Incentive Taxation

Support in Connecticut for Land Value Taxation

05/09/2013 13:30:00

New London mayor favors new approach to taxation

By Johanna Somers Day Staff, Publication: The Day

Published 05/09/2013 12:00 AM

But Finizio, who took office in 2011, said that if New London were chosen to participate this time, he would focus on the downtown area and exempt waterfront properties and large lots.
"I support it because I believe it will remove one of the largest disincentives to revitalization in downtown New London," Finizio said Tuesday.

The LVT proposal is one idea that working group chairman, state Rep. Jeffrey Berger, D-Waterbury, said he would like to see passed this session.

Taking it to the People: Land Value Tax vote set for May 7th in Lanesborough, Massachusetts

04/17/2013 15:04:00

Land Value Tax vote set for Berkshire County Community

One of the best traditions still in existence from the earliest days of the American experiment are the true exercises in democracy known as town meetings.

The road to Massachusetts land value tax may run through Lanesborough.

As Henry David Thoreau wrote:

"I am more and more convinced that, with reference to any public question, it is more important to know what the country thinks of it than what the city thinks. The city does not think much. On any moral question, I would rather have the opinion of Boxboro than of Boston and New York put together.

When the former speaks, I feel as if somebody had spoken, as if humanity was yet, and a reasonable being had asserted its rights — as if some unprejudiced men among the country's hills had at length turned their attention to the subject, and by a few sensible words redeemed the reputation of the race. When, in some obscure country town, the farmers come together to a special town-meeting, to express their opinion on some subject which is vexing the land, that, I think, is the true Congress, and the most respectable one that is ever assembled in the United States."

Towns and villages throughout New England use this tool to decide budgets, land use decisions, and all the other essential business of a community.

On May 7, the town of Lanesborough Massachusetts will hold a special meeting for citizens to decide whether land value taxation ought to be a replacement for the traditional property tax.

The effort is spearheaded by CSE board member Albert Hartheimer, a retired architect and longtime civic activist; he gathered the necessary 200 signatures required to petition the town for a special meeting.

Hartheimer played a leading role in managing passage of a land value tax enabling bill in New York State for the city of Amsterdam in 1993.

He currently has legislation introduced that would reduce Massachusetts' punitive sales tax and replace it with a levy on the taxable land values of the Commonwealth.

Al Hartheimer: Bringing LVT to the Berkshires?

The vote comes on the heels of an education campaign that demonstrated that a land value tax can help reverse the steady loss of population and commerce from Lanesborough and reduce the burden of taxation on nearly all homeowners and most business, such as the popular Bob's Country Kitchen. If the vote is in the affirmative, the legislature of the Commonwealth will have to approve the measure.

Urbantools will cover the story as it unfolds, from our seat at Bob's

LVT moving through CT?

04/04/2013 18:58:00

Our team was on the move this week throughout the State of CT. The Municipal Tax Authority Working Group Meeting of April 2, 2013 provides a glimpse of the work CSE is involved in at this time Video of the meeting

The Economist returns to Its roots (most often found in land)

03/12/2013 14:24:00

Glasgow: time to stop the private warehousing of land

In 1843, a newspaper named "The Economist" came into being with a mission that promised to discuss and promote ideas of fair trade, liberal economics, free markets and issues of taxation and rent.

Astoundingly, the Economist stuck to its mission, more or less, although one may - and one does - quibble with its flirtations with flailing neo-classical economics, coupled with some infatuation with permanent Keynesianism.

Happily, The Economist has rediscovered its core philosophy of classical economics, the old "political economy" modernized since the time of Adam Smith, John Stuart Mill and Henry George. The UK is still stumbling as it tries to shake off the effects of the Great Recession, brought on in no small measure by an easily avoidable land bubble.

This Power Point illustrating the great Japanese land bubble and subsequent swoon is remarkable in that acknowledges it was a LAND bubble, not a "real estate" bubble. the impacts were no different in the UK, Ireland, the US, etc.

The prescription by the Economist for this round of malaise is - happily - improving infrastructure (the "internal improvements" of old), providing liquidity to markets, not just banks, and a land value tax, to reverse the perverse incentives of taxation against wealth creation and community benefit.

Land Value Tax: The 2013 Rates are in!

03/06/2013 15:08:00

Three Cheers for Pennsylvania Land Value Tax Cities

Because UrbanTools is in Pennsylvania, it should be no surprise that land value tax is most prevalent in the Keystone state. We work all over the country in the world, but Pennsylvania is still "home." We've been proud to work with these communities, and are grateful that the outcomes have had positive effects and have helped people through hard economic times.

Each year, we collect a list of cities that use land value tax along with their rates. In 2013, we've also created links to each city government, a valuable resource for those who want to go straight to the source on how land value tax affects each of these communities.

Philadelphia's New Real Estate Values: Land Value Tax to Cure AVI Blues?

03/05/2013 17:12:00

No More either/Or: What's Philadelphia worth?

