Growth Spurts in Cities
GroundSwell, January-February 2007]
(Editor's note: This is the fourth article from Dr.
Mason Gaffney's paper, "New Life in Old Cities." The
Insights column published in the Sept.-Oct. 2006 issue of
GroundSwell entitled "New Life in Old Cities" was actually
the introduction in his 35-page paper. "New York City Reborn
1920-1931" was published in the Nov.-Dec. 2006 issue of
GroundSwell. His section E. on Chicago, "Georgists and
Chicago's Growth, 1890-1930" from the following part III. of
his paper, was published in the May-June 2006 issue of GroundSwell
and is not reprinted here)
III. Growth Spurts in some Other Cities
Data gathered originally for comparison with NYC, also point us to
some other cities that grew rapidly during parts of 1890-1940. Some
grew faster, percentage-wise, than NYC. What, then, is special about
NYCs spurt? In several of the other cities, rapid growth was
associated with Georgist-oriented policies and attitudes similar to
those of NYC under its Al Smith Act, and its Lawson Purdy assessment
practices. This supports C.J. Posts and Geigers and
Polaks assertions of cause and effect.
A. Cleveland, 1900-20
Cleveland grew by 109%, 1900-20. For most of this time it was
under the administrations of single-taxers Tom L. Johnson, 1901-09,
and Newton D. Baker, 1911-16. Charles Barker, biographer of Henry
George, describes Johnson as Georges field commander.
In 1906, Mayor Johnson inaugurated a low 3-cent trolley fare which
entailed possible deficits he intended to meet by taxing real
estate. In 1909, Johnson formally put in place reformed machinery
for land assessment. W.A. Somers, who had supplied his standard
unit system of mapping land values to Johnson in 1901, was
made Chief Clerk. Somers supervised the first quadrennial assessment
(Post, 1915, p.91). Johnson and Somers raised assessments from $180m
to $500m, with a new emphasis on land values. For the first time,
there was a fair assessment in Cleveland (Russell, p.291; Bremner,
Chap. 14, pp.153-64).
Johnson and Somers analyzed property assessments, and found that
assessors had been undervaluing holdings in rich neighborhoods, and
overvaluing those in poor. Johnson, a master showman, put up large
maps illustrating this, inviting discussion and suggestions from the
public. To aid understanding, he pushed the Somers unit system
a system later used by Purdy in NYC. A Standard Unit was one
front foot, 100 deep, with formulas to adjust for corner
influence, depth influence, etc.
To win support for up-valuing land and down-valuing buildings,
Johnson set up a city-sponsored Tax School in 1901. The biggest
landowner in Cleveland sued to stop it, and won, but by the time the
Tax School closed it had operated for 20 months, and prepared the
public mind for a large rise of land assessments (Johnson, pp.127,
129; Bremner, pp. 129, 136, 157-58). Johnsons parting view
upon leaving office in 1909 was of his candidates taking control of
the City Board of Equalization, which had the last word on assessed
valuations (Bremner, pp.162-64). To this day a bronze statue of
Johnson stands in downtown Cleveland, holding a book out for all to
see, and on it is engraven Progress and Poverty.
Johnson's City Solicitor and ally, Newton D. Baker, was another
remarkable leader, who later nearly edged out FDR for the Democratic
Presidential nomination in 1932 (Cramer; Neal; Moley). Baker won the
mayoralty in 1911, after an interregnum of just two years. Baker
implemented Johnsonian policies until President Wilson appointed him
Secretary of War in 1916. This high-level appointment recognized the
political power of the single-tax movement in that era, a power that
later historians and economists have wrongly trivialized. Baker left
behind an improved infrastructure, and the city debt that financed
it, so the City needed heavy land-value taxes for some time to come.
Peter Witt, often described as a fiery single-taxer, ran
to succeed Baker and lost only narrowly, indicating that Johnsonian
policies retained a large constituency. After 1916, though,
Cleveland slowly fell into old-line Tory hands (Cramer, p.7). It
also began its long slide into its present torpor and mediocrity.
