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

In the Keystone State, third-class cities, boroughs, and home rule municipalities can adopt local LVT. Also, school districts which are coterminous with third-class cities can also adopt local LVT.

Pennsylvania has had unbroken experience with land value taxation since 1913. The power to land at a higher rate than buildings has moved from two cities, to all cities, boroughs, as well as some school districts, and all "Home Rule" municipalities.1

Cities of the 2nd Class. In 1913 the Pennsylvania Legislature passed, and the Governor signed, Act 147 for the two 2nd class cities, Pittsburgh and Scranton, to reduce property taxes to a half-mill rate on buildings, to be phased in over a 10-year period. The two cities operated under a 2 mills on land to 1 mill on buildings until 1976 when Pittsburgh voters adopted a Home Rule Charter. Scranton followed in adoption.

In 2000, a 20-year overdue Allegheny County-wide reappraisal (property had been assessed at 20% of market value) was undertaken. Numerous challenges were received, especially on Pittsburgh's reassessed land values, and the firm responsible for the new assessments was sued on behalf of the Pittsburgh City Controller and a number of named plaintiffs. The county then hired another firm, Cole-Layer-Trumble, to straighten out the reassessment mess. In the interim, the embattled Council had to set 2001 tax rates and moved to revert to the one-rate property tax mill rate for 2001. This resulted in higher taxes for the very poorest neighborhoods and for downtown property owners.

The Pittsburgh Improvement District continues to use a land value tax.

Cities of the Third Class. In 1951 Act. No. 299, incorporated into Senate Bill 357, dealt with taxation and assessment of land and improvements. Thereafter, Public Law 37531 (Purdon) allowed Third class cities to adopt the two-rate property tax structure.

Boroughs. Senator Terry Punt's 1997 SB 211, to extend the two-rate property tax option to nearly 1,000 boroughs in Pennsylvania, passed both the House and Senate and signed into law by Governor Thomas Ridge in Nov. 1998 as Act 108. This legislation was supported by the Pennsylvania State Association of Boroughs.

Pennsylvania School Districts. In 1993 the Pennsylvania Governor signed Act 16 allowing school districts, which are coterminous with 3rd class cities, to levy higher rates of taxation on assessed land values than on building values. Eight cities qualify under this law. Two School Districts has thus far adopted the higher tax rate on land assessments.

Home Rule 2

Any municipality that chooses Home Rule in Pennsylvania may adopt a tax structure that exists by an act of law by the General Assembly:

"Municipalities shall have the right and power to frame and adopt home rule charters... A municipality which has a home rule charter may exercise any power to perform any function not denied by this Constitution, by its home rule charter or by the General Assembly at any time."

The Home Rule Charter and Optional Plans Law grants Pennsylvania municipalities the power to determine for themselves what structure their government will take and what services it will perform. A home rule municipality no longer has its powers and organization determined by the state legislature. A home rule municipality drafts and amends its own charter and can exercise any power or perform any function not denied by the state Constitution, the General Assembly or its home rule charter. As of2006, 71 municipalities have adopted home rule charters, including 6 counties, 19 cities, 19 boroughs and 27 townships.

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.