Ten Ways to Implement Land Value Taxation
[Reprinted from a Land-Theory discussion
posting, 9 January, 2006]
Many empirical studies show that land value taxation produces
tremendous benefits, but for political reasons it must be introduced
gradually to avoid opposition from those few property-owners who would
get a sudden increase in their property-tax bill (existing
arrangements should always be changed slowly to avoid economic
Advocates who don't know how to implement a land value tax leave the
impression that it can't be done, that it's just a pipe dream. But
here are 10 ways to do it:
1) Reduce the current local tax rate on building assessments, usually
by no more than 20% in the first year, and replace the lost
governmental revenue by increasing the tax rate on land assessments,
using this formula: PLTR = CLTR + Rev/LA, where PLTR = proposed land
tax rate, CLTR = current land tax rate, Rev = the revenue lost by not
taxing buildings so much, LA = land assessments in the whole taxing
jurisdiction. This is the approach used to induce 22 jurisdictions in
Pennsylvania to adopt a building-to-land property tax shift - always
with good economic results.
2) Exempt the first $50,000 (or some amount) of every building
assessment from the local property tax. Increase the exemption
gradually in later years. The same effect can be obtained by exempting
a percentage of the building assessments.
3) Exempt the first $1,000 (or so) of the property tax on building
assessments, more in later years (or exempt a percentage of the
4) Assess buildings at a lower percentage to market value than land
5) Pay the expenses of a popular public venture (like a park,
playground, highway, homestead credit, anti-poverty bonus, deficit
reduction, elderly property-tax recompense, federal tax liability,
etc.) with a surtax on land assessments. Or set a separate property
tax only on land, apart from the current benighted land-plus-building
6) The state could pay a locality for the revenue it will lose if it
reduces its property-tax rate on building assessments. Currently, many
states are paying localities to reduce property taxes on both land and
building assessments (the so-called "circuit-breaker"
approach) but the reduction should be only on building assessments.
7) No homeowner should pay more than 3% plus the inflation rate over
what was paid in the previous year (5% for commercial property owners)
as a result of a rate increase (but not assessment increase).
8) Elderly homeowners, also the poor and the temporarily unemployed,
should be allowed to postpone their property-tax payments (or
property-tax increases due to the land-tax shift) until the time of
sale or bequeathal.
9) Gradually replace taxes other than the property tax on buildings
with a property tax on land assessments. This would give most voters
10) All public entities - federal, state, county, school, etc., not
just cities - can and should reduce taxes on buildings and other
produced things with a higher tax on land assessments. For instance,
wouldn't most voters get a tax break if a federal land tax replaced
their payroll tax (or even part of it)?