SANE Views

Vol.6 No.38, 30 October 2006

Harrisburg is living proof that even a "modest" land value tax works

Dave Wetzel

"Harrisburg, the capital of Pennsylvania, with 50,000 population, sits in the "Rust Belt" of the USA where many towns and cities have lost traditional heavy industry and face economic decline.

Harrisburg was listed as the second most distressed city in the nation twenty years ago. It had sustained precipitous decline over nearly three decades --- a decline far greater in proportion than what has ever been experienced by any urban community in the State of Pennsylvania or, for that matter, every other state with the exception of one.

Since Harrisburg introduced the annual land value tax on all taxable land their city has jumped from bottom to the top group of American cities.

Mayor Reed says: "Without, hesitation we can commend the importance and benefit of the land value tax policy. It has worked in Harrisburg and in other communities where it has existed."

Since the 1970s Harrisburg has had a Split Rate Tax on property where land is valued separately to "improvements" (buildings). A levy is then applied to the two values. The City rates land six times more than buildings.

The Split Rate Tax (land and buildings) is a modest form of Annual Land Value Tax (LVT) and the land element only represents 14.5% of City tax revenues.
The City budget excludes the Harrisburg schools expenditure (the School District does not operate LVT and levies the same rate on both land and improvements). In addition the LVT only falls on about half the land in Harrisburg as Government, charity, education and health premises are excluded by Pennsylvania State law.

However - What are the results of this modest Land Value Tax?

-The facts speak for themselves:

-Empty sites and buildings have been redeveloped and the number of vacant properties cut by 85%

-The number of businesses on the tax roll has grown from 1,908 to 8,864

-Over 5,000 housing units have been newly constructed or rehabilitated

-Taxable real estate has grown from $212m to over $1.6 bn

-Unemployment has fallen by 19%

-Crime has dropped by 58%

-Fires have dropped by 76%

-Mayor Reed was first elected in 1982 and is still The Mayor today!

Dave Wetzel
E-mail: [email protected]
Web: www.LabourLand.org