Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
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Tax-exempt Land

In many cities, much of the best land is off the tax rolls. Colleges, universities, hospitals, municipal and other government buildings tend to be centrally located. The presence of their employees and customers helps to make the surrounding properties particularly valuable places to conduct business. When a signficant share of the downtown is occupied by entrenched tax-exempts, those who need a central location to conduct their business must pay higher rents to landlords who own the scarce remaining sites. Churches and their affiliates also occupy prime downtown land. Sometimes they provide a wide variety of social services, including services to the low-income portion of the population, who are severely burdened by the high rents they must pay in most cities; sometimes all they provide are worship opportunities and social events for their members — and few jobs.

Downtown parks also tend to make the surrounding properties far more valuable than they would otherwise be, with the most extreme effects on selling prices falling off within a few hundred feet.

When a church or a college or other tax-exempt entity decides it no longer needs a piece of land, should the tax-exempty entity get the full proceeds of the sale of that land, or should some portion of that huge gain be returned to the commons?  Is paying 5 years' worth of back property taxes sufficient compensation to the commons? 10 years' worth? More?  Should the entire gain go to the community?

Tax-exempt properties receive a lot of services from the taxpayer: police and fire protection and other emergency services, not to mention the schools which provide the employees who carry out their missions.

I would advocate not placing any property taxes on the buildings owned by those properties that are currently tax exempt, but it doesn't seem unreasonable to ask them to pay the commons for the use of their site, just as we ask others to pay as a function of the value of their sites. Might this cause some of them to sell off a portion of their underused holdings, or even relocate outside the central business district? Possibly. They might find that if they needed to make a business decision about their land, they would be led to use less-choice sites, freeing the centrally located property for the use of the private sector.

Mason Gaffney: Land as a Distinctive Factor of Production

Land is traditionally subject to a host of legal and customary limits on use and ownership.  Covenants are found in land titles: seldom in titles to cars or canned goods.  Divided ownership is common, there is so much about land to be owned.   There are easements through, air rights over, mineral rights under, and neighbors and zoning all around any parcel of land.  Changing lot lines is unavoidably a social process, there is no other way.

A large share of the more valuable land in cities is held by estates.  Public and eleemosynary [non-profit] holders are preferentially tax exempt and often without any visible motive to economize.  Water licenses are held subject to "use it or lose it" traditions leading to appalling waste.  Broadcasting/telecasting licenses are highly political.  And so on.  Only a resource with the characteristics of land could be subject to such a wide range of non-economic pressures. ... 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