options that are less attractive to them than the opportunities they lost. This represents a reduction in their location-specific human capital. Read the whole article Nic Tideman: Using Tax Policy to Promote Urban Growth The efficiency that is entailed
in using the rent of land to
finance public activities applies to certain other sources of public
revenue as well:
1. Charges on any publicly granted privileges, such as the exclusive right to use a portion of the frequency spectrum for radio and TV broadcasts. All of the above taxes are positively beneficial and should be collected even if the revenue is not needed for public purposes. Any excess can be returned to the population on an equal per capita basis. If these attractive sources of revenue do not suffice to finance necessary public expenditures, then the least damaging additional tax would probably be a "poll tax," a uniform charge on all residents. If some residents are regarded to be incapable of paying such a tax, then the next most efficient tax is a proportional tax on income up to some specified amount. Then there is no disincentive effect for all persons who reach the tax limit. The next most efficient tax is a proportional tax on all income. It is important not to tax the profits of corporations. Capital moves from where it is taxed to where it is not, until the same rate of return is earned everywhere. If the city refrains from taxing corporations they will invest more in St. Petersburg. Wages will be higher, and the rent of land, collected by the government, will be higher. The least damaging tax on corporations is one that provides a complete write-off of investments, with a carry-over of tax credits to future years. Such a tax has the effect of making the government a partner in all new investments. With such a tax the government provides, through tax credits, the same share of costs that it later receives in revenues. However, the tax does diminish the incentive for entrepreneurial activity, and it raises no revenue when investment is expanding rapidly. Furthermore, the efficiency of such a tax requires that everyone believe that the tax rate will never change. Thus it is best not to tax the profits of corporations at all. If the people of St. Petersburg want to share in the profits of corporations, then they should invest directly in the corporations, either privately or publicly. The residents of St. Petersburg would be best served by refraining from taxing the profits of corporations. Creating a place where profits are not taxed can be expected to attract so much capital that the resulting rises in wages and in government-collected rents will more than offset what might have been collected by taxing profits. The taxes that promote urban growth have at least one of two features.
Nic Tideman: Land Taxation and Efficient Land Speculation
Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS) 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. ...
... by 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. 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 Mason Gaffney: George's Economics of Abundance: Replacing dismal choices with practical resolutions and synergies ... George
saw cities as foci of
communication, cooperation,
socialization and exchange, and these as the basis of civilization.
He saw cities as the new frontier, an endless series of new frontiers
because the city as a whole enjoys increasing returns: the presence
of people with good mutual access, associating on equal terms,
expedites cooperation and specialization through the market.
Multivariate interactions in cities are synergistic. Indeed,
while
each part -- each parcel of land -- is developed in the stage of
decreasing returns, the composite city is generally in a stage of
increasing returns, thanks to synergy: the whole is greater than the
sum of its parts, and increases to the whole yield more than the sum
of increases to the parts.
Urban blight is cumulative and self-reinforcing: blighted buildings cast a pall on land around them, discourage upkeep and stifle renewal. Whatever slows renewal of one site therefore slows the neighborhood, which reflects back blight to the first, a vicious downward spiral. Conversely, new buildings help stimulate renewal around them.12 The rule is that new buildings draw tenants from old and weaken other Defenders so other owners have to renew, too. When they do, where better than next to the newest, hottest building? So renewal is cumulative, just like blight, only upwards in a benign spiral. A benign spiral is a "free lunch," the kind that cynics say "there ain't no such thing as." These matters are treated in the works cited above. 12 There are exceptions. Some new buildings, especially banks and corporate headquarters, sterilize a block with blank walls. I will not defend that, but the exception is not the rule; the abuse is not the precept. When a city untaxes buildings its
land prices, the new tax base,
are pushed up. Competition for sites raises the tax base -- not
buildings, now, but land prices derived from ground rents. Using the
higher base the city can improve public services, if needed, but
without taxing any building, without scaring away any generators of
fiscal surpluses. In this scenario, buildings raise the tax base
indirectly, by raising the value of land around them. So do
productive people, when their wages are not taxed away.
