Henry George is back in the news (okay, it's blogs and opinion pieces). Those who are knowledgeable of value capture are generally aware of role that Henry George played in popularizing the concept in the 19th century. His work inspired Ebeneezer Howard's Garden City Movement, the formation of several Georgist Communities (for example, Free Acres New Jersey), and the establishment of the Lincoln Land Institute.
Though not directly related to transit value capture, several commentators have mentioned Henry George in relation to housing affordability. For one, Harvard economist Ed Glaeser has gotten in on the action with an opinion piece in the Boston Globe. In Glaeser's words:
George vastly oversold his proposal, insisting that “the simple plan of taxation I propose would equalize the distribution of wealth, preventing waste and increasing productivity.” But he was right that taxing land more and buildings less would encourage the construction that many cities — including Boston — need to become more affordable and more inclusive.
In addition, blogger Noah Smith suggested in a recent (and popular) blog post that a Georgist land tax could help alleviate the price pressures in San Francisco.
What San Francisco needs now is a Henry George Tax. The policy would bring rents down, and thus encourage tech companies and their brilliant employees to keep moving into the city, to keep interacting and mixing and generating the ideas that make the tech world go. At the same time, it would raise the money the city needs to build better trains, run more bus lines, and build more public housing that will benefit the poor and middle class of San Francisco. And it would do it all in a way that seems much more fair than other kinds of taxation.
Perhaps Noah oversold the possibility of a Georgist tax in San Francisco. He puts forward the caveat that such a tax would have to overcome the political hurdles enacted by California's Prop 13. Quite a political hurdle!
Even if you could overcome Prop 13, Matt Yglesias points out that in places like San Francisco it's not speculation that's limiting the supply of housing, it's zoning. One would have to relax zoning to see any impact from a Georgist tax. But how much can San Francisco relax zoning so that there's room for a Georgist tax to have an impact? Last year, San Francisco's Chief Economist put to rest the idea that San Fran could bring about affordability by increasing supply when he suggested that it would take 100,000 new units to make the city's housing stock affordable. That's the same number of housing units produced in San Francisco from 1920 to today. If you know anything about San Francisco politics, you know that's bad news.
In contrast, if you know southeastern politics, it's a different story. Affordability driven by supply-side pressure is happening now in places like Charlotte (no Georgist tax there!). Whereas the topic has been framed in terms of housing affordability in San Francisco, the issue in Charlotte is framed around the viability of business interests who are seeing rents decline. Glaeser has long spoken of the advantages of low-regulation environments for housing affordability and this case seems to support the notion expressed by Matt Yglesias as well.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.