This site demonstrates an economically sound and equitable tax practice used worldwide in hundreds of localities. True tax reform - rethinking the means and ends of taxation- is the goal. This site shows that the problems states face -- urban decay, underfunded schools, unchecked sprawl, rural poverty, and high taxes on good citizens -- can be ameliorated.
Welcome to an idea.
The idea is land value taxation (LVT). On this site, you can directly see how LVT would affect you and your community with our Property Tax Calculator.
LVT in a Nutshell
Briefly, LVT is a re-interpretation of the property tax. Taxes on structures and improvements are reduced or eliminated. Instead of taxing what people do, such as building, buying or fixing up a house, office or factory, LVT taxes only that part of the property that is created by the community: the land values, i.e., the sites that are used. In this way, initiative is rewarded while land banking and speculation is discouraged. LVT maintains needed revenues, while reducing market force distortions caused by taxation.
Unlike many ideas put forth to revitalize our cities to combat sprawl and/or to encourage social and economic justice, LVT has a track record. The Pennsylvania cities of Harrisburg, Allentown and Scranton have been phasing in LVT for years. In five other US states, pending legislation will permit cities, counties and states to enact LVT. This site provides data that explains how LVT works and why it should be adopted.
LVT in our State
Can we do it?
The New Jersey Constitution, Art VII, Section I (1) provides that property taxation must be uniform. Pennsylvania has a similar uniformity clause, however, this has been interpreted to mean only that within each species of property (Land, Improvements, or Personal Property) there must be a uniform rate within the jurisdiction. We believe that this is the favored constitutional interpretation. One rate for ALL Land value. One rate for ALL Improvement value. One rate for ALL personal property value. There are no New Jersey cases which have directly ruled on the constitutionality of land value taxation. This reasonable interpretation of the uniformity clause to allow local option land value taxation (via the two-rate method), makes sense in light of the reasonably strong Constitutional and statutory foundations for home rule here in the Garden State. Article IV, Section VII (11) of our New Jersey Constitution guarantees that:
"The provisions of this Constitution and of any law concerning municipal corporations formed for local government, or concerning counties, shall be liberally construed in their favor. The powers of counties and such municipal corporations shall include not only those granted in express terms but also those of necessary or fair implication, or incident to the powers expressly conferred, or essential thereto, and not inconsistent with or prohibited by this Constitution or by law."
And the Home Rule Act of 1917 N.J.S.A. 40:42 et. seq. offers the following protection:
"In construing the provisions of this subtitle, all courts shall construe the same most favorably to municipalities, it being the intention to give all municipalities to which this subtitle applies the fullest and most complete powers possible over the internal affairs of such municipalities for local self-government."
Land Value Taxation can also be implemented by exempting or abating improvement value from taxation. This method would likely run afoul of the uniformity clause, but the New Jersey Constitution, Art VII, Section I, (6), provides that cities may exempt improvement and structure values in areas declared in need of rehabilitation in accordance with statutory criteria.
For a more detailed and concrete explanation of how LVT works, please check out LVT Explained. Additionally, the Wikipedia entry for LVT might be of interest.
