Pennsylvania

Overview

Pennsylvania holds a unique place in the history of land value taxation in the United States: in Mark Alan Hughes's words, it is "the only state government in the U.S. to enable split-rate property taxation among its local governments",[1] permitting municipalities to tax land at a higher rate than buildings (split-rate taxation). This legal permission turned the state into the country's de facto laboratory for the policy, supplying most of the real-world data on which the modern empirical case for LVT rests.

The Enabling-Law History

Pennsylvania's authority to grade the property tax toward land was built up in stages, city-class by city-class, over most of a century:

• 1913 — cities of the second class. The Pittsburgh Civic Commission secured passage of the Graded Tax Law, enabling a two-tier tax "for cities of the second class," of which there were then, and are still, only two in the Commonwealth: Pittsburgh and Scranton.[1][3] Scranton also adopted the graded tax that year. A key concession made during the legislative debate was that the school tax would be exempt from the split rate.[1] Pittsburgh phased its shift in five increments between 1915 and 1925, ending at a building rate one-half the land rate.[1][3] Both cities then held a 2:1 land-to-building ratio from 1913 until 1979, when each expanded it further.[2]
• 1951 — cities of the third class. An optional graded tax law extended the two-rate option to third-class cities; it was "first adopted in 1951, and amended in 1959," and was instigated by the Henry George Foundation, whose Graded Tax League of Pennsylvania had been established in 1950 to promote it.[4] Over the following decades roughly twenty third-class cities adopted the system.[4]
• 1993 — third-class school districts. Legislation sponsored by Rep. Sue Laughlin extended the two-rate option to third-class school districts with boundaries coterminous with a third-class city — a qualification only about eight districts then met.[2]
• 1998 — boroughs. The option was extended again, this time to boroughs.[5]

The Natural Experiment

Because many Pennsylvania cities adopted two-rate taxes at different times and in different ratios — Pittsburgh (1913), Harrisburg (1975), Scranton, Allentown (1996), New Castle, Aliquippa, and others — researchers could compare them against each other and against single-rate cities. Mark Alan Hughes's Lincoln Institute survey counts, across the whole period since 1913, 33 Pennsylvania municipalities that engaged with the policy: 16 with split rates in force, 5 that had rescinded them, and 12 that considered but never implemented them.[1] This variation produced the strongest empirical evidence that the policy increases construction — notably Plassmann & Tideman's (2000) 15-municipality study, Banzhaf & Lavery (2010) on density, and Yang & Hawley (2022) on the tax base — alongside the flagship Pittsburgh natural experiment.

Significance

Pennsylvania demonstrates that land value taxation is workable within an ordinary US property-tax framework. Its record cuts both ways, honestly reported: the state supplies the affirmative construction evidence, but it also supplies the leading cautionary tale — Pittsburgh's 2001 abandonment of a 90-year-old split rate amid a botched countywide reassessment, a failure of land assessment administration rather than of the tax principle (see Pittsburgh).

See Also

• United States — the country-level hub page linking Pennsylvania's split-rate laboratory to the rest of the wiki's scattered US material (Alaska, Proposition 13, Henry George's own campaign)
• Split-Rate Taxation · Pittsburgh · Harrisburg, Pennsylvania
• Split-rate taxation increases construction — the evidence the state's variation produced

Sources

1. Mark Alan Hughes (2006), "Why So Little Georgism in America: Using the Pennsylvania Case Files to Understand the Slow, Uneven Progress of Land Value Taxation," Lincoln Institute of Land Policy Working Paper WP06ZK1. PDF — used (full text read this session) for the 1913 Graded Tax Law enabling a two-tier tax "for cities of the second class (i.e., Pittsburgh and Scranton)," the school-tax exemption concession, the 1915–1925 phase-in, and the tally that since 1913 Pennsylvania produced "33 municipalities: 16 that have current split rates, 5 that have rescinded split rates, and 12 that have considered but never implemented split rates." Also the sole-enabling-state framing ("Pennsylvania is the only state government in the U.S. to enable split-rate property taxation among its local governments"). A new source for this wiki, not yet in sources/registry.csv.
2. Alanna Hartzok (1997), "Pennsylvania's Success with Local Property Tax Reform: The Split Rate Tax," American Journal of Economics and Sociology 56(2):205–213. JSTOR 3487258 · PDF — used (full text read this session) for "Scranton and Pittsburgh had a land tax to building tax ratio of 2 to 1 from 1913 until 1979 when both cities expanded land tax rates beyond that ratio," the extension of the option to third-class cities, and the 1993 Laughlin bill extending the two-rate option "to school districts of the third class that had coterminous boundaries with third class cities." A new source for this wiki, not yet in sources/registry.csv.
3. Edward F. Daume (1930), "A Critical Analysis of the Operation of the Pittsburgh Graded Tax Law," Annals of the American Academy of Political and Social Science 148(1). DOI — used (abstract verified this session) for confirmation that "the act of the Pennsylvania legislature of 1913, known generally as the Graded Tax Law" "provided for a gradual introduction of this method of taxation for cities of the second class; of these there were then, and are now, only two in the Commonwealth, namely, Pittsburgh and Scranton," and that the building rate reached one-half the land rate when fully effective in 1925. A new source for this wiki, not yet in sources/registry.csv.
4. "New Graded Tax Law Adopted," Henry George News (Feb. 1974). PDF — used (verified this session) for the optional third-class-city graded tax law "First adopted in 1951, and amended in 1959," "instigated by the Henry George Foundation." Corroborated by Edward J. Dodson (2007), "Best Practices" (cooperative-individualism.org): the law authorizing third-class cities to tax "land values at a higher rate than improvements was passed by the state legislature in 1951." A new source for this wiki, not yet in sources/registry.csv.
5. Lincoln Institute of Land Policy, "Significant Features of the Property Tax — Pennsylvania" (state profile, Jan. 2022). PDF — used (verified this session) for "school districts [were allowed] to implement two-rate property taxes in 1993, and boroughs were allowed in 1998 (Bourassa 2009)." A new source for this wiki, not yet in sources/registry.csv.
6. Empirical base (wiki summaries): Plassmann & Tideman (2000) · Oates & Schwab (1997) · Banzhaf & Lavery (2010) · Yang & Hawley (2022) — used for the multi-municipality construction, density, and tax-base evidence Pennsylvania's variation produced.