Wealth and Want
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Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
John Muir is right. "Tug on any one thing and find it connected to everything else in the universe." Tug on the property tax and find it connected to urban slums, farmland loss, political favoritism, and unearned equity with disrupted neighborhood tenure. Echoing Thoreau, the more familiar reforms have failed to address this many-headed hydra at its root. To think that the root could be chopped by a mere shift in the property tax base -- from buildings to land -- must seem like the epitome of unfounded faith. Yet the evidence shows that state and local tax activists do have a powerful, if subtle, tool at their disposal. The "stick" spurring efficient use of land is a higher tax rate upon land, up to even the site's full annual value. The "carrot" rewarding efficient use of land is a lower or zero tax rate upon improvements. ...

Australia has operated under various forms of site value taxation for nearly a century. Many studies have estimated the improved rates of construction, housing, rise in wages, and even expanded agricultural lands under land value taxation in Australia. Two cities fully exempt buildings. Canberra, the nation's capitol, exists on public land and leases lots. Sydney taxes land, not buildings. Neither one recovers all the land's annual market value and rely on some revenue from the federal government. Yet their lower-income areas appear much more livable than the dilapidated ghettos of many US cities. In the two most populous states, Victoria and New South Wales, revenues from land taxes increased significantly in the eighties. In Victoria revenues nearly doubled and in NSW, they nearly tripled from 1984 to 1990, accounting for inflation.

In 1951 the federal government also taxed land. All states except Victoria still have a land tax in some form. Over the last two decades, the percentage of government revenue collected in land rent at all levels was estimated to drop from 6.3 percent to 3.7 percent. In the recent decade, under influence of wealthy interests most states have diluted the land tax.

Following this trend away from capturing unearned land values, municipal revenue from property rates has fallen to 50 percent of the budget. One city, Hervey Bay, Queensland, now collects only about 20 percent of its revenues from site-values. Fixed charges or fees for particular purposes have gained popularity instead, including a minimum rate for all properties in some instances. Nationwide, all levels of government collected $148 billion in 1993-94. One estimate suggested that the present uncollected annual rental revenue in Australia would be about $40 billion, depending on the capitalization rate used.

Despite this drift away from site rent, especially among municipalities, a two-volume report commissioned by the Brisbane City Council in 1989 found significant advantages to taxing land. Comparing it to taxes on "heads" (the poll tax), sales, income, improved property value, and license fees, the research committee unanimously rated "rating" (the Aussie term for taxing property whether land or building) as best. They stated, "In principle, the unimproved value of land is a logical and appropriate basis for revenue raising irrespective of the level of government." They noted that land taxes are virtually impossible to evade, tap every member of the community, are simple and inexpensive to administer, and its compliance costs for citizens are minimal. ...

A big problem needs a big solution which in turn needs a matching shift of our prevailing paradigm. Geonomics -- advocating that we share the social value of sites and natural resources and untax earnings -- does just that. Read the whole article

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper