The free market is increasingly expected to solve a whole host of social and economic problems. No where is this more apparent than in the urban environment. In these more densely populated areas there is both promise and frustration. The presence of people stimulates commerce of all types while the many residents also make demands on the city infrastructure and the local economy. Too often, as the housing stock ages, the neighborhoods decline. Politicians turn to enterprise zones and tax incentive financing to create jobs and stimulate renewal. Administrators struggle to maintain city services as the tax base erodes.
The powerful forces of real estate economics cause massive migration as former slums are gentrified with new construction and renovation that prices housing out of the reach of the displaced former residents. Companies desert decrepit buildings and plants to build anew in the suburbs where they hope to attract a better caliber of worker and avoid the higher taxes and crime of the urban core. They often leave behind infrastructure that must be replaced in their new location. Gone too is access to dependable public transportation and their workers are doomed to an automobile centered world.
Paradoxically, BCCI believes that the very way that cities raise revenue can lead to the solution of many of their intractable problems. The fiscal reform they advocate also unshackles the free market from the monopoly in land and resources so it can more readily realize the expectations we have for it. The simple measure that harnesses these natural forces to work for the community is to limit city revenue to a fee for the exclusive use of land, i.e. a levy based solely on site values. This will tend to lower the cost of land but at the same time it will discourage under utilization of land and prevent desirable land from being held idle in outright speculation. On the other hand, productive enterprise will be unburdened of many taxes and fees by this tax shift - levies that presently are disincentives to activities that are so essential to the health of the city.
Revised April 11, 2016