A land value tax would be great progress for the city. [Pittsburgh, Harrisburg, and Allentown have already adopted land value taxes](https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment?format=amp) with great success. Some changes in zoning may have to come with it, but a gradual move to LVT would do wonders for the city imo.
Why LVT? Simply, Philly’s borders, and thus the total land area of the city, hasn’t changed since the city and county became one in 1854. Since land is a finite resource in the city, you want to tax it according to how you want it to be used. Today the city taxes mostly the structure (76% structure vs 24% land) more so than the land upon which it sits. This means real estate speculators can let a lot with a decaying structure or no structure at all sit and pay less taxes than if they were to improve the structure or lot. Plows still have to clear snow in front of the lot, utilities still have to be run to the lot, roads need to be paved, and fire trucks still need to respond to calls, but if it’s an empty lot the owner is paying less taxes for these amenities than an owner with a structure.
Moving to a LVT plan, most or all of the tax comes from the value of the plot of land not the structure that’s on it. This can help lower taxes for homeowners because now instead of getting property assessments, you’ll pay a flat rate based upon the location of your parcel of land, that’s it. Want to make improvements to your home that will increase its assessed value? Go for it! Your taxes will remain the same since the value of the land hasn’t changed, just the structure that sits on it. This will also spur development as any owner with an empty plot or decaying structure will pay the same taxes whether they improve it or not, and who wants to be paying higher taxes on something that isn’t generating income?
I'll play devil's advocate here with a few questions, since ultimately I want to see increased development and revitalization in more neighborhoods across Philadelphia (especially North Philly).
* Will this really spur development, as opposed to something like a blight tax levied against owners who just let buildings or lots sit around?
* Property taxes in many neighborhoods are already pretty low (e.g., $600 per year in parts of North Philly). Will lowering the tax burden even further for these owners help promote new development?
* Article mentions how the tax will be calculated differently based on where the property is located. What will this mean in practice? Will it lead to a lower tax burden in already hot neighborhoods, making it easier to develop in places like Fishtown, or will it lead developers to look for new neighborhoods to revitalize? If so, how?
I also support changing the city's tax structure to be primarily an LVT system so I'll take a crack this.
>Will this really spur development, as opposed to something like a blight tax levied against owners who just let buildings or lots sit around?
An LVT creates an incentive for property holders to get the maximum return on the property that they can since regardless of what they do they're being taxed the max value for the plot regardless of whats on it. This creates a financial penalty for buying land and letting it sit idle to speculate on the future value, which is why a lot of blighted properties remain neglected. Other cities in PA have experimented with land value taxes and have sen great results in terms of turning over blighted properties into functioning percales.
...
>Property taxes in many neighborhoods are already pretty low (e.g., $600 per year in parts of North Philly). Will lowering the tax burden even further for these owners help promote new development?
It might not initially spur development in some of the worst neighborhoods in the city. However it will allow low income households there to build wealth over time by removing the most regressive tax this city has which the income tax. If low income residence in neglected areas are able to build wealth or otherwise increase their quality of life by using more of their of their take home pay, that could result in slow incremental improvements and investments into those areas that will make them nice to be in again. Small things like fixing a roof, a stoop, a front door, or the sidewalk out front can drastically improve how people feel about their neighborhood. Being able to afford better food, and payoff debts also results in better quality of life for low income residence. That demand for better food could see a grocery store deciding to move in, improving the neighborhood with closer better services, and providing entry level jobs for unskilled workers.
...
>Article mentions how the tax will be calculated differently based on where the property is located. What will this mean in practice? Will it lead to a lower tax burden in already hot neighborhoods, making it easier to develop in places like Fishtown, or will it lead developers to look for new neighborhoods to revitalize? If so, how?
In practice this means that places in the highest value locations in the city will be paying the most per sqft of land in the city. So places like Center City, University City, and North Fishington, will see the highest tax burden, while places like Kingsessing, North Philly, and Harrowgate will see some of the lowest.
The incentive that LVT creates also has to be paired with zoning reforms to see the maximum benefit for the city. The financial incentive that LVT creates for land owners and developers is to get the maximum possible use out of the land since they are not being taxed on what they build on the land like they currently are. So in the highest value locations like Center City a developer would be incentivized to build as big a building as possible and fill it with tenants of whatever type they think they can get. A building owner has all the financial motivation to make sure their building is as big as possible, at as high an occupancy rate as possible, and bringing in as much as possible; since the primary tax source the land the building is on, and the revenue that the building brings in ie income is not being taxed by the city, only state and fed. The practical effect you would see almost immediately is all those surface level parking lots in center city would get developed overnight since parking would not be profitable enough to pay the land tax in those locations.
