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Land Value Taxation and Housing Development

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  • Steven C. Bourassa

Abstract

. The effects of land value taxation on housing development are studied in three disparate cities: Pittsburgh, McKeesport, and New Castle, Pennsylvania. These places are examples of three different types of city: central city, suburban city, and relatively isolated city, respectively. Shifting taxes from buildings to land is hypothesized to have different effects in the different types of cities. A liquidity effect, due to increases in the land tax rate, is expected to operate in all three types of cities. An incentive effect, due to decreases in the tax rate on improvements, is expected to function in central cities and, possibly, in relatively isolated cities. It is not expected to be important in suburban cities such as McKeesport. An incentive effect was found in Pittsburgh, but not in the other two cities. No evidence of a liquidity effect was found in any of the three cities. An explanation of why observed effects may not conform with hypotheses is given.

Suggested Citation

  • Steven C. Bourassa, 1990. "Land Value Taxation and Housing Development," American Journal of Economics and Sociology, Wiley Blackwell, vol. 49(1), pages 101-111, January.
    • Handle: RePEc:bla:ajecsc:v:49:y:1990:i:1:p:101-111
    DOI: 10.1111/j.1536-7150.1990.tb02264.x
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    References listed on IDEAS

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    1. Bentick, Brian L, 1979. "The Impact of Taxation and Valuation Practices on the Timing and Efficiency of Land Use," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 859-868, August.
    2. Mieszkowski, Peter, 1972. "The property tax: An excise tax or a profits tax?," Journal of Public Economics, Elsevier, vol. 1(1), pages 73-96, April.
    3. Ihlanfeldt, Keith R., 1984. "Property taxation and the demand for housing: An econometric analysis," Journal of Urban Economics, Elsevier, vol. 16(2), pages 208-224, September.
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    Cited by:

    1. Wallace E. Oates & Robert M. Schwab & Wallace E. Oates & Robert M. Schwab, 2004. "The Impact of Urban Land Taxation: The Pittsburgh Experience," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 16, pages 273-293, Edward Elgar Publishing.
    2. Chris KK Tan, 2015. "Rainbow belt: Singapore’s gay Chinatown as a Lefebvrian space," Urban Studies, Urban Studies Journal Limited, vol. 52(12), pages 2203-2218, September.
    3. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association, vol. 50(1), pages 1-21, March.
    4. Yang, Zhou, 2018. "Differential effects of land value taxation," Journal of Housing Economics, Elsevier, vol. 39(C), pages 33-39.
    5. Seong-Hoon Cho & Dayton M. Lambert & Roland K. Roberts, 2010. "Forecasting Open Space with a Two-Rate Property Tax," Land Economics, University of Wisconsin Press, vol. 86(2), pages 263-280.
    6. Richard W. England, 2003. "State and Local Impacts of a Revenue-Neutral Shift from a Uniform Property to a Land Value Tax: Results of a Simulation Study," Land Economics, University of Wisconsin Press, vol. 79(1), pages 38-43.
    7. Cho, Seong-Hoon & Kim, Seung Gyu & Roberts, Roland K., 2009. "Measuring the Effects of a Land Value Tax on Land Development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46760, Southern Agricultural Economics Association.
    8. Plassmann, Florenz & Tideman, T. Nicolaus, 2000. "A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction," Journal of Urban Economics, Elsevier, vol. 47(2), pages 216-247, March.

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