# Split-rate property tax A **split-rate** (two-rate, graded) property tax taxes **land at a higher millage than buildings**. It is the main real-world cousin of a [[Land value tax]] in the United States. It is *not* a [[Single tax]]: income, sales, and other levies remain, and buildings are usually still taxed, just less. ^def Incentive story: cutting the tax on structures removes a penalty for improvement; raising the tax on land raises the carrying cost of vacant or underused lots. ## Pennsylvania Pennsylvania is the laboratory. A 1913 Graded Tax Law for cities of the second class let Pittsburgh and Scranton phase in a higher land rate. Other municipalities later got authority. Counts move over time; Lincoln Institute / Progress.org tallies have run from the mid-teens to about twenty current or recent jurisdictions. **Pittsburgh (1913–2001).** Longest large-city run. Land:building ratio 2:1 for decades, then a sharp hike around 1979–80 to roughly 5–6:1 by the late 1980s (example: 31.37 mills on land vs 5.44 on improvements in 1989). Oates & Schwab (1997) found Pittsburgh’s commercial building-permit surge stood out among Rust Belt peers after the 1979–80 shift. Bourassa and Plassmann–Tideman reported more housing units / permits. Repealed in 2001 after a countywide reassessment jumped assessed land values, produced surprise bills, and was poorly coordinated with the split-rate structure. A downtown Business Improvement District kept a land-only surcharge for some years after. Without Pittsburgh, the largest U.S. split-rate city is far smaller. ^pittsburgh **Harrisburg (from 1975).** Often cited as the quiet success: long tenure, land rate about 6× buildings, associated locally with downtown recovery — though many other policies were in play. **Altoona.** For a period taxed buildings at zero (pure local LVT), later reversed (ended 2016 in one compilation). **Others (examples from 2013-era tables):** Allentown, Scranton, Aliquippa, Clairton, DuBois, Lock Haven, Washington PA, various school districts. Ratios have ranged from a bit over 1.5:1 to extreme 20:1+ cases. Several cities adopted and later rescinded (Uniontown, Hazleton, Coatesville, Connellsville, Pittsburgh). Important limit: the split usually applies only to the *city* property tax, not automatically to county and school-district millages. A homeowner still faces conventional rates on those bills. ^limit ## What the empirics say Recent work (Yang; Yang & Hawley 2022, Lincoln Institute) on Pennsylvania municipalities: - Switching to split-rate is associated with *higher* aggregate property market values (one estimate ~21.5% around adoption). - Land values do not collapse; estimated land-value decline under a mild 2:1 split is on the order of a couple of percent. - Commercial property appears to gain more than residential in some specs. That is the opposite of the full single-tax prediction that land *prices* crash because rent is collected. A modest split-rate is a development incentive inside an otherwise ordinary property tax. It does not make land stop being a store of value. ^empirics ## Why it matters for reading [[@TaxLandNotMan]] Monroe wants the whole burden on land and *zero* on improvements — and the abolition of non-property taxes. Pennsylvania is evidence that *shifting toward land* is administrable and can encourage building. It is not evidence for his full program. Pittsburgh’s 2001 repeal is also evidence that assessment quality is the kill switch. --- ## Citations 1. [Land value tax in the United States — Wikipedia](https://en.wikipedia.org/wiki/Land_value_tax_in_the_United_States). Pennsylvania section and 2013 rate table; Pittsburgh 5.77×; 2001 repeal; BID surcharge. 2. [Pittsburgh, Pennsylvania — progress.org wiki](https://www.progress.org/wiki/pittsburgh/). 1913–2001 chronology; 1979–80 hike; 6:1 by 1989; Yang & Hawley. 3. Mark Alan Hughes, Lincoln Institute report on Pennsylvania split-rate cases (PDF). 33-municipality ecology; Pittsburgh rescission as the turning point. 4. Zhou Yang, Lincoln Institute working paper on split-rate and property/land values ([yang_wp21zy1.pdf](https://www.lincolninst.edu/app/uploads/legacy-files/pubfiles/yang_wp21zy1.pdf)). 5. Progress and Poverty Institute, *PA Land Tax Report*. Bourassa 13% construction result; Plassmann & Tideman permits; Oates & Schwab 1997; Yang 2018 1% differential / 1% residential land-value result. 6. Allegheny County GRC draft on assessment (2020s). 2001 repeal attributed to reassessment shock and unpublished separate land/building values. 7. Related: [[Land value tax]], [[Single tax]].