Bring Your Own Mug

A few days ago, I mentioned making a new acquaintance, “Peter,” at a Bring Your Own Mug gathering at the Patent and Trademark Office. Among other things, we discussed land value taxation, and he brought up Detroit, where an attempt has been made to enact LVT. (As I understand it, so far the city has not obtained authorization from the state legislature, which would be required.). Peter asked me how this would help in parts of Detroit where houses are abandoned, and the land is essentially worthless. There are other areas which are not so badly blighted.

I pointed out that there two two aspects of Georgist tax reform, taxing land values more, and reducing or abolishing taxes on buildings, wages, sales, etc. A land value tax in Detroit could raise some revenue from neighborhoods which are not totally derelict, and discourage land speculation there. It would also enable lower taxes on buildings, etc., which would remove a disincentive to fixing up homes, taking derelict buildings and turning them into shops, habitable housing, etc. I gave Peter the example of Harrisburg, Pennsylvania some decades ago: it was about the most blighted city in America, with thousands of abandoned buildings and vacant lots; then, it enacted a two-rate property tax, much higher on land than on buildings, and it largely recovered, with the number of abandoned buildings falling steeply. So even when a community is badly blighted, land value taxation can help, even if it can’t make everything perfect.