This month Rep. Andy Schor (D-Lansing) introduced legislation that would allow cities to implement land value taxation.  Land value taxation would place the property tax burden on the actual land and not the buildings or improvements.

This concept has been used widely in other states (most notably in Pennsylvania). Land value taxation encourages investment by taxing the value of the land more heavily than improvements. This incents a property owner to develop property in order to balance the tax burden.

Rep. Schor’s bills, House Bills 5495 and 5496, would allow communities to create land value taxation zones similar to what has occurred with Renaissance Zones. The community can have as many zones as it likes, and they don’t need to be contiguous.

We look forward to working with Rep. Schor and other legislators to push forward this innovative concept to give local communities more options to incent development of property. The League’s Partnership for Place Agenda calls for land value taxation as one of many steps to improving Michigan’s communities as well as the state.

A 2013 article by Next City does a really nice job explaining this taxation issue and the benefits of land value taxation. Check it out.

Samantha Harkins is the Director of State Affairs for the Michigan Municipal League.  She can be reached at 517-908-0306 or email at sharkins@mml.org