BILL NUMBER: S7871A
SPONSOR: MAY
 
TITLE OF BILL:
An act to direct the department of taxation and finance to establish a
pilot program for implementation of local land value taxation
 
PURPOSE:
To create a pilot program for up to 5 municipalities to implement a land
value taxation system
 
SUMMARY OF PROVISIONS:
Section 1 establishes that the secretary of state shall establish a
pilot program for up to 5 municipalities to develop a plan for implemen-
tation of land value taxation
Section 2 establishes the effective date of the bill
 
JUSTIFICATION:
In 2023, facing economic and tax challenges not dissimilar to many Amer-
ican cities, Detroit's, Mayor, Mike Duggan, proposed a solution known as
a land value tax. This tax, also referred to as a split-rate tax,
involved taxing land at a higher rate to taxing infrastructure on the
land.
The key objective of this approach is to encourage the optimal use of
land by providing a reduced tax increase for land development. This will
promote infill development, rather than continuous outward sprawl from
city centers. By implementing this tax, speculation and wasteful use of
land are discouraged, as the cost of owning undeveloped land is
increased. The land value tax can alleviate the burden on homeowners in
many cities. It ensures that owners of high-value land, currently
utilized for low-value purposes, contribute their fair share.
Land value taxes have drawn interest and been put into practice else-
where, including in New York. In 1993, Governor Mario Cuomo approved a
bipartisan bill allowing Amsterdam to implement a land tax, but it was
later repealed due to a change in mayoral administration. More recently,
Buffalo's city council passed a resolution to study the implementation
of a land value tax in February 2023. Pennsylvania has permitted this
form of taxation since 1913, with 15 cities currently using a form of
land value, tax.
While property taxes are frequently discussed, there has been little
opportunity for innovation and policy advancement. This bill establishes
a pilot program granting permission and support to up to 5 munici-
palities to implement a land value tax, providing an opportunity for
experimentation and progress in tax policy.
 
LEGISLATIVE HISTORY:
New Bill.
 
FISCAL IMPLICATIONS:
None to the State.
 
EFFECTIVE DATE:
This act shall take effect immediately.