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http://www.earthrights.net/docs/foundation.html
Have We Forgotten The
Foundation?
By Walter Rybeck
American Institute of Architects Conference on
"The Vital Role: Historic Preservation in Livable
Cities"
WASHINGTON, DC - March 17, 2000
Introduction
Americans owe a tremendous debt to architects and others
who led the movement to save and restore our nation's
historic buildings and neighborhoods.
My thesis today is that it is equally
imperative to restore our historic land policy that
provided a foundation for the flowering of wholesome cities
and towns. Otherwise, precious treasures saved by
preservationists are in danger of becoming isolated islands
in an unsavory sea of urban ugliness, misery and
blight.
Land policy is rarely addressed in books by or about
architects. For most of the past century, political,
scientists, sociologists, planners and economists also
typically failed to focus on land policy.
The 20th century beheld many things that should have
boosted cities.
- Designers and builders had striking new materials and
engineering capacities at their command.
- The city beautiful movement came on the scene.
- The planning profession expanded.
- Federal urban programs were launched.
- And at long last, citizen support for saving our
heritage mobilized.
Despite all this, misconstrued land
policies led to a sharp decline in the character and
quality of life in our cities and towns. Sprawl ruined the
landscape surrounding our communities. Sprawl promoters and
apologists say this is merely an expansion of the American
dream. To me, sprawl is more appropriately recognized as an
American nightmare.
Apparently we have suffered a kind of amnesia about our
initial and highly successful land philosophy. I'll try to
sketch the essence of it and suggest how architects and
others can help restore the foundation, as well as the
superstructure, of our cities. We can't halt sprawl unless
we save our cities.
Early Land Policy
Life in early America was far from idyllic. Settlers
experienced extreme hardships. Public welfare to ease
adversity was nonexistent. The minimal level of our public
amenities shocked foreign visitors. Nevertheless, Americans
developed an optimistic "can-do" spirit and created the
most dynamic and egalitarian society the world had seen to
date. In no small measure this phenomenon stemmed from
factors related to land.
Land hunger lured Europeans to the New World. To them, free
or cheap access to land spelled opportunity. With a few
tools anyone could build a shelter, garden, hunt, start a
trade. With neither oppressive governments nor landlords to
expropriate their earnings, people willing to apply
themselves to nature's cornucopia could escape poverty.
This land-people relationship fostered the American work
ethic.
Comparing the United States with South American nations is
instructive. Spanish and Portuguese conquistadors promptly
took dominion over much of the land. They used peon labor
and plundered gold to create charming cities, magnificent
cathedrals and luxurious haciendas. This was at a time when
our colonists were still mostly in log cabins. We were the
backward nation, the developed nations were to the South.
Before long, however, their economies atrophied, even as
ours burgeoned. A critical difference explained why:
The United States during its first half century raised
public revenues predominantly from taxes on land values.
Latin America hardly taxed land at all. After Independence,
the federal government played an important but minor role.
Its early budgets were unbelievably meager--financed
largely from export and import duties. It wasn't till the
1930s that federal revenues exceeded local revenues.
Initially, cities, counties and states were our major
governmental players. Their tax of choice was the property
tax--virtually their sole tax throughout the 1800s.
In that era, because average homes and shops were so
modest, it is important to underscore that the bulk of our
local property tax revenue represented a tax on the value
of the underlying land.
Since the conventional property tax is in such ill repute
today, it needs to be clarified that this tax was not only
a good source of revenue. It was also a mechanism for
allocating land in an equitable manner. Let's recount the virtues of the land tax from the
perspective of our young country:
- It required owners of the most productive sites to
pay extra for the privilege such lands conveyed.
- It eased the lot of poor citizens on marginal lands
by requiring little or no taxes from them and by giving
them public protection and services financed by favored
owners of prime locations.
- It discouraged large unused estates. Owners (like
George Washington, who had obtained considerable holdings
all the way to the Ohio River) were induced to sell off
excess land to minimize taxes.
- This increased the supply of land on the market,
reducing its cost for those who needed to use it.