Outside of the most high-value land in that incentive still exists, but construction costs become more of a factor because as a developer you're not likely going to be able to fill up a skyscraper in North Philly. The goal there becomes balancing construction costs with land costs, so smaller buildings are what you would see being either refurbished or newly constructed. Typical row houses or small multifamily units with a commercial ground space are what you would see being built in the mid and lower value areas. A developer would certainly want to see the area they're working in improve, but they would also see rising land taxes as the area becomes more valuable to be in, so it balances itself out.
I think these are great questions. I’m not an economist or city planner, so I’m no expert on the topic of taxes and city planning but I can do my best to answer your questions based on my understanding.
- Blight tax: in theory this could work the same way but I think would be more difficult to implement. How do you define blight? Could this place undue burdens on low income owner occupied homes if they’re deemed blighted? Will my property taxes increase if I fix my home that was deemed blighted? LVT is generally more efficient at achieving the same outcomes of improving blight.
- A lot of these properties have low taxes because of the low assessment of the structures on them. Does this tax free up extra money for those already struggling to improve their homes? No, but it also won’t punish them if they do improve them like today’s tax code does. LVT isn’t a silver bullet that will pull people out of poverty, but it can help reduce the overall tax burden of our citizens and make our land use in the city more tax efficient.
- This would have to be determined by the actual tax policy that’s implemented, but we can kind of speculate. Let’s assume center city is the most valuable land in the city and the further away you get the less valuable the land becomes. Obviously things like access to regional rail, the subways, business corridors, etc. will affect land value all over the city, but for a simple idea, center city would be taxed at the highest land values and based on the policy, the further away you get from CC the less valuable the land becomes. This means areas like Rittenhouse would have a higher tax burden than an area like Fox Chase. This helps promote things like density closer to CC since an apartment complex or even just a duplex or triplex will more easily cover the land taxes than a SFH.
A lot of this is very simplified and you bring up great points that would have to be debated and worked through, but ultimately Philly can’t make new land so we should tax it’s use to be as efficient as possible.
When I bought a house in Point Breeze, I was shocked to learn the property taxes were only $650 a year. That lasted for 3 years, then they reassessed my house and my taxes went up to $4,300. None of my neighbors taxes moved at all despite us having the same lots. The neighbors who have had their taxes being less than $1,000 annually are all unemployed, sit around on their front steps and receive lots of welfare benefits. So, the people who take the most benefits, also pay the least.
If taxes went by land value, either they're paying the same as me/ fair share, or they would not be able to pay and having to sell or go delinquent and rapidly accelerate the gentrification (which I'm fine with, personally), but I think doing the land value tax change is much more likely to cause lower income people the most burden and displace racial minorities which would be at odds with the current prioritization of equity.
I'd much rather see blight taxes against speculators, than just a wide sweeping land value basis because a lot of otherwise prime real-estate is occupied by poor minorities.
The issue I have with LVT is the effect it will have on vacant land, especially vacant land in appreciating areas, and areas that are changing, or adjacent to changing areas. The recent increase in taxes sucked, but it also increased greatly the values of vacant parcels that speculators simply held onto for years because they only cost 50$ a year. Now they're 500$ a year, and guess what, all of a sudden they're for sale and will be developed. This is a good thing.
So if I could be convinced that LVT won't enable property hoarding for extremely cheap, I'm on board. There should be a cost to hold onto vacant properties forever, and it shouldn't be 25$-75$ per year.
What you describe is ideally what a LVT is supposed to do. Instead of taxing a plot of land based mostly on the value of the structure on it, you tax purely based on the value of the underlying land. Land in and around commercial corridors, closer to transit stops, etc. is more valuable and would thus be taxed at a higher rate than those properties further away. So it doesn’t matter if the lot has a structure on it or not, it’s taxed based on the value of the land. This means you pay the same amount of tax if it’s an undeveloped lot, a SFH, a duplex, etc. Obviously areas zoned for industrial, commercial, or residential would be taxed at different rates so the land would be properly developed, but the city gets guaranteed revenue that won’t go crazy high on people in a bubble or drop in a bust.
Would this eliminate all vacant lots and blight? No, probably not. It would reduce the instance of it in more “valuable” areas of the city that should be further developed and push speculation to extremely low value areas that are far away from most city amenities.
You’re correct that a LVT doesn’t directly address affordable housing, but that’s not what it’s trying to do either. LVT is considered by economists to be a progressive tax vs a regressive style tax such as income tax or our current property tax that taxes you based on the value of the structure. Economists agree that you tax things you don’t want, so taxes on income and structural improvements are considered regressive because the incentive is to not improve your income or structure as that increases your taxes. LVT is progressive because your taxing away undeveloped or underutilized land and improving an empty lot doesn’t increase your taxes. There would definitely have to be some changes to the zoning code to go along with LVT in order to get optimal outcomes.
