Bill Seeks to Revise “Act 47” Distressed Municipality Law

Just a brief update on this one. A new bill sponsored by Wojnaroski, seeks to amend what is known as Act 47, the Municipal Recovery Act. Read about the changes here.

In short, the changes would make it harder for municipalities to recover, since it would make it more difficult for them to control labor costs (the largest expense for most municipalities) , and at the same time the bill would limit the amount of time that a municipality can take advantage of the recovery status.

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2 responses to “Bill Seeks to Revise “Act 47” Distressed Municipality Law

  • steven cord

    =========If you want economic development, don’t tax it. Tax locations instead in order to get the necessary revenue. You can request EMPIRICAL proof that it’s already been done (free, no obligation, by email). Here are two examples from a report containing 23. Available by request only.

    Two Empirical Studies
    Showing That This Ability-to-Pay Tax
    Actually Promotes Economic Development
    (Most Voters Will Pay Less & the Government Loses no Revenue)

    (7) Pittsburgh, Pa. – its long two-rate LVT experience has provided many studies.
    When it increased its land-tax rate (but not its building tax rate) in 1979 and also in 1980, its construction increased fully 6.2 times faster than U.S. construction (sources: City of Pittsburgh building-permit annual reports & table 1194, U.S. Census report C30.
    In the years 1980-84, when Pittsburgh was expanding the difference between its land and building property-tax rates, its new construction as measured by building-permits issued was fully 3.57 times higher, adjusted for inflation, than in the pre-change years of 1974-78, despite the steady post-1980 contraction of Pittsburgh’s steel industry (source: Pa. Economy League 1985 study of Pittsburgh’s two-rate tax, p. 16).
    But for the entire United States, 1980-84 office-building permits were only 1.6 times higher than for 1974-78 (not adjusted for inflation, per Daniel Sansbury, U.S. Bureau of Census, Suitland, Md., 1/21/93 phone call).
    The boom in Pittsburgh continued: in 1985, its building permits increased fully 2.29 times over 1984; in 1986, it was 2.38 times greater than in 1984 (source: Pbg. Bldg. Inspection Dept.).

    (10) In 1995, Professor Nicolaus Tideman of Virginia Tech University and his graduate student, Florenz Plassmann (now a professor at the University of Binghamton) completed a highly technical study of land value taxation in Pennsylvania entitled “A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction.” It was published in the peer-reviewed Journal of Urban Economics (3/00, pp. 216-47) and concluded as follows:
    “The results say that in all four categories of construction, an increase in the effective tax differential is associated with an increase in the average value per permit. In the case of residential housing, a 1% increase in the effective tax differential is associated with a 12% increase in the average value per unit…From the perspective of economic theory, it is not at all surprising that when taxes are taken off of buildings, people build more valuable buildings. But it is nice to see the numbers.”
    This study completely confirmed all the two-rate studies that had been done in Pennsylvania at that time (then fifteen).

    You can request a free 6-page easy-to-read report containing 23 summaries of empirical studies on the effect of a building-to-land tax switch, or a longer report containing 233 such studies (free, no obligation). These larger reports contain many studies showing that most voters get tax decreases with this tax (with no loss in city revenue.

    Steven Cord, Professor-Emeritus, 10528 Cross Fox Lane, Columbia MD 21044, 1-410-997-1182, stevencord2000@yahoo.com

  • steven cord

    To request empirical proof for a tax that produces economic development AND jobs, see above

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