The Herald, Sharon, Pa.

Local News

March 16, 2007

Sharon council mulls land value tax after presentation by economics official

By Courtney Anderson

SHARON — Would a land value tax help fix Sharon’s problems?

An expert thinks so and Thursday presented the findings of his study to council members who said they’ll consider it.

Joshua Vincent, executive director of the Center for the Study of Economics in Philadelphia, said the taxing system, which reduces taxes on buildings and raises rates on land, would be revenue neutral for the city but would save money for about 63 percent of homeowners.

That number is one of the better results he’s ever measured for a community, he said.

Vincent recommended that Sharon set rates at about 95 mills 94.942 for land and about 30.4 mills 30.375 for buildings to start. The city’s current tax rate is 40.5 mills. A mill is $1 for every $1,000 of a property’s 1970 market value.

About 10 percent of the land in Sharon is vacant, Vincent said, and valued at about $1.2 million. This is a high percentage and not healthy for the city, he said.

Switching to a land value tax would reward people who keep their buildings maintained and encourage construction, said Vincent. And it would discourage people who don’t live in the city but own vacant lots to either do something with them or sell them.

“It puts pressure on the bad actors,” Vincent said.

The current system penalizes people who improve their property by taxing the value of the buildings, said Vincent.

According to Vincent’s study, there are 6,712 taxable parcels in Sharon and the city currently gets 15.7 percent of its revenue from land and 84.7 percent from building taxes. A land value tax system would shift the burden to 36.7 percent of revenue from land.

This makes Sharon, with the highest millage in the county, unable to compete with other communities, he said. Greenville, the community with the second-highest tax rate, levies 23 mills of tax on real estate, about half of Sharon’s rate.

Other positives for a land value tax are that it’s stable. It doesn’t rely on population or construction. It also discourages sprawl and speculation as well, said Vincent’s study.

Most commercial properties would see a decrease in their tax bill, Vincent said, which doesn’t usually happen.

Sharon’s in a unique situation because the school district is one of only 12 in the state that can also switch to a land value tax.

Mayor Bob Lucas said the center’s studies don’t always show a municipality should switch to the land value tax.

“Failing maybe Harrisburg coming to the rescue, you have control over your destiny,” Vincent said, alluding to the possibility that the city could become an Act 47 distressed community.

Council member Jennifer Barborak said she wants to look into it and President Fred Hoffman said they will go over some specifics.

Because the public gets scared any time a tax change is discussed, council member Frank Connelly said the issue will have to be explained well.

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