The bard of property tax reform

July 18, 1994|By Mark Guidera | Mark Guidera,Sun Staff Writer

With his thick glasses, wispy graying hair, and rumpled seersucker suit jacket, Steven Cord hardly cuts the figure of the rebel.

But the cause the Columbia resident has championed for almost two decades is downright revolutionary, dry and arcane as it may be: property tax reform for municipalities.

Specifically, Mr. Cord and the obscure organization he heads, the Henry George Foundation, have been pushing for elected officials across the country to let towns and cities set different property tax rates for land and buildings.

Generally, land and buildings are taxed at the same rate.

Mr. Cord and foundation members argue that lowering the property tax rate for buildings while raising the tax rate on land would spur economic development.

Owners of vacant land would develop their land to help pay the higher taxes on land, while rents in buildings would drop because of lower taxes on buildings, the foundation argues.

They offer as proof the charts and graphs of new construction activity in the 15 cities in Pennsylvania, including Pittsburgh, that have such a method, known as "split rate taxation." The foundation also likes to note that such countries as New Zealand have split rate taxation.

"Well, it sure isn't a sexy issue, but he's definitely dedicated to it," says Del. Michael R. Gordon, a Democrat from Montgomery County, who has taken a keen interest in the foundation's mission.

In the last General Assembly session, Mr. Gordon sponsored legislation that would give municipalities in Maryland the ability to set different property tax rates for land and buildings.

Mr. Cord has been working on what he calls "land value taxation" or "split rate taxation" for the 17 years he has been president of the 800-member foundation, which has an annual budget of about $120,00 and three employees.

The foundation's focus may be a real eye-glazer to some, but it's one whose time may have come for Maryland, says Jon C. Burrell, executive director of the Maryland Municipal League, the lobbying arm of cities and towns.

"Property taxes are really the lifeblood of cities and towns in Maryland," he said. "Lately that's been threatened by the taxpayer revolt groups. Cities need a system they can at least try [out] to ease the burden on homeowners without ruining their budgets."

Mr. Cord couldn't agree more. He thought it made sense almost 30 years ago when he first got hooked on the issue of property taxation at a summer course he took at the Henry George Foundation, then based in New York City.

Later, while a professor of economics and history at Indiana University in Pennsylvania, 60 miles northeast of Pittsburgh, he was named president of the foundation. He moved its headquarters to the basement of his home.

In the mid-1980s, the foundation moved to an office complex in Columbia when Mr. Cord, now retired from teaching, and his wife moved to the town.

As foundation president, Mr. Cord's duties include writing the foundation's newsletter, Incentive Taxation, published eight times a year, with such articles as "LVT is an Ability To Pay Tax: Gaffney's Evidence" and "Seven Nobel Prize Winners Endorse Land Value Taxation."

He also has visited mayors, council members and budget directors of small cities throughout Pennsylvania in an effort to persuade them to take advantage of a 1951 Pennsylvania law TC letting cities set different tax rates for land and buildings.

The foundation is named after an eclectic and popular economist of the late 1800s who advocated abolishing all taxes except one: a land tax.

George, who ran for governor of New York just before he died, argued that a land tax was the only one that is fair because government should live off what it creates. The only thing governments create, argued George, is the "locational value of land" -- namely by building roads and schools, and making other improvements on or near properties.

Mr. Cord doesn't champion a single land tax or the abolition of income and other taxes, saying "it would be virtually impossible to do today," given the vast network of government services now based on income, sales and other taxes.

But he is convinced that letting local governments, namely towns and cities, set different tax rates for land and buildings is an attainable goal and a "vital" one whose time may have come.

"I don't see any solution to the [government] deficit problem other than land value taxation. The deficit problem will erupt with a real fury in the year 2020 when the Social Security system goes bankrupt," he says.

Mr. Cord got Mr. Gordon's ear at a fund-raiser for Sen. Laurence Levitan, another Montgomery County Democrat, held before the 1994 General Assembly session.

He also sold the split-rate taxation idea to Mr. Levitan, who heads the Senate's influential Budget and Taxation Committee. He was introduced to the senator at a party by Kenneth Freeman, a real estate developer from Bethesda who also is a Henry George Foundation member.

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