Sandy Smith is making great points about AVI and land taxes:
For now, revenue neutrality is the right strategy to follow, especially after upset residents and Council members lambasted Nutter’s early attempts to generate more revenue from the new tax regime. But in the longer run, the issue of how much revenue the city raises from property taxes should be revisited.
The moment is right for it: the city is now tax-competitive with its suburbs, thanks to dramatically higher property taxes in many suburban jurisdictions. And as the city’s wage tax remains nearly three times that found in those suburbs that have one, and the city’s property tax income per capita is well below that of its big-city peers, shifting the balance of taxation from income to property could encourage more people to move to, and stay in, the city.
The moment is also right for another move that could strengthen those virtuous trends: shifting the bulk of the property tax burden from buildings to land. Most of the appreciation in property values in those gentrifying neighborhoods comes from improvements on the land – new houses and office buildings, renovations and expansions. Were Council to adopt a split property tax rate, taxing land more heavily than improvements, the blow to homeowners in places like Northern Liberties and Point Breeze could be softened while maintaining the current revenue-generating effort – especially since undervalued vacant land in such areas would then be taxed even more heavily, encouraging land owners to develop it in order to cover the tab.
Back in 2009, Center for the Study of Economics looked at how shifting the tax burden onto land would change the residential tax burden in each Councilmanic district. The exact numbers here will change somewhat when the 2012 values are plugged in, but the overall pattern is clear – residential property owners’ share of the tax burden would go down in every Councilmanic district:
If people think they need a political villain to make some headway on this issue, it’s the irresponsible owners of vacant lots and blighted properties. Slumlord shaming has proven to be pretty good politics this year.