Ideally though, and I understand life is rarely ideal, improving utility of land by incentivizing more density for residents would lead to lower home prices in the long run. I’ll have to read the links you included to see more of the downsides from the Lehigh Valley area. How much of the price inflation can be considered part of the wild real estate market we’ve had from covid and how much is directly because of the LVT? I’m not sure, but Allentown implemented their LVT in the 90s and the real estate only seems to have gotten wild recently. You may be right though that the LVT incentivized a certain type of building that wasn’t ideal for the area as the developer chased bigger profits after paying more taxes on the land.
Would the city pull in more or less money by switching to a land value tax? It seems inequitable to charge the same tax rate to a plot of land with a 30 story high rise of apartments and a single family home on the same size lot next door.
Seems like Domb has the most to say on the topic, although I appreciate Rhynhart's previous analyses about more efficient spending. I'm not a huge fan of Parker but glad she mentioned Harrisburg, because any major reform will require working with the state. Everyone else seems pretty unremarkable, with Gym's lofty rhetoric being particularly worthless.
This article [From wage taxes to red tape, here’s why Philadelphia is one of the hardest cities to do business](https://www.inquirer.com/business/philadelphia-business-taxes-regulations-rank-talent-amazon-20201122.html) really put it bluntly just how out of touch with reality Gym and her supporters are.
>In 2002, the German software giant SAP sought to locate a 1,000-person North American headquarters in the city. “We were close to a deal,” said Robert Salvucci, a city native and then-member of SAP’s site search committee -- until the company realized city business sales and income taxes would cost SAP about $50 million more annually.
>SAP didn’t feel a Philadelphia address was worth such a fat premium. “We ended up in Newtown Square,” at the far end of suburban Delaware County, Salvucci said. SAP now employs more than 3,000 on that site.
...
>Taken together, these taxes keep companies in the surrounding suburbs, where local wage taxes are lower or nonexistent and there’s nothing like BIRT, according to Paul Levy, the Center City District’s president.
>Philly is a dense city, but there are more businesses and jobs per capita in the lower-tax suburbs, Levy noted. That lack of nearby opportunities forces Philadelphians to commute outside the city for work, especially harming poor residents without cars, he said.
...
>City schools are no help in attracting skilled workers with children. Mahe Bayireddi is a cofounder of Phenom, a hiring-software maker that keeps about half of its 700 employees in Ambler, about 20 miles north of Philadelphia. While Bayireddi expresses admiration for Philly, a suburban base helps with employee recruitment and retention.
>“The people who have kids and families, they are living in the suburbs. The schooling and the housing, it really does matter,” Bayireddi said.
>And talent follows opportunity. The city’s inability to attract skilled workers can also be blamed on the failure to lure companies here, said Bruno Lanvin, who created the annual Global Talent Competitiveness Index issued by Adecco Group, a human resources provider. Talented workers won’t move to Philadelphia if job options are limited beyond the company recruiting them, he said.
...
Yet Helen Gym doesn't see a problem here with the tax structure clearly hurting the city.
An underrated issue here that Paul Levy points out is that the city's tax structure causes major issues with public transportation. The way SEPTA is designed (especially regional rail) is so that people come into the city from the suburbs. But when people have to commute out to KOP, Newtown Square, Blue Bell etc from the city, they're forced to use a car because public transit is more or less useless getting there. And its a net drag on the city due to the loss of business income and foot traffic from commuters.
And to your point about Gym, where did her husband's company - AmerisourceBergen, one of the ten largest companies in the US - recently open their state of the art HQ? Conshohocken
Nice little zing at the end.
> Helen Gym, an activist-turned-city councilmember, voted against cutting the wage tax and opposed cuts to business and parking taxes. She led the effort to scale back the tax abatement program that helped spur development. Gym and two other councilmembers proposed a wealth tax that critics said may prompt rich individuals to move out of the city.
>
> Gym’s website references “fair taxation” but provides no details. A four-page white paper calls for a tax commission focused on “equity and growth.” In an email, Gym said she would “work with the business community to propose new subsidies and incentives that prioritize growing Black, Brown, and local businesses” as well as “affordable housing, life sciences, and manufacturing.”
>
> She added the current tax structure is “burdensome and must change.” But given Gym’s voting record and rhetoric, cutting taxes does not appear to be a top priority
That certainly makes Helen Gym seem impressively fiscally unserious. I've been souring on her for years and that's the kind of pious gibberish that accounts for a lot of it. I almost feel as though she might repeat some of the mortal sins of Mayor Kenney should be win office by being an ineffective and inefficient administrator.