Land prices are raised just by the expectation of new buildings' being tax free. The mere expectation will immediately boost the value of land, even before the new buildings go up. Urban renewal without subsidizing evictions Georgist tax policy helps renew
cities, without subsidizing or
administering teardowns and "clearance" of old buildings and
neighborhoods. Georgist policy does not speed renewal by penalizing
old buildings, but by encouraging new ones. It does not subsidize
new ones, it just stops penalizing them. Teardown is never an end in
itself; it only comes when incidental to releasing land for new
buildings of greater capacity. ... read the whole article
Mason Gaffney: Economics in Support of Environmentalism Pinchot
on "Development"
Gifford Pinchot, the father of Conservation, was not against developing land. In his own words:
So Pinchot was against waste, so what? Who isn't? This could be just a banality, but he gives it a new turn. To him, waste means failing to use renewable resources. His example was hydropower, which he would substitute for coal and oil. That is not such a good example today, when we cherish our few remaining wild rivers, but today urban land makes an even better example. "Urban land?", you may ask. "What has urban land in common with falling water?" Economists (who are not all bad) classify urban land as a "flow resource." They liken it to flowing water because its services perish with time, whether used or not, and we are trapped in the one-way flow of time. Likewise, urban land is not depleted by use. It is an even better example of a "flow resource" than flowing water itself, because, as we are so conscious today, "unharnessed" flowing water may have other downstream uses. Even in wasting out through the Golden Gate, it may repel salinity. The unreaped harvests of idle land, however, flow down the river and out the gates of time like lost loves dimming, and golden moments we let slip away beyond recall. What is this "service" of urban land, that we should be mindful of it?
Mason Gaffney: How to Revive a Dying City Some cities should be abandoned. Towns around played-out mines are obvious examples. A farm town becomes redundant when new roads let customers patronize a larger or better town. Salvage what you can and move on. Some would apply the same logic to all cities. Dead cities aren't lost, they say, but rebuilt elsewhere; they were cash cows that have been milked dry. Their depreciation allowances are reinvested on new frontiers; people and vitality move with the capital. It is an important half-truth, but a half-truth is also half wrong. The basic original site stays put; land cannot move. Public and private social capital cannot move, either. We cannot afford throwaway cities in a finite world. New natural sites are not common. There is only one Hudson Valley with only one mouth, and here New York City has stood for 350 years. We cannot abandon the Bronx and duplicate its environment somewhere; we cannot rebuild the natural setting, and the sunk social capital is too costly. Relocating to suburbs involves commuting cost in terms of money and congestion. And then, when we tire of the new suburbs, where will we go next? Furthermore, blighted areas have high potential market values. Picture a topographic map of a city where the contour lines represent points not of equal elevation, but of equal market value per square foot. The peaks, the Everests and McKinleys, are in the city retail centers, where just one square foot rises to $2,000 (about $90 million per acre). Land just a few miles away from dizzying altitudes can hardly be worthless. Harlem is near Park Avenue; Watts is near Beverly Hills; South State Street is very near the Sears Tower. Newark is 15 minutes by train from Manhattan. Newark office rents are $25/sf per year. That is less, of course, than in Manhattan, but in Riverside, California, we are throwing up offices to get rent of $12/sf per year, while Newark stagnates. Capital earning $25 is obviously
more productive than that
yielding $12. I do not mean capital in the floor atop a high-rise,
which likely costs $25/sf (in annualized terms) to build and operate;
but capital in lower floors, which costs less to build but rents for
as much, yielding a surplus. To get more such capital and the
corresponding surplus, renew more land in high potential areas, like
Newark. Not to renew is to waste potential surpluses. Each year's
loss is gone forever; services of land perish with time. Urban
revival works best when healthy pieces remain on which to anchor
development. In the worst scenario no such place remains, but even
Camden has Campbell Soup; Newark has a great airport, a new Hartz
Mountain Industrial Park, and the Pru. Life is persistent and
resilient; seedlings that sprout seek only sunshine, water, and
cultivation. ...
