[RP TownTalk] TownTalk Digest, Vol 9, Issue 13

[Jack R. Jones]

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>Today's Topics:
>
>    1. Re: Fwd: PG Transit Plan meetings (Rob Oppenheim)
>    2. Re: Fwd: Arts District Hyattsville Grand Opening	Information
>       (Rob Oppenheim)
>    3.  m-utc report from this week (David Hiles)
>    4. Re: m-utc report from this week (Gerard Kiernan)
>    5. Land Value Tax (Marc Molino)
>    6. Re: m-utc report from this week (bruce.wernek at mindspring.com)
>    7. Re: Land Value Tax (The Curries)
>    8. Re: m-utc report from this week (CHRISTINA DAVIS)
>

Jack here in italic bold...so many thoughts and questions...I will 
try to answer them "expertly". And, as a connected whole...enjoy the 
wandering if it happens. I hope I have addressed all the questions 
and comments well, if not you know where I am. My customary charge is 
to sit and talk over a cup of coffee. Also check out the web links at 
the end.

A. No one in Maryland has done it!

Guess what? If no one is first...it will never happen. Imagine we 
could still be eating raw meat and vegetables and sitting in cold 
caves, afraid to take those burning limbs from that lighting struck 
tree.

I personally thank the hominid that picked up that first burning 
branch, the one who ate the first oyster, et cetera.

B. What are the advantages?

LVT switches the the economic incentive. Economists would explain how 
income, sales, and property taxes are a dead weight on the economy 
but a land tax is not.

I come at this more from the Social Ecologist view. People look for 
the least expensive or most profitable way of doing things. So they 
go to the high income or low income tax, to the low sales tax, to the 
low building tax, et cetera...myriad ways of moving to a better 
economic situation.
Land presents a problem for the running away solution, the land can 
not go with you. The solution is to make better use of the land, in 
fact the highest and best use...note also due to the economics of 
central places and markets, going to higher use will result in a loss 
of profit. LVT provides an economic thermostat that allows only the 
Goldilocks solution "just right"

C. Taxes will go up!

No! Not unless you want to raise them. It is recommended to go 
revenue neutral with a phase in period. Primary reason is to let 
people adjust from bad economic behavior to good economic behavior. 
To arrive at the effect on your own property taxes multiply 0.0148 
(revenue neutral for 50%) times your land value and compare that 
amount to your current property tax to find if you pay more or less. 
Since the current rate is 65%, if I recall correctly, then the 
revenue neutral rate is 0.01924. I trust there is some astute 
mathematician out there to check my calculations.

D. The effect is small and not worth doing.

I disagree, the margins are very important, currently the average 
ratio of building value to land value is c. 2.5 to 1. At 65% 
$1.625/$100 from building and $0.65/$100 from land so the positive 
effect of $0.65 is protecting the situation from being even worse 
than were all the tax on improvements. Put all the tax on land and we 
raise the positive effect 250%. The effect is accumulative, were the 
town able to negotiate a land tax in lieu of the municipal portion of 
the sales tax and the income tax there would be additional positive 
effect. Where would people tend to shop if Riverdale Park had a 4% 
sales tax versus 5%? Would people want to move into RP because they 
would not have to pay a municipal income tax (= 60% of state tax). 
Would county jurisdiction people want to annex to Riverdale Park if 
they knew that an improvement to their house would not increase their 
property tax?

E. Hyattsville and the LVT.

I was at a town meeting in Hyattsville some time way back...about 
30-50 people in attendance, my sense of the meeting was the majority 
of residents wanted the LVT but wanted to have it on commercial 
property only. Many felt that business should be treated different 
than residents. I feel that the dichotomies are not the classes of 
use but that they are the unused, the under-used, and the highest and 
best used land. The first two groups are benefiting from having low 
taxes while the land value climbs and they make their wind fall gains 
from speculation at the expense of those who use the land best and 
contribute to the economy. Industry and Commerce are not the bad 
guys. The bad guys are those who do nothing with their land and reap 
the profits created by those who contribute to the economy.

An interesting aside on the paths of history. The legislator who got 
the enabling legislation for Municipalities passed was planning to do 
enabling legislation for counties the next session, but was appointed 
to a federal judgeship in Texas and so we are left with the oddity 
that the State and Municipalities can tax land at a different rate 
than improvements but the counties and Baltimore City can not.

I gather from the history that the LVT was brought on in a PG County 
behind closed doors fashion and sprung on people with no warning or 
explanation, apparently this so infuriated the loosing faction that 
they spent years trying to get LVT outlawed...completely missing the 
benefit in their infuriation with the manner of its initiation which 
has no bearing on its merit. C'est la guerre.


Meanwhile outside of Maryland is a different story, our northern 
neighbor Pennsylvania has a couple dozen jurisdictions with LVT (also 
Site Value Tax SVT) and to my mind to great examples

1. Harrisburg which in the early 1980's was something like the next 
to worse city economic situation in the nation with several thousand 
vacant commercial properties with in 5-10 year period the number 
dropped to a couple hundred. I ran into a resident of Harrisburg at a 
LUTRAC conference in the 1990's and he told me people were actually 
abandoning the suburbs and moving back into the city. I am sure the 
Mayor's Office of Harrisburg would be willing to share their 
experience.

2. Pittsburg (had LVT 1913 to c. 2000) set the scene...when a town 
goes with LVT (none to my knowledge have gone 100% yet) the range of 
increase in building permits in the 2 year period after adoption goes 
up by 65-75% of which 70-80% are improvements on existing buildings. 
Now...Pittsburg had a reassessment study on land and property after 
not doing any for something like 20-30 years. At the time Pittsburg's 
land to property tax ratio was 7 to 1 (which allowed it to weather 
the Rust Bust) everybody panicked at the high land tax and they 
shifted it all to property. With in a year their economy was dropping 
and the building permits had dropped to something like 50% of the 
National average (there is a case study being done).