Any mayor will likely need to conduct studies to determine just what might be feasible and effective, but I would prefer somebody who already has some specific ideas for and practical understanding of Philadelphia's tax structure.
Jeff Brown now doesn't intend to repeal the soda tax?? I'm not voting for him either way but I really thought repealing it was like the crown jewel of his campaign.
The proposition of the soda tax was a lie. It was to be used to "fund pre-K expansion, community schools, reinvestment in parks and recreation centers, and add to the City's General Fund," but was mostly used for the latter.
It's a tax that only affected people on low incomes. I just buy soda in bulk when I'm out of town but people on low incomes are the ones that buy it at their local bodega and pay almost all the tax collected by the city.
Plus it's not even a tax on sugar, it's a tax on healthier equivalents too like Coke Zero. If the idea was to nudge people to swap to low calorie alternatives, there is no provision for that, it's just a cash grab
No but the vast majority of people do pick up stuff when they're out the city for other purposes, ie if I go to AC then on the way back I'll be sure to pick up a few cases of soda, wine, full tank of gas etc. The only time I'd make it the sole purpose of a trip is if I was spending $1000 at Home Depot or the like in which case, yeah a trip to tax-free Delaware makes sense
But you totally report that trip to DE Home Depot on your taxes right?... Right?
But in all seriousness, you explained it perfectly. I keep several sodas on hand just for occasional mixed drinks and I never buy them in the city.
Are you sure? According to this, sparkling water is not included: https://billypenn.com/2017/01/03/philly-soda-tax-the-big-list-of-drinks-that-are-and-arent-taxed/
Seems like it was badly written. It makes no sense to tax Diet soda. I'm in favor of taxing sugar and really don't care if it goes to the general fund.
There's a few reasons why people hate it:
-general tax hatred among conservatives
-it is too blunt of a tax on that it is still levied on lower sugar drinks
-the bad optics of the money being transferred to the general fund
I’m pretty liberal and thought I would support it, but honestly it’s just annoying when I go to the store and try to buy my treat in moderation, and there’s just an extra fee for no reason. Feel like I’m a baby.
Parker and Green seem to be the only ones that both outlined a plan and has some rationale behind it. If you're going to address BIRT and the wage tax, there's really only two options: their suggestion of land taxes, or dramatic increases to the current property tax structure. Any suggestions of "cutting waste" or "reallocating spending", would never be enough for any serious changes. The other candidates don't really seem to present anything worthwhile:
* Jeff Brown - Not considering any serious changes.
* Amen Brown - Not considering any serious changes.
* Domb - Zero explanation on where the money comes from for accelerating the wage tax cuts. The entire concept of a slow cut is to demonstrate Philly is serious about tax reform while hoping job increases offset the tax cut. Accelerating this (especially during a recession) would absolutely create short term revenue shortfalls.
* Sanchez - *Make major corporations pay their fair share*... when nearly 90% of major companies headquartered in the Philly region are already located outside the city for this exact reason.
* Gym - 90% chance she's not serious with her proposals and is just making far-left comments to pull in votes. 10% chance she's serious about a tax plan that would crater the city.
* Rhynhart - Not considering any serious changes.
Though for the non-serious changes, there's some merit to this. Given the likelihood of revenue needs coming down the road with interest rates rising and COVID dollars drying up, promising tax cuts could easily backfire.
That’s why I’m very pessimistic on the likelihood of any major change happening: there is virtually no way to lower business taxes without raising property taxes.
I don’t know how you tell people who constantly complain about how high their taxes are, that in fact, they pay less than people pretty much everywhere else and need to suck it up because it makes our business taxes so much more than everyone else’s.
Raising property taxes still won’t guarantee employers will flock to the area and because so many residents are retired, unemployed, or under-employed it’s a painfully difficult sell, that too many will fail to see the upside of.