From 1900 to 1920, Cleveland's population had more than doubled. If
Cleveland had continued growing at the Johnson-Baker rate, its
population today would be 15 millions or so, double that of NYC, and
30 times the half million it actually has now. Its masses of voters
would dominate Ohio politics, which helps explain the efforts of the
Taft and Hanna machines in the 1912 Ohio constitutional convention,
to be described below, to block its pro-growth policies.
B. Detroit, 1890-1930
Detroit's soaring growth, 1890-1930, obviously involved the auto
industry, but why did that industry focus on Detroit? There was no
St. Lawrence Seaway that opened in 1959, when it failed to
arrest the decline of most Great Lakes cities, whose leaders were
failing to stop their internal decay. Growth began under Mayor, then
Governor Hazen S. Pingree (Lorenz, pp.17-18; Johnson, p.91). Pingree
had called Tom Johnson to Detroit in 1899 to help beef up its street
car system and lower fares, under public ownership (Lorenz,
pp.17-18; Johnson, pp.91-97; Bremner, p.42; Bemis). It is one of the
great ironies: The Motor City, whose auto firms did so much to
destroy mass transit, originally attracted them by providing cheap
mass transit for their workers. Pingree was growth-oriented, but not
annexationist, and was in tune with Johnson. Growth after Pingree,
however, entailed vast annexations, nearly quadrupling the City area
by 1930. During this period Detroit subsidized sprawl massively,
resulting in one of the worst cases of excess subdivision in the
U.S.A. at that time (Fisher and Smith, 1932; Fisher, 1933), although
there was keen competition for that superlative. Historians have
neglected Pingree as compared with Johnson and Baker of Cleveland,
and Jones and Whitlock of Toledo, but Joseph Dana Miller rates
Pingree with Johnson and Whitlock as a true single-taxer
(Miller, pp. 411-12).
Table I ("Population, NYC and Comparison cities, 1890-2000,
Ranked by 1900 Populations") shows a sensational collapse of
Detroit after 1950 or so. A weak market for autos? Hardly: Detroits
fall coincided with the Interstate Highway System and the greatest
auto sales boom in history. The St. Lawrence Seaway opened in 1959,
opening more export markets. Foreign competition came later. Detroits
leaders, auto-oriented, forgot the Pingree policies that had
launched Detroit earlier. During Detroit's fall, the brand new
suburb of Southfield elected a latter-day single-tax Mayor, James
Clarkson, who appointed a single-tax assessor, Ted Gwartney. During
the Clarkson-Gwartney era Southfield boomed vigorously, until
opposing forces got Clarkson kicked upstairs as a lifetime judge.
Thereupon, Southfield immediately stagnated.
C. Toledo, 1890-1920
Toledo tripled its population, 1890-1920. Much of this occurred
under single-tax Mayors Samuel M. Golden Rule Jones,
1897-1904, and his disciple, Brand Whitlock, 1905-1913, a graduate
of Gov. Altgelds populist administration in Illinois. Many
cities grew fast in this period, but Toledo grew by 200%, outpacing
most other cities. Books by Jones and Whitlock tell much of the
Toledo peaked out after 1920. The shackles of the 1912
Constitution blocked Toledo just as they did Cleveland. In addition,
according to Milwaukee Mayor Daniel Hoan, the railroads with their
key landholdings choked Toledo by tying up its waterfront (Kerstein,
pp.42-43). Hoan had taken drastic action to take control of
Milwaukees waterfront, with its city-owned port and parks.
Chicago had earlier done the same. It was Hoan who led the fight for
the St. Lawrence Seaway Project, fighting railroad corporations all
D. Milwaukee, 1916-40
Milwaukee grew fast for 30 years under its "socialist"
Mayors Emil Seidel (1910-12) and Daniel Hoan (1916-40). Hoans
tenure was the longest of any Mayor of a large American city; he was
nationally recognized as the best mayor in the country, and
Milwaukee under Hoan was the best-governed city (Kerstein, 1966).