The counterpart of sharing rent through taxation is to untax things, like buildings, that involve human endeavor. This doubles the incentive effect. If land tax is the stick, untaxing buildings is the corresponding carrot, and George's program makes both larger. Every lot with an old "Defender" building has a potential replacement, the "Challenger." Taxing buildings rigs the fight against the Challenger. Say the lot-cum-Defender is worth $100K, and the Challenger would cost $500K to build. Challenger cash flow must exceed Defender cash flow by enough to pay $500K, plus added taxes based on it. Georgist tax, by contrast, is
impartial between Defender and
Challenger; the market decides. In 1965, after a detailed Milwaukee
study, I found that switching to the George program would allow 30%
of the city to be renewed immediately, simply by untaxing Challengers
vis-a-vis Defenders. (Sadly, Mayor Maier went the other way, so
Milwaukee lost 20% of its people and much of its wealth.) ... read the whole article Mason Gaffney: Privatizing Land Without Giveaway (1990) Annual revaluation of land for
tax purposes might seem to impose
extra uncertainty on landowners, in comparison to the lot of lessees
on fixed terms. However it is only the amount of the tax that is
uncertain; the principle of it is known and certain. Furthermore the
principle is such that the tax only rises when exogenous forces raise
the earning potential of land; thus the added tax is neither
arbitrary nor grievous to bear. When exogenous forces lower earnings,
they also lower the tax burden, so that the fisc shares the risk with
landowners.
Annual revaluation occasionally
will penalize a landowner when the
best use of land changes in the midlife of a durable building.
Anticipating that hazard, landowners in some times and places will
avoid long commitments. This is not such a bad effect, however. Life
is uncertain; economic tides are uncertain; optimal land use calls
for frequent adjustments to new forces and data. Therefore the most
fixed, durable improvement should rarely be encouraged. It is too
ponderous and inflexible, too likely to be a monument or white
elephant that will obsolesce before it pays off. Some examples are
the C&O Canal, the Great Wall of China, the Edsel plant, the
Maginot Line, and a dozen buildings we could all pick out in our own
cities. In my own neighborhood, near a growing shopping center, over
half the parcels have been cleared and rebuilt in the last fifteen
years, even without any tax stimulus. In dynamic times and places it
is good for builders to anticipate fairly early demolition and
renewal, and plan accordingly.... read the whole article
Mason Gaffney: The Taxable
Capacity of Land
The question I am assigned is whether the taxable capacity of land without buildings is up to the job of financing cities, counties, and schools. Will the revenue be enough? The answer is "yes." The universal state and local revenue problem today is whether we must cap tax rates to avoid driving business away. It is exemplified by Governor Pete Wilson of the suffering State of California. He keeps repeating we must make a hard choice: cut taxes and public services, or drive out business and jobs. (When a public figure gives you two choices you know they're both bad, and he wants one of them.) The unique, remarkable quality of a property tax based on land ex buildings is that you may raise the rate with no fear of driving away business, construction, people, jobs, or capital! You certainly will not drive away the land. However high the tax rate, not one square foot of it will put on a track shoe and hop out of town. The only bad thing to say about this tax's incentive effects is that it stimulates revitalization, and makes jobs. If some people think that is bad, maybe this attitude is the problem. There is the answer to
Governor Wilson' dilemma. I hope here
in The Empire State you will supply a practical demonstration of the
answer, one we may then use to inspire The Golden State. California
now, following Proposition 13, has become a morality play, a gruesome
object lesson in what happens when the property tax is pushed down
toward zero. It forces higher taxes on production and exchange.
Non-property
taxes, you know, mostly have the character that they
"shoot anything that moves," penalizing and discouraging economic
activity. New
buildings gain by having a lower property tax burden,
it is true; but they bear the brunt of these new taxes and impost
fees up front, at the time they are built. These offset the benefits
of their lower property tax rate. ...
The property tax, rather than "shoot anything that moves," is a charge on inactivity. It taxes both lands and buildings on their market value, regardless of how they are used. "Hold on," you might say, "how about the very activity of constructing those buildings?" Yes, touché, the property tax does shoot at that, and shoot hard. However, that is why we are here today, to consider modifying the tax to exempt buildings. The proposal is to make it a tax mainly, or even purely, on "land ex buildings," a tax on inactivity, a tax just for sitting on a piece carved from the world's fixed, limited land supply. ... The taxable capacity of land
is camouflaged in our times
by a consistent modern
tendency to underassess it, relative to
buildings. There are several studies in point. The most general
one
is the quinquennial Report of the U.S. Census of Governments. It
actually understates the tendency a lot, by omitting the class of
land most underassessed, that is, raw acreage in and near
cities.
...
