Land Value Tax Implementation Research / Studies
CUNY June 8, 2013
Bringing Transparency & Efficiency to Connecticut’s Property Tax System [Apr 2013]
Presentation prepared for the Municipal Opportunities & Regional Efficiencies April 2013
CSE/Urbantools first researched and assisted Altoona, PA in its transition to land value tax in 2001. This year, in 2011, Altoona became the first city in the USA to impose no property tax ion buildings. Currently, school and county taxes are not primarily land-based. This report looks at some outcomes in the past 10 years, along with the revenue effects of the last year of transition to a land only tax, as well as the impact of reversion to the standard property tax.
The city of Frederick requested a report on the revenue impact of land value taxation for the FY12 budget season. The report and appendices on patterns of land ownership and outcomes are presented here.
A New Approach to Land Value Tax: Assessment Exemption for Improvements (AXI)
What is AXI?
Put simply, a blanket permanent abatement of a certain dollar amount on a building is put into effect. The overall tax rate then rises accordingly, with a greater impact on land value. For example, if someone’s building is worth $50,000 and the AXI is $50,000 then they will pay no tax on the building. If the building is worth $500,000 then the owner would pay tax on $450,000.
This has the effect of sometimes dramatically reducing tax burden on lower valued properties, most often residential properties, but also “mom and pop” and mixed-use parcels. In a tax jurisdiction, it would provide immediate and substantial tax relief to homeowners, from poor to upper middle class, while maintaining or enhancing revenue flows.
By that measure, it is a model with much vertical equity* .AXI shifts the tax burden to those properties with either the ability to pay, or the capacity to build and profit from what is now fallow land.How is AXI Determined?
First a number is chosen that fits the data set For a model, the goal would the median value of all taxable buildings in the city (for example, in the city of New London, CT that is $83,100).
As a model, we chose $50,000 to simplify the educational process. First each property must be credited with the AXI, then the formula can be used
a. (BAi-$50,000, MAX $0) = New BAi
b. New BAi + Lai = New total assessment
c. Sum all properties for a Grand Total (LA 495,951,895+New BA $750,295,360)= 1,246,247,255
d. PTRp = $39,684,251/$1,246,247,255 (Revenue divided by Assessments = Rate)
e. PTRp = 31.843 mills
Presented in a brief, AXI's impact is nearly purely progressive in tax incidence, essential for a community that lacks a wide spectrum of levels of wealth.
A similar outcome for Lancaster, PA is noted. The AXI alternative is used, due to questions about the accuracy of existing property valuations
The county seat of Montgomery County, PA asked for a revenue impact study for this borough of 35,000.
Philadelphia, Pennsylvania - 2013
CSE/Urbantools' Recent Submissions and Studies to the City of Philadelphia and its elected leaders, citizens and policy groups.
What is wrong with how the current tax system works in a major city? In what ways can it be fixed? CSE submitted a position paper using analysis of current assessments to demonstrate that land value taxation and an assessment exemption on improvements can be a force for fairness, vertical equity and economic growth in an environment that has historically discouraged these positive factors.
New Hampshire 2009
New Hampshire has always tantalized land value tax advocates. Property tax is the primary form of taxation and New Hampshire has prospered mightily. The University of New Hampshire's Richard England provided an admirable study of the possible impact of land value tax in select communities. Here, Williams College student Morgan Seybert explores an interest and universal take on land value and tax incidence: In the Lake Winnipesaukee area, land values are large on the waterfront, and decline as one moves inland. No surprise. Yet, houses get bigger off the lake front, and a land value tax would reduce the poorer owner-occupiers taxes, whilst shifting tax burden to the second-home absentees.
New Haven, Connecticut March 2008
LVT Study done at the request of Mayor John DiStefano. Outcome: Generally positive for implementation. As in most New England assessments there are no established land values for residential condominiums. CSE allocated a percentage of total condo value to land value (allocation being common appraisal practice), so that non-condo parcels would be treated equitably.
Following interest in the discovery of a large amount of valuable vacant land in Manhattan (and New York City), CSE was asked to do a report on the patterns of vacant land and possible LVT solutions. Already, a new law was passed to end the preferential treatment of vacant land in Manhattan.
Lancaster,Lancaster County,Pennsylvania 2007
Asked by the city to determine if LVT was a candidate for implementation, CSE had to recommend against a traditional LVT shift due to wildly varying land and building assessments, over-assessment of poor neighborhoods relationally to richer suburban townships, and problematic land values for newer "big box" commercial development. Outcome: LVT is not a good choice for the city at this time. The valuation data needs more study, preferably through mapping. The county's assessments must be challenged on ground of uniformity, equity and accuracy.
Titusville, Crawford County,Pennsylvania January 2007
CSE was asked to study any changes in Titusville's LVT outcomes since a 1990 implementation. We were also asked to look at the accuracy of assessments. We found that there were slightly fewer vacant lots since 1990, but that assessments were outdated and that non-residential land values in particular were inaccurate. Outcome: LVT was working as a tax relief measure for homeowners, but the valuation data needs updating. The county assessment roll has not been made available after repeated requests from both CSE and the City council of Titusville. This recalcitrance is hard to explain, except in a political context, as power rests outside the city and the larger boroughs of the county. CSE is not prepared to stop study of this issue.
LVT Harrisburg Data