Welcome to the Center for the Study of Economics

We aim to promote the adoption of Land Value Taxation (LVT). LVT is a fair method of taxation that not only provides for public needs but can also solve many of the problems facing our communities today. The current system of taxing labor and capital inevitably results in negative consequences for our lives and our communities. We believe there is a better solution: taxation of land and site values is the sanest, safest way to fund our systems of government.

LVT is the best way to attain what we all want: a world that rewards initiative without privilege and yet never forgets that there are those who have been left behind and must be helped. This method of taxation also serves as a brake against the epidemic of boom and bust land speculation that is so detrimental to our Main Street cities and towns. We hope that this site will be a resource for those who think that there must be a better way to finance our governments, to combat sprawl without breaking the public bank, or to help the disadvantaged without establishing new layers of intrusive and uncaring bureaucracy.

 
In the strict public policy application, Land Value Taxation (also known as split-rate real property taxation, and two-tiered real property taxation) is a type of real property taxation.  Whereas the typical real property tax taxes both land and the improvements on the land at the same rate, land value taxation taxes land at a higher rate while simultaneously reducing, or even eliminating, the tax on improvements.

For example, Clairton in Allegheny County, Pennsylvania has a tax rate of 103 mills on land and 4.32 mills on buildings rather than 29.5 mills on both (City and School District combined).

 Why Would a Community Implement Land Value Taxation?

 •           A shift to LVT, even when structured in a revenue-neutral manner, usually results in net tax reductions for the vast majority of residents.

•           The problem of inaccurate or radically higher assessments is reduced because of the reduction in reliance on the building portion of the property tax.

•           The damage that taxes like sales and income taxes do to working families and local commerce can be lessened.

•           By reducing or eliminating the tax on improvements, there is a greater incentive to build, to build with higher quality materials, to maintain, to avoid blight, and to redevelop economically depressed areas.

•           Cities are almost always on the “short end of the stick” when economic development dollars are handed out.  This program helps achieve the same goals with no public investment.

•           When cities DO get permission to give out tax abatements, they lead to a revenue loss to the community with no assured payoff later.  LVT is purely revenue neutral to the city.  There is NO tax shifting to citizens and property owners who have already done their bit.

•           A tax on land also has the advantage of being a "value capture tax."  A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up.  Thus, the new public improvements would be paid for by those most benefited by the new public improvements -- i.e., those whose land value went up most.

•           A tax on land has been shown to result in better land use patterns and more in-fill development.  This has the benefit of reducing sprawl.

•           Several Nobel Prize winners in economics have stated their approval of government revenue being raised from taxes on land.

•           Support for LVT cuts across political lines.  Free-market economists like how it reduces distortions in economic decision-making.  Environmentalists like how it reduces sprawl and helps fund public transportation.  Developers appreciate how it makes new homes more affordable for their customers.  Citizens like the reduction in taxes.

Where has Land Value Taxation Been Implemented?

 
In the United States, it is best associated with Pennsylvania.  In Pennsylvania, numerous cities and other taxing entities have implemented LVT.  In Harrisburg, the tax on improvements is only one sixth the tax on land -- many economists credit the "Renaissance" of Pittsburgh over the last two decades to Pittsburgh's shift to Land Value Taxation in 1978. Towns as small as Steelton (pop.2,500) to as large as Allentown (pop. 105,000) have used LVT successfully in Pennsylvania.

Want to know more?

Contact:

The Center for the Study of Economics

1518 Walnut Street, Suite 604

Philadelphia, PA 19102

USA

215.545.6004

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