On April 29, 2003, the Philadelphia City Council
Committee of the Whole held an all-day public hearing at
City Hall, presided over by Council President Anna Verna.
Among the eight Councilors in attendance was Councilwoman
Jannie Blackwell, who had sponsored the Resolution 020509
passed unanimously September 12, 2002.
Resolution 020509 authorized "the Council Committee
of the Whole to hold hearings on real estate taxation in
Philadelphia and the potential of land-value taxation to
encourage development and discourage blight creation in the
city; and, further authoriz[ed] the Committee to seek
advice and recommendations on real estate tax policy and
land-value taxation from citizens, community groups,
economists, academia, business executives, officials from
other jurisdictions, and other state legislative and
executive branch officials."
This action followed the much publicized
release on November 26, 2001 of the "Tax Structure Analysis
Report" by City Controller Jonathan Saidel. (see
November-December 2001 GroundSwell.)
Though a minority of the Philadelphia Councilors
were present to hear the testimony April 29, a 222 page
transcript of testimony was produced by a legal
stenographer. Some of the testimony is posted on the
Hallwatch web page of Philadelphian Ed Goppelt,
http://www.goppelt.net/pdf/lvt_testimony.pdf.
Josh Vincent, Director of the Center for the Study
of Economics, Philadelphia, reports that "a standing room
only crowd of Philadelphia homeowners, public policy
experts and Geoist advocates gathered in City Council
chambers to press elected officials to adopt land value
taxation. Dozens of others, including our Ken Ford, were
turned away. Hundreds of private citizens showed up or
faxed their support to council, after they had been
informed what land tax was and how it would affect them.
Those Councilors present heard from dozens of witnesses
with all but the Philly Auto Dealers asking for land value
taxation. Geoist speakers included Joan Sage, Pat Lowe,
Richard Biddle, Joshua Vincent, Al Hartheimer, Dan
Sullivan, Sandy Sorlien and Ed Goppelt. Alanna Hartzok and
Bill Batt sent written statements. The presiding
councilperson declared that more of Council would have
shown up, but it was election year. Yet it was in all an
upbeat day. The chairman of the Philadelphia Tax Reform
Commission, former councilman Ed Schwartz pledged that the
commission would take land tax up in a meeting."
Many witnesses, especially from neighborhood
groups, commented on the blight-causing effect of the
present property tax. Your GroundSwell editor has
extracted a few of the other comments from selected
testimony from the April 29 official transcript, as
follows.
The first witness was City Controller Jonathan
Saidel, who commented, in part, as follows. "This past
summer, homeowners across Philadelphia received notice that
their real estate taxes would increase because of a change
in the market value of their homes. Like you, I was upset
to see so many neighbors and seniors angrily complaining
that their taxes have increased by more than 100 or even
200 percent. ...As one way to reduce real estate tax
burdens for Philadelphia homeowners, we can change how we
tax property. As I recommended in my November 2001 Tax
Structure Analysis Report, I advocate for a system that
will tax buildings less and tax land more to encourage
individuals to maintain and improve their properties. At
the same time, such a shift will discourage speculation and
blight by decreasing incentives to allow buildings to
decay. Based on my analysis, such a system would reduce
real estate taxes on nearly 80 percent of residential
property owners. Similar systems in Harrisburg and
Allentown have reduced abandonment, encouraged development,
and generated popular approval. ...While we have and will
continue to reduce the wage tax and business taxes, land
value taxation will bring relief to neighborhoods hit by
August's reassessments. My proposal is to decrease the tax
on structures and increase the tax on land so that
Philadelphia could generate an equal amount of revenue from
the tax on land and the tax on structures instead of the
current situation where three quarters of real estate taxes
are generated by the tax on buildings. ...The proposed
shift to land value taxation would be revenue neutral as
the shift to land value taxation would shift taxes from
buildings to land while generating the same revenues.
Under my proposal, the School District and the City will
receive the same amount of taxes they do now. In the future, if the tax base expands,
School District and City revenues should increase
accordingly. I have long advocated for business tax
reductions, and I'm happy to report that these tax
reductions improved the City's business climate and
dramatically closed the gap between Philadelphia employment
growth and US employment growth."
