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Editorial

My wife recently came across a very interesting family document, an official inventory of the estate of her great-great-grandfather, Robert McCrillis, who died in 1884 in Topsham, Vermont.

Written in a robust script on one single sheet of ledger paper, it enumerates all of his possessions. The entries include four acres of tillage land at $43.75 an acre and two axes, a saw, and a manure fork, each valued at 25 cents. His 6-year-old work horse was worth $65, a “new milch cow” $30, and a yearling heifer $16. In total, his estate was worth $470.25, and nearly all of its value was tied up in his farm in improved land, livestock, and feed. There are no stocks, no mutual funds, no time-share in Cozumel.

While this reckoning was taken at the time of his death, each year every household compiled a similar list for the listers of what was known as general property. This Grand List was the basis for the annual tax due. In the simpler time when this system was devised, a person’s wealth was readily visible. Everyone in town knew who was doing well and who wasn’t.

Still, the listers struggled to catch tax evaders. In his 1894 History of Taxation in Vermont, Frederick A. Wood wrote, “The history of the grand list will be seen to bristle with attempts – for the most part unsuccessful – to bring to light certain kinds of property which in their nature are easily concealed and are therefore convenient subjects for evasion.”

As society became more complex and wealth more easily hidden, officials continually tinkered with the general property tax in an attempt to fairly assess a person’s wealth. Ultimately, many states (but not all) instituted other more easily collected taxes, such as sales tax and income tax. Still, the property tax is in place everywhere, but missing from it is any attempt to make it a fair reckoning, and that failure contributes significantly to the chopping up of the once-rural Northeast.

Today’s property tax is levied only on a person’s real estate: his land, house, and other buildings. It ignores all other wealth, including stocks and other financial instruments that are no longer so easily concealed. Consequently, a person’s house and land becomes the basis for determining his or her ability to contribute to the public treasury. It’s hard to imagine anything less equitable, because a mansion on the escarpment could be one percent of one person’s wealth, while an 1850s farmhouse with rotting sills and a 150-acre woodlot could be 99 percent of another’s wealth.

In the face of property taxes that do nothing but climb, the person with the rotting sills and the 150 acres can be hard-pressed to come up with a ready source of cash to meet his annual obligation to the government. If he’s forced to cash in, it probably won’t be the house that goes first. If he’s smart, he’ll sell only a small parcel, knowing that land prices are skyrocketing and the value of what he holds onto can only go up – small comfort indeed when before long he’s forced to sell another chunk. This process, played out in every town in the Northeast, keeps driving the suburbanization of our landscape.

Each state has a current-use program that allows landowners to enroll their land so that it’s taxed not on its fair market value but instead on its current undeveloped status. But these programs vary widely from state to state in their eligibility requirements and their usefulness. If they worked perfectly, all undeveloped land would be automatically enrolled and would be taxed accordingly. Owning land is both a personal choice and a public service, and those who own undeveloped land deserve every possible break because it provides so much to society: clean water, wildlife habitat, a beautiful landscape, and raw materials that create good jobs in the community.

The property tax system is broken, and the societal consequences are dire. If lawmakers throughout the region have any interest in keeping rural communities intact, when devising tax policy they will consider these two things: all undeveloped land needs to be taxed at its undeveloped value; and real estate is not the only property available to be taxed. Without restoring sanity to the system, we will end up with a land that is rural in name only, void of working-class people, and home only to those people whose other wealth is sufficient to let them hold onto their place in the country.

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