I have here data (Gaffney, 1970, submitted herewith) I worked up in Milwaukee from 1969 data indicating that, if land were assessed correctly, the land fraction of the real estate tax base would be over twice what the City Assessor reported. His fraction was 31%; it should have been 70%. How does one come to so startling a finding? Wisconsin is not a backward state. It prides itself on the high quality of its public administration. What I did was study sites on the eve of demolition. When you buy an old junker to tear down and replace with a new building, you (the market) are obviously recognizing that the building has no residual value. All the value is then in the land. However, in Milwaukee in 1969 the Assessor was saying the building was worth about three times as much as the land, just before tear-down. That is a good way to measure to what extent land is underassessed. Try that in Manhattan. When the visitor first gapes at its skyline from afar, it looks like one big modern high-rise. If you poke around on foot much, though, you soon realize those are the exception. Most of the lots are covered with obsolete junk, some of it tumbledown, commanding rents mainly for their location value. Check the Empire State Building. Old as it is, it is still nearly the tallest building in the world. As to its site, it is in a so-so reach of 5th Avenue (34th Street), many blocks from the 100% location (57th Street, I would guess). Even so, when the site and the building sold in separate transactions a few years ago, the site represented 1/3 of the total value. What does that say about the land fraction on neighboring parcels, covered only with the remains of ordinary old structures? What does that say about the land fraction nearer the 100% location? Besides that, exempting buildings from the property tax will raise the value of the land that goes with them. When you exempt buildings and uptax land, you are still taxing the same parcel of real estate, you are just taxing it in a different way. What you don't get from the building you can now get from the land, whose taxable capacity is enhanced by your exempting the building, and all potential future buildings, on the parcel. The process of arbitrage, the higgling of the land market, should make the land value rise by about the amount of the discounted present value of the building taxes abated. How much is that? Take a property tax rate at 2% of the market value of a new building. Over fifty years, tax payments add up to 100% of the original value. That's a lot. To be sure, we must correct for the "time value of money," and discount those future payments to the present. We must adjust for the anticipated drop in the building assessment after 20 years or so. Doing so brings that 100% down to about 30%, more or less, depending on your discount rate. Thus, the impact of a 2% property tax on a new structure is about the same as a 30% building permit fee levied once, at the time of building. Ouch! Remove that tax threat and buyers will be willing, if they must, to bid that much more for the land underneath. If they must? They must: competition and arbitrage see to that. Land is fixed, but Capital flows like liquid or gas. It abhors a vacuum, and rushes into new chances. To seize this one, the investors must bid for land in the subject jurisdiction. Collectively they bid land up, fortifying your land tax base. Please understand, the proposed tax change will not produce an untempered rise of land prices. Taxing land at a higher rate balances and offsets the effect of exempting buildings. It tends to lower land prices, just as untaxing buildings tends to raise them. On balance, however, the positive effects on land prices will outweigh the negative ones, because of the constructive incentive effects of changing the tax base to land. Read on. "What, then, will have changed?", you might be asking. It's a fair question. What's changed is that your property tax is no longer biased against renewal, against replacement of old by new. Neither is it biased against full development of the economic capacity of each site. All the ground rents that are now aborted by deferral of renewal, and by underdevelopment, will be generated by new, full development. Land prices, your new tax base, will be pushed up just by the expectation of new buildings' being tax free. The mere expectation will immediately boost the value of land, your new city tax base, even before the new buildings go up. ... "Corporate" is not coterminous with "industrial," anyway. Many corporations are in retailing. They own chain stores, malls, gasoline stations, auto dealerships, major real estate "developments," drive-ins, office space, department stores, banks, "power centers," etc. As to these, shifting to the land basis will shift more of the tax burden to them, because retailing has a higher land fraction than any other major land use (except vacant, golf courses, cemeteries, parking lots, etc.). That is because location is more critical to retailers than other businesses. You can tell this by their high rate of tear-downs and remodeling. Among its other effects, site-value taxation will induce some land to shift from retail to industrial use. Recall that exempting the building, or prospective building, lets buyers bid more for land. The higher the building fraction, the stronger is that force. Thus the present system, which is biased against buildings generally, is biased against industrial compared with retail uses. Removing that bias will help industry outbid retail for land -- not all land, of course, but land on the tipping point between the uses. Most towns today seem oversupplied with retailers, compared with their shortage of basic industries. Shifting to the site-value basis of property taxation helps redress that balance. ... To stimulate building is also to uphold and fortify the tax base, even though you do not tax the new buildings directly. Some people fault the "depressing" canyons of Manhattan, between the skyscrapers. In my observation, it is not the canyons that depress Manhattan. When the GM building went up, Fortune Magazine reported it doubled the rents of stores across the deep canyon so formed. Its spillover effects were highly positive. What really depresses Manhattan are rather the centenarian firetraps and the activities they attract. They tend to downvalue other lands nearby, eroding the tax base. Consider the effect of floorspace rentals on ground rents and land values. Doubling floorspace rentals will more than double land values, through a kind of leverage effect. That is because all cash flows above a constant amount required for the building will inure as ground rents. The higgling and arbitrage of the market will see to that. Once that constant is met, everything above it goes to landownership as such, raising land prices which are the land tax base. When you observe cities much, the positive neighborhood effects of replacing old buildings with new are irresistible and contagious, raising land prices all around. The converse is also true: the negative neighborhood effects of letting old junkers stand without replacement are depressive. Thus, when you take the tax off new buildings, and put it on the land under old tumbledowns, you kick off a general process of revitalization that turns gloom into hope into optimism: optimism that boosts land prices and the land tax base. There are three kinds of slums.
