Policy — Land Value Taxes
April 4, 2024
This is the third entry in our Policy series. Here we discuss what Land Value Taxes are, how they impact housing in Pittsburgh, and how we can use them to reduce blight.
This is the third entry in our ongoing Policy series. Pittsburgh is in the midst of a severe housing crisis, with many neighborhoods becoming increasingly out of reach for many families. While the causes for our housing problems today are many, the goal of Pro-Housing Pittsburgh is to advocate for each and every change that can lessen the extent of the crisis. Each entry in this series describes a specific Policy that can be undertaken by the local government to help with the housing crisis in Pittsburgh.
As part of that advocacy, we are calling for the City of Pittsburgh, and all other taxing bodies in Allegheny County, to switch their current property tax systems from Flat Rate Taxes to Land Value Taxes or revert to the Split Rate Tax system Pittsburgh had before 2001.
What are Land Value Taxes?
In most municipalities, including Pittsburgh, property taxes are ‘Flat Rate’ - they are levied on the assessed value of the entire property, both the building and the land it sits on. A Land Value Tax is levied solely on the assessed value of the land. A Split Rate Tax levies a different rate on land values and building values. Land Value Taxes incentivize land owners to develop their land - it makes it more costly to hold empty or blighted land as a speculative investment.
Consider the neighborhood of Uptown. While it is seeing a lot of new development, there are also many parking lots, vacant lots, and blighted buildings. If we look at two neighboring buildings in Uptown, 1505 Fifth Ave and 1507 Fifth Ave, our Flat Rate Tax system’s subsidization of blight is cast into stark relief.
1505 Fifth Ave is on the left, 1507 Fifth Ave is on the right.
1505 Fifth Ave is a boarded up three story building, a blight, on 1,800 square feet of land. Next door is 1507 Fifth Ave, a similar sized but well maintained building, also on 1,800 square feet of land. Under a Land Value Tax, these two properties would pay the same amount in taxes.But in 2023, 1505 Fifth Ave, the blighted building, paid ~$1,200 in taxes while 1507 Fifth Ave, the well maintained building, paid ~$4,200 in taxes. We’re taxing people who contribute to our community while subsidizing those who blight it.
