Alex Dobbins
October 16, 2026
Pittsburgh needs to reconsider its current approach to taxing development. The city’s property tax system can discourage new deconstruction by increasing the tax burden on properties when buildings and other improvements are added. Implementing a modern split-rate system would tax the land portion more heavily while simultaneously placing less emphasis on the buildings themselves. Build a business, apartment, or house on any given piece of property, and any improvements can add to the assessed value of a property. Leave the land barren, and now there’s no building to tax. For a city that wants and needs more housing and residential and commercial development, Pittsburgh needs to reconsider whether its current property tax system creates the right incentives for how land is used.
Underused or vacant properties still remain a major problem in Pittsburgh. A task force report done by the Pittsburgh Land Bank in 2025 found more than 11,000 tax-delinquent parcels, including more than 2,000 “dead-end” and condemned parcels, across the entire city [1]. Pittsburgh is already investing many resources into revitalizing these properties for commercial, residential, and other active uses, and additional changes to how the city taxes land and buildings could provide yet another tool for assuring and encouraging new development.
A land value tax (LVT) is an alternative to the traditional property tax system in most places in the U.S. As opposed to implementing the same tax rate on land and the buildings on it (or taxing buildings more than the land), a land value tax shifts more of the property owner’s tax burden on the assessed value of the land rather than its improvements (buildings). Pittsburgh has historically used a version called a “split-rate property tax,” where both buildings and land get taxed, however land is taxed at a significantly higher rate [2].
The reasoning behind the specific policy can be explained by envisioning two neighboring parcels of land with land assessed at $150,000. The owner of one parcel uses their land to construct an apartment building, while the other leaves their property completely vacant. In a traditional property tax, the apartment building adds substantial taxable value to the now developed property. In a split-rate system, the city would tax the land at a higher rate while lowering the rate that is applied to the building (the apartment). The developed property still gets taxed, but the property owner faces much less penalty for actually utilizing the land.
Land also differs from many other taxable assets given that there is a fixed amount. Higher taxes on land can’t reduce the available land in Pittsburgh, nor can a landowner move their parcel to another city or municipality to avoid the tax. The Federal Reserve Bank of Chicago explains the supply of land as “fixed, perfectly inelastic,” which is one reason economists have typically viewed the taxing of land as an efficient and valid way for governments to increase revenue [3].
Pittsburgh has direct experience with split-rate taxation. The city first adopted it for properties back in 1913 [3]. The difference between the two rates grew substantially as time progressed; Pittsburgh increased its land-to-building tax ratio to around 3:1 by 1980 before eventually going even further to tax land at several more times the rate of actual structures [4].
There is evidence that this system of taxation helped to encourage development. Economists Robert Schwab and Wallace Oates studied Pittsburgh’s experience with this taxation method and ultimately discovered that the city had experienced a “dramatic increase in building activity” in the 1980s. Schwab and Oates didn’t claim that split-rate taxation alone caused the building boom in Pittsburgh. They noted other factors, like the demand for commercial spaces and various economic and social conditions (collapse of the steel industry, oil crisis). However, they did conclude that the tax changes played an “important supporting role” in the development of Pittsburgh. They argued that taxing the land more heavily gave Pittsburgh the ability to raise revenues while not having to rely as much on other taxes that could discourage investment [4].
Despite the potential benefits, Pittsburgh officially abandoned the split-rate property tax in 2001, after over eight decades of use. The change came amidst a countywide property reassessment that had substantially increased the assessed value of land, which led to negative reactions from property owners seeing much higher tax bills [3]. Since Pittsburgh had been taxing land at a much higher rate than buildings, large changes to land assessments were especially major in the split-rate system. Instead of continuing the system after the reassessment, Pittsburgh transitioned back to a single-rate property tax [3]. The controversy and fallout emphasize a notable limitation of the land-based tax, which is that the system has a heavy dependence on regular and accurate assessments, something Allegheny County has struggled for decades to maintain.
The issue with property assessments remains relevant today. Allegheny County uses 2012 (yes, 14 years ago) as its base year for property assessments, with the most recent countywide reassessment taking place in 2013 [5]. The county itself even remarks that these assessed values shouldn’t be interpreted as the current market values of properties [5]. However the system is going to change. In August 2026, the Allegheny County Court of Common Pleas ordered the county to start a new countywide reassessment by the start of 2027, finish it within five years, and conduct new reassessments every five years [6]. While the obsolete assessment system would make immediately reintroducing a split-rate tax system a challenge, the expected reassessment could give Pittsburgh an opportunity to reconsider the policy while using the soon-to-be regularly updated and more accurate property values.
A split-rate property tax unfortunately would not be able to solve every vacancy, housing, development, or financial issue that Pittsburgh is currently facing. Some properties continue to remain vacant due to construction costs and interest rates, zoning restrictions, lack of demand, or other issues that changing taxation won’t fix. Despite this, Pittsburgh can control whether its tax system encourages or discourages development that the city wants and needs. This is even more important as Pittsburgh looks at its own serious financial challenges, including declining real estate tax revenues, which is caused in part by falling property assessments [7]. Once the county starts to update its property assessments, Pittsburgh should give serious consideration to bringing back a modernized split-rate property tax that puts a higher tax rate on land and a lower one on improvements and buildings. Pittsburgh can’t create more land, however it can create better incentives and uses for the land it has, while bolstering a vital source of city revenue.
Works Cited
[1] City of Pittsburgh. 2025. “Task Force Report Finds Pittsburgh Could Eliminate Blight in Five Years with Sustained Land Bank Funding.” City of Pittsburgh. https://www.pittsburghpa.gov/City-Government/The-City-Council/Districts/Bobby-Wilson-District-1/1-District-1-Newsletters-Press-Releases/Task-Force-Report-Finds-Pittsburgh-Could-Eliminate-Blight-in-Five-Years-with-Sustained-Land-Bank-Funding
[2] Yang, Zhou, and Zackary Hawley. 2021. “Split-Rate Taxation: Impacts on Tax Base.” Lincoln Institute of Land Policy. https://www.lincolninst.edu/publications/working-papers/split-rate-taxation
[3] Kepner, Elizabeth, and Rick Mattoon. 2023. “Land Value Taxes—What They Are and Where They Come From.” Federal Reserve Bank of Chicago. https://www.chicagofed.org/publications/chicago-fed-letter/2023/489
[4] Oates, Wallace E., and Robert M. Schwab. 1997. “The Impact of Urban Land Taxation: The Pittsburgh Experience.” National Tax Journal 50 (1): 1–21. https://www.journals.uchicago.edu/doi/abs/10.1086/NTJ41789240
[5] Allegheny County. n.d. “Property Assessments.” Allegheny County. Accessed October 2, 2026. https://www.alleghenycounty.us/Services/Property-Assessments-and-Real-Estate/Property-Assessments
[6] Allegheny County. 2026. “Countywide Reassessment to be Completed in Next Five Years.” Allegheny County, August 17. https://www.alleghenycounty.us/News-Articles/Allegheny-County-Press-Releases/August-2026/8-17-26-Countywide-Reassessment
[7] Ritenbaugh, Stephanie. 2025. “Pittsburgh Mayor Ed Gainey Proposes Budget with No Tax Increases.” CBS News Pittsburgh, November 10. https://www.cbsnews.com/pittsburgh/news/pittsburgh-proposed-budget-2026