This was a period of slowing growth in most other cities in Table I.
Hoan's brand of what others labeled "sewer socialism"
consisted in applying the principles of marginal-cost pricing to
Milwaukee's infrastructure, meaning keeping transit and utility
user-rates low, and meeting deficits by raising property taxes. Hoan
also expanded social services, and pressed city assessors (in
Milwaukee these serve at the mayor's pleasure) to up-value land and
down-value buildings (Hoan, 1936, pp.26-27). Hoan had his assessor
distribute maps of city land values, block by block, to enlist
citizen aid and support for assessing land first, and buildings "residually"
the quick and easy way, as well as the theoretically correct
way, to raise assessed values of land and lower those of buildings.
This is the system spread by W.A. Somers, and at that time known by
his name. Like all progressive mayors of the era, and like Tax
Commissioner Purdy in NYC, Hoan studied and learned from the
achievements of Tom Johnson (Hoan, passim).
Hoan also took control of Milwaukees waterfront from the
rails for the City, creating the Port of Milwaukee and a string of
lakefront parks. Hoan was inspired by civic reform in Chicago, where
he had lived from 1905-08 under Mayor Edward Dunne (q.v.), and taken
his law degree. He modeled himself on Clarence Darrow.
Later Mayor Frank Zeidler (1950-60) was also a "socialist"
of sorts, and well-intended, but without Hoans keen mind. He
believed annexation was the way to provide cheap housing for workers
so he annexed all of northwestern Milwaukee County, doubling the
City's area. Then he stepped down in 1961 for Henry Maier, whom he
mistakenly thought would carry on the Hoan tradition. Maier turned
out to be retrograde, consumed by national ambitions and a
do-nothing strategy of blaming all the Citys problems on its
suburbs and an imaginary conspiracy of enemies. Under his
leadership, Milwaukee started rapidly to hollow out and lose
The formula for growing and revitalizing cities seems to be the
same, whether under a "socialist" like Hoan, a colorful
populist like Johnson, a reluctant dilettante like Whitlock, a
leading citizen like Purdy, or a lawyer like Clarkson: supply
infrastructure, keep user-rates low, raise land taxes, attend to the
details of assessment, and go easy on buildings. It is simply the
economists' theory of "marginal-cost pricing" as
articulated by Hotelling (1938), and later developed at length by
William Vickrey in many books, lectures and articles (Arnott).
F. San Francisco
Many cities outside the northeast quadrant were implementing
growth-oriented, George-like policies in this era. Here is a case
study of one, San Francisco, to represent the genre.
Born-again San Francisco, 1907-30, makes an edifying case study in
regenerative tax policy. Its calamity of 1906 wiped out most of the
city. It had no State or Federal aids to speak of. The state of
California had oil, but didnt even tax it, as all other states
do. It did have private insurance, but so did and do other cities.
It had no power to tax sales or incomes. It had no lock on Sierra
water to sell its neighbors, as now; no finished Panama Canal, as
now; no regional monopoly comparable to New Orleans hold on
the vast Mississippi Valley. Unlike rival Los Angeles (whose smog
lay in the future) it had cold fog, cold-water beaches, no local
fuel, nor semitropical farm products, nor easy mountain passes to
the east. Its rail and shipping connections were inferior to the
major rail and port and shipbuilding complex in rival Oakland, and
even to inland Stocktons. It was hilly, more so than any other
major American city; much of its flatter space was landfill, in
jeopardy both to liquefaction of soil in another quake, and
precarious titles subject to the public trust doctrine (Wilmar,
1999). Its great bridges were unbuilt it was more island than
peninsula. It was known for eccentricity, drunken sailors, tong
wars, labor strife, racism, vice, vigilantism, and civic scandals.
