Public Officials and Land Value Taxation
A Panel Discussion
Warren Chamberlain, Ted Gwartney, Al Katzenberger,
Dan Sullivan, and Josh Vincent
[Reprinted from
GroundSwell, November 2012]
The following article was written by GroundSwell
editor Nadine Stoner from notes and an audio recording and is
abbreviated from the entire July 31, 2012 presentation in
Harrisburg. When invited public officials (the DuBois, PA treasurer,
City President of Johnston, PA, and Budget Analyst for the
Pittsburgh Council) were unable to be present, Georgists who work
with public officials stepped up to comment. The new panel
format invited audience participation.
Pictured below are Josh Vincent of Philadelphia who is the
director of the Center for the Study of Economics; Al
Katzenberger of St. Louis who is the president of the Public Revenue
Expenditure Council; Dan Sullivan of Pittsburgh who is the
director of Saving Communities; Warren Chamberlain of
Holliston, Mass. who serves as an elected member of the Planning
Board; and Ted Gwartney, MAI, who served as an assessor in
Michigan, British Columbia, Connecticut, and as an appraiser in
California.)
Josh Vincent:
Scranton is in the news right now in the Investors
Business Daily and the Wall Street Journal because they are about to
punk out on a bond payment. The Scranton Parking Authority
floated bonds back in the 1990s and early 2000s at high rates back
in the good old days and is now in an impossible situation.
The Council defaulted on the municipal bonds. We wrote to the
Mayor Doherty and the Council recently suggesting why don't you
increase the land value tax. The response has been property
taxes are bad; we think in our city that is very poor and
depopulating that a wage tax is the way to go. They have a wage
tax now, about 2.8%. What would be the Georgist response that
a wage tax is the way for a city to go?
Frank Peddle:
We had a conference in Canada in 2007. Wages in Scranton
are going to be Bolshevik wages. Everybody is going to be making the
same because they took the firemen and policemen and everybody down
to minimum wage, which is the same as if you are scooping ice cream. You
want to be increasing wages, not reducing them to that level.
Somehow you have got to make the connection between increasing wages
and productivity.
Josh Vincent:
Mayor Doherty put up 25 properties, condos and hotels
abated on taxes for 20 years. By reducing the take from real
property we are actually going to reduce taxes.
Nick Rosen:
We shouldn't give tax abatements to a few developers, but
pass a general law saying if you build an addition to your house
your property tax does not go up.
Ted Gwartney:
Mayor Jim Clarkson of Southfield, Mich. in 1967 when
facing this exact same question announced that he was going to hire
a new assessor whose job would be to reassess all the land and value
it properly and depreciate all the buildings and also put out a
brochure that said any improvements you make will not increase your
taxes. He was successful.
Dan Sullivan:
Let me tell you about Pittsburgh's experience with the
wage tax. We had a City Council that loved land value tax but we had
a mayor that loved wage taxes. The wage tax went up and up to 4%.
The wage earners went out and out until we weren't getting much
revenue from that. We were hemorrhaging people. So the next mayor
cut the wage tax 1/2% one year and 5/8% the next year and out
migration slowed, and ten years later we were not losing many people
at all. The School Board then started raising the wage tax and the
out migration resumed.
Al Katzenberger:
St. Louis is a wage tax city. It's wage tax is not as
high as other cities. St. Louis's wage tax is 1%. What happened
recently was a fellow by name of Rex Sinquefield required St. Louis
to vote on this wage tax issue every 5 years. When it was on the
burner, Josh, Don Killoren and I were at the mayor's office because
they were concerned that the wage tax might not pass. This was an
opportune time to talk about land value taxation. In St. Louis the
city property tax is only about 11% of the city's revenue. Most of
the city revenue comes from the wage tax, sales taxes and fees. The
mayor's office said LVT should help stabilize the city's finances.
The city is millions of dollars in debt to its three pension
systems. I think an LVT study would help St. Louis. (PS: The city
voters voted to continue the wage tax for 5 more years.)
Ted Gwartney:
I told you about Southfield, Mich. That is where
the mayor decided to do something without legislation or any special
laws being passed. The results were that the taxes on land tripled.
The taxes on buildings were halved. The public was educated about
the new land taxation system. It was not increasing the assessment
taxes on new construction. Thirty US corporation headquarters were
relocated to Southfield from Detroit and other regional locations.
Southfield became one of the fastest growing cities in the US in the
1960s. You can do things without necessarily having to change the
law. Unemployment was near zero at that time.
Role playing as the mayor of Hartford, the capital of Conn., nearly
60% of all the values in our town are exempt. The state capital has
state office buildings so our tax base in quite small. About half of
the remainder that is left is commercial. So we solved our problems
during the past 20 years by doubling the tax rate on commercial so
they are paying much more taxes than residential, freezing
assessments so that wouldn't change, and getting some revenue from
Indian casinos, and we got big subsidies from the state government.
The state government pays about half of our total city budget. Now
in 2012 the state doesn't have the money and is not able to
subsidize the city more than 50%. The Indian casinos are not doing
as well as in the past so we are not getting as much money from
that. The only thing that is left is basically increasing taxes and
we have already gone as high as we can on commercial, and we don't
want to increase residential. So we are looking at alternatives. At
this point we are one of at least a half dozen cities in Conn.
giving some thought to the land value tax as an alternative.
