Seattle's property tax system has serious shortcomings, but adopting a land value tax could address them.
Property tax plays a critical role in how Seattle functions. In 2025, property tax represented over 22% of Seattle’s entire revenue stream, making it the City’s largest income category. Property tax brings in more than Seattle’s other significant income sources of sales tax, business and occupation (B&O) tax, and utility tax. This accounts for only about 30% of the property tax we pay, with the rest going to the County, Schools and other services. Here in the state of Washington, this revenue source is especially critical due to our lack of state income tax.
I believe that our method of assessing property tax is antiquated and unnecessarily discourages development. Current practice in King County, and essentially the entire United States, is to assess property values by combining the value of the land with the value of the improvements, unceremoniously adding them together, and then charging that year’s tax based on this sum. The improvements on the land - meaning the value of any and all structures on that land - are often assessed at dramatically higher values than the land itself.
Here in Seattle, we are blessed with being located on an isthmus. We are bound by water to the east and west and are thus unable to sprawl. This means that we have to look inward to accommodate our seemingly insatiable growth demand. Using data from 2025, the city of Seattle has $156.8 billion worth of appraised land value and a remarkably similar $159.5 billion worth of appraised improved value.
Note that not all of the properties included in those numbers are taxed, either because they are public properties or otherwise exempt. The value of taxable land in the city is $126.3 billion and taxable improvements are $137.7 billion. For the rest of this piece, I will be referring to the total appraised value, both taxable and non-taxable.
Taking this to the rest of the city
Our property tax system, by nature, discourages development. When a property owner builds on their land, their tax bill jumps – often dramatically. A large taxpayer, Onni South Lake Union, located on Denny Way and Boren Avenue in South Lake Union, illustrates this well. The improvements on the lot were assessed at a hefty $714.5 million in 2022 while the land itself was valued at $49.5 million, meaning the improvements are over 14 times the value of the land. This is part of what contributes to sky-high rents in luxury apartment buildings, large additional tax burdens for every floor and unit added.
The numbers pertaining to Onni SLU and many other office and residential buildings in the most valuable parts of the city are indeed enormous, but that is actually not what my gripe is really about. Nearly all of the parcels with the highest amounts of assessed improvements are located in the most desirable parts of the city, where people will pay top dollar to be.
I believe that our tax code should continue to tax those parcels at extremely high rates, not because their structures are so impressive, but because the land itself is so valuable. If a developer wants to build a nice 20-unit apartment in a part of town with less valuable land, I believe they should be allowed to without incurring a large tax bill derived on the quality of their building.
The effects of the current property tax system are also extremely significant in more residential parts of Seattle. Here is a small table showing the median values of some property types.
This table shows that there is a disparity in how different land use types take advantage of their space.
Maps!
Take a look at a couple of maps I made comparing the appraised land value and the appraised improvement value. The maps displayed here group every parcel in the city into hexagons, and adds together the land value and improvement value respectively that are captured in that hexagon.
This map showing the appraised land value throughout the city displays that the highest land values are where you would expect. Land located in Downtown, South Lake Union and the U District is taxed at a higher rate than other land around the city.
Appraised Land Value aggregated spatially
Interactive map of appraised land value. Use your scroll wheel to zoom in/out and Ctrl + Drag to change the view angle. (Aaron Schechter)
But now, take a look at this map showing the improved-upon value of that same land. The disparities seen in the improvement maps are dramatically larger than the disparity between land values across the city. I believe that this is a symptom of our tax code. Why would a developer make an extravagant building for any purpose on less valuable land when the valuation will be nearly entirely based upon the improvements?
Check out a more interactive version of this map here where you can view value information of specific land use types.
Appraised Improvement Value aggregated spatially
Interactive map of improvement value. (Aaron Schechter)
Does this distribution of valuation in buildings vs. land seem natural? Does it make sense that the land across the city is valued in a relatively even fashion with gentle peaks and valleys, whereas the investments made in our built structures are so incredibly concentrated in small areas of our city? The Office of Planning and Community Development has been using the city comprehensive plan to designate ‘neighborhood centers’ across the city in an effort to encourage development. I posit that an altered property tax code, one that would not charge extremely high improvement taxes on structures built on relatively low-value land, could do a lot to help develop those types of areas.
Gas stations and the like
A huge beneficiary of the current system are businesses who operate with underdeveloped land. Nobody looks at a gas station and thinks ‘what an amazing victory of architecture!’ The King County assessor agrees. Gas stations pay an average of $0.23 in improved value for every $1 of land value.
For context, single family homes (which account for about 70% of our parcels) pay an average (mean) of $1.03 in improved value for every $1 of land value.
Meanwhile, townhomes, the second most common parcel type, pay an average of $1.86 in improvement value tax for every dollar of land value tax. Apartments pay an even higher ratio, at $2.14 in improved value for every $1 of land value.
These discrepancies extend to other non-maximizing land uses such as commercial parking (13 cents per dollar), big box retail (8 cents per dollar), fast food restaurants (6 cents per dollar) which all pay far less in taxes than they should just because they operate on underdeveloped land with plenty of parking. We are discouraging land use types we need more of, such as apartments and dense lots in single family neighborhoods while encouraging businesses to not maximize their land usage.
Vacant lots
This may seem self evident, but I would also like to mention vacant lots. Throughout the city there are quite a few vacant lots –specifically, there are 889 vacant single family, 253 vacant multi-family, 246 vacant commercial, and 216 vacant industrial lots. These lots naturally have extremely low improvement to land value ratios, and although some of them have valid reasons for being vacant, many of them sit empty because it is the cheapest and easiest thing to do.