Ed Schwartz, Chairman of the newly created
Tax Reform Commission, said the Commission's charge is by
November 15 to produce in writing recommendations on how to
restructure Philadelphia's entire tax system in order to
reduce the burden of taxation on Philadelphia residents, to
make the City more competitive, and to provide a better
fiscal climate for the City for people to live and work.
"We're methodically going through a lot of different
proposals. ...Right now, we do not have a firm position on
the land tax. ...But I am here to say that the Tax Reform
Commission takes the land tax very, very seriously as a
significant proposal for taxes in Philadelphia and one
that could do the City a lot of good. And so we are from
the very beginning making the examination of the land tax
one of our major priorities. For example, the first public
meeting that we had to focus on real estate taxes featured
presentations by Benjamin Howells, a former City
Councilman in Allentown who led the fight for land tax
there, as well as Josh Vincent whom you will hear from here
from the Center for the Study of Economics in Philadelphia.
...We have a Real Estate Tax Committee on the Commission
and we have asked Brett Mandel from the Controller's
Office, who sits on the Commission, to chair that
Committee. ...The assertion of the Controller this morning
certainly has been said, not only by Mr. Saidel, but by
Finance Director Betsy Raveal 10 years ago when I was in
the Mayor's cabinet, and that is that we could raise the
real estate tax with a land tax and 80 percent of the
homeowners of Philadelphia, the residential property
owners, would get reductions in their taxes if we raise
land tax. We're taking our own fresh and somewhat
independent look at it. ...It certainly was a proposal that
deserved to be examined very carefully. And 10 years ago
when Betsy Raveal proposed this to Council and it was not
voted for or taken seriously then, I thought that was a
mistake because I had a high regard for her abilities as a
financial manager."
Dr. Roger McCain from the Department of Economics
and International Business at Drexel University is a
coordinator for a faculty research group who were asked to
do a fairly narrowly-defined job. "There had been
estimates of who gains and who loses based on ratios of
land to property value that were based in turn on Board of
Revision of Taxation data. ...The executive summary is that
while, of course, there are differences -- we expect some
differences when different methods are used for the same
data -- they're fairly small and we don't see any reason
for concern about the accuracy of those Board of Revision
of Taxation data..."
Testimony of David Zwanetz, Vice Chairman for the
Board of Revision of Taxes, was read into the record. ...
"I support the land value tax and City Council authorizes
an in depth study of its implementation and effects on each
parcel of real estate in Philadelphia. The City
Controller should be commended for bringing this issue up
for public discussion. The last person to do so was former
Councilman James Tayoun. The two tier land value tax is an
...incentive for efficient utilization of land. I believe
the land tax will discourage the inefficient use of land
and will encourage land to be utilized for its highest and
best use. It should encourage the vertical development of
land and attract building in our City. The existing
abatements are an incentive but engender great resentment
among adjacent homeowners who feel they are being treated
unfairly."
Joshua Vincent, Executive Director for the Center
for the Study of Economics, testified that "we've done
research parcel by parcel on how land value taxation
would affect various communities, neighborhoods, and types
of houses all throughout the City. We've spoken to many,
many community groups, mostly homeowner groups. And
generally the reception to land value tax has been very,
very good indeed. ...The program that we're talking about
could be implemented this year by the Council. It's a
program that is what I call an annual event. It's just
changing your annual property tax ordinance so that you
have a higher rate on land values and a lower rate on
building values in a revenue neutral manner. Wherever this
has been tried throughout the Commonwealth of Pennsylvania
and indeed overseas, it has been revenue neutral to the
jurisdiction involved.
"In January of this year, the City of Altoona was
the latest to adopt land value taxation. They've already
sent out their tax bills and the report from the city
government there is that the take, the revenue, has not
been decreased at all and, in fact, is very stable. The
City of Pittsburgh expanded land value tax in 1979 to about
a 4 to 1 ratio. Jack Saunder, at the time the head of the
Allegheny County Assessment Office, reported that appeals
and delinquencies dropped in the City of Pittsburgh.
"Most of our work has been done in row home
communities in Philadelphia. They see dramatic drops if
there were a land value tax. And it's the kind of
reduction that applies to everybody. This is a universal
tax abatement. They don't have to apply for a TIF [Tax
Increment Finance district], they don't have to live in a
KOZ [Keystone Opportunities Zone], they don't have to apply
for a 10-year tax abatement; all they have to do is exist
in the City of Philadelphia. And with the change in the
property tax rates, they will get that benefit. ...This is
a chance for the City simply to say, 'Thank you for staying
in the neighborhoods. Thank you for keeping the faith in
Philadelphia. Thank you for doing all this on your own.'