In its hinterland, mining was fading; irrigation barely beginning.
Lumbering was far north around Eureka; wine around Napa; deciduous
fruit around San Jose. Berkeley had the State University, Sacramento
the Capitol, Palo Alto Stanford, Oakland and Alameda the major U.S.
Naval supply center.
Yet, after the quake and fire of 1906, San Francisco bounced back
so fast its population grew by 22%, 1900-10, in the very wake of its
destruction; it grew another 22%, 1910-20; and another 25%, 1920-30,
remaining the 10th largest American city. It did this without
expanding its land base, as rival Los Angeles did; and while
providing wide parks and public spaces. Far from spreading out, it
had to pull back from the treacherous filled-in level lands that had
given way in the quake and over which the State was assuming greater
control (a 1909 Statute prohibits the privatization of any tidelands
or submerged lands anywhere in the State Wilmar). On its hills
and dales it housed, and linked with mass transit, a denser
population than any city except the Manhattan Borough of New York.
For a sense of its gradients, see the chase scenes from the films
Bullitt or Trench Coat. It is these people and their good works that
made San Francisco so famously livable, the cynosure of so many
eyes, and gave it the massed economic power later to bridge the Bay
and the Golden Gate, grab water from the High Sierra, finance the
fabulous growth of intensive irrigated farming in the Central
Valley, and become the financial, cultural, and tourism center of
the Pacific coast.
How did a City with so few assets raise funds to repair its broken
infrastructure and rise from its ashes? It had only the local
property tax, and much of this tax base was burned to the ground.
The answer is that it taxed the ground itself, raising money while
also kindling a new kind of fire under landowners to get on with it,
or get out of the way.
Historians have obsessed over the quake and fire, but blanked out
the recovery. We do know, though, that in 1907 San Francisco elected
a reform Mayor, Edward Robeson Taylor, with a uniquely relevant
background: he had helped Henry George write Progress and Poverty in
1879. George, Jr.s bio of his dad calls Taylor the only one
who vetted the entire MS. Georges academic biographer, Charles
Barker, credits Taylor with adding style and quality and ideas to
the work. Barker and Georges earlier academic biographer
(Geiger) consider Taylor to have been the major single influence on
George. Taylors call for action appears on p.396, introducing The
Application of the Remedy. If you had helped and swayed the
man writing Progress and Poverty, and composed its call for action,
and then became reform Mayor of a razed city with nothing to tax but
land value, what would you do?
Reams are in print about how Henry George was not elected Mayor of
New York, but nothing about how his colleague E.R. Taylor WAS
elected Mayor of San Francisco. While George was barnstorming New
York City and the world as an outsider, Taylor stayed home and rose
quietly to the top as an insider.
In 1907, single-tax was in the air. It was natural and easy to go
along with Cleveland, Detroit, Toledo, Milwaukee, Chicago, Houston,
San Diego, Edmonton, many smaller cities, and doubtless other big
cities yet to be researched, that chose to tax buildings less and
land more. Vancouver, above all, was a model and inspiration. Civic
leaders seriously considered going further. The Commonwealth
Club (San Francisco) Reports for 1914 reflect that more time was
devoted by the club to consideration of it (the single tax
initiative) than any other,
Again, as in 1912, much of the
debate centered around the success of the tax policies of the
British Columbia cities,
(Echols, 1967, p.59).
It was the Golden Age of American cities when they grew like fury,
and also with grace: The City Beautiful was the motif,
expressed in parks and expositions like San Franciscos 1915
Panama-Pacific International Exposition. The idea of city parks,
recreational land for all the people, melded with the idea of
national parks: San Francisco housed major leaders of the movement
like Franklin Lane, John Muir, William Kent, and others.