If we had a system where a vacant lot had to pay the same in property tax as the identical lot next door with a house on it, chances are there would be significantly less vacancy. Our current code enables vacancy in a city that needs the opposite.
The Multi-Family Tax Exemption
How a land value tax would fit with the City’s Multi-Family Tax Exemption (MFTE) program is also worth considering. The City of Seattle created this program to generate moderate-income housing and to counteract this exact dynamic. Property developers can (and frequently do) apply for the MFTE to get a property tax exemption in exchange for providing a certain percentage of rent-restricted properties. This is a good program that makes development in our city easier.
But there are a few factors holding back the MFTE.
- Developers still have to apply, get approved, and designate a certain amount of units to make less profit on.
- Because it is an optional and temporary ‘exemption’, participation is erratic and it’s not geared toward a culture change.
- It does not help a family that wants to build an accessory dwelling unit in the backyard, does not punish a business who is taking poor advantage of their land, and does not help a small developer who would want to make a multiplex on their land.
Common Concerns
I would like to address two common and valid objections that frequently get brought to this discussion.
The first being that land value tax can raise the burden on single family homeowners. For the majority of homeowners this policy change would only slightly affect their property tax bill because most homes have similar land and improved values. These homeowners would see their property tax shift marginally and gain the knowledge that making any improvement on their land would not directly lead to an increase in their tax bill. Note that considerable development in a particular neighborhood could lead to increased land values, which could drive up land value for lots in those areas.
Homeowners would now see their property taxes tied exclusively to the value of their land. Costly houses on small lots would see a tax break, whereas lots with rundown homes or lots of extra space on valuable land would see an increase. People unable to shoulder that burden would have access to exemptions.
I am not going to provide specific examples of these home types in the name of privacy, but the King County Parcel Viewer will show you many examples of both instances I mentioned.
The second commonly heard objection is that it can give significant tax breaks to the owners of the city’s most valuable buildings, which are typically highrise office or residential towers. The remedy to this is to value the land where these types of buildings are as appropriately more valuable than land on the outskirts of the city.
Here is what I mean. Consider this surface parking lot. It is across the street from Pike Place Market, some of the most valuable land in the Pacific Northwest. Meanwhile, this condo building directly behind that surface parking lot is on a parcel of close to the same size. Neighboring lots of similar size should have similar tax bills, right? In this case the parking lot pays $670 per square foot and the condo building comes in at $19,405 per square foot.
The nearly 30x difference between these two lots illustrates one of the ways that costs for housing can get so high. Whether it be condos or apartments, the property taxes will always get passed on to the individuals, making dense housing artificially more expensive than its true cost. At the same time the discrepancy highlights the massive opportunity cost sustained by the city in allowing a parking lot to occupy some of our city’s most valuable land and getting peanuts in return.
If those two lots could have valuations in the middle, it would result in the condo residents getting serious tax relief and something far more productive existing in place of the parking lot.
As for the offices, we are in a time where Seattle’s office buildings are experiencing high vacancy rates and tenants who can easily opt for work from home models. A land value tax could make the math on the high rise office buildings pencil out a lot more easily. Buildings in high value areas such as Downtown or South Lake Union would still have considerable property tax rates due to the land value, but the ones who really take advantage of their space by building upwards would be rewarded by paying less tax per square foot.
When combined with other creative business taxes such as Seattle’s jumpstart tax, our businesses would still be paying large amounts while also having a more realistic path towards high occupancy rates. A thriving Seattle needs both high commercial and residential density.
Pros to Land Value Tax
I want to clearly summarize some of the positive effects that a land value tax can have on a region.
First and foremost a land value tax can lower rents. Our current tax code increases property tax for increased building quality and size, passing those costs directly to renters. If land parcels paid the same property tax no matter what was on them, then owners of that land could build more units without fearing higher tax bills.
Secondly, this code can be an amazing tool in encouraging missing middle housing. Higher density options in more residential neighborhoods are critical in our journey to grow. About 70% of parcels in the city are single family homes, and with recent upzoning laws passed, those parcels are now eligible to house more people. Not increasing the tax bill for those developments considerably lowers their risk and would help projects actually happen.
Thirdly, and perhaps most importantly, land value tax can stop stunting urban development. As I covered previously when talking about gas stations, parking lots and other underdeveloped land, certain parcels can skate by with a far lower property tax bill than their neighbors. This will always exist unless there is a change, acting as an enormous opportunity cost for the city and county.
What we can do about it
Tax law is notoriously difficult to change, and I am no legal scholar or politician. So take this with a grain of salt.
I propose slowly, over time, increasing the ‘weight’ of the land value and decreasing the ‘weight’ of the improvement value. In year one of implementation, we could assess properties as we normally do, but when it comes time to do that final sum to add together the land value with the improved value, the assessors office could multiply the land value by 1.02, and multiply the improved value by 0.98. And then the next year change those numbers to 1.04 and 0.96 respectively and keep it going, so that in 50 years we are charging only tax on the land.
This way, property owners wouldn’t be surprised by the changes; people would have plenty of time to adjust and pivot, and it would slowly become more and more expensive to be the owner of a lot that is doing nothing.
The changes I propose here are all intended to encourage development in a smooth and natural way, primarily by discouraging gross underuse of valuable land like surface parking/strip malls/vacancy and to encourage increases to density.
Pushing the idea forward
I know that this is a serious topic and that there are many considerations that I have either not covered in this article or have not considered myself. If you are reading this and have thoughts I would love to hear them. Please reach out at aaron.m.schechter@gmail.com
Thanks to King County for the data, and if you would like to see my code for this project you can find it here.
Aaron Schechter is a Seattle cartographer who runs transitmapping.net.
Collin Thrower
Dan Bertolet