For years Philadelphia Pennsylvania has been an outlier among American cities (and internationally) for its menu of strange taxes on business and onerous levies on residents that have savage effects upon the local economy. For years, people who think about tax issues have proposed over and over again reducing reliance on these corrosive and self-destructive levies, that have driven jobs and capital out of the city squeezing the traditional middle class in particular.

2013 may turn out to be the year that Philadelphia turned itself around.

A new system of property values to be revisited on an annual basis could lead Philadelphia into the land of normality with a healthier reliance on property tax, in the manner of healthy urban economies from Texas to Washington and to Massachusetts.

Yet the Actual Value Initiative (known as AVI locally) is having what one might call a difficult birth. There has been no real civic discussion about the reassessment, and now Philadelphia city government is introducing dozens of ad hoc ideas meant to soften any perceived hardships that come from a reassessment.

Some make sense, some don't, and some have existed in the background for years. Recently several respected civic and political leaders ( including UrbanTools, Marc Stier, Jon Geeting) joined forces with editor Anthony West for an article on how to introduce AVI published this week in the Philadelphia Public Record, owned by longtime City Councilman James Tayoun ( Mr. Tayoun has also been a powerful and sensible voice for land value taxation).

Because Pennsylvania has a fairly rigid constitution when it comes to taxation, some very worthwhile ideas such as an exemption to the business Use and Occupancy tax ( a double tax on nonresidential property used actively for business), and a property tax deferral mooted by Councilpersons Sanchez and Johnson may have some difficulty in passage. However for now, the land value tax is demonstrably a fairer in much more progressive way to tax in the city of Philadelphia. An editorial in the Public Record endorses not only fixing the minor "bugs" in AVI, but forthrightly pushes for a land value tax, which is a simpler concept and easier to implement right now.

To quote Councilman Wilson Goode Jr. from the article:

“Every option should be on the table for consideration,” insisted Councilman Wilson Goode, Jr. “But our action should provide some relief to the majority of homeowners, with a focus on the economically disadvantaged with the least ability to pay.”

The Oregon Trail...To land value taxation

02/14/2013 15:34:00

The expansion of land value tax from its bases in Pennsylvania cities and jurisdictions all over Australia and New Zealand, may have just taken a strong step forward in the state of Oregon, where LVT advocates have been studying the legalities and the practical administrative steps to implementation of the past decade.

The Salem Statesman Journal published a comprehensive policy piece by Kris Nelson of Common Ground OR/WA and Tom Girhing . The op-ed provides solid theoretical underpinnings and empirical reality to make the case that Oregon cities, and indeed the whole Northwest have to join their Red State brethren and find ways to reduce traditional property taxes on labor and investment as well as pull back on taxation of wages.

Portland is an ideal candidate for a land value tax. Academic studies and statistical GIS modeling have shown that Portland has very high land values, in part caused by governmental action meant to curb sprawl: The Urban Growth Boundary. The literature on the success or failure of the UGB is dictated by perspectives the authors already posses: either its a blow for Smart Growth or a blow against Liberty and free markets.

From the perspective of classical economics that acknowledges that land economics is the wellspring of all other factors such as wages and capital, we know the truth to be in be-tween. That's where LVT for Oregon comes in. For sure, restricting the supply of land drives up its price. Driving up its price forces lower-wage people to live worse or live elsewhere. The city currently frets that it's becoming harder for families and minorities to live in Portland.

The selling price of land has to moderate; the high values are currently pocketed by private speculators, which a land value tax would stop. The community could recoup the value of the UGB-caused land scarcity and divert it back to the community.

State approval of land value tax research is to be heartily recommended, and wish success to The Northwest's LVT advocates!

2013 legislative update: Land Value Tax Legislation Introduced in Connecticut

02/01/2013 16:56:00

Connecticut's 2013 General Assembly meets for a six month session in January. Odd-numbered years generally concentrate on local laws and statutes for municipalities and relations with the state government in the so-called "long sessions."

This month, several bills have been introduced to permit municipalities flexibility in how and what they tax, as well as specific language permitting a municipality to enact land value tax. The sponsors are led by the New Haven Connecticut legislative delegation. We expect to interview them in the near future. UrbanTools is pleased to announce this broad follow-up to the 2009 law that permitted New London Connecticut to design and enact a land value tax program; with that effort currently on hold.

Meanwhile, many state leaders and municipal officials still believe that LVT can play an important role in a post-recessionary time that is seen tax increases at the state level and steady reduction in state aid to hard-pressed cities.

One vital tool as part of the program to make cities more self-sustaining and less dependent on the whims of the economy is the land value tax; as an expression of the Henry George Theorem, which asserts that land values in a city can actually pay for most or all city services (this term was first popularized by Nobel prize-winning economist Joseph Stiglitz in his "Theory of Local Public Goods").

Initial study by UrbanTools of several Connecticut cities (such as Norwalk), indicates land value tax would provide an environment conducive to private market investment, as well as significantly reduce the burden of taxation for citizens at all economic levels who build, invest, and produce. Evidence from other cities such as Hartford, New Haven, and New London indicate that the property tax would be converted to a progressive tax with adoption of land value taxation.

