Fixing Property Tax Accounting Issues
The accounting now used for valuing real property contains a fixable flaw, a flaw that has severely undermined our Common Wealth communities for decades. By devaluing land use, thereby placing emphasis on the structures placed on that land, we have encouraged rent-seekers whose “contribution” of vacant lots/blighted neighborhood areas are consuming city funds that could be used to build up as opposed to tear down this city.
Several recent studies estimate that this error, once remedied and applied gradually, would create strong incentives to improve our communities and generate additional necessary revenue Philadelphia needs to ensure growth within this city is “sustainable”.
Who are the benefactors of this accounting error? The banks and the speculators whose vacant lot and vacant buildings deplete city resources - take a moment to consider where in this city the highest rates of crime occur and compare the number of vacant lots/abandon buildings. Is there a correlation? Yes, a recent study by Susan Wachter’s team at Wharton, linked the decline of property values carefully to proximity to vacant lots and blighted buildings.
The potential for this city’s growth and prosperity begins with the land and valuing that land accordingly. By shifting the property tax so that the revenue from land is higher than the revenue from buildings (currently at 78%) those that are using the land at its highest and best use will be rewarded and those who once profited from the decline of this city will be forced to repay what they have taken for decades.
Speculators can improve the land or sell that vacant lot/abandoned building to someone who will. Homeowners need not face a higher assessment because they have improved their homes, city coffers can expand but that begins with correct accounting – valuing the land for what the market says it is worth…Land Value Taxation.
506 West Springer, Philadelphia, PA 19119
BRT “Market Value” 104,000
2009 Sale Price: $240,000
106 West Jefferson Street
BRT “Market Value”: $6,200
2009 Sale Price: $60,000
Like any good business, accounting – auditing assets – must be accurate, transparent and fair. What better way to start than with an accounting of what we are all working and living in the city to create: land values.