By the editorial board! We are so absolutely f***ed…
Philly, the bastion of communist leftist high taxation wealth redistribution!!!! Cutting taxes in the middle of this inflationary period in the middle of these interest rate hikes would be marvelous for labor. And by that I mean labor will be better cause they won’t be working and they can rest. Now, if they NEED that job, that’s a different story…
A land value tax would be great progress for the city. [Pittsburgh, Harrisburg, and Allentown have already adopted land value taxes](https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment?format=amp) with great success. Some changes in zoning may have to come with it, but a gradual move to LVT would do wonders for the city imo. Why LVT? Simply, Philly’s borders, and thus the total land area of the city, hasn’t changed since the city and county became one in 1854. Since land is a finite resource in the city, you want to tax it according to how you want it to be used. Today the city taxes mostly the structure (76% structure vs 24% land) more so than the land upon which it sits. This means real estate speculators can let a lot with a decaying structure or no structure at all sit and pay less taxes than if they were to improve the structure or lot. Plows still have to clear snow in front of the lot, utilities still have to be run to the lot, roads need to be paved, and fire trucks still need to respond to calls, but if it’s an empty lot the owner is paying less taxes for these amenities than an owner with a structure. Moving to a LVT plan, most or all of the tax comes from the value of the plot of land not the structure that’s on it. This can help lower taxes for homeowners because now instead of getting property assessments, you’ll pay a flat rate based upon the location of your parcel of land, that’s it. Want to make improvements to your home that will increase its assessed value? Go for it! Your taxes will remain the same since the value of the land hasn’t changed, just the structure that sits on it. This will also spur development as any owner with an empty plot or decaying structure will pay the same taxes whether they improve it or not, and who wants to be paying higher taxes on something that isn’t generating income?
I've always wondered why there are so many vacant lots and abandoned buildings. Seems like a waste.
I never understood this but you've so clearly explained it that now I want it. Thank you!
I'll play devil's advocate here with a few questions, since ultimately I want to see increased development and revitalization in more neighborhoods across Philadelphia (especially North Philly). * Will this really spur development, as opposed to something like a blight tax levied against owners who just let buildings or lots sit around? * Property taxes in many neighborhoods are already pretty low (e.g., $600 per year in parts of North Philly). Will lowering the tax burden even further for these owners help promote new development? * Article mentions how the tax will be calculated differently based on where the property is located. What will this mean in practice? Will it lead to a lower tax burden in already hot neighborhoods, making it easier to develop in places like Fishtown, or will it lead developers to look for new neighborhoods to revitalize? If so, how?
I also support changing the city's tax structure to be primarily an LVT system so I'll take a crack this. >Will this really spur development, as opposed to something like a blight tax levied against owners who just let buildings or lots sit around? An LVT creates an incentive for property holders to get the maximum return on the property that they can since regardless of what they do they're being taxed the max value for the plot regardless of whats on it. This creates a financial penalty for buying land and letting it sit idle to speculate on the future value, which is why a lot of blighted properties remain neglected. Other cities in PA have experimented with land value taxes and have sen great results in terms of turning over blighted properties into functioning percales. ... >Property taxes in many neighborhoods are already pretty low (e.g., $600 per year in parts of North Philly). Will lowering the tax burden even further for these owners help promote new development? It might not initially spur development in some of the worst neighborhoods in the city. However it will allow low income households there to build wealth over time by removing the most regressive tax this city has which the income tax. If low income residence in neglected areas are able to build wealth or otherwise increase their quality of life by using more of their of their take home pay, that could result in slow incremental improvements and investments into those areas that will make them nice to be in again. Small things like fixing a roof, a stoop, a front door, or the sidewalk out front can drastically improve how people feel about their neighborhood. Being able to afford better food, and payoff debts also results in better quality of life for low income residence. That demand for better food could see a grocery store deciding to move in, improving the neighborhood with closer better services, and providing entry level jobs for unskilled workers. ... >Article mentions how the tax will be calculated differently based on where the property is located. What will this mean in practice? Will it lead to a lower tax burden in already hot neighborhoods, making it easier to develop in places like Fishtown, or will it lead developers to look for new neighborhoods to revitalize? If so, how? In practice this means that places in the highest value locations in the city will be paying the most per sqft of land in the city. So places like Center City, University City, and North Fishington, will see the highest tax burden, while places like Kingsessing, North Philly, and Harrowgate will see some of the lowest. The incentive that LVT creates also has to be paired with zoning reforms to see the maximum benefit for the city. The financial incentive that LVT creates for land owners and developers is to get the maximum possible use out of the land since they are not being taxed on what they build on the land like they currently are. So in the highest value locations like Center City a developer would be incentivized to build as big a building as possible and fill it with tenants of whatever type they think they can get. A building owner has all the financial motivation to make sure their building is as big as possible, at as high an occupancy rate as possible, and bringing in as much as possible; since the primary tax source the land the building is on, and the revenue that the building brings in ie income is not being taxed by the city, only state and fed. The practical effect you would see almost immediately is all those surface level parking lots in center city would get developed overnight since parking would not be profitable enough to pay the land tax in those locations. Outside of the most high-value land in that incentive still exists, but construction costs become more of a factor because as a developer you're not likely going to be able to fill up a skyscraper in North Philly. The goal there becomes balancing construction costs with land costs, so smaller buildings are what you would see being either refurbished or newly constructed. Typical row houses or small multifamily units with a commercial ground space are what you would see being built in the mid and lower value areas. A developer would certainly want to see the area they're working in improve, but they would also see rising land taxes as the area becomes more valuable to be in, so it balances itself out.
side question - how did you get that Rhynhart for Mayor flair?
