WEST VIRGINIA EFFORTS TOWARD LAND VALUE TAXATION
Carl Shaw of Mt. Zion, WV has long been active in promoting the land value tax to officials. Shaw distributed the following memo to WV legislators on Jan. 20, 2007.
(Additionally, Carl Shaw and Art Rybeck (see Write On reprint on page 4 of this issue of GroundSwell) are elected senators to the West Virginia Silver Haired Legislature, where Rybeck chairs and Shaw co-chairs the Finance Committee. West Virginia seniors at the 55 WV county senior centers elect 100 House of Delegates members and 34 Senators for 2 year terms. The positions are non-partisan, volunteer and honorary. Those elected meet several days per year and enact proposals which are forwarded on to the regular legislature for their consideration.)
MEMORANDUM CONCERNING LAND OWNERSHIP
TO the January 2007 West Virginia Legislature
FROM Carl Shaw, Mt. Zion, WV, Jan. 20, 2007
1. The Creator probably made the WV land and resources for all of us to own and use equally. Total WV land area = 15,516,160 acres, divided by the population of 1,808,344 = 8.5 acres per person.
2. We all contribute by our presence and economic efforts toward creating the annual site rent of land. Labor and capital construct a) private improvements, homes, industrial plants, commercial business, and; b) public improvements including streets, government administrative, hospitals, schools, airports, police and fire. No land owner generates site rent all by him/her self. Rent is a social product and in justice must be shared by all society.
3. Any tax on land is a tax on the annual rent of land (presently calculated on the market value, but which only exists because most of the rent was not taxed).
4. West Virginia is about the 48th state in per capita income.
5. WV is nearly the eldest average population of all states, because many young people migrate elsewhere for better job opportunities.
6. WV unemployment and low job participation is currently at about 5% of the workforce. No unemployment should be acceptable.
7. WV land is taxed, but at one of the lowest rates in the nation. Only about 10% of the site rent is taxed (shared) -- all the rest goes to private persons.
8. Land can be considered as speculated if not in use. Unused land employs no one.
9. Taxing land creates an incentive to use. Labor and capital are not harmed by land taxation. Land taxation implements justice by sharing the site rent. Land taxation is economically beneficial.
10. Higher land taxation encourages its owner to find a better way to use land, so as to bring in enough additional income to pay any increased land tax.
11. Taxing labor and capital is a punishment for having produced wealth. Labor and capital won't work harder just because their sales, incomes, and profits are taxed.
12. WV taxes on labor and capital are near the middle of the U.S. states; however, taxes on equipment is among the highest in our nation.
13. Our state constitution tax law was written in 1932 to encourage land speculation. Article 10 can and must be changed in order to encourage economic activity and justice, via higher land taxation. This will require a vote of the people. The Legislature can begin the process.
14. Other states and nations which tax land higher do well economically.
15. There are two methods of land tax reform. The Pennsylvania two rate property tax, wherein the improvement part is reduced while the land part is increased usually results in reduced tax bills for most residential properties in residential neighborhoods. Harrisburg, Allentown and Washington are good examples. The other technique (psychological) could relieve taxpayer stress by billing property taxes monthly. State income taxes are levied with each paycheck or quarterly while sales taxes are levied on each sale.
16. New Hampshire was near the bottom of the states economically in 1930. Tax reform there involved higher land taxes, without income or sales taxes. Today NH is near the top of states in per capita income, and in population increase, while last in unemployment. Land taxation works!
17. Please don't ignore this all important issue. The practice of maintaining unused and underused, valuable city land cannot continue to be policy. We are losing young people to other states, and by taxing labor and capital instead of land values we penalize our economy while rewarding land hoarders. Land taxation cannot harm genuine farmers. Those who scream about hurting farmers are actually speculators who use farmers as an excuse to hang on to unused, valuable city land.
