Land Value Tax on the March in California

On February 1, 2023, Assemblymember Alex Lee introduced Assembly Bill 362, a bill that would require the state Department of Tax and Fee Administration to “conduct or commission a study on the efficacy of a statewide land value taxation system as an alternative to the current appraisal methods utilized for real property taxation.” In his bill announcement on Twitter, Assemblymember Lee noted a land value tax would “provide fairer assessments, boost housing supply, and give more freedom to landowners to build on properties without the fear of increasing taxes.” The bill has been introduced in the California State Assembly, but has yet to be appear before any committees.

This proposal creates an exciting opportunity for both state legislators and the public to engage and learn about the benefits of land value taxation. With a state budget deficit of over $22 billion, continuously growing rents and home prices, and the pressing need for green energy and transportation investments, the necessity of land value taxation has never been more clear. Although this is just a study bill, it offers a unique opportunity for Georgists and housing advocates to organize and educate the public about the benefits of moving to a land value tax.

Proposition 13, which put a cap on property taxes at the point of purchase, has inflicted decades of austerity on public services in California. It has also allowed landlords to hoard urban real estate, collect a land value windfall, and pay a pittance in taxes. A growing coalition of labor unions and community organizations are beginning to push back, advocating for reforming this unjust tax system and taking the power away from wealthy, landed interests. This came to a head with Proposition 15, the split roll property tax voter initiative, which unfortunately narrowly lostat the ballot box in 2020. However, a narrow loss in a year where an unprecedented pandemic prevented proper campaigning shows a clear growing constituency for reforming our system of real estate taxation. AB 362 offers a chance to shift the conversation towards an even more equitable form of taxation that encourages increasing housing supply, discourages real estate speculation, and collects enough revenue for needed investments in our cities. It also allows us to have a broader conversation about not only what we want to prioritize in our tax system but what kind of cities we want to build and how we can share the benefits of urban growth.

If passed, AB 362 would provide valuable research about the benefits of land value taxation as well as how it could potentially work in California. There are many hurdles and a long road ahead before California will seriously be able to tackle the power and wealth of landlords, but further research would help provide a roadmap on how to get us there and provide compelling information allowing us to grow our coalition and make the case to the public. We applaud Assemblymember Lee on his decision to author this bill and start an important conversation about how to build communities that work for everyone, not just the wealthy few.