New Subways Enrich Some Owners, Not Others, So Make Who Pay?
|December 24, 2013||Posted by Staff under Good Press|
Re: How to get moving again, Business Dec. 7
Re: A better idea for transit funding, Letter Dec. 14
Further to the letter by Frank de Jong, I agree that the best way to finance subways would be to take the unearned increment from adjacent properties. This is quite reasonable if you consider what happens when a city builds a subway.
Consider two identical properties at opposite ends of a city, both identical in capital value and rentable value. Call them property A and property B. The city decides to build a subway to property A but not property B using tax and fare box money. As a result of this subway, property A becomes more desirable hence more valuable and commands higher rents or exchange value, which all goes to the owners of property A.
In effect, the main result of building the subway, which is intended to move people from place to place, actually results in moving tax and fare box money from the city to the owners of property A. Of course, the taxes are paid by everyone, including the owners of property B, who get no benefit at all.
This could be rectified by removing the unearned increment 100 per cent through the existing tax system.
Ed. Notes: Society’s agent — government — could levy a tax on the rental value of all locations in its jurisdiction, but it need not use taxation. Instead, it could charge a land use fee, or make the deed fee annual and set at full market value, or institute land dues. Further it need not leave all the recovered rents in the public treasury for politicians to spend as they see fit but could instead pay a dividend to residents so they could spend their own money as they see fit, a little like how Singpaore does it. Whatever method is used, it would make new subways self-financing, and that’d be a big step forward.