Mayor Nagin of New Orleans today pleads that Katrina wiped out
most of his tax base, so he is impotent. By contrast, in 1907 Mayor
Taylors Committee on Assessment, Revenue, and Taxation
reported sanguinely that revenues were still adequate. How could
that be? Because before the quake and fire razed the city, 75% of
its real estate tax base was already land value (S.F. Municipal
Reports, FY 1906 and 1907, p. 777). S.F. also taxed personal
(movable) property, but it was much less than real estate, and secured
by land. The coterminous County and School District used the same
tax base. If we saw such a situation today we would say the local
people had adopted most of Henry Georges single tax program de
facto, whether or not they said so publicly. San Francisco was the
epicenter of Luke Norths 1916 Great Adventure
initiative campaign for a statewide single tax a campaign
that won 31% of the States voters. (Large Landholdings, 1919;
Miller, 1917, p.51; Geiger, 1933, p.433; Young, p.232). From
1912-22, North and others qualified a single-tax initiative at every
biennial election (Echols, 1979, passim). Even while "losing,"
such campaigns raised consciousness of the issue so that assessors
were focusing more attention on land. Thus, in California, 1917, tax
valuers focused on land value so much that it constituted 72% of the
assessment roll for property taxation, statewide (Troy, 1917b,
p.398)a much higher fraction than today.
It was a jolt to replace the lost part of the tax base by taxing
land value more, but small enough to be doable. This firm tax base
also sustained S.F.s credit to finance the great burst of
civic works that was to follow. Taylor retired in 1909, but soon
laid his hands on James Rolph, who remained Mayor for 19 years,
1911-30, a period of civic unity and public works. Sunny Jim
Rolph expanded city enterprise into water supply, planning,
municipally owned mass transit, the Panama-Pacific International
Exposition, and the matchless Civic Center. S.F. supplemented the
property tax by levying special assessments on land values enhanced
by public works like the Stockton Street and Twin Peaks Tunnels.
Good fiscal policy did not turn all the knaves into saints, as Gray
Brechin has documented in Imperial San Francisco. Rolph burned out
after 1918 or so, and fell into bad company with venal bankers and
imperialist engineers. But San Francisco still rose and throve.
G. Cincinnati, Ohio politics, and Decadence
Set against those cities with spurts of rapid growth there were
others frozen in time. Lincoln Steffens, in his Tale of Two
Cities, contrasted Cleveland, the best-governed American city,
with Cincinnati, one of the worst, and we will do the same.
After 1890, Cincinnati poked along only slowly under its various business-friendly
administrations. All during the years of Tom Johnson and Newton
Baker in Cleveland, and Samuel Jones and Brand Whitlock in Toledo,
Cincinnati was the power base of the old Tory guard who opposed them
and all they stood for, and put Ohioans McKinley, Taft and Harding,
three of our stodgier presidents, in the White House (Steffens;
Russell, pp.131, 136, 149, 155, 174, 203, et passim; Bremner). Under
their guidance, Cincinnati grew so little and shrunk so much that it
now has fewer people than it had in 1910, shriveling from 363,000 in
1910 to 331,000 in 2000 (see Table I). In April, 2001, Cincinnati
erupted in destructive emeutes.
Mark Hanna of Cleveland made McKinley President, and himself
Senator. Hanna enjoyed support from the richest American,
Clevelander John D. Rockefeller, and from Cincinnati bosses Cox and
Foraker, but could not control his own front yard because Johnson
did (Russell, p.120). Hanna routinely maligned Johnson, defining him
as a socialist-anarchist-nihilist. Socialism was the
equivalent of anarchism, said Hanna, and it was an anarchist who had
shot McKinley, so there. Johnson, a native southerner, was a carpetbagger
followed by a train of all the howling vagrants of Ohio.
It went beyond name-calling, and beyond Hanna. In Cleveland,
as in these other (Ohio) cities, there was organized as if by
instinct a sympathetic, political-financial-social group whose power
and influence made itself known the moment it was touched
(Hauser in Preface to Johnson, 1911, p. xxii.)