"Behind me is an illustration. This is the impact of land value taxation on
residential properties in the City of Philadelphia. Green
essentially means tax savings. Each dot represents one
parcel. What you're seeing is an overwhelming number of
tax reductions in our poorest and our most working class
neighborhoods. You do see increases, for example, in North
Philadelphia, [zip code] 19122, 19121. Why? Because
there's so many vacant parcels. There's so many abandoned
homes. They would see a tax increase for sure. And that's
good. These people for years have benefited while other
people against all odds keep investing in their homes. Now
when you get to 19121 or 22, who saves? It's the owner
occupiers. The people that have kept the faith in North
Philadelphia, they are aye sayers, just like everybody else
in Kensington, Port Richmond, Olney, Overbrook. I could go
on to the many neighborhoods, especially South
Philadelphia. Eastwick, the many neighborhoods where
almost every homeowner would see a reduction on their taxes
and the people that have contributed to blight and the
corrosion of our communities would finally have to pay the piper."
A summary of the testimony of Janet Milkman, the
Executive Director and interim President of 10,000 Friends
of Pennsylvania, was read into the record. "10,000 Friends
of Pennsylvania is an alliance of organizations and
individuals from across the State committed to land use
policies and actions that will enable Pennsylvania to
strengthen its diverse urban, suburban, and rural
communities and reduce sprawl. We seek development that
will support the social and economic viability of
Pennsylvania's cities and towns, protect environmental
quality, conserve fiscal resources, and preserve our
State's exceptional rural and heritage resources. 10,000
Friends' principles have been endorsed by over 200
organizations representing well over 310,000
Pennsylvanians. I am here today to support the
Controller's proposal to institute a land value tax,
changing the way land and real property are taxed in
Philadelphia, to a system where the tax on land and the tax
on structures and improvements each generate an equal
amount of revenue... "
A summary of the conclusions of Dr. Kenneth Lusht,
professor at the Pennsylvania State University, who has
done extensive research into land value taxation, was read
into the record. Dr. Lusht's "conclusion after looking at
land value taxation and its implementation in Melbourne,
Australia, is that there is evidence of a long run
association between the use of site value tax and the
intensity of development and indications that the use of
the site value tax stimulates faster development. Taken
together, these results support to varying degrees recent
analysis of the site value tax which conclude that the tax
is non-neutral, encouraging faster and more extensive
development."
Frank Concannon, a certified public accountant and
Controller of the City of the Allentown, testified on the
history of the land value tax in Allentown. "It's properly
known as the property development incentive taxation
system. It came into existence in 1997 as part of our Home
Rule Charter, which was adopted by the voters of Allentown
in 1996. We had to have a government study Commission,
approved in 1994 by a vote of the residents of the City, 60
percent to 40 percent. The land value tax was introduced
as part of the Home Rule Charter which was also adopted by
the similar 60 percent to 40 percent. ...An important
factor in our land value tax is that it was intended to be
revenue neutral. And it has turned out to be. ...How does
it work? Instead of all real property being taxed at one
fixed millage rate, a change is made in the apportionment
between the millage on the land and the millage on the
improvements. That's expressed as a ratio. And in 1997,
the first year, the millage was at a ratio of 1.4 to 1;
1.4 for the millage on the land to 1 as a millage on the
building. A progression of approximately 30 percent each
year in the ratio increases it to presently 4.7 percent to
1, almost 5 to 1. This means that approximately 82 percent
of the total millage rate on the property is assigned to
land and the remaining 18 percent millage rate is
attributable to improvements on the building. ...In the
packet there is a sheet headed "Construction and Property
Values," which shows the number of building permits and the
value of the anticipated construction. That is for the
past 12 years, 6 years prior to the enactment of the land
value tax and 6 years subsequent. The average number of
commercial construction permits issued was 18 permits per
average year as compared with 34 in the average year
subsequent to the land value tax. A similar increase took
place in the residential construction. ...Enacting the
legislation necessary to implement the tax and tax change
was not easy, but it seems to be very well accepted now
after seven years."
