Land Value Taxation Good for Urbanism

by Sandy Sorlien,

December 27, 2004

…Land Value Taxation (LVT) seems like a natural alliance for New Urbanism. It is an easy concept to convey to the public and it might be worth incorporating it into charrette presentations in downtown revitalization situations.

The basic principles of LVT encourage a pro-urban agenda. Current property tax policy in most American cities, unfortunately, supports the persistence of suburban typologies and urban blight in areas that should be infilled. You have only to look around Center City Philadelphia at all the surface parking lots, and at poor residential neighborhoods pockmarked by vacant lots and collapsing rowhouses, to know that unimproved land is severely undertaxed here. (It’s currently 78% building, 22% land. Our close-but-no-cigar attempt last spring would have shifted it to 50/50 over several years.)

Under LVT:

– If land is taxed more heavily than buildings, density is encouraged and sprawl is discouraged.

Large lots are discouraged and “highest and best use” of lots is encouraged. The Georgist ideal is 100% land tax, but any split-rate shifts toward heavier land tax have proven to spur development.

It is also worth considering Special Land Tax Districts in certain parts of the city.

Currently, in most jurisdictions:

– If improvements are taxed more than land, there is a disincentive to build, and incentive to hold empty lots as investments. Likewise there is a disincentive to improve or maintain existing buildings, which perpetuates neglect and blight.

If you want to know whether the New Urbanism should support LVT, look at who its prime enemies are:

  •  automobile dealerships
  •  oil companies with large tank farms
  •  owners of multiple unimproved properties (slumlords)
  •  owners of multiple surface parking lots
  •  big box corporations with large parking lots

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