The Graded Tax League of Pennsylvania and Related Associations

Collection Overview

Title: The Graded Tax League of Pennsylvania and Related Associations

Predominant Dates: 1925-1988

Arrangement: Arranged in four series: I. Officer Correspondence and Graded Tax League Publications; II. Publications about Pittsburgh’s Graded Tax; III. The Erie Land Tax Association; and, IV. The Incentive Tax League of Pennsylvania

Biographical Note

In 1950, the Henry George Foundation of America, headquartered in Pittsburgh, established the Graded Tax League of Pennsylvania to lobby city councils across the state to adopt the graded tax system that was in practice in Pittsburgh between 1913 and 2001. Under Pittsburgh’s graded system land values were taxed at twice the rate of buildings.

Pittsburgh’s Graded Tax Law

The history of Pittsburgh’s graded tax system dates back to the election of Mayor William A. Magee in 1909. Working with civic reformers throughout the city, Mayor Magee launched an effort to obtain legislative approval to significantly reform the process by which real estate was assessed and taxed in the city. At the time, most American cities lacked the authority to raise, lower, or alter the system of local taxation.

Although Magee had no personal history of involvement with the land value taxation movement, many prominent single taxers in and around the Pittsburgh-area helped convince the mayor that a graded system that taxed land at a higher rate than buildings would promote economic growth. In 1910, when the Russell Sage Foundation published the Pittsburgh Survey, supporters of a graded tax system could point to the report which detailed how the city’s current system enabled some of the most valuable plots of real estate to evade taxation.

Before authorizing a graded tax, the state legislature needed first to abolish Pittsburgh’s antiquated classification system for assessing real estate. Under the old system, land was divided into three categories: agricultural, rural, and urban. Agricultural was taxed at half its assessed value, rural land at two-thirds, and urban land at its full assessed value. One problem with this classification system, as the Pittsburgh Survey highlighted, was that unimproved land was classified as rural or agricultural offering no incentive to landowners to improve their holdings. In 1911, the Pennsylvania legislature abolished Pittsburgh’s classification system.

The next major step on the road towards a graded tax system came in January 1912 when the non-partisan Pittsburgh Civic Commission published its findings and recommendations after a careful review of the city’s tax and housing situation. In the report, Tax Revision to Promote Pittsburgh’s Progress, the Commission pointed out the relatively high land prices in Pittsburgh in comparison to other cities around the country and the impact of these prices on housing. To spur the development of new houses and other buildings, the Commission recommended fixing the tax rate on buildings at 50 percent the rate of land. It also suggested achieving this change gradually in 10 percent annual increments.

The Commission’s report was well received by the public and Mayor Magee. Although already receptive to the idea of a graded tax, he was further convinced when Vancouver Mayor L.D. Taylor visited Pittsburgh to share the Western Canadian city’s experience exempting buildings from taxation. After gradually shifting taxation off of buildings and onto land values, Vancouver experienced a remarkable building boom without a loss of revenue.

With the Mayor’s support, Representative Abram C. Stein of Pittsburgh introduced a graded tax bill to the state legislature on February 26, 1913. After receiving a favorable review from the Judiciary General Committee, the House passed the bill on April 9, 1913 by a vote of 113 to 5. On April 30, the State Senate unanimously approved it and Governor John T. Tener signed the bill into law on May 13, 1913.

Per the terms of the bill, Pittsburgh reduced the tax rate on buildings by 10 percent and increased the rate on land values by the same amount beginning in 1914 and every third year thereafter. By 1925, the rate of taxation on buildings had been reduced by 50 percent. In 1927, Pittsburgh reported a record number of new construction projects.

The new law faced one serious challenge shortly after its passage in 1915. That year, a group of large landowners in Pittsburgh tried to get the measure repealed on the grounds that a graded tax was discriminatory, benefiting wealthy building and factory owners at the expense of those who earned their living off of the land. They also claimed that the law moved the state closer to the enactment of Henry George’s single tax—at the time, a ringing indictment against the measure.

William Magee, then the former mayor of Pittsburgh, lobbied unsuccessfully against the repeal, which passed both houses. Still, his efforts helped convince Republican Governor Grove Brumbaugh of the merits of the graded tax system. Governor Brumbaugh vetoed the bill and no major effort to repeal the graded tax law surfaced for many decades.

The Graded Tax League of Pennsylvania

The Henry George Foundation of American established the Graded Tax League of Pennsylvania in 1950 to promote the passage of a new state law that would authorize other cities in the state to enjoy the same graded tax system in place in Pittsburgh. Pittsburgh’s former Chief Assessor Percy R. Williams Pittsburgh and one-time Pennsylvania Congressman Charles R. Eckert led the political campaign while a team of volunteers from the Foundation staffed League offices across the state.

Williams, also a founding member of the Henry George Foundation, proved an especially adept promoter of Pittsburgh’s graded tax law, penning dozens of publications detailing both the merits of the graded tax system and how it functioned. In 1962 and 1963, the American Journal of Economics and Sociology published a four-part series on Pittsburgh’s experience with a graded tax system.

In 1951, the League enlisted Pittsburgh State Senator Bernard B. McGinnis to sponsor a new graded tax bill that authorized any “third class” city—any city with a population less than 250,000—in Pennsylvania to adopt the graded tax system pending approval of the city council.

The Erie Land Tax Association

The Erie Land Tax Association (ELTA) was organized in the early 1960s to educate the citizens of Eire on the many advantages of land value taxation. In April 1963, the Erie City Council appointed a Special Study Committee to investigate the merits of adopting a graded system of property taxation. The Committee then formed a pro and con subcommittee. The findings of the pro and con subcommittees were presented in a report to the City Council later that year and published by the ELTA. This report is included in Series Four.

ELTA officers included Charles A. Hall, who served as president, Vice-President William E. Walker, and Executive Director Reverend W. Wylie Young. Series Four also features many of Rev. Young’s letters to various members of the Georgist Community on the progress of spreading Henry George’s ideas in Erie and elsewhere.

The Incentive Tax League of Pennsylvania

In 1974, the Graded Tax League changed its name to the Incentive Tax League of Pennsylvania and Steven Cord, editor of Incentive Taxation, became its president. The Incentive Tax League lobbied for the passage of state and local measures that helped move cities closer to a graded system of property taxation. In particular, the League vigorously campaigned for the passage of a series of bills in the 1980s that would have allowed counties, school boards, and smaller municipalities rate land values higher than buildings and other improvements.

The Incentive Taxation League maintained offices in Pittsburgh, Philadelphia, Delaware, and Indiana, Pennsylvania. Its officers included Richard Biddle, President of the Delaware Valley Chapter, Treasurer Edward Schoyer, and Dan Sullivan who served as Western Director.

Collection Content

Series One: Officer Correspondence and Graded Tax League Publications

Series Two: Publications about Pittsburgh’s Graded Tax Law

Series Three: The Erie Land Tax Association

Series Four: The Incentive Taxation League of Pennsylvania