-------------------------
Carl Shaw may be emailed at c.f.shaw@mountain.net
FORGET THE OLD TAX FIGHTS: ALL SHOULD ENJOY THE PROFITS FROM NATURE'S GIFTS
Printed in The Charleston Gazette, West Virginia
April 16, 2007
by Alanna Hartzok, Scotland, PA
Although I live in Pennsylvania, I have had a special affection for West Virginia, having lived and worked there some years ago. Recently, a West Virginia friend sent me a series of interesting viewpoints from The Charleston Gazette. There is a thread of important perspectives running through them all.
John David wrote on Nov. 27, 2006, about his concerns regarding the growing wealth gap between the super rich and the rest of us. He is disappointed with recent "Band-Aid" actions of the state's Legislature, which brought only a "little of something for everyone" rather than a deeply rooted solution "to help eliminate poverty." He then describes the Alaska Permanent Fund, which captures the "resource rent" from oil and other natural resources for the benefit of all residents of the state. "Resource rent" is a term that describes the profit that accrues to the gifts of nature above and beyond the necessary returns to labor and capital.
David is on to something we really need to learn more about. Each October, this innovative institution distributes checks of equal amounts to everyone, ranging from several hundred dollars to nearly $2,000 each year. These "citizen dividend" payments have made Alaska the only state in the country where the wealth gap has decreased rather than increased during the past several years. Think about it. A significant proportion of profits is due to the gifts of nature, and Alaska's state constitution vests ownership of natural resources in the people of the state. Is this not an elegant policy approach?
Which brings us to the heart of the matter -- the question concerning just and fair ownership of the gifts of nature. In West Virginia, much of the coal mining lands are "owned" by large companies that are not headquartered in the state. These are often companies that are not the "working" companies that organize labor and capital to do the hard job of mining the coal. Yet these outsider, non-working companies collect enormous amounts as lease fees from the productive coal companies, simply because they hold paper titles. The money that the paper title-holding companies demand and receive from the working companies is entirely "resource rent" and rightly belongs to the people of West Virginia.
Resource rent is being drained out of West Virginia by paper title-holding companies while most taxes fall on workers and productive capitalists. This is the problem that continues to relegate most West Virginians to a socioeconomic power status like that of many Third World countries. These countries are said to have a "resource curse." Though richly endowed with the gifts of nature, they are plagued with poverty and environmental devastation just like West Virginia. John David is right. His state greatly needs an institution similar to the Alaska Permanent Fund.
In his Dec. 8, 2006, commentary, Russell Sobel says that "by increasing the cost of doing business and reducing profitability, this plan would reduce and even destroy the incentive for future capital investment and new business development in our state." Sobel is locked in the old labor vs. capital paradigm and does not understand the concept of "resource rent." He has yet to consider the idea that unearned income accruing to the gifts of nature rightly belongs to the people as a whole. He does not yet grasp that there is a contemporary way to secure everyone's birthright to God's gifts of land and natural resources, thus freeing the energies of both labor and productive capital. Neither labor nor capital made the earth. Certainly we can all agree to this basic and most obvious truth.
If West Virginians were to capture resource rent, the unearned income now going to outsider paper title-holding non-working companies, then taxes on both workers' wages and on the rightful profits of working business owners could and should be substantially reduced. The essence of the conflict is not that of labor vs. capital, but that of all those who contribute mental and physical energy to the productive process vs. those individuals and companies that are monopolizing the gifts of nature.
From this perspective and policy approach, private ownership or enclosure of land and natural resources is made conditional upon paying a fair fee for that privilege to the people as a whole. This is another way of saying that it is important to collect property taxes based on natural resource and surface land values, while reducing taxes on wages, productive capital and other privately created wealth such as our houses and all other buildings. This ethic and policy approach can be viewed as an emerging new understanding of the role of governance. I sometimes call it "earth rights democracy."
John David responded to Russell Sobel on Dec. 18, 2006, with an even stronger focus on the wealth divide and the question of "who owns the earth?" by reminding us that all current titles can be traced back to land that was "taken from the Native American people." In a democracy, we are supposed to have equal rights as human beings. Is it not time that we constitute democracy on equal rights to our planet's land and natural resources, and institute practical policies based on this ethic?