- And it let the community recapture increased land
values created by the community -- as when tax-payers
through their governments built roads, canals and other
public facilities. America was blessed not only with vast
land resources, but also with remarkable political
philosophers like Jefferson, Madison and Paine. They
perceived that sustaining political equality -- the most
novel, radical and exciting idea stirring the new nation
-- required polices to assure universal access to
land.
Unlike Latin America, which catered to land holding,
our Founding Fathers put a premium on small holders and
land using. Heavy reliance on the land tax nourished our
market economy and supported the growth of vibrant cities
and towns from coast to coast as our experiment in
democracy took root.
Losing It
The land ethic and land practices, which served our economy
and cities so well, sadly fell into disrepair. Here are
five of the more important reasons:
- One: By 1900 the frontier was
gone. The country was virtually all fenced in.
Historian Frederick Jackson Turner in the 1890s
underscored the frontier's importance. Its free or cheap
land had been a safety valve for labor. Workers who felt
exploited could go West--strike out on their own.
- Two: Prodigious concentrations of
wealth materially altered the economic landscape.
Some of these were based on railway land giveaways. Most
were tied to natural resource monopolies -- of coal,
timber, oil, cattle lands and so forth -- whose owners
found ways to fend off land taxes.
- Three: A shift from local to federal
power occurred in the political arena. The
national government had to grow to save the Union and
execute the Civil War. It also expanded to combat abuses
of giant combines and trusts. To underwrite this growth,
Congress turned primarily to tax-ing production and
incomes.
- Four: At the urging of land
monopolists who practically owned many state legislatures
in the late 1800s, state governments discarded property
taxes, replacing them with income and sales taxes.
Local governments also gradually began to decrease their
reliance on property taxes.
- Five: The property tax itself was
transformed. It became less a tax on land values,
increasingly a tax on improvements--that is, on houses,
stores, offices and other edifices on the land.
These factors gave rise to slums, to panics (as
depressions were then called), and a widening gap between
the haves and have-nots. As a corrective, Henry George in
his 1879 masterwork,
Progress and Poverty, urged Americans to
address the land problem. He inspired a large popular
following, but many academics, politicians, economists
and captains of industry asked scornfully, "What land
problem?"
It calls to mind the routine where Jimmy Durante got
caught steeling an elephant from a circus. A cop says,
"Hey, where 'ya going with that elephant?" And Durante
replies, "What elephant?" A century later, few question
that we have an elephantine land problem.
- Ecologists know it.
- Sprawl and crawl people know it.
- Many elected officials, homebuyers, and people trying
to start a farm or a business know it.
However, too few have a clue about how to deal with
land issues, or any notion that archeological digs into our
history might provide useful answers. Instead, consider
what's happening:
- Habitat volunteers build houses for
the poor, making recipients and its volunteers feel real
good. This is a fine example of charity combined
with self-help, and it spreads awareness of a great
social ill. But more housing is being abandoned and
demolished than Habitat is able to build.
- This same treadmill effect
undermines federal efforts. HUD has spent billions
on public housing, urban renewal and enterprise zones.
Some of these programs have retarded urban decline but
their strongest advocates would not claim they have come
close to stopping or reversing it.
- Cities offer tax abatements to
revive decaying business districts. Yet after new
buildings are established, the cities hit owners with the
same tax burden that helped cause decay in the first
place.
- Some builders turn to what I call
"designer sprawl." They mimic old towns and are
clearly less wasteful of land than unplanned sprawl. Yet
they often invade wheat fields and wood lots far from the
job centers, transit lines and cultural institutions that
comprise real communities -- while large quantities of
usable sites that are well served by infrastructure lie
fallow in those real cities and towns. These stumbling
efforts recall an architectural parallel -- when people
first tried rather pathetically to restore old
neighborhoods with false storefronts, tarpaper bricks and
Permastone.
