Change in Chinese Cities L Value-Based Property Taxes L
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Change in Chinese Cities l Value-based Property Taxes l Panama City’s Casco Antiguo l Fellows l Program Calendar Land LinesOCTOBER 2008 LINCO L N I NSTITUTE OF LAND PO L ICY Land Lines OCTOBER 2008 • VOLUME 20, NUMBER 4 EDITOR PUBLICATIONS ASSISTANT CONTENTS Ann LeRoyer Robyn F. Salbo PRESIDENT & CEO DESIGN & PRODUCTION Gregory K. Ingram David Gerratt & Amanda Wait www.NonprofitDesign.com CHAIRMAN OF THE BOARD Kathryn J. Lincoln The Lincoln Institute of Land Policy is a private operating foundation whose mission is to improve the quality of public debate and decisions in the areas of land policy and land-related taxation in the United States and around the world. The Institute’s goals are to integrate theory and practice to better shape land policy and to provide a nonpartisan forum for discussion of the multidisciplinary forces that influence public PAGE 2 PAGE 4 policy. The work of the Institute is organized in four departments: Valuation and Taxation, Planning and Urban Form, Economic and Community Development, and International Studies. ◗ FEATURES We seek to inform decision making through education, research, demonstration projects, and the dissemina- 2 Beijing and shanghai: Places of Change and Contradiction tion of information through publications, our Web site, and other media. Our programs bring together C H R I S T I N E S AUM scholars, practitioners, public officials, policy advisers, and involved citizens in a collegial learning environ- Everywhere one hears of government plans to improve environmental quality, ment. The Lincoln Institute of Land Policy is an even while trying to lift millions of poor Chinese out of poverty. For the good of equal opportunity institution. the planet, let’s hope they succeed. Land Lines is published quarterly in January, April, July, and October to report on Institute-sponsored programs. 8 Developments in Value-based Property taxation in Central and eastern europe For More Information JA N E M ALME AN D JOAN YOUNGMAN The Lincoln Institute Web site (www.lincolninst.edu) provides a variety of features that make it easy for The development of new land and tax systems in several countries in users to quickly obtain information on land and tax policy issues and on specific education programs, political and economic transition reflects a unique array of historical, social, research, and publications. The e-commerce function political, and economic circumstances. permits users to order publications and multimedia products and to register for courses. 14 Heritage Preservation, tourism, and inclusive Development You can create your own “My Profile” to download in Panama City’s Casco antiguo current and past issues of Land Lines, more than N. A RIEL E S P INO 400 Working Papers, and other materials posted on the Web site. After you have completed your profile, you can “Log In” at any time by entering only your Recent, innovative policies have explored the intersections of tourism, username and password. To create a profile, go to affordable housing, employment, and culture in a historical context. http://www.lincolninst.edu/login/createprofile.asp. Copyright © 2008 ◗ DE P ARTMENTS Lincoln Institute of Land Policy 113 Brattle Street 1 Report from the President Cambridge, MA 02138-3400 USA 18 Faculty Profile: Carla J. robinson Tel: 617-661-3016 or 1-800-526-3873 Fax: 617-661-7235 or 1-800-526-3944 20 New lincoln institute Book E-mail: [email protected] (editorial content) Planning Support Systems for Cities and Regions [email protected] (information services) 21 Fellowship Programs Web: www.lincolninst.edu 24 Program Calendar Layers of development in Shanghai PRINTED ON RECYCLED papER USING SOY-BASED INKS © Christine Saum OCTOBER 2008 • Land Lines • LINCOLN INSTITUTE OF LAND POLICY Report from the President Evaluating Assessment Limits Homeowners understandably dislike unex- Typically a household loses its property pected increases in property taxes. Such in- tax advantage when it moves. The prospect creases have happened in the past most of paying higher property taxes may impede notably when property values grew rapidly, household mobility and distort housing deci- thereby raising property tax assessments sions, locking households into dwellings that are normally based on market prices. and locations that become suboptimal as Nineteen states and the District of Columbia household needs change. On balance, lower- have implemented limits on the growth of income households relocate less frequently assessments with the objective of providing than high-income households, so they ben- tax relief to homeowners. Gregory K. Ingram efit from the lower tax payments but bear The Institute’s recent policy focus report, Property Tax the costs of lower mobility. Assessment Limits: Lessons from Thirty Years of Experience, Assessment limits also have impacts on local govern- by Mark Haveman and Terri A. Sexton, concludes that as- ments, which typically rely more than any other level of sessment limits perform poorly in terms of their