Educators, school districts, parents file landmark lawsuit against the state

Splitting the property tax off buildings is the economic secret understood by anyone who considers both halves of the equation. Even gradually phasing out the building tax will spur jobs all over town as homeowners insulate and beautify, and as businesses invest. Gradually phasing up the annual cost of location value in land, ends idle land speculation and associated corruption.

Homeowners pay less, absentee idle land speculators pay more. Local jobs created, less money leaving town in rent and land payments. Ever increasing control of our own economy. Property owners can look at their tax bill and see the breakdown between land cost and building tax. Owners of vacant commercial land would pay more taxes, but everyone would be free to improve.

It is not just that we want to reduce taxes off homeowners, we want to free up future investments. Pittsburgh, Scranton, and dozens other cities that have split the property tax off buildings, have enjoyed the investment, jobs, increased homeownership, reversal of sprawl, and revitalization of their city centers.
Reap what you sow, dwell where you build. No taxes on labor in any form, no sales tax, no building tax, no income tax. Return just the annual costs for services equal with your neighbors. Locational value of land, or natural resource value of oil and mineral land, or broadcast or liquor license. Outsiders "buy" these resources because we do not charge the full "annual cost".

Land is the source for government revenue, no taxes on labor. Dae Miles

Two-Rate Pennsylvania Cities as of 1995 earthrights.net/docs/success

There are now 15 Pennsylvania cities (Table 1) using the two-rate approach. Pittsburgh and Scranton implemented this policy as far back as 1913. Since then enabling legislation was passed which gave this option to third class cities as well. Land value tax policy in Pennsylvania really took off in the 1980's through the "Johnny Appleseed" work of Steven Cord, formerly a professor at Indiana University in Pennsylvania, now director of the Center for the Study of Economics in Columbia, Maryland.

Table 1

Two-Rate Pennsylvania Cities as of 1995
Two-Rate Since Date	Land Tax Rate %	Building Tax Rate %	One-Rate % *	% of Tax on Land	Removed From Buildings in $000's	Population
Aliquippa Schools '93 Aliquippa '88 Clairton '89 Coatesville '91 Connellsville '92 DuBois '91 Duquesne '85 Harrisburg '75 Lock Haven '91 McKeesport '80 New Castle '82 Oil City '89 Pittsburgh '13+ Scranton '13+ Titusville '90 Washington '85	16.3 7.9 10.0 5.2 11.3 5.1 8.0 3.2 3.1 10.0 8.7 8.5 18.4 6.6 61.3 17.7	1.1 0.7 2.1 2.5 1.7 1.3 3.8 1.1 1.0 1.9 2.2 2.7 3.2 1.2 1.5 1.8	4.4 2.3 3.7 3.0 3.0 1.9 4.6 1.4 1.7 3.6 3.4 3.8 6.1 2.6 2.0 4.8	85.5 75.9 53.7 33.9 50.1 43.9 34.0 36.0 61.8 59.0 46.6 42.5 57.4 65.9 32.9 70.4	2,115 1,001 300 70 384 31 134 2,533 117 865 1,192 478 73,739 3,997 308 1,495	13,374 13,374 9,656 11,038 9,229 8,286 8,845 52,376 9,230 26,016 28,334 11,949 369,379 81,805 6,434 15,791
Total amount of taxes removed from buildings: $88,767,010
* One-Rate refers to the tax rate if there were no rate differentiation between land and buildings and the tax yield was unchanged. Scranton and Pittsburgh had a land tax to building tax ratio of 2 to 1 from 1913 until 1979 when both expanded land tax rates beyond that ratio. Please note: PA property tax rates are expressed in mills, i.e. Aliquippa: 16.3% = 163 mills Source: Center for the Study of Economics, 2000 Century Plaza, Suite 238, Columbia, MD, 21044 earthrights.net/docs/success

Twin bills in both the House and Senate would give the two-rate tax policy choice to
the nearly 1000 boroughs of the state. Their total population is two and a half million.

