Land-Value Taxation as a Method of Encouraging Growth in Baltimore

The events that occurred last May have left many residents of Baltimore wondering what can be done to rebuild their city better than it was before.1 One particular suggestion is the elimination of all current property taxes along with the implementation of a land-value tax (LVT).2 An LVT would tax property owners based on the unimproved land they own, rather than on the improvements and structures that have been built on the land.3 The argument follows that this method of taxation would incentivize property owners to develop their land, rather than leave it undeveloped so they can pay less in taxes.4 Indeed, several journalists have postulated this same theory over the course of the last century.5 Baltimore’s house-flipping market is one of the most lucrative in America.6 In the second quarter of 2014, flippers in Baltimore were making an average return on investment (ROI) of 73 percent.7 Baltimore was the third best market for house-flipping in the entire country, behind only New Orleans with an average ROI of 76 percent and Pittsburgh with an average ROI of 106 percent.8 The LVT is considered essential to drawing more investors into Baltimore’s real estate market and curbing inflation of property values when many Americans are still struggling to afford housing.