Ohio was not alone in having such a power structure. Judge Ben
Lindsey of Denver memorably described another such case in The
Beast. Ohio was unusual, though, in having Tom Johnson. Johnson,
inspired by Henry George, had the courage, skill, dedication, and
personal wealth to face The Beast and tame it.
Johnson died in 1911, but the spirit outlived the body.
Single-taxers were hard at work in the Ohio constitutional
convention of 1912, pushing for direct democracy to overcome
plutocratic and boss rule. Herbert S. Bigelow was the leader; fiery
Peter Witt was active. Like URen in Oregon they believed that
the Initiative and Referendum would open the gate for the
single-tax. Journalist Yisroel Pensack examined the Proceedings of
this convention. They show landowning anti-Georgists concentrating
their forces against such an outcome, to the extent that Ohio's
Constitution now provides that I&R may be used for almost any
purpose EXCEPT to enact the single tax (letter to the writer).
Professor William Peirce of Case Western University confirms Pensack
(2003). Oliver Lockhart wrote that the Convention was dominated by fear
of the single tax, which element (sic) was in control of most of the
convention machinery (1912, p.730). Francis Coker quoted the
then-new Ohio Constitution to the point (1913, p.196). Thus the
Cincinnati power group, based on a failing city, branded its mark on
a whole state while also giving the nation three mediocre
Presidents: McKinley, Taft, and Harding. Since then, Toledo and
Cleveland have joined Cincinnati on the sick list.
In upstate New York and downstate Illinois, it is the same. People
there gaze with distrust on the anti-business radicals
and sinners in the big city, and their high property taxes, while
people and capital and businesses keep moving from the farms and
small cities to the big one (and its suburbs). Something is askew
with popular perceptions of cause and effect. Data presented herein
tell a different story.
H. Are Pro-labor Mayors Bad for Business?
The population growth records herein suggest an arresting
hypothesis, that left-wing administrations are good for business
productive business, that is and "pro-business"
administrations are bad. San Francisco and New York, with their
leftwing democratic traditions, seem to hold up well compared with
other old cities. San Franciscos recovery from the quake and
fire of 1906 was fast and impressive, under its Mayor Edward Robeson
Taylor, 1907-09, and then enduring under Mayor James Rolph, 1911-30.
Georges major biographers consider Taylor to have been the
greatest single influence on George.
Mark Lause has named NYC as the focus of radical politics back to
1820 or so, during the time it was emerging as our largest city.
During this long growth period after 1820, NYC government was
collecting a large bite from land rents to support public services
(Geiger, p.427). The whole state, in fact, used land taxes to
finance the Erie Canal, opened in 1825.
Even Los Angeles, with its "open-shop" reputation, came
close to electing a socialist mayor, Job Harriman, in 1913. Like
Chicago and San Francisco, L.A. had natural handicaps to overcome,
and used city government for public works to raise private land
values just dont call it socialism, was the
ethic of the dominant L.A. Times and its allied ruling class. L.A.
raised property taxes to spend lavishly on public water supply,
public power, harbor facilities, sewers, city-owned rails, and other
public works. In 1934, L.A. voters even supported Upton Sinclair of
Pasadena for Governor. Sinclairs EPIC program
included a large element of Georgist land taxation and
As reported above, Houston, under single-tax assessor J.J.
Pastoriza, grew by some 25%, 1911-15, until a court ordered him to
go back to the old ways (Geiger, pp.434-35). Harris Moody, assessor
in San Diego, single-handedly used his administrative latitude to
convert the property tax to a land-value tax over several years,
1920-26, until stopped abruptly by court order (Mahoney). At this
point the city skyline froze for the next 75 years (Andelson).
Vancouver, B.C., quintupled in population, 1895-1909, after
exempting first 1/2, and then 3/4 of building values from the
property tax, as described by 8-term Mayor Louis Denison Single-tax
Taylor (Marsh, 1911, pp.33-37; Rawson, 2000).
Detroits explosive growth was triggered by Mayor and
Governor Hazen Pingree, battler against railroad corporations, other
land speculators, and transit monopolists. Chicagos long
growth record came under a series of leaders who supported labor
unions, education, parks, and welfare, and made a virtue of battling
monopolies, from Bradleys Anti-monopoly League of
1881 and socialization of the lakefront through muckrakers Tarbell
and Lloyd to the exile of transit magnate Samuel Yerkes. Milwaukees
rapid growth came under two avowed Socialist Mayors, Emil Seidel and
Daniel Hoan, who seized the lakefront from the rail corporations and
created vast public parks. Clevelands growth came under the
radical anti-monopolists Tom Johnson and Newton Baker. Toledos
burst of growth came with single-tax Mayors Samuel Golden Rule
Jones and Brand Whitlock. Pioneer land assessor William A. Somers
traveled busily on loan from city to city, instructing local
assessors in his Georgist techniques. Out west, San Franciscos
swift recovery from its quake and fire began under Mayor Edward
Robeson Taylor, who had helped Henry George write Progress and
Poverty in 1877-79. Vancouvers leader was 8-time Mayor Louis
Denison Single-tax Taylor. In Seattle it was Mayor
George F. Cotterill, who looked to Vancouver for inspiration. In
rural California it was the virtually unknown C.C. Wright
and L.L. Dennett of Modesto. I do not pursue those
threads here, but they surely call for review of stereotyped ideas
about "pro-business" governments and "leftwing"
governments. They also refute the idea that Georgism never weighed
in politics. These were not isolated local events. The principals were
very conscious of being part of a national movement, and they were
in close contact
(Morton, pp. ix, 8).
I. The Puzzle of Pittsburgh
Pittsburgh is a Georgist anomaly. Urban and tax scholars routinely
cite Pittsburgh, with its two-rate property tax plan
(lower on buildings, higher on land) to exemplify a tax-induced
growth effect roughly like what New Yorks law induced.
Whatever happened in Pittsburgh, however, has not made its
population rise. Its fall after 1980, especially, is steeper than
most cities in Table I ("Population, NYC and Comparison Cities,
1890-2000, Ranked by 1900 Populations").
No one publishing on Pittsburgh's Plan, pro or con, has addressed
this exodus, to my knowledge. Various studies have shown rapid
building in Pittsburgh under its two-rate regime (Cord, Oates and
Schwab, Tideman and Plassmann). None of these looked at population.
Whatever the answer, champions of the Pittsburgh graded tax plan
need to explain this outmigration.
One reason for it is that Pittsburghs plan, compared with
New Yorks, is not focused on housing. It has the effect of
encouraging commercial and industrial building which might actually
take land from residential use within the city limits, while
stimulating residential demand in the suburbs. Pittsburgh is also
tightly constricted in area, unlike NYC, and perhaps should be
compared with Manhattan, rather than all of NYC.
Another reason for an exodus is that Pittsburgh under Mayor
Richard Caliguiri imposed a wage tax of 4% during the 1980s. He also
raised gross receipts taxes. In 1989 a new mayor, Sophie Masloff,
commissioned research by Ralph Bangs of the University of Pittsburgh
to explain the exodus from Pittsburgh, and Bangs respondents
identified the wage tax as a major cause (letter from Pittsburgh
researcher Daniel Sullivan, 29 Dec 2000). Neither Masloff, 1989-93,
nor her successor Tom Murphy has abated the wage tax. Murphy abated
taxes on certain large businesses that agree to locate in Pittsburgh
but not on their workers.
A third reason is that the graded tax rate lower on
buildings than on land applies only to tax rates imposed by
the City of Pittsburgh, not to the overlapping property taxes of the
School District or of the County, Allegheny. The effect on taxpayers
is thus heavily diluted, so that many of them are scarcely aware of
any two-rate tax plan.
