Posts Tagged ‘land based’

There are plenty of influences on our country’s economic development including geography, natural resources and luck. However, government policy plays a powerful but sometimes unseen role.

Over the years government policies have contributed mightily to the American landscape

• The FHA loan program funded the suburban dream
• School desegregation gave rise to white flight
• Interstates made commuting possible
• Rural Electrification made far flung settlements possible
• Federal Housing projects enforced government ghettos

However one of the most powerful but least understood policies affecting cities and suburbs is the property tax structure.

A couple of illustrative examples make the point.

• In Barbados, if you don’t paint your house it’s considered under construction and is taxed at a lower value. Therefore there were plenty of unpainted houses in the country.
• In Philadelphia, houses were taxed by their width; therefore you see a lot of old narrow houses in Philly.

Today, most property taxes are based on the assessed value of a building. This is a progressive tax meant to more heavily tax the wealthy. However, by tying taxes to property value there is a built-in incentive to avoid property improvements. Therefore neighborhoods don’t improve like they might otherwise.

This is bad for both the payer and the collector. It’s expensive to continuously re-assess property values. In fact, it’s so painful, that Trenton rarely does it, making our revenue problem even worse.

Trenton’s property tax rate really hurts

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