Al Katzenberger
In Missouri we have over 50 different kinds of tax
abatements, including TIFs and sales, etc. that are available to the
City of St. Louis. We also have another 50 or so community
development programs going on, and these include different kinds of
grants. An example of one is near my house. It is a trolley that is
two miles long and will cost $45 million. The mayor said this is
good, this will bring in tourism but you (neighborhood folks) are
not paying for it because it is a grant. The government officials
will tell you we need a quick fix, that it takes too long to study
every issue (including LVT). St. Louis is both a city and a county.
One of the officials in our city, the treasurer, doesn't collect all
the money for the city. Uniquely he collects money from about 11,000
parking meters in the city. He is in sole possession of that money
and doesn't return it to the city. Now he has built multi level
parking garages. When we talk to the mayor about that as an example
of collecting revenue from land values, he says we are trying to get
rid of the treasurer's office. (PS: After 28 years St. Louis elected
a new Treasurer. She takes office January 1, 2013.)
Jake Himmelstein:
I have been in a couple of land tax fights in
Philadelphia, none of them successful. The point is that we did get
a lot of publicity. As a result I got a reputation as a land
taxer. I feel that the problem is that we have just got to get
enough publicity because there is little understanding of the land
tax. We have a crisis in taxation in Philadelphia. We need someone
to explain the land tax and how it would benefit Philadelphia. We
have to teach people what the land tax is.
Warren Chamberlain:
I am an elected official in the town of Holliston, Mass.
I am in my second term on the Planning Board. Since I have been
elected, though I knew a lot about Henry George before that, I am
sensitive to the political dynamics and what is acceptable and what
is not acceptable. We know that property taxes are extremely
unpopular. In Massachusetts our towns depend on subsidies from the
state. That amounts to income and sales taxes subsidizing our
property taxes. The local residents don't really
understand the difference between the privilege of the land versus
the right of their house or to be able to make that distinction.
What is it I am really paying for when I pay my taxes? For myself, I
am on limited income now and know the issue. What happens to someone
on a fixed income when things change? All towns, cities, and states
are short on cash. It is a local issue, national issue, and global
issue. Massachusetts recently voted to allow casino gambling,
thinking this is another way to get more revenues, because they want
to avoid paying more property taxes. The way the state gets its
money becomes an issue of income taxes, sales taxes, and now we get
the casino issue as a panacea. Being on the Planning Board in a town
that is very likely to be impacted negatively if a casino is located
in a targeted town right next to us, we know what happened in
Connecticut and all the cities in and around the casinos and
negative externalities imposed on them. A lot of those towns and
cities suffered in order for the state of Connecticut to get this
extra revenue that was evidently able to subsidize the city of
Hartford. In New England with its six states we are kind of like one
big family. But the states are separate entities and have different
tax policies. My son lives in New Hampshire. I went to a
meeting of the Federal Reserve Board a couple of years ago and
people from all the states came and gave reports on the economic
development of their states. New Hampshire gave a report that, since
the courts told them they had to subsidize the schools, NH did not
want to have a state sales or income tax. They decided to put a mill
rate on the local property tax. So there is a state property tax.
Half of the property tax is a land tax and normally a little more
than that. I would like to tell the legislators let's look at New
Hampshire. New Hampshire's population is growing, they have good
businesses growing, they have lower unemployment. We are losing
population. The difference is state tax assessments. I can use that
as an example. They tax the land. When we see the tax policy of a
community, what is the outcome? People in New Hampshire are quite
happy about the property tax. How do you feel about paying the $22
per thousand mill rate. What has happened to New Hampshire is that
when the local taxes are higher, the income of prospective buyer can
only buy so much and that means he can only borrow so much. That
means that house values are actually lower in New Hampshire even
though the monthly payment might be the same per month. The
difference is more of my money goes to the town and state and I have
control over it and less money goes to interest to the banks. In
Massachusetts the financial services sector is doing fine because
they can get more interest. There is a tug of war between the
financial powers and the towns in getting financing. If we can show
how we can shift people back to the land that is the real solution.
I am working on how to explain it.
Dan Sullivan:
Getting back to casinos, Las Vegas leads the nation in
housing foreclosures. All the gambling does not occur in the casino.
People who got away from property taxes, including California, lead
the nation in foreclosures. In Pittsburgh the
councilmen liked the land value tax but the assessments were so bad
to where the house next door had 7-8 times the land value, so we had
to get rid of it. We would like to bring it back but the county
doesn't want to fix this land problem. We can't sue in the courts
because the land and buildings are the same and the tax bill is the
same either way, so it is a moot question. The assessments are so
bad somebody would be paying more than they should. We don't have
control over the assessments. The city of Pittsburgh lost its right
to do its own assessments. The law gave that to the county. We had a
land value tax and when the assessments came in, there was a huge
outcry from people who were assessed 7-8 times as much, so the
Council voted to abolish the land value tax. If the land values were
right there are seven councilmen who would vote for it.
Josh Vincent:
In Alleghany County there are two ways to go. Pittsburgh
is an outlier due to fact that the land and buildings values are so
bad. Clairton, for example, has a land value tax, and it has
consistent land values from parcel to parcel and zoned use to use.
That way they have almost eliminated the tax on buildings.
Jake Himmelstein:
The land value tax was in force in Pittsburgh from 1913
to 2000. I have two scrapbooks about land value tax, including
Philadelphia, that I am willing to donate.
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