Thread by @larsiusprime

Let's talk about my boy J. J. Pastoriza, Houston's first Hispanic mayor and a devoted Georgist single-taxer.

(Excerpt from my upcoming article)

Before mayor, he was Commissioner, where he implemented a short-lived assessment and land tax policy known as "The Houston Plan" 🧵1/X

My first source is a pamphlet by Pastoriza himself, "The Houston Plan of Taxation." The plan lasted from 1912 through 1914, assessed land at full market , assessed buildings at 25%, and exempted personal property from all taxation. 2/X

Per Pastoriza (take with🧂):
- Rents fell 20%
- Building up 66% in 1st 6 months, 51% in 1st yr
- Vacant lots developed
- Boom in construction
- No increase in mortgage interest rates
- Houston bank deposits went up by $7M in 2yrs in response to declaration $ wouldn't be taxed 3/X

Pastoriza claims throughout the pamphlet that the "Houston Plan," by un-taxing personal assets and buildings, led to far less popular resistance and tax delinquency than the previous assessment regime. Key to this was his adoption of the "Somers system" of equalization 4/X

This was a policy of making sure that land and building assessments are applied fairly and uniformly across the municipality according to an objective standard.

Pastoriza: "out of 12,000 taxpayers only fifty refused to accept our prices as placed upon their real estate." 5/X

But what do others have to say? Arthur Nichols Young in his book, The Single Tax Movement in the United States (1916), notes his re-election for Commissioner in 1913 & 1915 by strong margins on a "Houston Plan" platform. Pastoriza was at least popular, as were his policies.

6/X

Young notes that Pastoriza himself & other "single tax propagandists" were crowing left & right about Houston's prosperity during this period. Young cites a lot of the same figures Pastoriza mentioned above, but also notes Houston supposedly grew by 25% during this period. 7/X

I was also able to find a contemporaneous New York Times article from 1916, but it mostly just quotes from Pastoriza at length and doesn't add anything new.

8/X

Unfortunately for Pastoriza & the single tax movement, Judge John A. Read struck down The Houston Plan as unconstitutional in 1915 (later upheld on appeal), bringing Houston's single-tax revolution to an abrupt end.

City of Houston v. Baker, 178 S.W. 820 (Tex. App. 1915)

9/X

So let's assess the Houston Plan. Three questions:

1. Can any of the basic claims be verified?
2. How Georgist was the Houston Plan?
3. How successful was the Houston Plan?

10/X

Most of the claims can't easily be checked over a hundred years later, but "25% population growth" between 1912-1915 is something we can sorta check. Census records tell us Houston's population jumped 75% between 1910 and 1920, so it's at least plausible.

11/X

But you really want to compare that against other top Texas cities to know if that is particularly meaningful or not. Here's % population growth between 1900-1910 and 1920-1920

Houston's growth is flat for both decades, while growth slowed for all others. However...

12/X

...I'm not sure how meaningful that fact is by itself. At the very least it doesn't contradict the Houston Plan's supporters.

The election results (and subsequent elevation to Mayor) are public record and speak for themselves though. People seemed to really like this guy.

13/X

The rest of the claims you either take Pastoriza's word for or not as he seems to be the main source. Not all of them were delivered in stump speeches though, many were presented as facts in his Commissioner's report to the mayor as part of the 1914 City Book of Houston.

14/X

The 2 facts we can actually check (the plan was popular, the population grew) seem legit. Various results attributed to the Houston Plan were delivered in official city reports (by Pastoriza) if you want to believe them.

Next question: How Georgist was the Houston Plan?

15/X

Pastoriza's report in the 1914 City Book gives us a few more facts:

1. Two separate assessments were done, one in 1912 and one in 1914
2. The effective tax rate on all property was 1.77% that year
3. Delinquent taxes were the smallest in Houston's history at 3.97%

16/X

We know from before that land was assessed at "full" value (presumably 100% of market value), but improvements were assessed at 25%, and personal property (like stocks, bonds, cash money, mortgages, furniture, etc) at 0%

17/X

Pastoriza used the "Somers system" named for William Somers, an early Georgist land assessor. Key to it was "equalization", a method for making property assessments adhere to an objective and consistent standard, removing capricious & haphazard differences

18/X

Somers' work laid the foundation for a lot of modern "best practices" in property assessment, such as those taught by Prof. Ted Gwartney in a seminar I've been attending:

cgocouncil.org/events/land-as…

19/X

If you want to go "Full Gwartney" you should have policies like:

- Assess land at 100% of market value
- Assess land & improvements separately
- Annual reassessments for *every* property

(and a bunch of others, but I can't check those against the Houston Plan)

20/X

Held to this standard, the Houston Plan falls a little short. It was bi-annual rather than annual, but that's still better than Texas' modern tri-annual schedule. And improvements were assessed at 25% rather than 0%, as Henry George would prefer.

But still quite strong!

21/X

Next, Zoning policy.

Given modern Houston is widely considered a zone-free "wild west" (asterisk deed restrictions), it's hard to imagine 1912-14 Houston being MORE restrictive, esp. given the landmark 1916 NYC zoning ordinance didn't pass until 1916

22/X

(And some quick checks with the Houston chronicle back this up)

web.archive.org/web/2019113021…

Next -- tax rate. Maximum Georgism wants an 85%+ tax on the rental value of land.

I found two tax rates: 1.5% (1912), and 1.77% (1914).

23/X

I don't know what the prevailing capitalization rate for Houston was in the 1910's, but nowadays it's about 7%. Even if it was half that in Pastoriza's time, his effective Land Value Tax was less than 50%, and keep in mind buildings/improvements were still assessed at 25%

24/X

The Houston Plan fell short of Fully Automated Luxury Space Georgism in various ways:

- Biannual assessments
- 25% assessment on buildings
- Modest LVT tax rate

Even so I grade Pastoriza's Houston Plan as an equivalent GeorgePill™ dose of 750mg (out of a maximum 1000mg)

25/X

But what we really want to know is, how successful was the Houston Plan?

Well, it was short lived and struck down as unconstitutional, so in that sense it was a failure.

But while it lasted, it had some positive effects that we can independently verify.

26/X

Stephen Davis tells us that in 1912, the Houston Plan let the city reduce the tax rate from 1.7% to 1.5%, while earning $100,000 more in revenue.

Houston grew at a steady rate during the decade the Houston Plan took place, while other major Texas cities' growth slowed.

27/X

Pastoriza won reelection as Commissioner by huge margins

Even after the judicial defeat of the Houston Plan, Pastoriza remained popular enough to be elected mayor, dying in office in 1917.

28/X

Whether we accept Pastoriza's lofty claims or not, I think the Houston Plan probably worked. To judge the exact effect size would require further research, and ideally, replication under modern conditions.

Reposar en paz, Señor Pastoriza.

Fin.

29/29

If you don't follow me regularly and were wondering what all these references to "Georgism" and "Single-Tax" are, here's a primer:

astralcodexten.substack.com/p/your-book-re…

(by "vacant lots developed" I mean Pastoriza claims "lots that were previously vacant were built on", not "there were more vacant lots than before")

As an addendum -- I'm inclined to believe Pastoriza's claims as made in his official capacity as commissioner. These claims would've been verifiable at the time, and he was running for office. If he was just lying and his high profile plan was a disaster, he'd likely have lost.

Pastoriza had an animated opposition, but they couldn't beat him at the ballot box so they had to drag his policy into court to defeat it