What do we mean when we say we must tax that which is immobile?
In our reality of disappearing borders, a global interplay of commerce, capital and labor, a sensible urban society wants to tax that which is immobile. If we want to maintain cities as the engines of our culture, they need to have a reliable source of revenue. Land and land values are the textbook definition of immobile. It is understandable that some may insist that the traditional property tax - falling on land and buildings – is also immobile; yet a closer examination informs us that buildings can suddenly become very mobile indeed.
Capital and labor are essential to maintain a building’s structural integrity.
Pull out those factors and poof:
A definite lack of capital: North Philadelphia
So, when we get to the bare bones, land values remain. How significant can taxing land values be to a community? Can it replace all other taxes, including sales and wage taxes? Would a land value tax be fair (i.e. progressive)? More importantly, if a community deemphasizes taxation of things like jobs, businesses and other wealth-creating activities, there will be more wealth, and at all levels of our economy and society. If disparate places like Texas*, Vermont, New Hampshire and Nebraska can thrive in hard times with notably higher property taxes, then that should serve as a roadmap to reducing taxes on effort and wealth-creation and replace them with a reformed property tax based on land value.
* Texas has done well in the jobs department for decades. “This point goes neglected,” says Bernard L. Weinstein, professor of business economics in the Cox School of Business at Southern Methodist University in Dallas. “Yes, Texas has created more jobs than any other state” in the last two years. “But that’s been true since 1970. For the last 41 years Texas has added more jobs than any other state, and in most years, has led the nation in job creation,” Weinstein told us. “So Gov. Perry can claim that these jobs were created on his watch, but they were created on everybody else’s watch too.”