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Land Taxes Just Begging for a Shot in Providence

Pittsburgh uses its 40% parking tax for revenue. But maybe we should refund
some of ours.
Dan McGowan suggests reports on several ways that Providence could close its structural deficit. I agree with several of them: taxing Brown and the hospitals more and changing the formula for pay-as-you-throw on trash collection are both great ideas. Some of the others I'd like to think about: what does it mean to have a private firm control the maintenance of Roger Williams Park? I want to see details before I pass judgement.

Two caught my eye especially: #3 (pass a parking tax), and #9 (increase street-cut fees, i.e., when the sidewalk or street are cut for piping or electrical repairs). 

Both of these, at root, are about land value and a land value tax. These are common in some places. My home state of Pennsylvania has been using a "dual tax" system (part land tax, part property tax) for the better part of a century.

Pass a Parking Tax
The parking tax that McGowan proposes is at a 5%. The highest parking tax in the country (viewed as a great success for land use and revenue collection) is Pittsburgh's, at 40%. I think McGowan's proposal to go gradual is a great idea. Let's do things a bit at a time.

When I wrote about the parking tax proposal in The Projo a little over a year ago, Projo editor Ed Achorn gave my piece a title I strenuously disagree with. He described the plan as "shifting the tax burden to city commuters." Achorn has a habit of changing titles to reflect his editorial biases, rather than letting writers describe their proposals in their own terms (talk to Jared Moffat some time, if you want a more harrowing example). In actual reality, garage* parking in cities is one of those items that is generally priced as high as the market will allow according to work published in Greater Greater Washington. It's true what commuters say: the garage owner is screwing you six ways to Sunday. Because parking prices can't really go higher without a serious backlash in demand, and because garage owners generally make a huge amount of money on a relatively low overhead business, taxing parking means lowering the profit margin of garage owners rather than costing commuters more money.

I proposed using 100% of the parking tax funds to lower property or commercial taxes. Given that Pittsburgh raises more money off of parking taxes than it does off of its local income tax, this seemed like a good opportunity to me for the city to encourage business growth and good land use at the same time.

Then I saw this:

I think this is really sad.

I don't really understand why the Providence Place Mall doesn't consider turning this space into apartments or condos. It's located right next to the train station, meaning that workers who have high-paying jobs in Boston would be well placed to take the lower rents (lower compared to Boston, that is). The occupancy rate in high rises near the train station is near 100%.

The trolls on The Projo, of course, are unhappy that this will be yet another place where they might have to pay $3 (So low!) the park. I have a hard time believing that $3 covers the costs of maintaining the parking, and think it's more likely a lead-loss hedging on the idea that suburban shoppers don't like paying for parking and would be more likely to come to shop if the cost was secretly hidden in the cost of the goods they buy. Why not charge a higher price for parking that reflects the real value of structured parking, and start gradually converting the spaces that are left over into places for people to live? (Maybe you can add your own take to this, by putting a polite comment to the contrary. #AlwaysReadTheComments).

A Frontage Tax
A frontage tax is a kind of land tax as well. The premise is that if your business takes up a larger portion of the road and sidewalk, you should pay more towards the maintenance of that road and sidewalk. Makes sense, right? A storefront on Thayer Street, for instance, is on a very small street and takes up a tiny portion of that street. It pays a much higher per-acre tax to the city than a Walmart or Home Depot. These larger businesses appear to be large taxpayers, but because they consumer a much larger share of public resources (road, sewer, sidewalk, transit, etc.) they actually are taking more from the city than they appear to.

I used Thayer as my initial example to raise your ire. Tax Walmart, but lower taxes on Thayer? Elitist! But actually, this general pattern cuts across the city. Smaller storefronts in areas like Cranston Street also punch far above their weight class when looked at on a per-acre basis. These businesses are often mixed-use, meaning that they provide housing and business rentals all in a tiny area. The space taken up by one of these businesses is often around 0.1 to 0.2 of an acre, so they're giving the city way more, and costing the city way less.

A Budget Crisis
The reality is that the city needs taxes. While I would propose my changes as revenue neutral if that was possible, I would argue that having taxes go up on parking and frontage would be more equitable and more business friendly (that is, both better for liberal reasons as well as conservative ones) than raising taxes some other way. I would propose raising the parking tax to 10% rather than 5% as McGowan suggests (still far lower than the 40% Pittsburgh rate) and putting 60% of the revenue into lower property or commercial taxes. The same for frontage. 60% of the tax revenue raised should go back to taxpayers through lower property tax rates, while 40% goes towards the immediate budget concerns of the city.

As the city figures out its situation, we should gradually increase that give-back until we hit the 100% point. We'll match growth with lower taxes.

Of course, if we find a better source of revenue, I still support passing a parking tax and a frontage tax, but I would then call for the full 100% return that I previously asked for.

*As opposed to street parking, which is often free or artificially underpriced.


  1. Good stuff, though I'd like to see some of this parking money directed to a dedicated transit fund so we can improve RIPTA into a functional system that citizens can depend on.

  2. I would be okay with some money going to transit, although I haven't advocated for this money to go to transit for a couple of reasons:

    1. I feel like people hate higher taxes, and the best way to get people to accept a higher tax on one thing is to pair it with lower taxes on another thing. We might be able to get businesses on board with this, because there are more stakeholders who care about their tax burden then (unfortunately) there are stakeholders who care about bus riders (and I am a bus rider).

    2. There's a direct connection between land-use and transit, so getting more development in (and preserving existing development and levels of occupancy) are tied to transit use as well.

    3. I worry that putting money to transit creates a conflict of interest between our goals. The goal of a land tax (especially the parking-specific tax) would be to over time reduce the viability of surface lots. The point of a tax to support transit would be to keep it low enough on the bell curve so that whatever is being taxed still remains viable, so that it's an ongoing cash source.

    4. And even though supporting transit is an equity thing, I think lowering people's property taxes is even more equity oriented, especially if we can target that towards apartments, smaller homes, and small businesses.


    5. (Sort of connected to 3, but not identical) What happens if we are successful in getting rid of some parking, and we run out of transit money? We have this problem with the gas tax, where just when people have the most demand for transit, that means there's less funding for it.

    So those are my arguments against using this for transit funding.

  3. The point of a tax to support transit would be to keep it low enough on the bell curve so that whatever is being taxed still remains viable, so that it's an ongoing cash source.

    Boston Logan Airport Transportation