PropertyTaxReform

Lawson Purdy: The Influence of Taxation on the Prosperity of Cities

Reprinted in The Public, October 6, 1906

THE INFLUENCE OF TAXATION ON THE PROSPERITY OF CITIES

A Paper Read by Lawson Purdy of New York
Before the League of American Municipalities,
in Session at Chicago, September 26, 1906.

In 1873, Enoch Ensley, a wealthy planter of Tennessee, wrote to Governor Brown asking him to call a special session of the legislature to amend the constitution so that changes could be made in the tax laws of Tennessee. The tax rate of Nashville was three and one-half per cent and of Memphis four per cent, and Mr. Ensley said that the burden on business was insupportable. Great land owner as he was, however, Ensley did not urge a search for new sources of revenue, but rather the application of the "rule or motto" which, he said, "It would be well for the State to adopt and have cut into the stone at the capitol (in large letters and have them gilded), in the Senate chamber, the hall of the House of Representatives and in the governor's office, . . . to-wit:

"Never tax anything
That would be of value to your State,
That could and would run away, or
That could and would come to you."

This rule laid down by Ensley has become an axiom, but before it can be applied the constitutions of about thirty-five States must be amended by repealing those despotic limitations on legislative power which are not found in the earlier constitutions, and which should find no place in the constitution of any free people. Because of constitutional and statutory restraints upon the power of cities we need discuss only what can be accomplished in most cities by executive officials under existing laws.

Conditions of Prosperity.

City officials often regard the city as apart and distinct from the individual citizens, and sometimes therefore uphold policies which appear to be in the interest of the city corporation, although opposed to the interests of the citizens. This is, of course, a short-sighted view. In reality nothing can be good for the city which is bad for the citizen, nor bad for the city which is good for the citizens. Again, many consider the interest of classes and speak of what will be advantageous to manufacturers or shopkeepers or land owners. This, too, is a mistaken attitude. Citizens should be regarded alike as men, and not as the owners or users of some kind of property. All depend upon the workers who render service for service, and it is fair therefore to consider the interest of all citizens as bound up in the interest of those who earn their living; and that city may be regarded as the most prosperous in which it is easiest and most agreeable to earn a living.

The interests of the city and of its citizens are identical. Nevertheless, they may be viewed from both standpoints.

A Few Inconvenient Truths about the Property Tax

I'm pleased to share (with permission of the author) something that appeared on a mailing list I subscribe to. The conversation was along the lines of "how do we share the idea of land value taxation [a reform of the property tax] with people who are used to hating the property tax?"

Roy Langston wrote,

When I encounter the usual unreasoning hatred of property taxes, I just point out a few inconvenient truths, along these lines:

Alabama's taxes

Friday night, PBS's NOW program had an excellent piece about Alabama's tax system.  It featured three families from different parts of the income and property spectrum, and one of my heroes, Susan Pace Hamill.  People whose income is below the federal poverty line pay income taxes in Alabama, and groceries carry sales taxes, at rates as high as 10% or 11%!  But property taxes are low.

Have you noticed that the places where property taxes are high seem to be the best places to live, with the largest proportion of the children going on to attend 4-year colleges?  Have you noticed that where property taxes are low, there is a great deal of poverty and poor schools and living situations that result in undereducated children?   Which sort of place would you prefer to live in?  Which sort would you like your grandchildren to grow up in?  Your nieces and nephews to raise their children in?  Should other people's children have anything less?

Is LVT the answer? It depends what the question is.

The title for this post was prompted by an article in the NYT about people not raised on farms deciding to become farmers, particularly in places near large cities.  It seems that local food was said to be the answer to a number of questions.  I'm generally in favor of it, but I'm not sure it is the answer to as many questions as its supporters claim.  That doesn't make "local food" a bad thing; just not the answer to as many questions as it might seem.

But the title for this post sprang to mind.  It seems to me that Land Value Taxation is the answer to a lot of very important questions.

Fixing Wages, and Fixing Housing Affordability -- for All of Us

By this, I mean fixing the problem of low wages -- wages insufficient to support an individual or a family in conditions we consider acceptable on a reasonable number of hours of labor per week. I don't mean minimum wage legislation, or living wage legislation, both of which I regard as well-intentioned but ultimately destructive for the community they intend to help.  I don't mean measures like the Earned Income Tax Credit, either.  It appears that people must jump through high hoops to get those dollars (which often seems to require professional advice, at a price), and then a significant portion of the money goes not to the wage earner but to his tax preparer/advisor, in the form of fees and interest.

Bob Herbert's 3/11 column, Sharing the Pain: The "Near-Poor"

Link: http://www.nytimes.com/2008/03/11/opinion/11herbert.html

It begins with the statement,

Now that the economic crunch is reaching those near the top of the pyramid, there is finally a sense that the U.S. is facing a real crisis.

The article goes on to talk about the large group of  "near-poor" in America -- the 60 million people who are "just one notch above the official poverty line," with incomes that range from $20,000 to $40,000 for a family of four.

We have always gotten a distorted picture of how well Americans were doing from politicians and the media. The U.S. has a population of 300 million. Thirty-seven million, many of them children, live in poverty. Close to 60 million are just one notch above the official poverty line. These near-poor Americans live in households with annual incomes that range from $20,000 to $40,000 for a family of four.

It is disgraceful that in a nation as wealthy as the United States, nearly a third of the people are poor or near-poor.

You can read the statistics, expressed in terms of income multiples of the Federal Poverty Guideline here.  I think you'll find them moving.

It isn't that I don't agree there is a problem -- readers of this blog likely know that  -- but must point out that defining the problem this way, as the authors of "The Missing Class" do, misses the point that $20,000 or $40,000 for a family of 4 in rural Alabama is very different from $20,000 to $40,000 in New York City or San Francisco, or any of our other major metropolitan areas, where the vast majority of us live. [See data about the cost of living in America's low-cost counties, and in America's major cities.]