Letters

Other People’s Property, Giving Thanks, The Broke and the Beautiful

Other People’s Property

Regarding Kellie C. Murphy’s recent article about Land Value Taxation:

Maybe the assessors can’t do an absolutely perfect job of distinguishing land value from building value, but so what? Right now, land and buildings are taxed at the same rate, so people who improve their properties get hit with higher taxes, while slumlord and speculators owning vacant lots get off easy.

If land were taxed at, say, four times the rate on buildings, that would be a great improvement (and cutting the tax on improvements would lead to great improvements, if you’ll pardon the pun). If assessments weren’t perfect, and someone paid land-rate taxes on a small part of the value of his building, or someone got off paying only the building rate on part of the value of his land, we’d still be much closer to a good tax system than we are now.

Land values are marked by continuity in space; building values are not. That’s why you can put land values on a map—most neighboring parcels are comparable to each other in value. That’s how NYC taxed residential land values while exempting new buildings (below a ceiling value) from 1921 to ’32, and boomed while Philly and other Eastern cities faded.

What’s being proposed has been needed for decades. For more than 30 years I worked in the housing finance sector and watched as rising land prices made housing less and less affordable for lower- and middle-income families. The only way to stabilize land prices at an affordable level is by making it unprofitable to hold land off the market (or to ignore the land you do own because the taxes are so low you need do nothing with it).

Philadelphia (and all communities) ought to be moving toward a land only property tax base, so that some time in the near future all property improvements are exempt from taxation and the full location rental values are collected to pay for public goods and services.

I’ve recently completed development of a global education program on land value taxation, or land value “capture,” as it’s coming to be known worldwide. From our analysis of the use of this policy both in the U.S. and other developed countries, there is no obstacle to separating land value from building/improvements value. Mr. Mescolotto should rest assured that there are no practical barriers for implementation of this policy in Philadelphia and the benefits would no doubt be significant.

Giving Thanks

In response to our cover story about philanthropic organizations and the declining economy:

As the director of a nonprofit organization here in Philadelphia, I was extremely pleased to read your cover story about the importance of giving to nonprofits during tough economic times. Our country’s financial crisis has made it more difficult for individuals to donate their resources, while also creating a higher demand for the services many nonprofits and foundations provide.

What makes all of these groups so special is their ability to effectively organize community members to foster change. I thank you for acknowledging and validating their work, and for bringing attention to their need for support.

As we enter the holiday season, it’s important to remember that we as individuals have the power to make real change happen in our city through giving. And I’m not just talking about money. It’s about donating your time and other resources to help those in need. There are so many people right here in Philadelphia who need our help. The city’s poverty rate is among the worst in the nation and the highest in the Northeast. When the economy worsens, it’s people already living on the margins who are the hardest hit. Now, more than ever, is the time to make a difference and make real change happen in Philadelphia.

The Broke and the Beautiful

Regarding Liz Spikol’s recent column about financial insecurity:

Hilarious and brilliant. I laughed till I cried. Like Liz, I know nada of 401(k)s, stock ownership, etc. This financial meltdown hasn’t affected me that much, except for my lovely credit cards. No car, no fancy clothes. But then again, no health insurance, either. The place that used to give it to me doesn’t exist anymore.

I do own a tiny little house and whatever great Russian said, “Property is theft” sure knew his stuff. Smarter folks than I have written we can ride this baby out if we stay local and provide our services to each other. Maybe that’s true. Here’s hopin.’

As a Philly resident who relies on expensive meds—and has bad credit—I think I can relate. With memories of a prosperous life (I used to have a 401(k) and a smokin’ debt-to-income ratio) before recessions and PSZ, I understood that any income I earn in this new, crazy world (I work online) could fuel a Roth IRA.

The difficulty, here and now, is surviving the moment. Too often, crapola occurs, such as running into the “unprotected” zone in prescription coverage, making it impossible to properly fuel “golden years” savings.

In one paragraph, Spikol mentions activities of daily living being, at the least, challenging. I’m curious as to what energy/focus-sapping things go through her mind. In my case, it’s a combination of fear, anger and disgust—which I think are ingredients of financial chaos.