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Alabama and other low-tax states Mason Gaffney: Land as a Distinctive Factor of Production
Landownership imparts superior bargaining
power Labor starves, in contests of
endurance; land endures. A landowner is also a person with labor power. He or she can earn income like any worker. Landownership gives income above that, which gives discretionary spending or waiting power. In contests with capital, land has the greater waiting power because over time capital depreciates, while land appreciates. Thus landowners (when free of heavy taxation) are noted for their patience. Patience is the essence of bargaining power. Because land is fixed, more ownership by one person or group means less ownership by others. To expand is to preempt, unavoidably. Thus, the expanding agent necessarily weakens others by the same stroke that strengthens himself. Landownership often gives market power in the sale of specific commodities and services. Read the whole article Mason Gaffney: Two-Rate in Reverse
In 1955, Spiro Agnew was a Maryland State
Assemblyman on the rise. He carried a
new law that let tax assessors value farmland on its
"use-value" as farmland, instead of market value. It
let owners who were farming for unearned increments
around Baltimore and D.C. hold out with low carrying
costs. "Farmland" meant land used for farming,
and any play at farming would qualify. Under this law,
a relative of mine with 102 acres in Maryland near
Western Avenue, the D.C. line, kept just two steers
thereon to validate his farmland assessment status.
Holding for the rise "never crossed his mind." Right --
except, whenever such land is condemned for public use,
courts everywhere have held that compensation must be
based on speculative market value. ...
It is not just peri-urban land speculators who gain. A large chunk of land value in rural regions is not based on cash flow from food and fiber, but on amenities. Wisconsin is a major playground for rich urbanites from nearby Chicago, Milwaukee, Minneapolis and St. Paul. "Use-value" assessment exempts this chunk of value completely, for use-value is based on capitalizing the net cash farm income from growing crops, and, in the Wisconsin law, specifically corn. The highest land values per capita in the State are in Vilas County up in the north woods, once dismissed as worthless "cutovers." Vilas' barren podzol soils are worthless for corn, but sparkling lakes bedizen the County. Values per capita in Vilas are 6 times those in Milwaukee. Rich recreationists and "investors" (read speculators) are gobbling up the "wild forties." Shoreline parcels are like diamonds among coal. ... 100 years ago, American Georgists made a big point that city land outvalues rural land many times over. One implication is that taxing city land is taxing the rich, and we can ignore farmland. Some land-taxers counsel that farmers are easily misled to oppose us, so leave them alone and convert the cities. But rich city folks also own choice rural lands.
those are a few of the
struggling family farmers whom use-value assessment of
farmland saves from destitution.
The privilege of use-value assessment stretches even beyond farmlands, vast as they are. Timberland in most states gets the same preferred treatment, only better. About 1/3 of the privately owned land in the U.S. is in timber. In California, owners (mostly huge corporations) may put the land into the "TPZ" class. The standing timber is then exempt, and taxed only at harvest, at 2.9%, much too low a rate to make up for a 60-year lifetime of exemption. County assessors have to value the land separately on its putative value for growing timber, following a State-legislated formula that is tailored drastically to understate even that low value (California Revenue and Tax Code, Section 434.5). Much of that land, though, has alternative uses, e.g. for retirement and vacation homes and resorts, the outliers and pioneers of urban sprawl. There are also mineral values, hunting, fishing, rifle ranges, grazing, campsites, tourism, rights of way, lumber camps, loading sites, water sources, lakes, log storage, landings - there are many things to do with 1/3 of a nation's land. Those uses are all declared "compatible" with timber, hence land values derived therefrom are tax-exempt. Read the whole article Alanna Hartzok: Who Would Jesus Tax? The Saga of Susan Pace Hamill's Alabama Tax Crusade
... Classification of land for taxation, with
preferential low assessment for lower uses (rarely are
assessments above the market for any use, except
apartments and rentals for the poor). In California,
some favored use-classes are farming, timber, and golf.
Alabama has another set of low-tax classes,
favoring land in forests and hunting grounds, catering
to the Heston vote in league with absentee corporate
owners (and, for no visible theological reason,
organized fundamentalists). Lands in classified uses
are assessed by capitalizing their visible money income
from the official use only, thus exempting from the tax
base all values from rustic manorial, recreational, and
blood-sport uses, and all speculative values based on
higher future uses. In vast rural and sylvan areas
these other influences are the main source of market
value. ... Discounts to large owners who have policy of slow sales or leasing. (Such discounts are given to Oregon timber; to Appalachian coal; and many extractive resources. They are given to laggards in ecotones.)... Read the whole article
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