How significant can taxing land values to a community? Can it replace all other taxes, including sales and wage taxes? Would a land value tax be fair (i.e. progressive), without morphing into a California-style redistributionist morass? Let’s start with some basics, and explore these issues in an ongoing series of what potentialities land values possess.
Let’s travel the I-95 corridor (In the US Mid-Atlantic) and stop in Norwalk, CT. It’s a combination of an old industrial working city with desirable waterfront property and yacht clubs. There are wide variables in socio-economic status.
A heat map of residential land values in Norwalk helps us to see these realities: This map has an underlay with per capita income by US Census blocks and land values inland start fairly low, then expand dramatically to the shoreline with a commensurate rise in income. The higher land values also reflect distance from the older post-industrial areas.
Land values (about $5 Billion) appear to be high enough to fund the entire city (Revenues are pegged in FY12 at $271 Million,) but become a progressive tax with a tax rate of .05419 (or 54.19 mills). Zooming in, we can also see how places where people are willing to pay more than a premium for land – the waterfront of Long Island Sound – would assume a larger share of city taxation (while leaving their homes untaxed).
Residential land values are only part of the mix. A similar map with all taxable values demonstrates that non-residential properties based near publicly funded infrastructure – rail, harbor and interstate – can also serve as a building block for a healthy economic future. For residential properties the level of tax incidence to benefits-received is illustrated by proximity to the amenity of the waterfront, and to a lesser degree proximity to a main commuter corridor (The Merritt Parkway) in the Northwest corner of the city.
For non-residential parcels, land values are concentrated on the three main primary roads (I-95, US Route 1, US-7 and the rail nodes in downtown Norwalk. The value of location can be translated into revenues that would satisfy the optimal expenses of the entire city, as highlighted by Joseph Stiglitz and other public economists in their development of the Henry George Theorem.