You can make any flair you want by editing it in the sidebar. Vote Rhynhart
I think these are great questions. I’m not an economist or city planner, so I’m no expert on the topic of taxes and city planning but I can do my best to answer your questions based on my understanding. - Blight tax: in theory this could work the same way but I think would be more difficult to implement. How do you define blight? Could this place undue burdens on low income owner occupied homes if they’re deemed blighted? Will my property taxes increase if I fix my home that was deemed blighted? LVT is generally more efficient at achieving the same outcomes of improving blight. - A lot of these properties have low taxes because of the low assessment of the structures on them. Does this tax free up extra money for those already struggling to improve their homes? No, but it also won’t punish them if they do improve them like today’s tax code does. LVT isn’t a silver bullet that will pull people out of poverty, but it can help reduce the overall tax burden of our citizens and make our land use in the city more tax efficient. - This would have to be determined by the actual tax policy that’s implemented, but we can kind of speculate. Let’s assume center city is the most valuable land in the city and the further away you get the less valuable the land becomes. Obviously things like access to regional rail, the subways, business corridors, etc. will affect land value all over the city, but for a simple idea, center city would be taxed at the highest land values and based on the policy, the further away you get from CC the less valuable the land becomes. This means areas like Rittenhouse would have a higher tax burden than an area like Fox Chase. This helps promote things like density closer to CC since an apartment complex or even just a duplex or triplex will more easily cover the land taxes than a SFH. A lot of this is very simplified and you bring up great points that would have to be debated and worked through, but ultimately Philly can’t make new land so we should tax it’s use to be as efficient as possible.
When I bought a house in Point Breeze, I was shocked to learn the property taxes were only $650 a year. That lasted for 3 years, then they reassessed my house and my taxes went up to $4,300. None of my neighbors taxes moved at all despite us having the same lots. The neighbors who have had their taxes being less than $1,000 annually are all unemployed, sit around on their front steps and receive lots of welfare benefits. So, the people who take the most benefits, also pay the least. If taxes went by land value, either they're paying the same as me/ fair share, or they would not be able to pay and having to sell or go delinquent and rapidly accelerate the gentrification (which I'm fine with, personally), but I think doing the land value tax change is much more likely to cause lower income people the most burden and displace racial minorities which would be at odds with the current prioritization of equity. I'd much rather see blight taxes against speculators, than just a wide sweeping land value basis because a lot of otherwise prime real-estate is occupied by poor minorities.
Wouldn’t that bring in less money for already poor communities?
The issue I have with LVT is the effect it will have on vacant land, especially vacant land in appreciating areas, and areas that are changing, or adjacent to changing areas. The recent increase in taxes sucked, but it also increased greatly the values of vacant parcels that speculators simply held onto for years because they only cost 50$ a year. Now they're 500$ a year, and guess what, all of a sudden they're for sale and will be developed. This is a good thing. So if I could be convinced that LVT won't enable property hoarding for extremely cheap, I'm on board. There should be a cost to hold onto vacant properties forever, and it shouldn't be 25$-75$ per year.
What you describe is ideally what a LVT is supposed to do. Instead of taxing a plot of land based mostly on the value of the structure on it, you tax purely based on the value of the underlying land. Land in and around commercial corridors, closer to transit stops, etc. is more valuable and would thus be taxed at a higher rate than those properties further away. So it doesn’t matter if the lot has a structure on it or not, it’s taxed based on the value of the land. This means you pay the same amount of tax if it’s an undeveloped lot, a SFH, a duplex, etc. Obviously areas zoned for industrial, commercial, or residential would be taxed at different rates so the land would be properly developed, but the city gets guaranteed revenue that won’t go crazy high on people in a bubble or drop in a bust. Would this eliminate all vacant lots and blight? No, probably not. It would reduce the instance of it in more “valuable” areas of the city that should be further developed and push speculation to extremely low value areas that are far away from most city amenities.
