Two More Calls for Taxing Land: London and Seattle
|June 18, 2014||Posted by Staff under Good Press|
These two 2014 excerpts on taxing land are from (1) The Guardian, Jun 2, by Hilary Osborne which was not so precise, and (2) Sightline, Jun 10, by Jerrell Whitehead and Clark Williams-Derry which was very precise.
Britain Told to Rein in Property Boom by European Commission
Britain needs to reform its council tax system, build more houses and make changes to the Help to Buy scheme to stop the property boom getting out of control, the European commission has warned.
The EU’s executive body urged the government to reform the “regressive” council tax system as taxes are relatively higher on low-value homes than high-value ones.
“Reforms to the taxation of land and property should be considered to alleviate distortions in the housing market. At the moment, increasing property values are not translated into higher property taxes as the property value roll has not been updated since 1991 and taxes on higher-value property are lower than on lower-value property in relative terms.”
To Revitalize Downtowns, Tax Land Speculation
Is an underused (at midday), 63-spot parking lot the new normal for downtown Seattle? It shouldn’t be. Proximity to jobs, people, retail, and transportation should have made parcels like these ideal targets for new homes or office buildings.
The Eitel Building is a historic building that is a stone’s throw from Pike Place Market, Seattle’s number one tourist attraction, and has been unoccupied above the ground floor since the 1970s.
There are plenty of other badly underutilized properties dotting the landscape of downtown Seattle, and there are undoubtedly similar cases in other major cities throughout the Northwest and beyond.
Under today’s tax rules, leaving a lot empty, or letting a building slowly rot, gives the property owner a light tax bill. Land speculators detract from the value of their neighborhood by leaving productive land derelict or by allowing buildings to disintegrate.
One of the best solutions is a land-value tax. In its purest form, the LVT taxes only the value of land itself, while leaving buildings and other improvements tax-free. Shifting taxes from buildings to land would make downtown land speculators’ tax bills soar, creating powerful incentives to put high-value land to more productive uses. A more built-up, vibrant downtown diverts growth from lower-value properties in the suburbs.
The greatest advocate for the tax was 19th century economist Henry George, whose seminal work Poverty and Progress (1879) argued for a “single tax” on land. Arden, Delaware (1900) and Fairhope, Alabama (1894) are small Georgist single tax “colonies.” Altoona, Pennsylvania in 2013 adopted a pure land-value tax.
When you tax something, you get less of it. Taxing sales reduces sales, taxing income reduces income, taxing buildings reduces building. Such taxes subtly distort the decisions of consumers, households, and businesses. But a land-value tax mostly discourages land speculation, particularly on the highest-value land.
Land-value taxation is fairer than many other taxes. Location, location, location —- that’s what gives land its value. The LVT puts a tax on benefits that a landowner didn’t earn either through their own labor or their own investments.
The LVT could replace other regressive taxes, including the sales tax.
What’s required to get the LVT moving are legal and political daring from determined champions that are willing to make the case for a fairer, more effective tax system.
Ed. Notes: It need not be a tax to recover the socially-generated value of land; a fee or dues or lease would work as well. And the revenue need not go to legislators to spend; it could come back to residents as a dividend. Incorporating the dividend is what gets carbon taxes passed; money in the pocket should work for asking people to pay land rent to their community, too.