Ohio Lawmaker Proposes Land Value Tax as Alternative to Property Tax Elimination
A proposal by Ohio State Senator Bill Blessing (R-Colerain Twp.) seeks to fundamentally alter the state’s property tax system by shifting the tax burden from land improvements to the land itself. The proposed legislation, Senate Joint Resolution 7, would grant local governments the authority to levy taxes based on the assessed value of the land, rather than the structures built upon it. The measure requires a supermajority vote in both legislative chambers before it can be presented to voters.
Blessing argues that a land value tax offers several advantages over the current property tax system. He contends that property taxes disincentivize development because increases in building value lead to higher tax bills. By taxing land independently of improvements, the proposal aims to encourage development and broaden the tax base, ultimately lowering individual tax burdens and increasing housing supply. This, in turn, could boost economic activity for both residents and local businesses.
The shift to a land value tax could also streamline tax administration. Current property tax systems often involve complex calculations and exemptions, which can be exploited to artificially lower property values. A land value tax, by focusing solely on the land, would eliminate these loopholes and promote greater transparency.
Economists generally favor land value taxation over traditional property taxes, citing its potential for greater efficiency and equity. Rob Moore, an economist who assisted Blessing with the proposal, stated that a land value tax is "more efficient (and) more equitable" than property taxes. However, concerns remain about the potential impact on existing homeowners and the agricultural sector.
One significant concern is the potential for increased tax burdens on property owners, particularly those with larger land parcels. Howard Fleeter, an economist specializing in public finance, noted that a land value tax could disproportionately affect homeowners with larger lots, as they would pay a higher tax relative to the value of their homes compared to those with smaller properties.
The Ohio Farm Bureau has yet to take a formal position on the proposal, but expressed concerns about the potential impact on farmland, which is currently protected by the Current Agricultural Use Value program. The program allows farmers to pay a lower tax rate based on the land's agricultural use value, rather than its market value. Any shift to a land value tax could significantly increase tax burdens for farmers, potentially threatening the viability of some agricultural operations.
Warren County Auditor Matt Nolan acknowledges the potential benefits of the proposal, particularly in expanding the tax base and reducing reliance on voted levies. However, he raises concerns about potential equity issues, such as the disparity in tax burdens between homeowners with large and small properties. He also suggests that the state could explore alternative approaches to expanding the tax base without amending the Ohio Constitution.
Despite these concerns, proponents of the land value tax argue that it is a necessary step to address the growing frustration with the current property tax system. They believe that the long-term benefits of a more efficient and equitable tax system outweigh the potential short-term challenges. The debate over the land value tax is likely to continue as lawmakers grapple with the complex challenges of funding essential public services and supporting economic growth in Ohio.