Dan Sullivan, currently the director of the Henry
George School on South 10th Street, Philadelphia, for 25
years has been dealing with land value taxes in Pittsburgh
for the most part as Director of the Center for Local Tax
Research in Pittsburgh. "We have done this [2-rate land
value tax] in 17 cities and a couple boroughs in
Pennsylvania and so I'd like to talk about what worked and
what didn't work. The first thing is, make small shifts at
first and then you can make larger shifts as people get
used to it. Also, as soon as you start taxing the land and
buildings separately, it gives a chance for the assessors
to start adjusting to changes in the market, and also it
gives the chance for people to appeal their land values
independently. Right now you can't appeal your land
value. You can only appeal the total. ...The only two
cities that rescinded the land value tax did so because
they got a big tax shift all at once, and it antagonized
people who were over-assessed...
"Avoid class warfare. The important thing is you
have people who represent people who will pay more. The
Board of Realtors supports this; there's some very
powerful members of the Board of Realtors who pay more.
And so the approach that the Board of Realtors have used with their own membership has been,
if this has the benefits that it's claimed for -- and as we
look at it, we think it does -- it's better to pay a high
tax in a City that's dynamic than to pay a low tax in a
City that's dying. ...There's no guarantee, even now, with
the current packages that you will be revenue neutral.
Any time you change taxes, you can slide an increase in
there. But the political repercussions are such that you
should never do it. ...Another thing you can do, you have
various redevelopment programs and loan programs and things
to help people renovate their property. 'We're trying to
get the City redeveloped. We're not trying to punish you.
You're getting a tax increase and you're qualified for the
loans.'
"The thing that undid Pittsburgh was that there was
a political coup. The first Republicans fired 85 assessors
and went in there and did a very political change of the
assessments and hired an outside company that totally
botched the land values. In a way, you're lucky that you
don't control the assessors.
"One question raised was about supermarkets. The
thing with supermarkets that they do have parking lots, but
not of them have the same. We looked at this in
Pittsburgh. The supermarkets that had the competitive
disadvantage from land value tax were the ones in the prime
neighborhoods with the huge lots. And what we found is
the supermarket in the poor neighborhood that is a
neighborhood supermarket has a relatively small parking lot
and maybe half of his land is parking lot, [and] has a
competitive advantage under land tax over a supermarket on
very expensive land where 80 percent of its land footprint
is parking lot.
"A question was raised about Sunoco. Their tanks
are mostly all exempt because they've appealed and got them
classified for machinery. Sunoco pays no taxes on most of
structures you see. There are some office buildings and
things. Sunoco doesn't get out of paying the tax by
leaving. A corporation can't say, I'm going to take my
land and go somewhere else. So Sunoco is in a position
that if they decided they wanted to reduce their land value
tax, the best thing they could do is sell some of the land
to somebody else. It's harbor land. It's very valuable
land. There's also some super fund questions. The minute
Sunoco stepped away from that land, they would be liable
and the whole corporation would be liable for any cleanup.
So I don't see Sunoco leaving as a cause of this. You
can't help Sunoco in going from buildings to land because
they've already got their buildings exempted. You would
probably help Sunoco in going from wage tax to land because
people don't want to work in the City of Philadelphia
because of the wage tax. The more you reduce the wage tax,
the better..."
A written statement from Harrisburg Mayor Stephen
Read was submitted into the record, partially quoted from
as follows. "...We have had the land value tax in place
for years and have found it to be an important incentive.
Presently, we have a ratio of 1 to 6 in place, meaning that
the millage rate on improvements/buildings is a tax rate
only one-sixth of the millage rate charged on land. Such a
policy rewards the productive use of land. The greater the
investment, the greater the savings to the owner/developer
over a single tax rate system. In other words, it is a
reward for initiative and private investment risk.
Moreover, a higher millage rate on land tends to discourage
real estate speculation by irresponsible absentee owners -
a genuine problem in probably every city in Pennsylvania.
The City of Harrisburg was listed as the second most
distressed city in the nation twenty years ago. It had
sustained precipitous decline over nearly three decades - a
decline far greater in proportion than what has even been
experienced by any urban community in this state or, for
that matter, every other state with the exception of one.
