Taxing land values stimulates smart growth
Oregon-Washington chapter of Common Ground USA
We promote legislation that democratizes use of land and natural resources in these two states — that treats land and natural resources more like a commonwealth for the productive use of all residents, rather than as a commodity to be speculated on and for generating unearned income.
Taxing private use of land and natural resources keeps prices low and stable, to better share ownership and encourage productivity (“highest and best use”).
Take a look at our Legislative Action tabs for more information about our current focus!
Innovative financing at New York’s Hudson Yards
March 22, 2017
From a blog post that originally appeared at the American Planning Association blog, as part of a series published in the run-up to the APA’s National Planning Conference in New York City.
New York City is redeveloping Hudson Yards with the understanding that public actions such as regulatory changes or infrastructure investment can generate large increases in the value of land. Large private development has been made possible by the rezoning of the area, beginning in 2005, from mostly industrial to mixed use. The city also funded the first addition to the New York subway system in 26 years, an extension of the number 7 line to the new 34th Street–Hudson Yards Station, which opened in fall 2015.
These two actions alone are projected to generate billions of dollars in increased land value. Through a policy approach known as land value capture, the city will recover some of the new land value and use it for public benefit — for the subway extension itself, as well as the reconstruction of a street, the development of affordable housing, and the provision of green space.
The project is instructive for cities looking to capitalize on the land value generated by public actions, which often escapes completely as private windfalls.
NEWS FROM B.C. CANADA: PROPOSALS TO TAX LAND SPECULATION
Housing affordability is a ‘huge driver’ in the upcoming provincial election, May 9. An April opinion poll suggests the majority of voters are unhappy with the B.C. Liberals handling of unaffordable housing costs. Housing prices in Vancouver jumped by more than 40 per cent in a single year, and detached homes now fetch well over $1-million.
“Housing is a necessity, not a luxury”. This is an opportunity for the NDP, if they have a credible plan.
A ‘radical tax shift could cool the market’, says U. of Missouri economist Michael Hudson in a speech to Vancouver residents on 11 April. “Who is going to benefit from rising housing prices, the people of Vancouver or real-estate developers and banks?” “When housing prices rise, all that windfall ends up getting paid to banks as mortgage interest. This is not a natural law; it is the result of bad tax policies. All these windfall gains could be taxed, and that would keep housing prices down.”
Back in 1974 Ontario brought in a land speculation tax as an effort to discourage the flipping of properties, but the realtors managed to get it scuttled.
The current B.C. election is going to be a tight contest; the NDP and the Greens are gaining in the polls. Just last week the NDP revealed its party’s platform, reviving the speculation tax.
B.C.’s New Democrats are promising to impose a 2 percent annual tax on property speculators who don’t pay income tax in the province, which the party says will be more effective than a levy on foreign buyers introduced last year by Christy Clark’s Liberal government. The party says the tax would raise $200-million – a projection linked to a study by the University of British Columbia Sauder School of Business. The tax would be based on assessed property values and proceeds would go to a housing affordability fund.
The B.C. Green Party unveiled its platform on April 11. It is proposing to tax capital gains on home sales, and implement a 12 percent transfer tax on properties valued above $3 million. The Greens suggest that when a seller’s lifetime capital gains reach in excess of $750,000, that profit should be taxed.
From CG-ORWA: Remember… Windfalls and capital gains all derive from land value, the unearned increment of real estate. Dampen housing price inflation by shifting property taxes off building values onto land values!
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