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Pennsylvania City of Altoona Scraps Land Value Tax

According to Washington Examiner's economics writer, Joseph Lawler, last month, "An experiment in truly bold tax reform quietly died last summer, when the Pennsylvania city of Altoona scrapped its land value tax."

Lawler explains in part:

"Starting in 2011, the small city in central Pennsylvania employed a tax system unique among U.S. cities. It taxed properties based on the value of land, not on the value of structures.

"As the only example of a town with a land value tax, Altoona was the incarnation of tax economists' dream. Despite support from economists across the political spectrum, however, the tax eventually foundered on the realities of administrative complexity and politics in Altoona.

"Land value tax proponents have sought to experiment with a 100 percent land value tax since the idea was popularized by 19th-century political economist and journalist Henry George. George suggested land value taxes as a way of rewarding strivers and business owners who build up cities and generate commerce — and of denying financial returns to owners of land merely because they happen to own the land.

"The concept has strong intellectual support. Milton Friedman, the father of modern free-market economics, called the land value tax "the least bad tax." That logic is simple: Taxing discourages whatever it is that is taxed. Tax income, and you will get fewer workers working fewer hours. Tax investment, and you will get fewer new ventures and smaller factories. Tax land, however, and the supply of land remains the same.

"More recently, the land value tax has received interest from the Left . . . ."

Lawler added:

"Losing population and tax base, Altoona began trying out the land value tax in 2002 on the recommendation of the Center for the Study of Economics, a Philadelphia think tank that advocates land value taxes.

"In 2011, the city began levying taxes solely on land value and not at all on property value.

"Joshua Vincent, the head of the Center for the Study of Economics, portrayed the reform as a way to boost a struggling city. Altoona, he said, was out of the "economic mainstream now, sort of flyover country if you will. They were stuck with vacant land and had no practical way to attract investment."

"The idea was that, by eliminating taxes on building, the land value tax system would spur construction and increase density in the downtown area."

In concluding remarks, Lawler wrote, "the trial run in Altoona may have helped advance the goals of Henry George and his intellectual followers. City officials said that while the tax was in place, it earned interest from national media and places as far away as England and elsewhere in Europe intrigued by land value taxes."

So, kudos to the Altoona city council for their willingness to experiment with Henry George's land value tax, and even more kudos for being willing to letting the tax die when it eventually foundered. Were it that most other legislators were that wise?

Read Joseph Lawler's entire article here.


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