Harrisburg, in the current era, launched aggressive
initiatives related to economic development, the creation
of non-tax revenue sources and a constant effort to refine
and improve the operations of city government. These
remain our triple, equally important priorities. As part
of our economic development incentives, the land value tax
policy is key and, without it, a significant amount of new
investment would not have occurred here during recent
years. In the current era, we have registered in excess of
$3.1 billion in new investment. The number of businesses
on the City's tax rolls has increased from 1,908 to more
than 5,900. Taxable real estate values have increased from
an aggregate of $212 million to over $1.6 billion. The
number of vacant properties has been cut by 85%..."
Carter Murdoch, Ph.D., Managing Director of
Research for the National Association of Realtors and
principal economist, testified that "this project raised
interest among our research staff. Our chief economist
David Loray, in particular really likes the project in that
the research is indicating that it is a win/win policy
decision. The Research Division of the National
Association of Realtors has collaborated with this research
project and we believe collectively that it is in the best
interest not only [for] the City of Philadelphia but
homeowners and the real estate community as a whole."
Rev. Bruce Edwards, President of the Urban
Leadership Council commented on this innovating and very
exciting initiative. "Since the formation of the tax
reform coalition that was spearheaded by the Greater
Philadelphia Chamber of Commerce, the City Controller's
Office, several members of this honorable body and joined
by a host of business, civic and grass root organizations,
much has transpired on the tax reform front. This
coalition that I speak of to date has played a dynamic role
as it relates to the passage of legislation that provides
for continued reductions in the City's burdensome wage tax,
business privilege tax, the passage of legislation that
supported the creation of the Tax Reform Commission, and
recently our support of City Council bill 030073 that ties
property tax increases to reductions in the City's wage
tax. ...I am here today on behalf of our member
organizations to lend our unqualified support to what we believe will be a real catalyst for
positive change as it relates to taxation in Philadelphia.
"The City Controller's Office through its release
of the Tax Structure Analysis Report, the recently released
study done by Drexel University for the Controller's Office
relative to the shift to land value taxation and the work
done by the Center for the Study of Economics are all to be
applauded and now serve as a guide for further positive
movement towards reforming the way in which our City
collects taxes in general and assesses real estate in
particular. To a great degree our current system allows
for slumlords and their propensity to allow properties to
deteriorate and to remain in a state of disrepair year
after year with no penalty or incentive to be good citizens
of our City. Land value taxation challenges the prudence
relative to taxing buildings at all."
Kevin Mazzucola, Executive Director of the
Automobile Dealers Association of Greater Philadelphia.
spoke on behalf of our Philadelphia members who sell and
service new vehicles in 28 stores within the City limits
who are opposed to the institution of a land value tax.
"Even though my members disagree with the City Controller
proposal for a land value tax, I want to compliment him for
stimulating the discussion of a bolder approach to reducing
Philadelphia's taxes. In the past, most of his other
proposals have benefited automobile dealers and other
businesses in the City. It's hard to argue with targets
set for reduced rates on the wage tax and business taxes.
...Prior to this hearing, we were able to analyze the
impact of this proposal on 20 of the 28 new car dealers in
our City. Our analysis found that 2 of the 20 dealers
would experience a relatively small tax reduction. And
that the other 18 would experience tax increases, many of
them very steep increases..."
Sandy Sorlien, listed as representing Ridge Park
Civic Association, said she was testifying as a private
citizen. "I'm in favor of the land value tax for
Philadelphia even though my own taxes would go up under
such a system because I have a big yard. I'm a
photographer who lives on the Roxborough-Manayunk line.
...Most Philadelphians agree that the current system of
taxation in Philadelphia is broken and has been chasing our
residents away for decades. We have to try something
serious and we have to try it now. A two tiered gradual
shift toward a land tax makes sense to me the way it was
done in Harrisburg and other Pennsylvania towns and
cities."
Christine Schwarz, said "Controller Saidel's tax
reform proposals, cutting business taxes, wage taxes and
changing the way property is taxed simultaneously, address
the problems our City faces holistically. I have presented
the ideas of land value tax to the members of two civic
associations of which I am a member, Wissahickon Neighbors
Civic Association and Manayunk Neighborhood Council, and
the membership there received these ideas favorably. ...In
my section of Manayunk, I pay $1200 a year in taxes. If
you were to tear down my house, that same piece of property
would bring in $100 a year in taxes. Why should we
continue to encourage blight of this sort?"
