 Spreading Like Kudzu Historic reality: in 1950, Cleveland Ohio had a population
of nearly
1,000,000. It had a tax base that
was compact and served all sectors of the city well. Great fortunes were made, along with the success
of the working and middle classes. From the 1900s to the 1950s, great civic
amenities became possible with this wealth.
John Rockefeller was only the largest source of foundations and gifts that
made Cleveland not only a gritty industrial hub, but a place where one could
become a more educated, cultured and involved citizen. Present reality: in 2012 the population has dropped below
400,000, the last time it was that low was just after the year 1900. The loss
is second only to Detroit. The tax base
has shriveled. The population living in poverty is staggering; the abandonment
of land from use – and the tax rolls – is legend. Still, these palaces of civic virtue sit unaffected by the decline of an urban core that can no longer pay for them. Cleveland, Pittsburgh, Philadelphia, and many more all share
this scenario, Planning for the future. Planners in Cleveland and all over
the struggling cities of the United States are charged with a Herculean task to
reestablish urban cores. Planners must
use as base alloys for success land and institutions that are tax exempt. In the past, the sentence "We'll get a
grant for that" was the go to strategy.
No longer. Tax-exempt institutions – commonly called Eds and
Meds – are generally assumed to be positives are generally assumed to be
positives, especially when one reads glossy Chamber of Commerce style websites
and reports often prepared by the Eds and Meds themselves . Yet this focus on nonprofit institutions has some clear and
some opaque costs. The higher wages paid
by nonprofits is often touted in cities such as Pittsburgh and Philadelphia as
a rationale for not minding the ever-growing presence of nonprofits. This presupposes the benefit of having a tax
system that collects much or most revenue for the municipality from people's
wages.
Taxing wages is purely a bad idea from a geographical economics
perspective. Wages are mobile, and if
one doesn't have the blessing of tax exempt status, then the employer and the
employees are also on the hook for every other tax in the community. Not paying property tax has a clear downside. Like Morningside Heights next to Columbia,
and like West Philadelphia next to the University of Pennsylvania, taxable
properties disappear as the University expands. In the case of the city like
Philadelphia, which is trying to wean itself away from the fallacy of wage
taxation, the alternative of property taxation appears less reliable. The relationship between the municipality and the tax exempt
entity slips ever more into a struggle for power and influence in the community. Who controls the community in these
instances, the government elected by the citizens or nonprofits answerable at
best only to a board? Planners lead the charge to create an economic development
and community environment that will lead to more "ratable's" i.e.
property on the tax rolls. A good plan
will overcome the paradox between town and gown, and assist the community in
raising the revenue it needs for the city services for its citizens. That is
the job of the city. That job is not
always in the self-interest of the not-for-profit. What to do? Some towns, like New Haven Connecticut have an appropriately
symbiotic relationship between town and university. Yale University pays almost $10 million a
year to the city. That's great, but it's due to one-on-one negotiations and
personal relationships between the chief executives of both entities. It’s not a system, and certainly not built
for permanence.
What is needed is a systemic method for nonprofit entities
to be able to maintain your charitable purpose, but also pay their fair share
for services like any other property owner.
Allegheny County Pennsylvania, home to Pittsburgh, is wrestling
with the preponderance of tax exempt properties midst traditional revenue
streams being wrung dry. The County executive
is doing it piecemeal, without a rationalized method for deciding what the
contribution from the not for profit should be. Interestingly, the biggest non
profit is called only by its initials UPMC,
as if its magnitude confers the acronymic majesty of such dead stars as USX
(i.e. United States Steel).
There are several ways out including raising wage taxes
(which will tax the butcher the Baker and the candlestick maker as well), begging,
glomming on to the economic magnet effect of the nonprofit by re-purposing surrounding vacant and blighted land, or levying a charge based upon the value
of the land that the tax exempt entity owns.
Why? Anyone of
goodwill knows that the Cleveland Clinic, Yale University, Massachusetts
General Hospital etc. do good deeds. The
land upon which they sit only provides a platform to do that good. The land value has little to do with the
charitable purpose of these nonprofits. Therefore,
instead of a traditional property tax or some of to use algorithm to determine
an annual contribution (that can be terminated at any time), why not collect
revenue based upon land value using the same formula that the rest of the city
uses. A land tax on that basis is uniform, fair and efficient, and would go a
long way to letting cities get back to the business of governing, planning and
providing a framework for improved lives. For example, just using the exempt
land values of Philadelphia, using the current property tax, an extra $45 Million
could be raised; and transitional land value tax would raise just about double that. We think that beats creeping annual tax hikes
on everyone else. |
 |
|||||||
CategoriesAct 47Africa Agricultural Policy Allegheny County Australia Baltimore Berkshire Canberra Clairton Connecticut Current News Item Economic Development Economic Policy Economic Rent Economist Education Federal Tax Policy Fiscal Policy and Taxes Gentrification George Osborne Harrisburg Hartford Healthy Communities Housing Housing Policy Hurricane Sandy India Ireland Jimmy Tayoun Kenyatta Johnson Land Policy Land Value Tax Lanesborough Law and the Constitution Maria Quinones-Sanchez Martin Looney Maryland Massachusetts Michigan Monroe County Montreal Moonachie Namibia National Tax Policy New Jersey New London NY Oregon Parking and Transportation Patricia Dillon Pennsylvania Philadelphia Pittsburgh Portland Property Assessment Property Tax Reform Public Opinion Public Resources Public Works Regional Tax Base Sharing Regionalism Rochester Scranton Smart Growth Taiwan Tax Exemption and Abatment Titusville Uncategorized United Kingdom Urban Rejuvenation Urban Tax Policy Wales Wilson Goode Jr. |
|
 |
|||||
    |
|||||||