A fourth, and perhaps the weightiest reason is the least visible,
in normal times: the City of Pittsburgh does not control its own
assessments the way Johnson did in Cleveland, Hoan in Milwaukee,
Purdy in NYC, and Clarkson in Southfield.
The Allegheny County Assessor controls tax valuations, and this
officer has another agenda, which includes undervaluing land.
Pittsburgh's assessed land values were so low in 1999, "they
weren't anywhere near reality," said George Donatello,
operations director for Sabre Systems, a contract assessment firm
retained to reassess Allegheny County in 2000 (Belko). In 2000, land
was only 10% of the property tax base in Pittsburgh: an absurdly low
figure that lacks all credibility (Pittsburgh Councilman Daniel
Cohen, cited in Snowbeck).
Sabre Systems revalued Allegheny County land at triple the amount,
but the powers in Pittsburgh responded by ditching the graded tax
plan. Modern crusaders for "two-rate" tax reform resist
addressing and dealing with malassessment, because they fear
reassessment as a political liability. Perhaps it is, but without
Purdy-style assessments, the "Pittsburgh Plan," for all
its publicity, is form without substance, more nominal than real. It
is tempting to "Let sleeping dogs lie," but the reason
reassessments awaken the dogs is because valuation of the tax base
is where the real bite is, and without real bite there is no real
Scholarly researchers, too, have neglected malassessment, because
it is messy, and the modern academic style is to build complex
econometric models that are top-heavy and fragile, even with good
firm numbers, and often impossible when the input numbers are fuzzy.
Models are mechanistic and mathematical, with no room for the
attitudes and personalities of civic leaders which, as we have seen,
make a world of difference. There is wide latitude in the assessment
process, latitude that can be used either to subvert a Pittsburgh
Plan, or, as in Pastoriza's Houston, 1909-15, or Harris Moody's San
Diego, 1920-26, to subvert the taxation of buildings and move toward
a de facto single-tax regime.
Pittsburgh City officials who support taxing wages are obviously
not oriented toward encouraging immigration, so the wage tax may be
just one of several anti-personnel devices. The lessons seem to be
1) that one must look at the whole of city policies, not just the
apparent structure of the property tax, to determine the overall
impetus of public policy on population; 2) Pittsburgh's officials
have been more interested in favoring capital than labor; 3) where
there are two or more overlapping jurisdictions levying on property,
a change in just one of them may not amount to much; and 4) property
tax reforms may be subverted by contrary assessment practices.
Population growth is not always a goal of civic policy. Many
cities discourage immigration, while seeking to import and retain
taxable capital. Federal tax policies of recent times, shifting more
and more of the tax burden off property income and onto labor
income, have diluted or offset normal local incentives to attract
people. Population, however, is surely one measure of city health,
even from the particularistic local view: a thriving city attracts
From a distributive and full-employment view the one taken
here it is vital to the interests of labor to have cities vie
to attract people by fostering good use of their land. That is,
indeed, the main point of Progress and Poverty, Georges major
work. Competition for people is also vital to the interests of all
people as consumers, especially of housing. In this neo-Malthusian
era, it is useful to point out the obvious, that luring people from
city A to city B is a zero-sum game, from a national population
view. Indeed, luring people from farms to cities generally lowers
"Labor" as used here includes most people: everyone
except passive-aggressive landowners. As to the last, however, the
rise of land prices in NYC (which C.J. Post and Pleydell and Wood
document), and their fall in torpid cities and neighborhoods, says
that landowners, too, gain from urban health and vigor. As to
savers, and active investors in new buildings, and other productive
entrepreneurs, interurban competition tends to raise the marginal
rate of return on capital, too. How is all this good news possible?
A healthy economy generates surpluses that belie the Chicago School
slogan that There is no free lunch. Land rents are the
free lunch, the substance of Natures bounty and the evidence
of things unseen. The question for us is who will get them, and how