A split-rate property tax that assesses land at
ROBERT STEUTEVILLE    MAY. 1, 1998
A split-rate property tax that assesses land at a higher rate than buildings can help to encourage infill development and fight sprawl, according to Rick Rybeck, a planner for the District of Columbia Department of Public Works. In a paper, Rybeck cites Pittsburgh as the largest U.S. city with a split-rate property tax. Until the late 1970s, Pittsburgh taxed buildings at one-half the rate on land values. Since then, officials have further decreased building taxes relative to land taxes. “Today Pittsburgh taxes buildings at one-sixth the rate on land,” Rybeck says. “In spite of the severe depression in steel and related industries, development within Pittsburgh grew substantially. Contrary to national trends, development within city limits outpaced the suburbs.” During the last 20 years, 11 Pennsylvania cities have adopted the split-rate tax (five cities, including Pittsburgh, already had such a tax structure in 1978). “These cities experienced more development after implementing a split-rate tax than did neighboring cities of comparable size and economic character,” Rybeck says. A high tax on buildings relative to land encourages owners to hold on to vacant property and engage in land speculation, Rybeck reports. Development is then forced out to areas of cheaper land, promoting sprawl. A high tax on land relative to buildings, on the other hand, promotes the productive use of land where there is public infrastructure, i.e. on infill properties in urbanized areas.