Value capture: A land tax for transit?
"A land tax for transit is fair, because transit service increases land values, and those who benefit the most pay the most."
A recent issue of monthly publication of the Heartland Institute, "Public Transit Creates Value but Fails to Collect," calls for the use of a land value tax to supplement transit funding in order to "avoid (or minimize) service cuts and fare increases" as many transit agencies around the nation "have been in financial difficulty for a long time."
The essay compares the land value tax to more commonly used alternatives like sales tax or automobile registration fee. The question is whether we want consumers, motorists, or landowners to pay the transit subsidy. "To some extent these are the same people, but the economic impacts of taxing them aren't the same." A sales tax may burden the poor people the most and drive commerce out . Increase automobile registration fee may be less regressive than a sales tax, yet it is unfair for low-incomers cannot afford to live in the areas with good transit service, and hard to prevent evasion by people who register their cars elsewhere.
A land tax is considered a much better choice. It is not regressive "because many poor people own no land at all, and if they do own land it is of relatively low value;" it can't be evaded "because land is visible and real estate tax information is public;" it is fair "because transit service increases land values and those who benefit the most pay the most;" and it can't drive away jobs "because it isn't a tax on economic activity."
The essay was based on the Henry George School's recent Research Note #5A: "Retrieving Transit's Benefits":