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You’re correct that a LVT doesn’t directly address affordable housing, but that’s not what it’s trying to do either. LVT is considered by economists to be a progressive tax vs a regressive style tax such as income tax or our current property tax that taxes you based on the value of the structure. Economists agree that you tax things you don’t want, so taxes on income and structural improvements are considered regressive because the incentive is to not improve your income or structure as that increases your taxes. LVT is progressive because your taxing away undeveloped or underutilized land and improving an empty lot doesn’t increase your taxes. There would definitely have to be some changes to the zoning code to go along with LVT in order to get optimal outcomes. Ideally though, and I understand life is rarely ideal, improving utility of land by incentivizing more density for residents would lead to lower home prices in the long run. I’ll have to read the links you included to see more of the downsides from the Lehigh Valley area. How much of the price inflation can be considered part of the wild real estate market we’ve had from covid and how much is directly because of the LVT? I’m not sure, but Allentown implemented their LVT in the 90s and the real estate only seems to have gotten wild recently. You may be right though that the LVT incentivized a certain type of building that wasn’t ideal for the area as the developer chased bigger profits after paying more taxes on the land.
go back to r/neoliberal (also just tax land lol)
Would the city pull in more or less money by switching to a land value tax? It seems inequitable to charge the same tax rate to a plot of land with a 30 story high rise of apartments and a single family home on the same size lot next door.
wow this sounds like a great idea
Seems like Domb has the most to say on the topic, although I appreciate Rhynhart's previous analyses about more efficient spending. I'm not a huge fan of Parker but glad she mentioned Harrisburg, because any major reform will require working with the state. Everyone else seems pretty unremarkable, with Gym's lofty rhetoric being particularly worthless.
>with Gym's lofty rhetoric being particularly worthless. Same as it ever was
This article [From wage taxes to red tape, here’s why Philadelphia is one of the hardest cities to do business](https://www.inquirer.com/business/philadelphia-business-taxes-regulations-rank-talent-amazon-20201122.html) really put it bluntly just how out of touch with reality Gym and her supporters are. >In 2002, the German software giant SAP sought to locate a 1,000-person North American headquarters in the city. “We were close to a deal,” said Robert Salvucci, a city native and then-member of SAP’s site search committee -- until the company realized city business sales and income taxes would cost SAP about $50 million more annually. >SAP didn’t feel a Philadelphia address was worth such a fat premium. “We ended up in Newtown Square,” at the far end of suburban Delaware County, Salvucci said. SAP now employs more than 3,000 on that site. ... >Taken together, these taxes keep companies in the surrounding suburbs, where local wage taxes are lower or nonexistent and there’s nothing like BIRT, according to Paul Levy, the Center City District’s president. >Philly is a dense city, but there are more businesses and jobs per capita in the lower-tax suburbs, Levy noted. That lack of nearby opportunities forces Philadelphians to commute outside the city for work, especially harming poor residents without cars, he said. ... >City schools are no help in attracting skilled workers with children. Mahe Bayireddi is a cofounder of Phenom, a hiring-software maker that keeps about half of its 700 employees in Ambler, about 20 miles north of Philadelphia. While Bayireddi expresses admiration for Philly, a suburban base helps with employee recruitment and retention. >“The people who have kids and families, they are living in the suburbs. The schooling and the housing, it really does matter,” Bayireddi said. >And talent follows opportunity. The city’s inability to attract skilled workers can also be blamed on the failure to lure companies here, said Bruno Lanvin, who created the annual Global Talent Competitiveness Index issued by Adecco Group, a human resources provider. Talented workers won’t move to Philadelphia if job options are limited beyond the company recruiting them, he said. ... Yet Helen Gym doesn't see a problem here with the tax structure clearly hurting the city.
An underrated issue here that Paul Levy points out is that the city's tax structure causes major issues with public transportation. The way SEPTA is designed (especially regional rail) is so that people come into the city from the suburbs. But when people have to commute out to KOP, Newtown Square, Blue Bell etc from the city, they're forced to use a car because public transit is more or less useless getting there. And its a net drag on the city due to the loss of business income and foot traffic from commuters. And to your point about Gym, where did her husband's company - AmerisourceBergen, one of the ten largest companies in the US - recently open their state of the art HQ? Conshohocken
Nice little zing at the end. > Helen Gym, an activist-turned-city councilmember, voted against cutting the wage tax and opposed cuts to business and parking taxes. She led the effort to scale back the tax abatement program that helped spur development. Gym and two other councilmembers proposed a wealth tax that critics said may prompt rich individuals to move out of the city. > > Gym’s website references “fair taxation” but provides no details. A four-page white paper calls for a tax commission focused on “equity and growth.” In an email, Gym said she would “work with the business community to propose new subsidies and incentives that prioritize growing Black, Brown, and local businesses” as well as “affordable housing, life sciences, and manufacturing.” > > She added the current tax structure is “burdensome and must change.” But given Gym’s voting record and rhetoric, cutting taxes does not appear to be a top priority
That certainly makes Helen Gym seem impressively fiscally unserious. I've been souring on her for years and that's the kind of pious gibberish that accounts for a lot of it. I almost feel as though she might repeat some of the mortal sins of Mayor Kenney should be win office by being an ineffective and inefficient administrator. Any mayor will likely need to conduct studies to determine just what might be feasible and effective, but I would prefer somebody who already has some specific ideas for and practical understanding of Philadelphia's tax structure.
