- The number of vacant structures, over 4200 in 1982, is today less than 500.
- With a resident population of 53,000, today there are 4,700 more city residents employed than in 1982.
- The crime rate has dropped 22.5% since 1981.
- The fire rate has dropped 51% since 1982.
These results are especially noteworthy when one considers the fact
that 41% of the land and buildings of Harrisburg cannot be taxed by
the city because it is owned by the state or non-profit bodies.
Maryland and Beyond
Now on to the state of Maryland which has had some very interesting
recent developments. Enabling legislation for the two-rate policy was
vetoed by the Governor in April 1994. Immediately following the veto
the Henry George Foundation of America, based in Columbia, began to
research the history of the property tax in Maryland. The HGFA
suspected the existence of an earlier law permitting municipalities
the two-rate tax option.
After weeks of law library research HGFA found a 1916 law in the 1994
Annotated Code of Maryland that had gone through several permutations.
This indicated that Maryland municipalities could go to the two-rate
The Attorney General of the state of Maryland was asked for an
opinion and after researching the statutes, on January 25, 1995
issued Option #95-002 which confirmed the authority of municipalities
(with the exception of Baltimore) to set differential property tax
The small town of North Beach will probably go to the two-rate system
next April, and Hyattsville may soon follow. Mayor Steven Sager of
Hagerstown, which has only 35% home ownership, is urging his city
council to move in this direction.
Joshua Vincent of the HGFA reports that the buildings to land ratios
in Maryland are "more professional, less politicized. There is no
distortion of residential assessments such as that existing in
Pennsylvania. As a result, upper and upper-middle class homeowners
pay their fair share but the poor and the working class get a real
No doubt Pennsylvania could be learning more about accurate
assessment practices from Maryland while Maryland is learning how best
to implement the two-rate tax system based on Pennsylvania's
successful experiences so far. But interest is being shown in other
states and cities as well.
Last February assessments expert Ted Gwartney, Walter Rybeck of the
Center for Public Dialog, and this paper's author were asked by West
Virginia Delegate, Bruce Petersen, to speak to the State House of
Delegates about Pennsylvania's land value tax. Delegate Petersen is
writing enabling legislation for land value taxation for West
The mayors of Wheeling and Cincinnatti have stated that they would
like to move their local public finance in this direction.
Detailed studies on the effects of the two-rate policy have been
conducted for Washington, DC, St. Louis, Missouri, and the state of
Washington. There are groups actively supporting this policy in these
places as well as in nearly every state in the United States and
numerous other countries as well.
The City of Amsterdam in New York has recently received permission to
implement the two-rate tax policy and will serve as a pilot project
for that state.
The Art of Tax Improvement
While much has been learned about the successful use of land value
based local public finance in Pennsylvania, mistakes have been made.
For instance, the City of Uniontown reverted back to the flat rate
system after an initial experience with the two-rate approach. What
happened in Uniontown? Here the two-rate shift was combined with an
overall tax increase the same year. A handful of irate community
residents equated the two-rate policy with the tax increase and had it
There is a lesson here in the "art of tax improvement." It is
necessary to move to the two-rate system while maintaining a revenue
neutral tax base, at least initially. Another key is to move
gradually. One generally accepted guideline is to shift no more than
20% of the taxes off of buildings and onto land each year for a period
of five years, or 10% each year for a period of ten years, in order
to fully shift all taxes off buildings and onto land values.
Such a gradual transition, combined with community education, allows
the citizenry to make the adjustments required, particularly to orient
away from expectations of speculative gain in real estate land price
escalation and towards investment in the development of affordable
housing and business activities. Obviously as buildings are taxed
less their value might rise, while the value of the more heavily taxed
land should fall. While more research of these types of effects is
needed it would appear from the long continuation of this tax policy
in areas that have tried it that it meets with voter approval.
The Needs For The Public To Be Informed
With the many positive results of this policy in Pennsylvania, why
have only 15 cities implemented it, when 50 cities could do so? Why is
the main thrust and public discussion focused there as elsewhere on
reducing reliance on property taxes and giving local municipalities
options to levy sales and income taxes?
The truth is that the word has just simply not gotten out. The
success so far has come from the persistent efforts of just a handful
of devoted activists who have educated city council members and urged
them to adopt this policy.
But the majority of state legislators, public officials, community
leaders, and the public at large remain for the most part in the dark.
This does appear to be gradually changing in the legislature though
because of the several current land value tax bills already mentioned.
Both the Pennsylvania League of Cities and Municipalities and the
State Association of Boroughs have professional lobbyists following
Unfortunately at this time, few economics or government professors at
the university level introduce their students to this policy. Indeed
this macroeconomics approach has been taught not by mainstream
academic institutions but for the most part by the devoted teachers
who volunteer their time at the Henry George School of Social Science,
headquartered in New York with branches in Philadelphia, Chicago, San
Francisco, Los Angeles, and Santo Domingo, and by the important work
of the Robert Schalkenbach Foundation, also in New York.
There is a great need for institutions like the Jerome Levy Economist
Institute to come to the fore of enlightened economic education and to
teach their students about public finance policies that further
free market incentives while at the same time narrowing the gap between
the rich and the poor.
I feel a great deal of appreciation for the Jerome Levy Economics
Institute for sponsoring this "Land, Wealth, and Poverty" conference
and I thank you very much for the opportunity to present this
information to you today.