These cities powered the US from the beginning of the Civil War until the end of World War II. When the steel industry finally collapsed in the mid to late seventies, these towns lost people, businesses and tax base. As in much of the country, people and commerce pulled out, and built anew, sometimes only a couple of miles away.

The situation was dire. Many cities fell into state control. During this period, Clairton, Aliquippa, and New Castle adopted a land value tax (LVT) at the recommendation of the State. By 1982, the state capital, Harrisburg, was facing bankruptcy. The Mayor looked at the papers to sign and said ”No!” Instead, Harrisburg took LVT and expanded it.

These moves were a bet that changing the property tax system could stem the tide of blight and vacancy in Pennsylvania cities: specifically, that taxing land at a higher rate than buildings would incentivize redevelopment and discourage owners from sitting on unused land, as Charles Marohn outlines in "You Get What You Tax For."

Did LVT help prevent blight in deindustrializing Pennsylvania cities? Let's take a look.

The Case of Harrisburg

In 1982, Harrisburg instituted a tax rate on land that was four times the rate on buildings. By 1994, the mayor, Stephen Reed, wrote the following in a letter to Allentown, PA civic activists:

With over 90% of the property owners in the City of Harrisburg, the two-tiered tax rate system actually saves money over what would otherwise be a single tax system that is currently in use nearly all municipalities in Pennsylvania. We therefore continue to regard the two-tiered tax rate system as an important ingredient in our overall economic development activities. I should note that the City of Harrisburg was considered the second most distressed in the United States twelve years ago under the Federal distress criteria. Since then, over $1.2 billion new investment has occurred here, reversing nearly three decades of very serious previous decline. None of this happened by accident and a variety of economic development initiatives and policies were created and utilized. The two-rate system has been and continues to be one of the key local policies that has been factored into this initial economic success here.

The number of vacant structures in Harrisburg declined from over 4200 in 1982 to under 500 by 2001. The downtown—previously a ghost town—is alive, even at night. The number of businesses on the tax roll has grown from 1,908 to 8,864.

The Case of Allentown