Green Taxes for Green Goals

Alanna Hartzok

[A presentation at the first conference of the Global Institute for Taxation (GIFT), * "Taxation Alternatives for the 21st Century." Reprinted from GroundSwell, 2002]

There is a troublesome and painful contradiction in the lives of many of us who are working for peace, justice, poverty eradication, debt cancellation and sustainable development. While our hearts and minds focus on building a better world for everyone, each day we hand over fistfuls of dollars to build weapons of mass destruction, fuel dangerous, dirty and polluting technologies, and subsidize huge conglomerates which concentrate the wealth of the world in the control of the few. But together we can end tax tyranny and align our visions and values with how we finance our governments.

Taxation not only raises money to fund government services, it also reflects the overall value system of a society. The goal of green tax policy is to put in place a system of public finance which strengthens and maximizes incentives for:

  • Fair distribution of wealth
  • Environmental protection
  • Basic needs production
  • Provision of adequate government services
  • Peaceful resolution of territorial conflicts

Green tax reform makes a clear distinction between private property and common property. Private property is that which is created by labor. Common property is that which is provided by nature. Green tax policy removes taxes from wages and other private property and increases taxes and user fees on common property. Reducing taxes on labor increases purchasing capacity; reducing taxes on houses and basic needs increases their affordability. Shifting taxes to land and resources curbs speculation and private profiteering in our common property and is a practical way to conserve and fairly share the earth.

Captured in brief sound bites, "tax waste, not work"; "tax bads, not goods"; "pay for what you take, not what you make"; and "polluter pays" become tax shift principles readily translated into voter friendly policy recommendations with broad-based political support. Green tax policy CUTS taxes on:

  • Wages and earned income
  • Productive and sustainable capital
  • Sales, especially for basic necessities
  • Homes and other buildings

Green tax policy INCREASES taxes and fees on:

  • Land sites according to land value
  • Lands used for timber, grazing, mining
  • Emissions into air, water, or soil
  • Ocean and freshwater resources
  • electromagnetic spectrum
  • Satellite orbital zones
  • Oil and minerals

Green tax policy seeks to ELIMINATE subsidies environmentally or socially harmful, unnecessary, or inequitable. Slated for drastic reduction or complete removal are subsidies for:

  • Energy production
  • Resource extraction
  • Commerce and industry
  • Agriculture and forestry
  • Weapons of mass destruction

Towns and cities in Pennsylvania have been pioneering a form of green tax on surface land values. The so-called "split-rate" tax approach has been put in place to varying degrees in nineteen municipalities in our state. All have experienced notable improvements as a result. The Philadelphia Controller's Office has just released a substantial report which strongly recommends that the city shift a significant portion of its tax base off of wages and buildings and onto land values.

To understand how the split-rate tax works, it is helpful to view the property tax as actually two very different types of taxes. The tax which falls on buildings is a disincentive to improvements, renovations and good upkeep of residential, commercial and industrial property. The split-rate tax approach lowers taxes on buildings and improvements by levying a lower rate on their value. The tax which falls on land values, however, is beneficial because it encourages good site use and discourages land speculation and profiteering in surface land, a common heritage resource. Land values increase due to the efforts of the entire community and to public investments in infrastructure such as roads, water and sewer lines. High quality educational systems funded by the public also increase land values. By increasing the rate on land values to make up for the lower taxes on buildings, the public recaptures more of the value that it has created. Land value may then be considered a form of "common wealth." And conversely, value and improvements created by the labor of individuals are kept in the private sector when building taxes are lowered. Effort and responsible land use are rewarded.

This public finance approach, by collecting more of the community created land value for community needs by levying taxes on the value of the site or location while lowering the tax on improvements contributed by individual effort is a constructive way of securing public revenue which:

  • Encourages building upkeep and revitalizes the urban core
  • Keeps land prices and housing affordable by discouraging land speculation and stimulating new housing construction where needed
  • Discourages sprawl by encouraging good site use in already developed areas
  • Lowers property taxes for most home and business owners who make good use of valuable sites.

An attractive and colorful four page Green Tax brochure can be downloaded from the website: www.greentax.net

For more information: Earth Rights Institute, P.O. Box 328, Scotland, PA 17254, USA; Phone: 717-264-5036, 1-888-471-3929. E-mail: earthrts@pa.net, URL: http://www.earthrights.net

(Alanna Hartzok, M.A., is the United Nations Non-Governmental Organization Representative for the International Union for Land Value Taxation, Vice-President of the Council of Georgist Organizations, State Coordinator for the Pennsylvania Fair Tax Coalition, and Director of Earth Rights Institute.)


(* GIFT is the brainchild of St. John's University tax Professor Patrick R. Colabella). Hartzok's presentation was given lengthly publicity in the CPA Journal's Trends in Taxation section in an article, by James A. Woehlke, "Reinventing Federal Taxation."