No Tempest in a Teapot

 

Some people say that the movement to tax buildings less and land values more is just a tempest in a teapot, that it wouldn’t make any significant difference in the economy.  Let’s see how big a teapot tempest it is. 

 

I live in Howard County, Maryland.  Its taxable land values are assessed at $24,473,747,530 (per Howard Levinson, Chief Assessor, 1/7/08).   If the land tax rate were gradually increased to 7%, $1,713,162,327 would be raised each year.  This is $978,992,327 more than the total 2008 county budget of $734,170,000 (Howard County Construction Report, 10/07). 

 

The estimated population of the county is 279,799 (Internet, H.C. Md. govt.).  If the entire $978,992,327 were rebated to each resident, a typical family of four would receive $13,996 per year!  Not only that, but county production would leap upward since what jobs produce wouldn’t be taxed by the county and the up-taxed land would be used more efficiently.  Recreational & open-space areas should continue to be tax-exempted.

Should the county immediately adopt a 100% tax rate on land assessments?

 

Absolutely NOT – no, no, no.  No.  A few property owners would receive big tax increases - but not if rate increases aren’t allowed to raise anyone’s property taxes by more than 3% above the previous year’s property tax payment, or if the current building tax rate is lowered by about 20% in each of the next five years with the land tax rate being raised to prevent loss of property-tax revenue.  Other measures can be suggested. 

 

By the fifth year, only land assessments would be property-taxed.  Then gradually replace other county taxes by the land tax.  Most people would get substantial tax decreases and production would be less taxed, to the great benefit of the county’s economy.  Land tax good, all other taxes bad (especially the building tax). 

 

Agricultural land could be completely exempted altogether, as could the land of the poor, elderly, temporarily unemployed, veterans, etc.  Also, such land could be taxed at lower rates or tax-deferred until time of land sale or bequeathal.   The revenue loss would be inconsequential. 

 

            Considering the benefits of doing all this, land value taxation is obviously not a tempest in a teapot.  Just proceed gradually.