Subtraction by Land Subdivision

White River Junction

Which is more important, kids or land? More specifically, which is more important, educating our children or making sure they’ll have land to use and enjoy when they grow up?

Hopefully you’re thinking right now, “What a horrible choice; you can’t choose between kids and land — we need both.” And yet Town Meeting is right around the corner, which means that we’re about to be asked the same question we’re asked every year at this time, namely: What’ll it be, kids or land?

It’s been going on like this in Vermont and New Hampshire for nearly three centuries. And the land is losing.

The connection between kids and land is property taxes. Depending on which town you live in, your property tax bill is one of the biggest bills your household will face this year, and somewhere between two-thirds and three-quarters of it will go to funding schools. What you pay will be based on the value of your house and your land.

Most economists know (and politicians seem to ignore) the simple fact that taxing something tends to discourage it. Generally speaking, we pay little attention to this in our country. We tax things that are obviously good (paychecks, for example, or open land) while giving a pass to things that are clearly terrible (carbon emissions or gas-guzzling cars). We have a few minor “sin taxes” on things like tobacco, but when it comes to the main sources of government revenue, we get it mostly backward.

Especially when it comes to open land, meaning land that is in forest or farms that has not been developed for roads, houses or businesses. When surveys are done about the quality of life in the Upper Valley, some variation of “preserving its rural character” always comes in at the top of the list as a key determinant. Even in relatively built-up Hartford and Lebanon, we all are lucky enough to live within a few miles of open land.

What’s your favorite thing about open land? Bird watching? Deer hunting? Skiing or snowmobiling? Do you work in the woods or on a farm? Do you heat with firewood or shop at the farmer’s market? Do you appreciate open land because it purifies the air and helps prevent flood damage? Or do you simply enjoy gazing at a lovely hillside that catches your eye on your commute home every day?

Open land is one of the loveliest things about life in the Upper Valley, which is why it’s maddening that our tax policy is working to get rid of it.

We inherited this tax system from our colonial forebears, who funded schools through property taxes for the simple reason that property back then was a good approximation of a person’s ability to pay. If you were a successful farmer, you bought more land or built a bigger barn. If you were the local doctor or lawyer, you built a brick house in the village. The system was simple to implement and easy to enforce. Plus, relatively speaking, there was lots of land and schools were small (one teacher, one room), so the burden was widely shared.

Fast forward to today, and open land is vanishing while the cost of running schools is mushrooming. People have been selling off lots for centuries to try to keep up. Paying taxes isn’t the only reason why people develop land, but it is a most unfortunate one. And property taxes are like rust: They slowly eat away at open land, often imperceptibly. One day you live in the bucolic Upper Valley, and the next you live in the suburbs of Nowheresville.

Both states have recognized this problem and put “current use” programs in place to minimize the property taxes on undeveloped land by taxing land for its current use (as forest or field) rather than its development value (houses and roads). These programs have been essential in protecting the open land we still enjoy in the Upper Valley.

But current use suffers from three fatal flaws. First, it is often characterized as a tax loophole or a tax giveaway, rather than as a necessary correction for a flawed system. Second, the taxes saved by putting land in current use are shifted onto land that is not in current use, making the property tax burden worse for owners of land that isn’t enrolled. Third, many parcels are too small to qualify for the current use program, so the owner of a gorgeous 8-acre meadow enjoyed by everyone in town has no option but to pay the full freight or cut it up into lots.

Vermont’s otherwise admirable effort to cap property taxes based on a person’s income adds to the problem, since the cap only applies to your house. If you own that gorgeous meadow, you’re taxed at the nonresidential rate, which is higher in most towns than the house rate.

Fortunately, there’s a simple solution to be had. Stop taxing open land. Tax houses and the land they sit on, sure, but don’t tax undeveloped land at all. This will remove the relentless pressure that’s carving up our landscape.

If someone decides to develop their land in the future, charge them a hefty land-conversion tax. Dedicate this to helping fund schools and the associated infrastructure that growth requires. Developed land typically costs a town more in expenses than it generates in revenue anyway, so a land-conversion tax would both discourage poorly conceived development and help compensate towns for the added expense.

This is not an anti-growth proposal. We all need places to live and shop, and building and maintaining homes and businesses provide many good jobs here in the Upper Valley. All this proposal does is change the tax implications so that growth occurs where it’s most efficient and most needed rather than on land that’s being forced onto the market.

For people who want to post their land against trespassing, charge them an annual “estate” fee. This would discourage posting and help compensate the public for lost recreational opportunities. Free public access to private land is one of the great traditions of New England, something we inherited from the English and something that distinguishes us from the rest of the country, where “Private Property: Keep Out” is the default.

Most of a town’s property tax revenue is generated by houses and businesses, not land, so dropping the tax on open land wouldn’t be as disruptive as it might at first seem, especially when the land-conversion tax and posting fees are added back in. In other words, we can protect open land without having to scrap the property tax system altogether.

Of course, sparing the land will increase the taxes that are charged on houses, though house value correlates much better with ability to pay than acreage. Also houses, though a public good, are also a public expense, requiring significant taxpayer support in the form of schools, police, fire, roads, etc. Open land, meanwhile, requires almost nothing in the way of taxpayer support to provide that whole host of public benefits, from recreation and wildlife habitat to flood control and natural beauty.

So when you ponder your school budget at Town Meeting this spring and face the dreaded decision of kids versus land, remember that it doesn’t have to be this way. With a simple change, we can have it both ways — we can have kids and land together.

Chuck Wooster is a farmer and writer who lives in White River Junction.


Letter: Noteworthy Items in the Paper

Friday, February 8, 2013

To the Editor: The recent publication of so many good things has finally impelled me to write. Foremost among them is Chuck Wooster’s new Perspectives page commentary on the property tax, “Subtraction by Land Subdivision,” published Feb. 3. If this mindset gains currency, it might actually be possible to make progress in our method of local taxation. At least it …

Letter: Disappearing Intelligent Life

Tuesday, February 19, 2013

To the Editor: I have been reading about all the proposed spending and tax increases projected in our local towns, and something I fail to understand is why are so many of our elected leaders so out of touch with the local wage scale? Property taxes go up $200 to $300 a year, and people just keep electing the same …