Property Tax Background

"Propert tax increases are alway made under the pretense of equalization"

Any discussion of the current situation must start with the fact that the whole idea of a “property tax” is one that made sense as a revenue source to support major governance functions two centuries ago but has little positive relevance now. The “property tax,” especially a tax on owner-occupied residential property is an historical anachronism. It was useful when 95 percent of the households were non-urban and owning land was not just the primary measure of wealth, it was the resource that was used to earn money. Even those who owned an urban home likely lived in the back or up stairs and ran their business or profession out of a storefront or from a workshop on the alley. The primary reason for a tax on property, especially owner- occupied residential property would be:

  1. A transfer fee to cut down churn which undermines the evolution of Balanced Communities   (ie. speculation,  RCO)
  2. An unearned profit levy when the increase in property value is directly related to public investment: e.g. building an interchange or extending a shared-vehicle transit system. It also needs to be noted that there is a fundamental difference between owner-occupied residential land and commercial land.  Rental residential dwellings are commercial property for the landlord. Within a comprehensive new revenue generation system, owner-occupied dwellings could be treated as a separate form of property.

Finally, the so called “reforms” like California’s Proposition 13 ceilings, rollbacks, homestead exemptions and other crutches are not “solutions.” They only add complexity to a outmoded system of public revenue generation. The only significant change that has been on any table is split-rate tax for urban land. 

(This is the opposite of the New Jersey Uniformity Rule,  RCO)

 

From Bacon's Rebellion Blog    http://baconsrebellion.blogspot.com/

America’s top mayor uses split-rate land tax

Posted by taxpayer on December 6th, 2006

Harrisburg (PA) Mayor Steve Reed came in third in the world-wide “Outstanding Mayor” poll, but was the highest-scoring American.  Under Reed, Harrisburg adopted an increased land tax (the term in Pennsylvania is “split-rate tax”) which he credits as important in the revitalization of the City.

He enthusiastically took the opportunity of Pennsylvania local property tax reforms to apply a split rate valuation.This has been attacked by extreme conservatives and Reed has been high profile in answering them. He says “in our central business district, for example, our two-tiered tax rate policy has specifically encouraged vertical development as opposed to low rise or horizontal development that seems to permeate suburban communities and which utilizes much more land than is necessary.” He says “ nine out of ten property owners gain from the system if compared directly with the single rate system in use in most municipalities in the state.”