New Jersey's Night: Rebuilding the community by opening the Community Chest
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Incentive Taxation

New Jersey's Night: Rebuilding the community by opening the Community Chest

Darkness in Moonachie, NJ

As this piece is being written, millions of citizens in the Northeast are without power, 
gasoline, water or even food.  The nightmare that was Hurricane Sandy has blown apart communities and broken hearts. 

The first order of business is of course to offer relief and comfort for our fellow citizens and neighbors. The second step is to rebuild people's homes and lives as much as possible. New Jersey can serve as an example of how markets can be used to strengthen the recovery effort, and not just for a lucky few.  

Certainly, government aid and insurance will be deployed in massive amounts.  Yet, a modest homeowner or a small business will eventually have to take on some form of debt to finish the rebuilding process, a difficult proposition in this economy and when you been wiped out.

The small borough of Moonachie New Jersey (listen to was particularly hard hit, due to a berm being overtopped on the Hackensack River (Listen here to a story on the berms and levees in New Jersey).  As in most New Jersey communities that have been ravaged, no one knows where to turn to or who to ask for help.  We would suggest a long-term program for Moonachie's recovery.

Like previously well-documented disasters, such as Katrina or the "New England hurricane" of 1938, some areas may well and truly be left desolate for years and decades to come because the local and regional economies had been stripped of two centuries worth of growth in the form of jobs, homes and commerce. The federal government simply can't do it all.  Neither can the states.  New Jersey in particular faces a cold economic truth:  when rebuilding is complete, those selfsame buildings will – eventually – be subject to onerous taxes on buildings, as well as the other high taxes on labor and capital that the people of New Jersey pay.  

Another level is needed: meshing community and market by collecting revenues to rebuild from land values, which have survived Hurricane Sandy essentially unchanged.  That's where the Community Chest comes in. 

Land values are created by the activity and enterprise of hard-working people from all areas of society.  Land values pay for schools, public services, and essential infrastructure; a direct cause-and-effect is that these public assets increase land values even more.  It's an often unseen resource that creates – or re-creates – a town or region or nation.  It's not a coincidence that about the only safe place on the Monopoly board is the Community Chest. How does that apply to today's disaster?  

After Katrina, then-Mayor Nagin bemoaned the fact that his tax base was gone. He was quite correct as far as his thinking went, because like most people, he saw the tax base as buildings for property tax, commerce for sales tax, and human beings as income tax.  Tragically, land value was not even noticed.  But as Dr. Mason Gaffney wrote in Dollars and Sense Magazine in 2006, it didn't have to stop there. Historically, San Francisco used land values to revitalize in a relatively short time-frame after the catastrophic earthquake and fire in 1906. 

Look to the Land: Moonachie's taxable land values

Moonnachie and countless other towns stricken by this storm can make a choice to use their significant land values (it is an Excel file)as a permanent resource for the future, and the universal tax abatement for the present in order to rebuild.  With over $300 million in taxable land values (not even counting abated and exempt land), Moonachie can permanently untax every building in town, and return better than before.  

5 Comments to New Jersey's Night: Rebuilding the community by opening the Community Chest:

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Mark Koerner on Sunday, November 11, 2012 4:30 PM
Josh-- I had always thought "Community Chest" existed only on Monopoly boards and early-sixties TV sitcoms. ("Mom! We raised _twenty-three_dollars_ for Community Chest!") According to Wikipedia, however, Community Chest was a real organization that did good works in many American cities. It eventually became United Way. Which gets to the heart of the issue: United Way, the Red Cross, and so on are great organizations, but they just don't have the resources to deal with a disaster like this. For something like this, we need the entity that everyone loves to hate: Big Government. Only the federal government has the necessary resources to maintain order, erect temporary shelters, and distribute food and water in a hurry. Mayors and governors always want to get their hands on federal disaster money so the money "looks local," giving the residents the opportunity to think that it _wasn't_ the federal government that helped them, when of course it was. Over the longer run, all levels of government should take steps to keep people from building structures so close to the water, and to re-create pre-existing wetlands, estuaries, and so on. The West Coast can be the model; in Washington, Oregon, and California no one can build as close to the beach as they've been doing in Atlantic City for over a century. A thin band of parkland along the coastline from Galveston, Texas to the rockbound coast of Maine would be highly advisable, even if it would take a Hundred Year Plan to implement. As for New Jersey adopting land value taxation as a way for distressed local governments to regain their revenue footing, I'm certainly not against that, but is it legal? Legally, do local governments have that power, or would it require a change in state law? If it would require a change in state law, local governments had better find some other solution, because I doubt the state government is going to change its property tax system in the near future. --Mark Koerner
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