A Tax Tool for Meeting Urban Fiscal Crisis

MOST OF OUR CENTRAL CITIES, as is now well known, are threatened by a vicious circle which is related to property taxation.

As buildings become older, they tend to become fiscal deficits requiring more in cost than they return in taxes. As the central cities age, the buildings become old and fiscal-deficit generators. This requires the central city to increase its tax rate.

The higher tax rate in cities drives investors elsewhere, both home builders and industry, because whoever puts up a new building under this state of affairs tends to become a fiscal surplus generator, and no one really wants to be that: it means you pay more in taxes than you get back in services.