Back in January I noted a proposal to spend $141,000 of our tax (TIF) money per job “created,” to subsidize redevelopment of the old Brach’s candy factory site. Even more scandalous, the planned distribution center would have contained only 75 jobs on 30 acres within the densely-developed west side of Chicago.
Now comes a report that the City Council Finance Committee has delayed approval of the subsidy. Not because of the wasteful spending or small number of jobs created, but because some local people prefer that a school be built on the site. I’m not familiar enough with the area’s land use or politics to know whether this is a good site for a school, but at least somebody seems to be paying attention to the fact that land is a limited resource, and perhaps giving land and money away for a small number of jobs is a bad idea.
btw, the more recent report places the parcel size at 12 acres, not 30, which seems small to me but perhaps the area involved is less than the entire site of the former Brach’s facility.
The March ’08 issue (pdf) of the Center for the Study of Economics’ Incentive Taxation newsletter has a couple of positive notes.
Washington, PA, a split-rate city for decades, solved a budget deficit by raising the tax on land to 82.63 mills, while taxing buildings at a rate of only 3.5 mills. Thus the added tax burden goes mainly to people who are leaving land idle, and doesn’t discourage productive construction or investment.
And in New London, CT., the Re-New London Council recommends a land tax because of its benefits to, among other things, housing affordability. Had such a policy been in place over past decades, perhaps the Kelo case would never have happened.
That’s the estimate I came up with in the revised and quite enhanced version of HGS Research Note 5a. I’m using parameters estimated several years ago in a study of the Washington, DC, metropolitan area. Maybe the actual number here would be a lot more; I wish someone would do the analysis. This loss is expected to occur by 2014; further losses would follow.
If RTA really needs the funding, I estimate we could do it with a land tax that would cost the typical homeowner maybe $40/year, with renters essentially paying nothing. For $290/year, the homeowner could do away with all transit taxes, and fares too. No jobs would be lost; some would be gained.
By comparison, Chicago Metropolis 2020, in their surprisingly thoughtful study Time is Money, estimate that fully funding all the transit spending that RTA wants, plus some “smart growth” changes in land use arrangements, would add 22,307 jobs by 2020. They do not discuss how the funds would be obtained, although the study does note that a doubling of gasoline prices– which might be achieved thru taxation– would have great benefits for transit use.