Pennsylvania's Success with Local Property Tax Reform: The Split Rate Tax

Fifteen cities in Pennsylvania are pioneering an innovative approach to local tax reform that harnesses market incentives for urban renewal. Opting for the so-called "two-rate" or "split-rate" property tax, these cities are lowering taxes on buildings, thereby encouraging improvements and renovations, while raising the tax on land values, thus discouraging land speculation. The resulting infill development as indicated by increased building permits means down-town jobs, efficient use of urban infrastructure, an improved housing stock, and less urban sprawl. Cities in other states are poised to follow Pennsylvania's example.


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