Overall, this is one of the best “Cities After” podcasts I have heard. Robles-Duran introduced me to the direct link between McCarthyism and Levittown. That was quite a revelation!

However, the podcast opens with an error of fact that some might find offputting. Herbert Hoover was not the President in 1920. he was the Secretary of Commerce. However, he was so active as SoC, and Harding, the actual President, was so inactive, that many at the time regarded Hoover as the main mover and shaker in the Harding administration.

The history of suburban development in the U.S. has complex causes. Until well into the 1970s the quality of urban life was quite low for many if not most people. The allocation of huge amounts of federal funds into highway expansion opened up land outside of the urban core for development of residential subdivisions and the retail and service businesses servicing the needs of suburban dwellers. And, eventually, manufacturing firms abandoned their urban locations, acquiring enough land for current use as well as future expansion. Urban neighborhoods that arose to serve urban manufacturing businesses were gradually abandoned by the working middle class, conveyed to speculators who offered the properties for lease to low income households.

The one change in public policy that could have effectively mitigated this outmigration of people and businesses was identified in the late 1960s by the commission headed by former Senator Paul Douglas. The form of property taxation in effect in almost all communities across the United States was a primary cause. Housing units and other buildings (which are depreciating assets) were overtaxed. The annual tax on buildings equated to a sales tax paid year after year. The optimum rate of taxation on building values, from the standpoint of economic efficiency, is zero.

What communities provide are locations on which to construct housing and other buildings and to conduct business. The value of locations is community-created, by the quality of public goods and services brought to locations and by the population growth that translates into increasing demand for locations based on actual and perceived locational advantages. Every parcel or tract of land in a community has some potential annual rental value based on the above characteristics. This is the value that rightfully belongs to the community, that should be collected via taxation. Unfortunately, almost everywhere assessment practices failed to reflect the current market value of land. Low effective rates of taxation financially benefitting those who held land vacant or under-improved. Thus, even in the financial districts of cities many land parcels (even entire blocks) remain vacant for years or even decades.

A handful of communities in the U.S. came to understand the problem described above. One, the capital of Pennsylvania, Harrisburg, began to restructure its city property tax in the 1970s. At the time, Harrisburg was thought to be one of the most distressed cities in the country. Slowly, the city fathers approved shifts in property tax rates off of buildings and onto land values. Today, Harrisburg imposes a rate 6 times higher on assessed land values than on its buildings. Its mayors have repeatedly endorsed this change, pointing to many positive improvements in the quality of life in the city. Another 20 towns, boroughs and school districts have moved in a similar direction in Pennsylvania.

Sprawl is here. With sound public policies — including the move to a land value only property tax structure — people will return to the cities. Sprawl can be halted in time.