David also stated that "West Virginia's wealth is tied to land and energy resources." Is not all tangible wealth everywhere tied to the gifts of nature? Look around from where you now sit reading this. Is there anything, other than human beings and nature itself, that you see that has not come from mental and physical exertion upon the gifts of nature?
By Jan. 31, Arthur Rybeck had taken a particular interest in the John David-Russell Sobel dialogue. In his commentary, Rybeck describes the so-called "two-rate property tax" that numerous cities in Pennsylvania have been putting into place. The policy has indeed been proving successful here. It is based on the reasoning that taxes should be shifted off our houses as well as productive labor and capital and that government should collect "resource rent." Homeowners love it. Most pay less than with the old form of property taxes. They can fix up their houses without fear of a tax increase for their efforts.
Mayor Stephen Reed, recently voted No. 1 mayor in the country and No. 3 in the world, says that this form of property tax is a key policy that brought Harrisburg from the status of second most distressed city in the United States in 1980 to a high quality of life now.
Perry Mann, in his Feb. 9 commentary, puts forth some important economic truths and correctly credits Henry George as one of the great forerunners of the newly emerging "beyond the old right and the old left" land tenure and tax policy paradigm. It seems to me from his tone of writing, however, that Mann has observed so much corruption and self-serving in the Legislature that he has little hope that West Virginia can ever emerge from its current status as an internal Third World country.
"The villains are those who make the laws," Mann wrote. But in a democracy, the ordinary people are supposed to have something to say about the making of the laws. I note that Mann is a lawyer. And I sense he has a good heart and soul underneath his bleak despair.
So I ask you now, Perry Mann, might you be willing to lend a hand to the people of West Virginia to assist them in establishing the new laws and taxation policies that can enable everyone in West Virginia to have a life worth living?
Hartzok is co-director of the Earth Rights Institute in Scotland, Pa., www.earthrights.net. Email: Alanna@earthrights.net
ECONOMIC TRUTH: TWO-RATE TAX PROPOSAL
printed in the Gazette Mail (WV), Feb. 9, 2007
commentary by Perry Mann
quoting Art Rybeck, Wheeling, WV
Dr. S. Arthur Rybeck is quoted in a Gazette-Mail (WV) Feb. 9, 2007 article, "Economic truth: Two-rate tax proposal."
"S. Arthur Rybeck Jr., president of Mountaineers United for Sane Taxation (MUST), advocates a two-rate tax structure in a column in the Jan. 31 Gazette. Here are two pertinent paragraphs:
"Columbia University economics professor emeritus Lowell Harriss notes that when a community builds a bridge or improves fire protection, nearby property values rise. When society thirsts for more energy, the value of coal, gas and oils sites rise. What could be fairer, Harriss asks, than to recycle values created by society back to society via a land tax? If they are not recaptured, government must get revenue from production -- highly taxing wages and profits. Land speculators and land hoarders object to shifting taxes onto land values. It blocks their reaping windfall gains created by public improvements and adjacent businesses."
"Yet speculators simply follow current rules of the game -- rules imposing high risks and high taxes for enterprise but little risks or costs for reaping what others sow. Looking for villains? The villains are those who make the laws. The tax code allows a taxpayer makes a million by selling real estate for which he paid a thousand, and sat on his behind, to be taxed on the difference at the rate of 15 percent or less and then taxes an individual who earns a million in wages 30 percent or so. And also the villains are those who speculate instead of work, who buy and sell with a view to buying cheap and selling dear as a career. They live from the value, created by labor and capital, that they appropriate either by rent or sale. They never create anything and they devise their real estate to their heirs who continue to live on rent and often live high on it. Few allege that such an arrangement corrupts heirs but many allege that welfare corrupts the poor."
GroundSwell editor's note: MUST has worked with city governments and assessors, state legislators and governors toward creating Land Value Tax legislation.