Vermont Property Taxes:

Tax Rate 2004 Revenue

Property Transfer Tax

.5%- 1.25% $33,951,657

Speculative Gains Tax

5-80% $4,288,132

Current Use Penalty Tax

10-20% $404,155

Property Tax (State Portion)

avg 1.52% $741,600,000

Vermont Property Taxes

eee property tax (PROP68)

0%

current use property1%

land29%

Property Transfer Tax4%

Current Use Penalty Tax0%

buildings 65%

Speculative Gains Tax 1%

Property Taxes

• Are actually 2 taxes: on land and on

improvements.

• Provide a steady and reliable source of

income.

• Account for 1/3 of VT’s state revenue.

• Can influence development patterns.

Land Value Taxation:

• Shifts property tax liability from

improvements to land.

• Articulated by political economist Henry

George (1879).

• Equity, Efficiency, Environmental

Protection.

Effects of Land Value Taxation:

• Removes “market disincentive” for making improvements.

• Reduces land speculation.

• Reduces sprawl, encourages compact development.

• Society benefits from societal value of land.

Applications of Land Value Taxation:

• 700 cities worldwide use a graded

property tax system

• Denmark (1844)

• Canada (1903)

• South Africa (1914)

• Pennsylvania (1913)

Land Value Taxation in Vermont?

• Currently 2/3 of VT Property Tax Revenue

comes from tax on the value of buildings.

• Buildings assessed at $33.2 Billion

• and Land assessed at $14.9 Billion.

• LVT rate of 5% would generate the current level

of revenue for the state.

Recommendations:

• Apply LVT only in “growth centers.”

• Reverse current ratio to generate 2/3 of state property tax revenue from taxes on land.

• Work with established growth boundaries being developed by the Vermont Smart Growth Collaborative.

• Revenue Neutral.

Proposed Property Tax Revenue

2004 REVISED VT Property taxes

eee property tax (PROP68)0%

current use property1%

land-NICU65%

Property Transfer Tax4%

Current Use Penalty Tax0%

buildings-NICU29%

Speculative Gains Tax1%