The Case of Harrisburg
Harrisburg, Pennsylvania started using the two-rate
tax in 1975 with a very modest shift of tax off
buildings, onto land. At that time it was known as a
municipal "basket case," with over 4000 vacant
structures. Since then it has shifted more tax off
buildings on to land in several steps. Today the tax rate
on land is 4.89%, the tax rate on buildings is 0.9618%.
Today there are less than 500 vacant structures and
Harrisburg is considered an up and coming city.
Mayor Reed in a 1994 letter to Patrick J. Toomey said
the following. "The City of Harrisburg continues in the
view that such a land value taxation system, which places
a much higher tax on land than on improvements, is an
important incentive for the highest and best use of land
in already developed communities, such as cities.
[…] Moreover, the same two-rate system tends to
discourage real estate speculators and others who would
be inclined under normal conditions to tie up land tracts
that could otherwise be used for development purposes.
[…]
With over 90% of the property owners in the City of
Harrisburg, the two-tiered tax system actually saves
money over what would be otherwise a single rate system
that is currently in use in nearly all municipalities in
Pennsylvania. […] I should note that the City of
Harrisburg was considered the second most distressed in
the United States twelve years ago […] Since then,
over $1.2 billion in new investment has occurred here,
reversing nearly three decades of very serious decline."
A coincidence? Perhaps not.