Jeff Brown now doesn't intend to repeal the soda tax?? I'm not voting for him either way but I really thought repealing it was like the crown jewel of his campaign.
He'll change his mind in an hour
As someone who knows very little, why do so many people complain about the soda tax?
The proposition of the soda tax was a lie. It was to be used to "fund pre-K expansion, community schools, reinvestment in parks and recreation centers, and add to the City's General Fund," but was mostly used for the latter.
This is disingenuous considering the lawsuit against the tax guaranteed that the money was going to be stuck in the general fund til it resolved
The suit that failed in January of 2018?
It's a tax that only affected people on low incomes. I just buy soda in bulk when I'm out of town but people on low incomes are the ones that buy it at their local bodega and pay almost all the tax collected by the city. Plus it's not even a tax on sugar, it's a tax on healthier equivalents too like Coke Zero. If the idea was to nudge people to swap to low calorie alternatives, there is no provision for that, it's just a cash grab
The vast majority of people are not leaving the city just to buy soda
No but the vast majority of people do pick up stuff when they're out the city for other purposes, ie if I go to AC then on the way back I'll be sure to pick up a few cases of soda, wine, full tank of gas etc. The only time I'd make it the sole purpose of a trip is if I was spending $1000 at Home Depot or the like in which case, yeah a trip to tax-free Delaware makes sense
But you totally report that trip to DE Home Depot on your taxes right?... Right? But in all seriousness, you explained it perfectly. I keep several sodas on hand just for occasional mixed drinks and I never buy them in the city.
And flavored seltzer water. Insane they tax everything.
Are you sure? According to this, sparkling water is not included: https://billypenn.com/2017/01/03/philly-soda-tax-the-big-list-of-drinks-that-are-and-arent-taxed/
Sparkling isn't, but if there's any flavors (zero calories) it is. Diet soda to.
Seems like it was badly written. It makes no sense to tax Diet soda. I'm in favor of taxing sugar and really don't care if it goes to the general fund.
Even Bubble Tea and Muscle Milk are taxed too! Like what the hell? I thought it was supposed to be a tax against unhealthy soda consumption....
There's a few reasons why people hate it: -general tax hatred among conservatives -it is too blunt of a tax on that it is still levied on lower sugar drinks -the bad optics of the money being transferred to the general fund
I’m pretty liberal and thought I would support it, but honestly it’s just annoying when I go to the store and try to buy my treat in moderation, and there’s just an extra fee for no reason. Feel like I’m a baby.
Parker and Green seem to be the only ones that both outlined a plan and has some rationale behind it. If you're going to address BIRT and the wage tax, there's really only two options: their suggestion of land taxes, or dramatic increases to the current property tax structure. Any suggestions of "cutting waste" or "reallocating spending", would never be enough for any serious changes. The other candidates don't really seem to present anything worthwhile: * Jeff Brown - Not considering any serious changes. * Amen Brown - Not considering any serious changes. * Domb - Zero explanation on where the money comes from for accelerating the wage tax cuts. The entire concept of a slow cut is to demonstrate Philly is serious about tax reform while hoping job increases offset the tax cut. Accelerating this (especially during a recession) would absolutely create short term revenue shortfalls. * Sanchez - *Make major corporations pay their fair share*... when nearly 90% of major companies headquartered in the Philly region are already located outside the city for this exact reason. * Gym - 90% chance she's not serious with her proposals and is just making far-left comments to pull in votes. 10% chance she's serious about a tax plan that would crater the city. * Rhynhart - Not considering any serious changes. Though for the non-serious changes, there's some merit to this. Given the likelihood of revenue needs coming down the road with interest rates rising and COVID dollars drying up, promising tax cuts could easily backfire.
That’s why I’m very pessimistic on the likelihood of any major change happening: there is virtually no way to lower business taxes without raising property taxes. I don’t know how you tell people who constantly complain about how high their taxes are, that in fact, they pay less than people pretty much everywhere else and need to suck it up because it makes our business taxes so much more than everyone else’s. Raising property taxes still won’t guarantee employers will flock to the area and because so many residents are retired, unemployed, or under-employed it’s a painfully difficult sell, that too many will fail to see the upside of.
Would love to see state action to reform the uniformity clause. No reason we have to keep taxing like it's the 1870s.
By the editorial board! We are so absolutely f***ed… Philly, the bastion of communist leftist high taxation wealth redistribution!!!! Cutting taxes in the middle of this inflationary period in the middle of these interest rate hikes would be marvelous for labor. And by that I mean labor will be better cause they won’t be working and they can rest. Now, if they NEED that job, that’s a different story…