The ‘Georgists’ are out there, and they want to tax your land

From the article (archive):

When Mayor Mike Duggan talks about his accomplishments in Detroit, the list is both impressive and sad. He had the streetlights turned back on, and reopened closed parks. In the decade since he took office, the city has demolished some 25,000 blighted homes whose rusty debris and incubation of crime drag down neighborhoods.

The progress would be even greater, the mayor argues, if the city hadn’t been smothered by speculation. In the years after the Great Recession, tens of thousands of Detroit properties were bought by absentee landlords and faceless LLCs. The owners are so negligent and hard to find that the city mows their lawns without asking.

Mr. Duggan gets angry discussing the subject. In speeches and community meetings, he paints a stark, moralized contrast between the businesses that invest in jobs and the sit-and-wait landowners whose paydays rely on others’ efforts.

“Blight is rewarded, building is punished,” he said in a recent speech, repeating it over and over for emphasis.

The refrain is a windup for Mr. Duggan’s scheme to fix the blight: a new tax plan that would raise rates on land and lower them on occupied structures. Slap the empty parcels with higher taxes, the argument goes, and their owners will be forced to develop them into something useful. In the meantime, homeowners who actually live in the city will be rewarded with lower bills.

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[A]mid a continuing crisis in affordable housing, a generation of young professionals has burrowed into housing policy, and gotten interested in the YIMBY movement, for Yes in My Backyard, that advocates for denser neighborhoods and zoning changes. As YIMBYs have grown from a curiosity to a legislative force, a subset of them and others who are angry about the cost of living have discovered Georgism.

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Mayor Duggan knew none of this. When I asked him if he’d heard of Henry George at the beginning of our interview, his answer was “nope.” He was surprised to learn that he had become something of a Georgist hero, and that his plan was being cheered as a step toward restoring Georgism to the American conscience.

“This isn’t any deep philosophical movement,” Mr. Duggan said. “I’m trying to cut taxes.”

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From Delaware to California, every Georgist I talked to was closely following Detroit. Mr. Duggan’s proposal, while a long way from full-blown Georgism, represents something the movement hasn’t had much of: the hope of a real-world victory and a chance to show how land-value taxes can solve an actual problem — in this case, blight.

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The problem is that in the years after the downturn, investors bought large swaths of the city and have mostly just sat on it.

From 2011 to 2015, about 100,000 properties — more than a quarter of the Detroit lots — were auctioned in tax foreclosures, according to Regrid, a Detroit-based provider of parcel data nationally. They weigh on the city’s progress and produce a stream of sad stories, like the one about a grandmother who was evicted from her home and moved to a van across the street, but continued to mow the lawn because she cared about the neighborhood.

Mr. Duggan refers to vacant properties as “lottery tickets.” They can be bought for little and held for little — some lots have taxes as low as $30 per year — but have a huge potential payoff, usually because someone else wants to invest. (Speculators recently made money after the city bought out vacant lots to help revive an auto plant that would bring jobs to the area.)

Problems like this are what helped spur interest in a new tax scheme. An early advocate for Detroit’s plan was Nick Allen, now a 32-year-old graduate student in urban planning at the Massachusetts Institute of Technology who worked for a city economic development agency from 2017 to 2019. Mr. Allen said his main project at the agency was finding new ways to stimulate growth that didn’t rely on grants and tax breaks. After reading “Progress and Poverty” years earlier, he’d become obsessed with the problem of speculation, and suggested a land-value tax. (Mr. Allen said he had never mentioned Henry George to the mayor because “the idea survives on its own without having to go back to 1879.”)

So instead of citing a dusty text, Mr. Duggan’s speeches on the land-value tax feature the politically salient image of homeowners with lovely gardens who pay more in property taxes than the vacant apartment building next door. A tax break for residents — paid for by nameless investors who are “taking advantage of the city” — would seem like a political layup.

But he needs state approval to do it, and lawmakers have been skeptical. This year, Michigan legislators debated a bill that would allow the mayor’s plan to go forward, but the measure was tabled until next year. Even if the bill passes, Detroit voters would then have to approve it. It’s a lot of ifs.