Pandemic's Economic Realities Bolster Case for a Land Value Tax
Josie Faass writes an argument in favor of a land value tax—an argument bolstered, according to the article, by how the city's real estate tax has fared during the pandemic.
"Based on the assessed value of an owner’s buildings and land, real estate taxes have remained in the black since the pandemic began, increasing more than 5% over last July’s total," writes Faass.
Faass makes the case that a simple change could leverage the stability of property taxes to ease the burden of the pandemic's economic downturn.
Because through a simple mathematical rejiggering of the tax code, Philadelphia could alleviate tax burdens on its most at-risk populations without reducing the overall revenue stream one dime — effectively creating a free stimulus for homeowners and businesses struggling to make ends meet. Philadelphia can create an environment of shared and increased prosperity.
The difference between a property tax and a land value tax is where the nuts and bolts of the "rejiggering" suggested here is found. In Philadelphia, the value of buildings makes up the vast majority of property tax bills, at 76 percent, versus just 24 percent for the value of the land, according to Faass.
If Philadelphia shifted to just a 50-50 ratio of tax on buildings to tax on land, homeowners would see a savings of over $60M each year, and with land value tax or LVT, that total jumps to about $123M — that’s over 10% less than residential property owners pay now, and in a city where the median household income is less than $48,000 a year, this will have real impact.
The difference would be made up for by land speculators, or "exactly who you'd hope," according to Faass.