The current controversy over coal land valuation misses the point. AH the annual site rent of land should be taxed. If this were done there would be no sale value to argue over, because land sale prices would fall. Speculation by out-of-staters (or locals) would not be possible. No one, in or out of state, would care to hoard land, or even own it unless he could use it.

If site rent were taxed sufficiently we would not need to tax homes, businesses, incomes, sales, autos, gasoline, or food.

The main economic and tax questions we face in W.V. is who should own the site rent? When site rent is privately owned (low taxed) and wages are publicly owned (sales and income taxes) the economy is strangled.

Are Hechler, Farber, and others purposely diverting our attention away from land value taxation to help the urban land owners? When we dispute over this rural hillside coal land (which may or may not be of value), we ignore the moral travesty under our feet in the cities. The advantageous location in downtown Charleston (for instance Virginia St. E @ McFarland) generates an economic site rent of $2.27 per sq. ft. per year, of which only $0.11 is taxed * Coal reserve land rentals are worth less than $0.01 per sq. ft. per year, and that land sells for only $29.00 more per acre than rural Calhoun Co.! (* based upon comparable sales of $20 per sq. ft., current mortgage interest rate of 9.5%, and a tax rate of 30.816 mills.)

The State Tax Dept. says that the average price of reserve coal land is about $357.00 per acre. The 1991-1993 reappraisal has found that the average price of Calhoun Co. land is $328.00 per acre. There is no coal in Calhoun Co.

Sixteen ** coal-rich counties with populations of 2-16 times that of Calhoun Co. should be of much greater land value due to populations, but they are not (possibly due to a sluggish economy). It is not natural resources in the ground that yields value - it is population up on the surface. It is only active coal mine land that has unusual value, and resources don't just pop out -- they have to be dug. This is the reason for the value of coal after extraction. (** The 16 coal counties referred to are Barbour, Boone, Fayette, Greenbrier, Kanawha, Lincoln, Logan, McDowell, Mercer, Mingo, Monongalia, Raleigh, Summers, Wayne, Webster, Wyoming.)

The only way for owners (in or out of state) to get rich by mining coal would be for workers to labor for free. When coal land is mined someone exerts labor, time and effort, and they usually draw good wages.

With populations of many times Calhoun Co. and to be worth only $29.00 more per acre, what should this tell you about the value of coal? It tells me that coal hi the ground is of negligible value. If the State Tax Dept. coal land valuation is off by a factor of 500% (not likely) the coal on reserve still would not be much of a factor considering the greater population of these coal rich counties.

Today Calhoun County's average land rent is $24.46 per acre, per year, and Mingo Co. land has to be in this same general price range. The real argument should be over the low tax rate and not the valuation (sale price). The Calhoun Co. tax rate is so low (15.328 mills -- Class 3) that only $2.01 of the $24.46 rent is being taxed (or about 8% of the rent). In order to publicly collect most of the community produced site rent of land a tax of at least 100-125 mills will be needed. The average C1.3 tax rate in 16 W.V. coal counties currently is only 22 mills. Consequently the untaxed net site rent then gets capitalized (divided by mortgage interest rate) into sale price.

The Hechler school should be pushing for higher tax rates on land rent (with or without natural resources). The benefit of this plan would be to reduce the price of land across W.V., end land speculation, encourage highest and best use, and stimulate basic industry. At the same time the robbery of labor and capital via sales, income, building and all other taxes should ease.

Here in Calhoun Co. our resources are Oil, Gas, and Timber. Today the presence of oil and natural gas adds only $30.00 to the price of an acre of Calhoun Co. land. In this decade due to increased timber prices, natural resources have begun to play a role in the sale price of rural, hillside, vacant land. Marketable trees now have added $50-$ 100 per acre to selling prices. The price result amounts to $300-$400 per acre. In the 1980's timber was not much of an influence on land sale price. We timbered our 80 acres of trees here during Spring of 1991; our original land sale price was $ 195 per acre (1978). Our share of the timber money was $21,000. The 1993 re-appraisal states that our land was worth $283.75 per acre (assessed $170.24). This (ells me that despite the taking and sale of $40,000 worth of trees the land is still worth about what we paid for it, taking into account an average of 3% inflation per year. Calhoun Co. lost 365 inhabitants during the 1980s. When folks move out they take land value with them. Had population remained Calhoun Co. land would be worth more today. Trees did not add much of anything to the land. One White Oak, about 130 years old, just a tree in 1978, sold for $1,600 in 1991 (3-16 ft. logs) after it was cut down. That would have bought 8 acres in 1978. But we did not dream of timbering when we bought this land. The realtor did not charge us any extra for those trees. He charged about what rural, vacant, hillside land was bringing in 1978. Timbering was not a big thing in the 1970's. The $17,000 farm sale price was divided among 12 Kerby family members (previous owners). I guess what I am saying is that natural resource value is really a labor value, realized only when human exertion has been performed.

Our trees weren't worth anything in particular until they were cut down, bulldozed up to the landing, cut them into designated lengths, and the trucker hoisted them onto the truck and hauled them to the sawmill.

Even today there is a vast difference between natural resource land, regardless of how valuable, and urban land sale prices. Even if rural timber-rich land were to sell for $1,000 per acre, labor effort and time would be required to make such a price worth it.

I believe this principle holds whether the resource is coal, oil, gas, timber, gravel, or sand.

I believe that resource value is one thing and site value is quite another. The resource value has to be labor related. The site value exists because of the presence and economic activities of all the nearby population. The site value is worth far more than any resource.

Are Virginia St. lots in Charleston worth $750,000 per acre because of the underlying coal? Coal mining is not allowed in Charleston. Three-fourths of a million dollars will buy a lot of reserve coal land (2,100 acres).

Appraise the land up to full market value, then impose a realistic tax rate so as to collect most of the site rent. Then stop taxing everything else.