Site Recycling

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. ...

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.

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

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

Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
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