Check in often as the legislative session moves forward.

News Flash: High taxes on valuable land puts land back into use in Montreal

01/30/2013 17:48:00

Montréal's tax on parking lots: cause-and-effect

Montréal: land of the lots no more?

One thing city governments ( and most people) can't stand but feel helpless to remedy is the ubiquitous and metastasizing presence of surface parking lots on the most valuable land in town: center city (or Centre Ville in this case).

Almost the definition of parasitism, think of the parking lot business model as a twisted Seven Pillars of Wisdom.

1. Buy an old business building downtown. If occupied, let the leases lapse

2. Make a choice about the fate of the building (other taxes on structures, wages and business entail too much work to fix it up).

3.Knock down the building.

4. Pave it put up the plywood shack.

5. Suck off money from all the surrounding businesses, their employees, and their customers.

6. Repeat as needed throughout the city center to make tons of money with little investment.

7. Take advantage of all the taxpayer provided roads and infrastructure and pay not even a pretty penny for it.

We therefore tip our humble chapeau to the city of Montréal, which has doubled the tax rate on commercial parking lots. UrbanTools would only wish that an additional tax would be imposed upon residential parking spaces as well.

Yet, we'll take the good news. Happily, land speculators figured out exactly what was going on immediately, and provided the requisite sob stories about passing the cost onto consumers, losing money, or cashing out now. Lot owners being rational economics beings, we will bet that cashing out now will be the outcome.

One of the truisms of classical land economics is that a land tax cannot be passed on. Often, people don't believe that to be true. However,quoting from the Montréal Gazette article the operators of the lots see that economic theory meets their reality:

“It’s a major problem,” said David Cohen, who runs Modico Parking Inc., which operates outdoor lots in downtown Montreal. “You just can’t keep passing (the higher taxes) on.”

Couple this with a new effort to dramatically increase metered rates for public parking on the streets broached by Councillor Marvin Rotrand, Montréal stands a very good chance of becoming a city for buildings, people, commerce, and wealth creation.

Councillor Rotrand: There is no free parking

Québec needs to become economically competitive, and these moves toward collecting publicly created land values can point the way not just for the cities, but the province. Allez!

The Philly Assessments Cometh, Part One

01/21/2013 18:16:00

2013 heralds something considered cataclysmic in Philadelphia but is routine in the rest of the world: a new assessment for property tax purposes. From Podunk to Portland (Oregon or Maine), assessment officers and departments apply land and building values to each property, the community figures out how much revenue it needs and divides it by those values. Voilà, you get a property tax rate, and then send out a bill.

A very little history

Nothing is ever quite that simple in the city that UrbanTools loves. For one thing, Philadelphia – nearly unique in United States – taxes wages on a local level at a flat rate. For another thing, Philadelphia – nearly unique in the United States – taxes businesses coming and going i.e. on gross receipts and net receipts. Using the property tax as an alternative to these outmoded and corrosive taxes ought to be a strategic goal for Philadelphia. In the past 75 years, the city of Philadelphia has seen fit to adopt and then fiercely maintain bad tax policies that correlate directly to sinking revenues, jobs, neighborhoods, and business. Like a giant oil tanker headed for the rocks, it takes a long distance in a long time to turn the ship around. Yet, it has been happening.

Property and Protection

Philadelphia is introducing the new assessments under the moniker Actual Value Initiative (AVI). Neighborhoods that have been over-assessed for years will likely see some form of tax relief, and the small bits of Philadelphia that have gentrified will likely see their ossified values approach something close to reality. Because of the lag between valuations, there will be some sort of sticker shock to some residents. That's the price of decades of inaction. It's not the fault of those residents. So, the Philadelphia delegation in the Pennsylvania assembly is introducing several bills to help alleviate that predicted shock. Some ideas in the bills are long-overdue. We're going to examine each of these bills, and give our analysis on the various strengths and weaknesses of each.

Lien on me, when you're not strong…

The ability of the city to put a lien on the owners of tax delinquent parcels has been on reformers’ wish list for years. What would this bill do? If you were "1215 Associates LP" and you owed tens of thousands of dollars on a couple of condo units at 1215 Spruce St., not only would the city put a lien on those units (and they have put about 10 on them), but the government would have the power to lien the owner's property (somewhere in Brooklyn, specifically 1555 39th St.). This is a powerful and appropriate tool in our city because the only working business model for residential property – aside from high-end tax abatements – has been to buy residential property, slap some paint on it, collect rent or do a quick flip, don't really renovate , and heaven forbid never pay your taxes. In Philadelphia, these operators have become used to ignoring the law, as the law was never used. Going after them at home would put some real teeth in the tax collection process. We close with one caveat: for decades property tax scofflaws have been able to befuddle the Philadelphia Sheriff's Department and other agencies charged with collecting taxes. A new law is a great idea, but some resources have to be devoted to tracking down the owners wherever they may be. Some years ago, UrbanTools help track down dozens of delinquent property owners to their front doors, and the city did nothing. Next: Proposed relief against gentrification: does means testing work?