There are also over a 1000 Municipalities, States, Provinces, or 
Nations in the world that use LVT to good effect now, and the number 
grows every year. By all means Riverdale Park wait until Maryland is 
the last State in the Union, and Riverdale Park is the last 
Municipality in the State to adopt LVT...and even then it will not be 
done because everyone will have moved to a better place and there 
will be no one to vote for or against LVT.

More Information on LVT
http://www.urbantools.org/
http://www.henrygeorgefoundation.us/

And my precis of "Progress and Poverty" by Henry George
or you can read the entire book which I highly recommend,
as I could not do it justice in such a short space.
http://www.tpaine.org/tphgprop.htm

If you made it this far, God Bless you for your Curiosity and Patience.
Sincerely,
Jack R. Jones

>Message: 5
>Date: Tue, 11 Apr 2006 07:32:34 -0400
>From: "Marc Molino" <mmolino54 at hotmail.com>
>Subject: [RP TownTalk] Land Value Tax
>To: gerardkiernan at earthlink.net, TownTalk at riverdale-park.org
>Message-ID: <BAY107-F15BAC1F27DD29635B4B071A5CD0 at phx.gbl>
>Content-Type: text/plain; format=flowed
>
>Putting aside the individual personalities and which policies they support,
>could someone explain to me why a land value tax is a bad idea, or better
>yet, by what reasoning have previous town councils voted against
>implementing an LVT?
>
>Because a theory sounds good, doesn't mean it's practial; likewise, just
>because someone voted against it, doesn't mean it's a bad idea. I would
>assume one argument might go that if Riverdale Park were the only
>municipality to have an LVT, developers might go elsewhere to purchase
>property first.
>
>Anyhow, I'd appreciate hearing a little more on why Riverdale Park has voted
>against such an option in the past. At this point, I am neither for nor
>against an LVT. Mostly, I just miss the Riverdale Bookstore and the bicycle
>store.
>
>Kindly,
>Marc Molino
>



>Message: 6
>Date: Tue, 11 Apr 2006 07:54:05 -0400 (GMT-04:00)
>From: bruce.wernek at mindspring.com
>Subject: Re: [RP TownTalk] m-utc report from this week
>To: David Hiles <hilesd at mindspring.com>, TownTalk at riverdale-park.org
>Message-ID:
> 
>	<17397168.1144756446091.JavaMail.root at mswamui-andean.atl.sa.earthlink.net>
>
>Content-Type: text/plain; charset=us-ascii
>
>David
>
>Won't this LVT increase our property taxes as well?  Riverdale Park 
>has one of the highest property tax rates in the state.  I am not in 
>favor of any increases in this rate.
>
>Bruce


>
>
>Message: 7
>Date: Tue, 11 Apr 2006 07:54:52 -0400
>From: "The Curries" <the.curries at verizon.net>
>Subject: Re: [RP TownTalk] Land Value Tax
>To: <TownTalk at riverdale-park.org>
>Message-ID: <0IXK002P23RTKQ66 at vms042.mailsrvcs.net>
>Content-Type: text/plain; charset=us-ascii
>
>As it happens, before he was mayor, Hyattsville's Bill Gardiner did a study
>for his master's degree in urban planning of how LVT would impact economic
>development in Hyattsville.  He found that it would have a positive impact,
>but it would be slight because the municipal share of property tax is so
>small.  Unless the other governments that make up the largest part of the
>levy (County, State) went the same way, you can't change the dynamic much
>with a municipal LVT. 
>
>Hyattsville, by the way, was the first municipality in the country to enact
>the LVT -- more than 100 years ago.  Commissioner Jackson Ralston was a
>disciple of visionary economist Henry George, who pioneered the concept of
>land-value taxation.  Unfortunately for him and his cohort on the town
>council, an opposing group sued the City and won in state court a year
>later. At that time, Md. state law didn't provide for municipalities to
>adopt LVT (it now does).  To add insult to injury, Ralston and his group
>were voted out of office and replaced with the opposing faction in the next
>election.
>
>That history might explain why Hyattsville (and perhaps Riverdale Park?)
>haven't tried to enact LVT even when there is some evidence it would have a
>marginal positive impact on local development of commercial property.
>
>Chris Currie
>Hyattsville City Councilmember





>Message: 8
>Date: Tue, 11 Apr 2006 08:08:31 -0400
>From: "CHRISTINA DAVIS" <book-smart at verizon.net>
>Subject: Re: [RP TownTalk] m-utc report from this week
>To: <bruce.wernek at mindspring.com>,	"'David Hiles'"
>	<hilesd at mindspring.com>,	<TownTalk at riverdale-park.org>
>Message-ID: <000c01c65d60$a714f550$020aa8c0 at naw.org>
>Content-Type: text/plain; charset=us-ascii
>
>Hello Bruce, David, and others:
>
>Actually, most of the residential property owners would see a tax decrease
>(Jack has the tax rolls run periodically to show this by individual
>address). No town council has ever voted against this. I thought it was a
>bad idea until we had the historic districts in place. Once that happened, I
>tried to bring it up on several occasions. However, most people did not want
>to be the first in the state to try something new. . .
>
>Chris Davis
>

-- 
"We have met the enemy, and he is us!" Pogo Possum
http://theriverdaleobserver.blogspot.com
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