Most county and local governments in Pennsylvania are financed primarily through property taxes. Sometimes a payroll tax is also levied. In Philadelphia, it is the opposite: payroll tax is the biggest burden on people who live and work in the city, while property taxes are comparatively low.

When you think about it, it’s kind of odd: the payroll tax concentrates the burden of taxation on one group – wage earners. That’s good news for retirees and for people who have already earned their money, but bad news for people trying to make a living and improve their financial situation. At the same time, people who own a lot of property have a much lower tax burden than in almost any other part of the Commonwealth.

No one is going to complain much about the one tax that Philadelphia’s City Council didn’t raise as high as it could. But the inequality does get you thinking about how the city could cut other taxes and fall in line with the rest of the state, while shifting the incentives that sometimes stifle growth and push middle-income families to move to the suburbs.

An old answer is receiving new attention in the city: the property tax.

Typically, property taxes – including those levied throughout the Commonwealth – tax both the land and any value-enhancing improvements to it. This makes sense on its face; both increase the value of the property, so both should be taxed.

But whenever the government taxes something, it at least has a small deterrent effect.

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Taxing property improvements – charging higher fees for the cost of building or improving – means discouraging these investments. When the city or county charges higher fees for newly renovated properties, they are telling property owners that it would be cheaper to leave the property undeveloped. Of course, people will build anyway, because we need houses to live in and businesses can make a profit on a building, even if it costs them more in taxes. But on the margin, the traditional property tax discourages construction and economic growth.

The property tax removes this incentive by taxing only the land. Land is worth what it’s worth, and nothing more is made of it. By taxing only the land, the city sends the message that building is good. In high-value areas, it encourages high density – exactly what housing and urban planners say we need to lower the cost of living.

The idea was first seriously proposed in the 19th century by Henry George. He called it the “single tax” because it was intended to replace all other taxes. That sounds great—until you realize that this would be achieved by imposing a 100 percent tax on the value of annual ground rent—that is, if a landowner rents out land for $10,000 a year, the tax would be $10,000. If the owner doesn’t rent out the land, the tax is levied on notional income—the amount the land would have brought in rent. That’s a big tax, but if other taxes were reduced to compensate, it could be effectively revenue-neutral while greatly simplifying the tax system for everyone.

All this would entail a comprehensive reorganization of social finances.

George ran for mayor of New York on this platform in 1886 and came second, but that was the height of Georgism. But today, some old ideas are being reinterpreted as people look for a way to revitalize cities and make them more affordable. 5th Square, which calls itself “Philly’s urbanist political action committee,” held a public meeting on Georgist property taxes last month.

Russell Richie, 5th Square’s property tax point person, explained in more detail how this would all work in practice. (Full disclosure: He’s also my brother-in-law.) The land value, he said, can be “determined without much difficulty. Sales of vacant land, demolitions and sales of uninhabitable buildings, and paired sales analysis can all be used to determine land value for properties across the city. Then you interpolate them to get land values ​​for unsold properties.”

So you can determine the value of a property based on the prices at which similar properties have sold. Rent – and notional rent – are harder to determine, but the concept of notional income already exists in income tax law, even if the average taxpayer rarely has to deal with it. The city already determines property value under the current system. A new system could simply use a percentage of the value as a substitute for rent.

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Could the city reasonably raise 100% taxes on it, as George has suggested, replacing all other taxes? Richie says that’s unlikely. “I’m not working toward that right now,” he told me, “and no other serious reformer I know is either.”

But even if it’s just a switch from the current property tax system to one that taxes land alone, it could lead to more growth in the city and greater incentives to build more housing. After all, if a vacant lot is taxed the same as an apartment building, what sensible landowner would refuse to build something? And for the average homeowner, switching to land value could save an average of $275 per lot per year, according to Richie. And moving away from payroll taxes could make life easier for young people entering the workforce.

The system shows great promise and it is encouraging to see that people are thinking about real reforms in the city and not just getting by with an increasingly dysfunctional system.

The challenge, as with any city tax system, is to keep corruption at bay. A city council that blithely changes zoning through alderman prerogatives – often for corrupt reasons – would probably do the same with property valuation. But these numbers at least have the advantage of being simple and public. Perhaps then there would be less room for political machinations.

The last real era of reform in Philadelphia was in the early 1950s, and from taxes to corruption to zoning and more, another one is long overdue. Whether property taxes are a part of it or not, it’s a refreshing change to see people seriously discussing change and renewal.