In Search of a Progressive Property Tax: a Connecticut City
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Incentive Taxation

In Search of a Progressive Property Tax: a Connecticut City

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.

11 Comments to In Search of a Progressive Property Tax: a Connecticut City:

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Queensland Homes on Thursday, June 28, 2012 8:23 AM
This is a good post. I'm definitely going to look into it. Thank you so much for this unique article. Keep up the good work.
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Donna Hoffman on Monday, August 20, 2012 5:26 PM
The value of location is relative. In Austin, Texas my rapidly growing city, low and moderate income hispanics, African Americans and poor artist whites live in a highly desirable river front barrio and central east Austin neighborhood adjacent to downtown. These east Austin neighborhoods are undergoing gentrification and more vested middle and owning class people desire the location. Property values have skyrocketed and with them property taxes making it impossible for families to stay where they have enjoyed living for generations. What to do in a case like ours to stabilize the property taxes for the low to moderate income residents of a diverse neighborhood which has become a more valuable location so that the residents aren't displaced by a bully economy.
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Joshua Vincent on Wednesday, August 22, 2012 4:33 PM
Dear Ms. Hoffman: I agree that the value of location is relative; indeed is key to understanding what's happening to her cities (or in our sprawling suburbs). The maps that we made for that town in Connecticut show that there is a causal relationship between natural advantages – such as being on the waterfront – or community created advantages (such as access to good urban infrastructure, an interstate highway, or a railroad station). Our observation of that Connecticut town informs us that much of the most valuable land is vacant, driving up land values in areas that would otherwise be stable neighborhoods for working people and artists. That scenario has played out for decades East of the Mississippi. The young and the poor of the lower East Side in New York City were safe until developers and those with money broke out of their restricted neighborhoods in midtown Manhattan, and drove out the population that had lived there since the end of World War II. Ironically, they were driven to Brooklyn where today land values have escalated to the point where they're being driven out of that borough. It's a real problem. Having spent some time in East Austin in 2006, enjoying such wonderful spots as the Blue Dahlia, my colleague who lives in Austin and I both suspected that speculators were snatching up many residential lots in expectation of changing the neighborhood to take advantage of its funkiness. I'm sorry to say our suspicions were borne out by your reality. The best solutions to help turn back the excesses of development in your neighborhood are options such as property tax deferral, wherein the homeowner is allowed to do further property tax entirely until sale or death. If the city government is responsive to the needs of its neighborhoods, it it may down zone East Austin, to ensure that newer and bigger condos etc. can't be built. The effect of down zoning is to reduce land values, because the parcel then becomes worth much less money to the speculators. In Austin, I have seen that where there ought to be expensive high-rise development is in the downtown and the immediate vicinity around UT. Why do I say that? If one looks at Google Earth, that high land value area is blanketed by surface parking lots. Those lots have been held by speculators for years. If they were land value tax in Austin, those surface lots would be sold and builders would build up – and not out – relieving the pressure on the older neighborhoods. I believe that because there are nearly no buildings at all on,say, 7th and Trinity, we found a real culprit for folks trying to push into East Austin. I really thank you for taking the time to write, and I hope that if I haven't answered your concerns to your satisfaction you let me know.

Danny Handelman on Wednesday, December 19, 2012 12:13 AM
High land value reflects demand exceeding supply. The only way to equitably resolve the situation is to construct more dwelling units on the land, which will result in lower capital, operating (utilities), maintenance and transportation costs per dwelling unit due to economies of scale and shorter median journey distances.

Fast House Sale London on Friday, January 11, 2013 5:32 AM
This is a well-written piece on this subject. I appreciate your efforts.Thanks so much for giving us an update on this matter on your web page.
Reply to comment on Friday, February 01, 2013 5:12 PM
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
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pokies on Wednesday, February 27, 2013 12:33 PM
I have no idea who so chaotically constructed districts. Why was it necessary to do so? Is impossible to develop a plan?
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Starting examination by UrbanTools of a few Connecticut urban communities, (for example, Norwalk), demonstrates arrive esteem duty would give a domain helpful for private market venture,
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