Fred Murphy, a resident of the Fiddler Square area
of Philadelphia, is a professor in Fox School of Business
and management at Temple University. He said "the Center
City Residents Association did a study of taxes in the City
of Philadelphia just released on our CCRA website.
...Philadelphia continues to shrink while other cities are
growing, in good part because the tax system drives
business and people from the City. Taxes in the City are
exorbitant. We can document families where City taxes are
20 percent of take-home pay. The City system fails because
it's inefficient, encourages cheating, is unfair in its
application, even among residents of the same neighborhood,
and has distorted the regional economy to the detriment of
the City. After receiving my real estate tax increase, I
started looking at comparable neighborhood property tax
rates. I was appalled and incensed that the BRT is valuing
for tax purposes rental real estate properties at
substantially lower market rates than the owner-occupied
properties. Why should an owner of real estate investment
property and in many cases the absentee owner living
outside the City be subsidized by owner occupied residents?
...The process encourages lying, exaggerated claims, bad
maintenance and destruction of property values. "
Richard Biddle, a Chestnut Hill resident, agreed
that the assessments are a mess. "And it's very clear that
if you look at residential properties, they're getting
constantly reassessed. Commercial, industrial, and vacant
land are not reassessed. For the car dealers to come in
here and claim that they're being potentially overtaxed if
we go to a land tax is just outrageous because they're
simply not reassessed now. Their assessments are all over
the place. The land tax is a win/win proposition for
Philadelphia. With a land tax, residential homeowners pay
less and get more value for their up-front investments for
their residences. They pay much less for the land value
component, which is the current speculative bubble
driv[ing] up the hot neighborhoods, and that is when
they're purchasing the residences. They pay much less in
terms of the current low land value taxes [that] are
capitalized into higher prices for the land. Paying a
higher land value tax also means more affordable housing
across the board for Philadelphians. You can call it a
partial universal tax abatement because all building taxes
are lowered year after year. The land tax is a win/win
for straightening out the BRT assessment mess. Once
differential rates, i.e., land and buildings having
different millage rates, are introduced, however slight,
then all parcels have legal standing to challenge their
land value and building assessment allocations."
Christopher Patusky, Deputy Director of the Fels
Institute of Government where he teaches Government Law and
is responsible for operations, spoke as President of the Fairmount Community Development
Corporation. "If you look at the map of vacancy in
Fairmount, you'll see that we have a strip of property
between Poplar street and West Girard Avenue that has some
significant blocks of abandonment. We support the land
value tax because we're convinced that it will force the
owners of these abandoned properties to either give up the
properties to the City through tax sale or sell them."
Ed Goppelt [webmaster hallwatch.org] said that
having looked at the statistics compiled by the
Controller's Office, "my understanding is that if you pass
the land value tax, about 75 percent of your constituents
will receive a tax cut. It seems to me you have a rare
opportunity to do something which is in our City's best
interest, won't cost the City a dime, and in addition to
those advantages is also smart politics. All that is
needed is for you to enact the land value tax here in
Philadelphia. ...The land tax, in my opinion, would help
turn around neighborhoods in decline, such as those in
Olney and Fairmount, by encouraging homeowners to fix up
their houses and also encouraging businesses to invest in
their properties. It would also discourage Sam
Rappaport-type speculation by penalizing those who buy
valuable downtown property and then keep it vacant for
decades as the property deteriorates."
Patricia Lowe, a resident of Rhawnhurst and a school
activist who used to live in Olney, said "I know from
looking over Hall Watch [web site], the properties in Olney
by and large would pay less under land value tax. Most of
the residential properties in Philadelphia, especially the
row houses. By the same token, people who own row houses
for the most part are less affluent than people who own
houses with more land around them. So in that respect, the
land value tax is more progressive than a regular property
tax, real estate tax...." She presented a copy of the
"Ethical Land Tenure Interest Religious Resource
Directory," and a copy of the second edition in 1998 of
"Land Value Taxation Around the World."
Kathy Harris, representing herself and also the
Olney community, said "Here we are just getting over the
promised wage tax cuts that were almost rescinded and
changes in business taxes and we get the BRT real estate
reassessments. Property taxes are out of control and
disproportionate. We are paying for assessments that may
have been justifiable when the value of many of the
properties were on the rise. But, for many, such is not
the case any longer. Somehow the Board of Revision of
Taxes has missed this. ...I have been paying a lot of
attention to run-down properties and checking on what their
assessments are and will continue to do so in the future.
