The Real Challenges with Baltimore Property Taxes

June 2, 2015

Dan Reed asks in the Baltimore Sun if a land tax could save Baltimore. This idea, popularized by economist Henry George, is one that historically has had support from left and right. The left supports it in the belief that wealth comes primarily from land, taxing it prevents excessive wealth accumulation and speculation, and that it would be progressive since the poor don't usually own land. (These arguments were first made over a century ago, and our switch from an agricultural economy to a more service-based economy may undermine some of them.) The right supports it because a land tax, unlike other taxes, does not discourage productive activity since no more land can be created, and taxing land instead of income is less harmful to investment and development.

That said, the real property tax problems in Baltimore are the excessiveness ($2.36 per $100 in assessed value, including local and state tax, nearly twice the national average) and the inequity (most property in the Inner Harbor and nearby areas have up to 90 percent of their property tax abated as part of deals with the city and state). So parts of Baltimore have punishing property tax burdens (including many of the most distressed parts of the city) while others have little to no property tax burden (including many of the most developed and successful parts of the city). Leveling up could wipe out what successful development there is; leveling down means cutting spending, raising other taxes, or some combination thereof. That’s the real challenge for Baltimore tax policy.

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