Urbanologists and the public need to be awakened to
the central role played by taxation. They need to see that
loss of our historic land tax has made speculation our top
national sport -- a treacherous one at that. As Hans
Blumenthal wrote in Metropolis...and
Beyond (edited by fellow panelist on this program,
architect Paul Spreiregen):
There is no doubt that the present real property
tax...contributes more to depressing the standard of
housing than all government housing policies combined do
to raise it. The current property tax may fairly be
called the upside-down tax. It taxes land values too
lightly, buildings much too heavily. It rewards bad land
use, penalizes good land use. Consider three identical
homes and lots:
- Owner No. 1 adds a rec room, new
roof, great landscaping. The assessor comes by and
says, in effect: "As punishment for making a showplace,
and for generating jobs and profits for local businesses,
we're raising your assessment by the amount of your
investments. Your tax bill will go up, not just for a
year, but for as long as you keep the house in good
condition."
- Owner No. 2 lets his house of the
same size run down -- loose banisters, torn screens,
broken gutters, junk-filled yard. The assessor
tells him, in effect: "Because you created an eyesore for
your neighbors and an unsafe dwelling for your tenants,
we're reducing your assessment and your taxes. If your
place is more dilapidated next year, we'll reduce them
even more."
- Owner No. 3 tears his building down;
the idle lot neither houses nor employs anybody.
The friendly assessor tells him, in effect: "For
completely wasting your property, and for making no use
of the infrastructure provided for this area, we'll give
you the lowest assessment and tax bill of the
three."
These all-too-familiar examples condemn not the assessor
but our present tax system. And the same perverse
property tax incentives apply to commercial properties.
Is it any wonder cities are torn apart? The wretched tax
on buildings is only the half of it. The low land tax is
the other half. A speculator sees that
the annual increase in his or her land value is greater
than the tax bill. This signals the owner to do nothing,
to sit back and collect the values generated by
productive neighbors and the community.
Speculation feeds on itself. The more
land held out of use, the tighter the supply of available
sites. This raises land prices further, seducing
more speculators into the land game, hastening the flight
of residents and businesses from central cities and even
small towns. This is far from the only cause of sprawl, but
one of the most potent. It cannot be stressed too much
because it is one of the least recognized causes.
If we continue on our present course, overtaxing production
and undertaxing land, the outlook is dismal. It is heading
us toward the very conditions seen in extreme forms in
Latin America and other continents.
Time for Good News
The good news is that we can reclaim our historic
foundation.
A problem is that our present property tax imposes a single
tax rate on the total land-plus-building value. When a
locality increases the good land tax, it automatically
raises the destructive building tax. Thus
the obvious first reform is to sever the unholy union of
these distinctly different parts of the property
tax.
Pittsburgh pioneered an easy way to do this with a
two-rate tax. It taxed buildings
at only one-sixth the rate on site values. Aliquippa taxes
land at a rate 16 times higher than on buildings. Some 20
Pennsylvania cities and towns utilize this approach,
gradually reducing taxes on structures. Results have been
uniformly good -- bringing idle land and empty buildings
back into use, rejuvenating business districts, and holding
home prices in check so seniors on fixed incomes are not
pushed out of their neighborhoods.
Architects and other preservationists can help revive urban
livability by...
- Joining forces with those who are pushing for this
two-rate tax reform;
- Persuading local governments to pass resolutions
urging their state legislatures to enable them to tax
land and buildings at separate rates;
- Pushing state legislators to follow through on this
action; and
- Finally, at every opportunity, bringing public
attention to the necessity of recapturing publicly
created land values as a way to save our cities. Those
who make restoration of America's historic land system a
part of the historic resources agenda will be doing a
great service to the country. This is the challenge and
the opportunity.
CENTER FOR PUBLIC DIALOGUE
10615 Brunswick Ave - Kensington MD 20895
301-933-0277 - waltrybeck@aol.com
Why not make more free to “the poor”
the land they were born to inherit as they inherit
the air to breathe and daylight to see by and water
to drink?
I am aware of the academic economist’s
reaction to any land question. Nevertheless, Henry
George clearly enough showed us the simple basis of
poverty in human society. And some organic solution
of this land problem is not only needed, it is
imperative.
What hope for stimulating a great architecture
while land holds the im-provements instead of the
improvements holding the land? For an organic
economic structure this is wrong end around, and
all architecture is only for the landlord.
— Frank Lloyd Wright, The
Disappearing City, 1932,
reprinted in “FLW Collected
Writings,” Vol. 3, p. 98,
Rizzoli International Publications, NY, 1993
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