Bills, which are part of Representative Joseph Gladeck's enterprise package, extend the
option to first and second class townships and cities of the first class (which applies only to Philadelphia). His "Tax Free Development Zone Act" (HB 1256) recommends that municipalities wishing to designate an area as a tax free zone use the split-rate tax as well.

Among the cities that have gone to the two-rate system there is a considerable spread
between the taxes on the value of land and those on the value of buildings.
Table 2

Land to Building Tax Ratios in Pennsylvania Cities Using The Two-Rate Tax
Cities	Land-to-Buildings Tax Ratio (1996)
Pittsburgh Scranton Harrisburg McKeesport New Castle Washington Duquesne Aliquippa Clairton Oil City Titusville	5.61 to 1 3.90 to 1 4.00 to 1 4.00 to 1 1.75 to 1 4.35 to 1 5.61 to 1 16.20 to 1 4.76 to 1 1.23 to 1 8.68 to 1
Source: Center for the Study of Economics, 2000 Century Plaza, Suite 238, Columbia, MD 21044

For instance, the small city of Aliquippa, which led the way towards the two-rate
option for school districts, taxes land 16 times more heavily than buildings.
Pittsburgh's tax rate on land is nearly six times the rate of buildings, the
Titusville ratio is nearly 9 to 1, while Harrisburg's ratio which has been
3 to 1 will soon change to 4 to 1.

Research based on building permits issued in the three-year period before and after
the implementation of the two-rate tax policy in Pennsylvania cities consistently shows significant increases in building permits issued after the policy was put in place.
Table 3

Average Annual Value of Building Permits (Thousands of Constant 1982 Dollars)
City	1960-79	1980-89	% Change
Pittsburgh Akron Allentown Buffalo Canton Cincinnati Cleveland Columbus Dayton Detroit Erie Rochester Syracuse Toledo Youngstown 15-City Average	181,734 134,026 48,124 93,749 40,235 318,248 329,511 456,580 107,798 368,894 48,353 118,726 94,503 138,384 33,688 167,503	309,727 87,907 28,801 82,930 24,251 231,561 224,587 527,026 92,249 277,783 22,761 82,411 53,673 93,495 11,120 143,352	+70.4 -34.4 -40.2 -11.5 -39.7 -27.2 -31.8 +15.4 -14.4 -24.7 -52.9 -30.6 -43.2 -32.4 -67.0 -14.4
Source: "Urban Land Taxation for the Economic Rejuvenation of Center Cities: The Pittsburgh Experience" by professors Wallace Oates and Robert Schwab of the University of Maryland, 1992, available from Center for the Study of Economics, 2000 Century Plaza, Suite 238, Columbia, MD 21044

Pennsylvania is a pioneer leading the way and this is being increasingly acknowledged.
A Wall Street Journal article (3/12/85) was entitled "It's the Land Tax, by George,
That Sets Pennsylvania Apart." (The reference is to Henry George who drew great
public attention to these possibilities a long time ago.)

NOTE: Eastern States have a separate school property tax, ((some of the revenue from all the land)) Western States have Land Grant School Funding ((all of the revenue from some of the land)). Either way school funding should grow with the growth of the community.

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. earthrights.net/docs/success

The Single Tax What It Is And Why We Urge It 1880 Henry George schoolalaska.com/singletax

Two-Rate Pennsylvania Cities as of 1995 earthrights.net/docs/success

Two-Rate Pennsylvania Cities as of 1995

Land to Building Tax Ratios in Pennsylvania Cities Using The Two-Rate Tax

Average Annual Value of Building Permits (Thousands of Constant 1982 Dollars)

Land to Building Tax Ratios in Pennsylvania
Cities Using The Two-Rate Tax

Average Annual Value of Building Permits
(Thousands of Constant 1982 Dollars)