effective- government on property tax revenues. Assessment limits ness, efficiency, and equity outcomes. Other approaches, have reduced the tax base of municipal governments by such as circuit breakers that target tax relief to particular as much as half and have produced similar reductions in groups of households, perform better. locally controlled revenues. This limitation on the revenues The logic of assessment limits is straightforward. The of local governments also constrains local control over spend- amount of property tax due is determined by multiplying a ing because decreased local revenue is replaced by state tax rate times a property’s assessment. If assessed values aid payments that often come with restrictions. In lean track market prices, then higher property prices will in- times state aid payments may be reduced dramatically, crease assessments. If tax rates are not reduced to offset leaving local governments with few options to replace state the overall rise in assessments, property tax bills will go up. funds. The reduction in local control over spending also An obvious solution is to limit the growth in assessments. leads to less citizen involvement in local governments that However, such limits make the determination of local taxes now have less authority and influence over local spending. less transparent to citizens and have produced surprising What other instruments can help to control rising prop- consequences. erty tax bills? Truth-in-taxation procedures require muni- Assessment limits normally set a uniform cap on the cipalities to announce the constant-yield tax rate that would annual growth of assessments, but all property values do maintain revenues at the same amount as the previous not rise at the same rate. The uniform cap redistributes the year. Any increase above that rate is then seen trans- property tax burden—reducing the share paid by properties parently as an increase in the property tax rate. that are increasing rapidly in value, and raising the share If the objective is to reduce property tax burdens for paid by those growing slowly or not at all. This redistribution low-income households or those in financial difficulty, benefits high-income households when the prices of larger circuit breakers—which reduce property taxes that exceed houses increase more than prices of smaller houses. In a given percentage of income—can be used to target fact, the dollar benefit of assessment limits has been found relief to households whose bills are large relative to their to increase with household income. incomes. This targeting increases the efficiency of prop- In most states with assessment limits, the assessed erty tax relief because high-income households normally value of a house is reset to its market value when it is sold. would not qualify. Neither of these measures has the mani- This also redistributes the property tax burden—reducing fold unintended consequences produced by assessment the share paid by long-term residents and raising the share limits. paid by new residents—so that the tax payments of other- A free copy of the complete report can be downloaded wise identical properties can differ many fold. at www.lincolninst.edu. OCTOBEROCTOBER 20082008 • Land Lines • LINCOLN INSTITUTE OF LAND POLICY Beijing and shanghai: Places of Change and Contradiction © E The Gate of Heavenly Peace ric T stands at the end of the redevel- . Fleisher oped Qianmen Street in Beijing. Christine Saum the architectural characteristics of old Beijing. a lone trolley car waited in the middle of the street azhalan, in the Qianmen district south to take visitors to the designer shops that would be of Beijing’s tiananmen square, has opening in a few weeks. this is the Beijing we had been described as a hutong (lane) with come to see: a place that is changing so fast that a “heady jumble of shops,” includ- a feature described in a guidebook may no longer ing some of the oldest stores in the exist, or if it does, the subway line to reach it may city.D so it was puzzling when the taxi driver stop- be so new that it doesn’t appear on any map. ped in the middle of the street and waved vaguely When the 2007–2008 class of loeb Fellows at a construction site nearby. through a gap in the from harvard university’s graduate school of fence we could see a broad new street lined with Design met for the first time in may 2007 to dis- modern, mixed-use buildings whose design reflected cuss options for the study trip that would conclude 2 LINCOLN INSTITUTE OF LAND POLICY • Land Lines • OCTOBER 2 0 0 8 OCTOBER 2 0 0 8 • Land Lines • LINCOLN INSTITUTE OF LAND POLICY a year at harvard the following spring, we quickly agreed on a number of criteria. We were looking for a place where change was happening now; a place where a visit five years before or hence would be a different experience; a place dealing with sig- nificant environmental, transportation, and hous- ing challenges; a place looking for ways to preserve some of its past while moving into the future; and a place where it was possible to see the role that outside designers and consultants were playing.