It is not fair during this era of anti-blight initiatives
that ones who choose to do routine maintenance and improve
on their properties are the ones penalized. It is not fair
that derelict landlords and owner occupants get tax breaks
for the eyesores that plague our communities. Now I look
at properties that undergo major renovations with zoning
permits and new construction. They are exempt from the
increase in real estate taxes on the structure for 10
years. Now there's incentive. PHA [Public Housing
Authority] owns properties. As we build more and more PHA
properties, we are not getting the real estate tax revenue
as we would from privately owned properties. All this adds
to the deficit and the insult we bear.
"...Can we afford LVT? We cannot afford not to.
We are losing people hand over fist because they are tired
of waiting for something to happen that will make residency
and business more appealing. Land speculation has cost us
thousands of dollars each, and we have been left to balance
that deficit. The more we improve, the more we are
penalized. The ones keeping the land from being improved
should pay the debt they owe. The fiasco with the public
school system which affected my two youngest children and
the threatened end to cuts in City wage taxes, along with
the increased real estate taxes for my eldest leads me to
fear that my children will be among those who choose not to
stay and I will not be able to argue that point. If we
give the professional vision Mr. Saidel's tax package
offers a chance, you will see how it not only identifies
and addresses economic vertigo, but clearly provides a
blueprint for putting an end to the never-ending disarray
and catch up we've come to call progress. As the changes
in wage tax, business tax and land value tax all play their
part in community and economic resuscitation, I believe we
will experience positive change. I urge you to support
Jonathan Saidel's vision and well-written proposal for LVT.
If we do not think as progressively as our City Controller,
Philadelphia's financial hardships will continue to
increase as more and more flee. Land value taxation is
fair and does not discriminate."
Albert Hartheimer, Vice President of the Center for
the Study of Economics in Philadelphia, said that shifting
taxes off buildings onto land is a subtle mechanism which
produces varying change in who pays the tax, how much they
pay, and how much the benefit. ...We use taxation to
encourage or discourage people's behavior. We tax tobacco
heavily to discourage its use; we tax alcohol heavily to
discourage its use. The present real property tax in
Philadelphia taxes improvements heavily which discourages
building, and taxes land lightly which encourages
speculation. I understand that in Philadelphia 75 to 80
percent of the real property tax is on improvements and 20
to 25 percent is on land. Do you really want to discourage
building? Because that's what you're doing. If you
improve the City by adding to your house or erecting a new
building, your first visitor will be the assessor who will
assess your new building or addition. The resulting tax is
your penalty for improving the City. ...Tax policy should
encourage improvement, not discourage it. You can reverse
this situation with a lower tax on buildings, and perhaps
some day no tax on buildings. ...We know from experience in
20 Pennsylvania taxing jurisdictions that whenever the tax
rate on buildings is lowered, somebody builds; and
whenever the tax rate on
land is increased, somebody builds. It's a win/win
situation. We recommend local gradualism in which the
rates are shifted gradually over a period of years. The
result is that the positive effects of land value taxation
are evidenced gradually and no one is hurt in the
process...
"I would recommend to the automobile dealers that
they understand that when you have land value taxation, you
have more economic activity. And with more economic
activity, they will make more money even though they pay
more land tax. ...The land tax has a very unique property,
unique solely to the land tax. And that is that it
increases its own tax base. The more you reduce the tax on
buildings and the more you increase the tax on land, the
more building and remodeling will occur. And as this
happens, the demand for land will increase and the value of
the land will increase, thus increasing the tax base.
...There was a big discussion earlier about property where
the taxes are now uncollectible and they're going to
continue to be uncollectible even with land value taxation.
To my knowledge, in those 20 [Pennsylvania] taxing
jurisdictions that have used land value taxation, they have
not experienced any great degree of uncollectibility after
as compared to before. ...Consider that with the land tax,
you cannot burn it, you cannot put it in a Swiss bank
account, it's there for everyone to see. And the art of
assessing, which has nothing to do with tax policy, is such
today that assessments can be very accurate. ...The land
tax is a very steady base. It permits government to plan,
and it permits government to carry on without the increases
and decreases that are associated with the sales tax and
with the income tax."