That's the bad news. How do you turn it around? When you drop buildings from the property tax base, you change the arithmetic of incentives, as we have discussed. Parachuting into the middle of a slum is still hopeless, as before. Change will come first to the fringes of the Type II slum, where it merges into healthy neighborhoods. New development likes to anchor onto healthy neighborhoods. Richard Hurd, father of urban studies in America, taught us in 1902 that land values are marked by continuity in space. It's still so. Fashions and technology change, but principles last. Hope survives at the edge of the slum; land there retains some renewal value. There is where you'll first see change, because there is where the forces are evenly balanced. Tip the forces for renewal, and there is where it begins. Once it begins, it
proceeds incrementally through the
Type II slum. When it's through, your oldest neighborhood has become
your newest, the cutting edge of progress, the showplace of the town.
That is how it has got to work; that is how it will work when you
exempt buildings and tax only land. When it is through, you have a
high tax base where now you have nothing but fire and police
calls. ... Read
the whole article Wyn Achenbaum: Eminent Domain and Government Giveaways It seems to me that there are
better ways than eminent domain to
provide the incentives that will lead the private sector to develop
choice land. ...
While at one time this area might have been an appropriate place for a neighborhood of single family homes, it appeared to me that that time had passed a decade or so ago. It seemed to me that the path of progress would -- if the incentives were logical and the market responsive to signals -- have caused the private sector to have redeveloped that site. Such re-development might have been painful to the residents of the neighborhood, but would have put now-choice land to a higher and better use than single-family homes. But our system wasn't designed to send signals all that well -- Connecticut law required properties to be reassessed once every decade (and I've heard that once in early '70s and once in the late 80's was construed to satisfy that requirement). ... But if the properties had been reassessed on a regular basis, with market-based values assigned first to the land and the residual being assigned to the existing buildings, the homeowners themselves would have been in a position to make their own rational decisions on whether it was worth it to them to continue to occupy extremely valuable land (and pay the taxes on it), or more to their advantage to accept an offer from someone who was prepared to put it to a higher and better use, and take that equity and buy elsewhere. ... Most of us know of an older home, or perhaps a diner, or something else that was a highly appropriate use for its site -- and typical of the neighborhood -- 50 years ago, which stubbornly remains in the middle of a neighborhood which has been redeveloped with taller commercial buildings. The home or diner is something everyone else has to walk around, drive around. If that site were well developed, it could prevent the premature development of far less desirable sites on the fringe of town -- an acre downtown well developed, can save 10 or so acres on the fringe. ... But unless the properties are regularly and correctly assessed, land first and buildings as the residual, we won't have the signals which tell us when it might be time to move on. In the absence of such a system of regular revaluations and a property tax which is concentrated on land values rather than equally on land and buildings, New London turned to eminent domain. But eminent domain is not the problem here. Lack of appropriate signals is the problem. ... Our land, particularly the best-located land, is a common asset on which we are all dependent. Allowing individuals or corporations to occupy it without compensating the rest of us for its value is the underlying problem, and solving that problem through good assessment and rational (that is, land value) taxes is the way to solve it. When we do that, a lot of problems will begin to fall away. read the entire article |
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