Earth Rights Institute - Ten Alleviations

Ten Alleviations

Here are 10 ways to alleviate hardships caused by land rent taxation (LRT):

Defer all or part of the tax to the time of sale or inheritance for the elderly, low-income, and temporarily unemployed. This deferral could apply to either the whole amount of the property tax, just to the property tax on buildings, or just to the excess payment that might result from the introduction of LRT.
Provide a cap (or limit) on annual property-tax increases due to increased rates (but not to increased assessments) of 2% plus the inflation rate for homeowners or 5% plus the inflation rate for commercial owners. For example, if the inflation rate is 2.5%/yr., a homeowner paying $10,000 in property tax this year need pay no more than $10,450 next year ($10,000 + $10,000 x [.02 + .025]), assuming no change in assessment. If the inflation rate is 3% in the second year, then the property owner need pay no more than $10,972.50 ($10,450 + [$10,450 x [.02 + .03]), again assuming no change in assessment. The inflation rate could be the official BLS estimate for the previous year as usually announced in February, or it could be the ten-month estimate for the previous year, announced earlier than February.
Provide salary-withholding for the LRT. If the mortgage holder isn't paying the tax bill, it could be payable quarterly by the employer (à la the income tax) so that the property-tax bill doesn't come once a year in an undesirable lump sum.
Other taxes (state or local) can pay the extra property tax of those who pay more with LRT (or perhaps just for the elderly, poor or temporarily unemployed). This is already done in some states for the current property tax on both land and buildings and is called a “circuit-breaker.”
Provide a government loan fund to pay the property tax of those who are hardshipped by LRT (or just for the elderly, poor, or temporarily unemployed).
Provide a land value tax rebate – a land-tax payment receipt can be used to obtain a 50% or 100% rebate on other local taxes, or such receipts can be used only by farmers, homeowners, the poor, temporarily unemployed.
Provide a purchase-and-demolition (P.A.D.) reimbursement – The local government could reimburse a building owner for the appraised value of his improvement if it is demolished and replaced within a year (the old building must be at least 12 years old). This is more protection than building owners have now and would protect them from an unexpected veering of urban development in their direction. This protection would be less needed if the LRT introduction were gradual.
Provide building-assessment abatements (perhaps $500 or so) for special groups such as farmers, homeowners, the elderly, poor, or temporarily unemployed. Or perhaps a percentage of the building assessment could be abated.
Exempt the first $1,000 of the property tax on building assessments. In particular, this would help the poor, elderly or temporarily unemployed. Of course, this requires an increase in the property tax rate to make up for the revenue lost by this exemption.
Establish a Property-Tax Alleviation Board – This board (either national, state or local) could provide pre-determined hardship reductions in the property tax.

The gradual implementation of LRT is itself an alleviation by giving landowners time to adjust. Experience shows that LRT causes only a small minority to pay substantially more (mostly they are absentee landowners who are damaging the local economy).
The voters are more likely to support a land-tax rate increase if the extra revenue is dedicated to such popular projects as parks, playgrounds, and highways.

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