[RP TownTalk] Land Value Tax Calculator (fwd)

[Alan Thompson and Sarah Wayland]

[Sarah here, speaking only for myself.]

While I *do* support the idea of a Land Value Tax, I worry about two issues.

The first is that the current assessed value of the land does not reflect size 
or location.

The second is that the differential incentive is small, and I wonder whether it 
will be effective.

Let me give some examples to illustrate.

(1) The value of land (versus the improvements on the land) is currently set by 
the state, and those values do not reflect lot size or location.

Example 1: On my street are 3 houses: A is on one lot, B is on two lots, and C 
is on three lots. Each address has only one house on it. The land value for 
each property is set at:

A (9000 sq ft) = $55,500
B (18000 sq ft) = $56,400
C (22500 sq ft) = $56,850

So my neighbors all pay roughly the same tax on their land, even though the 
smallest lot is 13,500 feet smaller than the biggest lot.

Example 2: The Town of Riverdale Park sold a 649 square foot commercial lot on 
the southeast corner of East-West Highway and Route 1 for $36,000 to Riverdale 
One LLC (Mr. Caputo) on 6/4/2003. That same property has a state-assessed value 
(last updated on 1/1/2004) of $200.

Clearly the state will have to reassess the value of the land before a "land 
value tax" can have any real meaning.

(2) The amount of money a commercial property will pay, with the current 
assessment structure, will not change by enough to motivate a change in 
behavior.

Example: The old Crestar Bank Building at 6200 Baltimore Avenue, currently 
owned by Jemal Riverdale Citizens LLC, currently pays the following in taxes:

STATE:       $946
COUNTY:      $8508
MUNICIPAL:   $7173

Under a Land Value Taxation scheme, Jemal Riverdale Citizens LLC would pay:

STATE:       $1469
COUNTY:      $8936
MUNICIPAL:   $7534

For Riverdale Park, this means Jemal would pay $361 more to the town under Land 
Value Taxation. He bought the building for $1,350,000. I don't know that $361 
will motivate any changes in behavior on his part. David Hiles says that this 
argument (that the incentive is too small (or a different version too large)) 
was not relevant to the merit of the proposal, but I think it is
worth considering nonetheless.

----

To summarize, the main point is that the state will have to change how land is 
valued before Land Value Tax can truly work. A secondary point is that the 
amount of money we are discussing here will not have much impact on a developer 
who is used to dealing with millions of dollars at a time, and doesn't seem to 
mind lost revenue on the order of many thousands each month.

-Sarah