Viewpoint: Montana needs a Land Value Tax to equalize wealth

Eli Steinberg

The air is freely accessible for all breathing people. That idea is so basic, so common sense, so easy to see as correct, that no one, regardless of political views, or culture, challenges it. As such, all can access air, with no one person owning or controlling it.

But who owns the land? Unlike air, land is, with exception to public and federal lands, private; and in the United States, land has become increasingly monopolized. In the United States, the 100 wealthiest families own a total land area nearly the size of New England. But that question, who owns the land, and do they have a right to that land, is not being asked in Montana politics today. The question being asked is: what should property tax rates be? Should they be lower or higher?

The Republican state government recently cut property taxes for big businesses and the wealthy, while raising them on working Montanans, not to mention the income tax cuts for the wealthy. These handouts to the wealthy will cost Montana $170 MILLION.

Now again, the question in Montana is should property taxes be higher or lower? But that is a false distinction. While higher property taxes are worse, the very tax itself is wrong and fallacious. The taxation of property hurts all those affected. It hurts the family, the farmer, and the worker, who pay a higher tax in relation to their income. That is wrong, and nowhere is this broken system seen more clearly than by the fact that today in Montana, the bottom 20 percent of Montanans pay a HIGHER effective state tax rate than the wealthiest top 1 percent.

This imbalance is caused by the current property tax system. But the property tax also hits businesses just as hard, as development of land is taxed, but unused land is not, disincentivizing housing and infrastructure development.

But this broken system is not the only system available to us. The solution to this dilemma, and to so many of the other plagues to society today is to tax not the property, but the land. This system is called a Land Value Tax (LVT). A LVT is a tax on the value of the land itself, not the development on the land. A home for example, is taxed not for the value of the home, but for the value and size of the land the home is built on.

This tax will, first of all, ease the burden on hard working Montanans, as the average Montanan does not own large swaths of land, but the wealthy and big businesses do. Meaning homeowners pay less in taxes. Additionally, rural land is in less demand than the land in cities and towns, as a result, farmers pay a lower rate of tax.

Not only does the LVT slash the taxes that working Montanans pay, but furthermore, the LVT, unlike almost every other tax, directly incentives economic development. The LVT would at last make it profitable no longer to own land, speculate upon on it, but not use it, in turn, the large and wealthy landlords are compelled to put their land to use, or to sell it, fighting the monopoly of the wealthy on the land, while at the same time building a stronger economy.

Moreover, there is also a moral dimension. Land, just like the air, is necessary for life, invented by nobody, and naturally occurring. Just as the air is the most basic necessity for human sustenance, the land is the most basic necessity for economic sustenance, it provides us with food, resources, the space to build our cities and houses, and the materials needed for industry and manufacturing.

Therefore, as the land was not created by one person, it should not be owned by one person. Nobody should own staggering amounts of land when it is not necessary for their personal or agricultural use. And should a person own land not being used directly for their own living or farming, they should pay dues to society to respect their claim to that land.

This moral and economic idea was too shared by President Lincoln, as he put it “The land [...] should never be the possession of any man. An individual, or company, or enterprise requiring land should hold no more than is required for their home and sustenance and never more than they have in actual use.”

Now, let's put the LVT in practice in Montana. At the state level, if we placed a LVT on the twenty largest landowners in Montana, all of which are large corporations, wealthy families, and wealthy ranchers, at a rate of just 10 or 12 percent, we could bring the same amount of revenues currently generated from current state property taxes. In other words, we could abolish the property tax, implement a LVT, maintain fiscal stability, and at the same time, cut taxes massively for farmers, homeowners, and workers.

We today see clearly that in Montana, a state with bountiful resources, land, and opportunity under our Big Sky, that a Land Value Tax will make that opportunity more available to all, while keeping the government out of the wallets of hardworking Montanans.