IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v39y2009i6p739-748.html
   My bibliography  Save this article

The impact of positive property tax differentials on the timing of development

Author

Listed:
  • Groves, Jeremy R.

Abstract

To date, few empirical studies have focused on the location decision by residential developers in response to changes in the property tax. Based on a dynamic time-to-development model by Turnbull, this paper finds, using 17Â years of parcel level data from Saint Louis County, Missouri, that higher than average tax rates increase the time-to-development for vacant parcels by between 4 and 11%, all else equal. Additionally this paper finds that the tax differential effect is cumulative, resulting in about a 20% increase in the time-to-development for the parcel facing the average number of years with a higher than average rate. These results support the analytical results by both Turnbull [Turnbull, G.K., 1988. The effects of local taxes and public services on residential development patterns. Journal of Regional Science, 28 (4), 541-562.] and McMillen [McMillen, D.P., 1990. The timing and duration of development tax rate increases. Journal of Urban Economics, 28, 1-18.] that the property tax can distort residential capital markets leading to inefficient urban growth, or sprawl.

Suggested Citation

  • Groves, Jeremy R., 2009. "The impact of positive property tax differentials on the timing of development," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 739-748, November.
    • Handle: RePEc:eee:regeco:v:39:y:2009:i:6:p:739-748
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166-0462(09)00067-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Song, Yan & Zenou, Yves, 2006. "Property tax and urban sprawl: Theory and implications for US cities," Journal of Urban Economics, Elsevier, vol. 60(3), pages 519-534, November.
    2. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September.
    3. Yan Song & Yves Zenou, 2009. "How Do Differences In Property Taxes Within Cities Affect Urban Sprawl?," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 801-831, December.
    4. Zax Jeffrey S. & Skidmore Mark, 1994. "Property Tax Rate Changes and Rates of Development," Journal of Urban Economics, Elsevier, vol. 36(3), pages 314-332, November.
    5. Anderson, John E., 1986. "Property taxes and the timing of urban land development," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 483-492, November.
    6. Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 5-23, January.
    7. McDonald, John F. & McMillen, Daniel P., 2000. "Employment Subcenters and Subsequent Real Estate Development in Suburban Chicago," Journal of Urban Economics, Elsevier, vol. 48(1), pages 135-157, July.
    8. Fujita, Masahisa, 1982. "Spatial patterns of residential development," Journal of Urban Economics, Elsevier, vol. 12(1), pages 22-52, July.
    9. Isaac Bayoh & Elena G. Irwin & Timothy Haab, 2006. "Determinants of Residential Location Choice: How Important Are Local Public Goods in Attracting Homeowners to Central City Locations?," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 97-120, February.
    10. McMillen, Daniel P., 1990. "The timing and duration of development tax rate increases," Journal of Urban Economics, Elsevier, vol. 28(1), pages 1-18, July.
    11. Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
    12. Donald C Shoup, 1970. "The Optimal Timing Of Urban Land Development," Papers in Regional Science, Wiley Blackwell, vol. 25(1), pages 33-44, April.
    13. Cunningham, Christopher R., 2006. "House price uncertainty, timing of development, and vacant land prices: Evidence for real options in Seattle," Journal of Urban Economics, Elsevier, vol. 59(1), pages 1-31, January.
    14. Wassmer, Robert W., 1993. "Property Taxation, Property Base, and Property Value: An Empirical Test of the 'New View'," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 135-159, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lu, Chien-Lin & Liao, Wen-Chi & Peng, Chien-Wen, 2020. "Developers’ perspectives on timing to build: Evidence from microdata of land acquisition and development," Journal of Housing Economics, Elsevier, vol. 49(C).
    2. Barros, Carlos Pestana & Gil-Alana, Luis A. & Chen, Zhongfei, 2014. "The housing market in Beijing and delays in sales: A fractional polynomial survival model," Economic Modelling, Elsevier, vol. 42(C), pages 296-300.
    3. Mendonça, Rita & Roebeling, Peter & Martins, Filomena & Fidélis, Teresa & Teotónio, Carla & Alves, Henrique & Rocha, João, 2020. "Assessing economic instruments to steer urban residential sprawl, using a hedonic pricing simulation modelling approach," Land Use Policy, Elsevier, vol. 92(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wassmer, Robert W., 2016. "Further empirical evidence on residential property taxation and the occurrence of urban sprawl," Regional Science and Urban Economics, Elsevier, vol. 61(C), pages 73-85.
    2. Russ Kashian & Mark Skidmore, 2002. "Preserving Agricultural Land via Property Assessment Policy and the Willingness to Pay for Land Preservation," Economic Development Quarterly, , vol. 16(1), pages 75-87, February.
    3. Tomomi Miyazaki & Motohiro Sato, 2019. "Property Tax Reform and Land Use: Evidence from Japan," Working Papers 181905, University of California-Irvine, Department of Economics.
    4. Miyazaki, Tomomi & Sato, Motohiro, 2022. "Property tax and farmland use in urban areas: Evidence from the reform in the early 1990s in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    5. Ermini, Barbara & Santolini, Raffaella, 2015. "Differentiated property tax and urban sprawl in Italian urbanized areas," MPRA Paper 65460, University Library of Munich, Germany.
    6. Yan Song & Yves Zenou, 2009. "How Do Differences In Property Taxes Within Cities Affect Urban Sprawl?," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 801-831, December.
    7. Shin‐Kun Peng & Ping Wang, 2009. "A Normative Analysis of Housing‐Related Tax Policy in a General Equilibrium Model of Housing Quality and Prices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 667-696, October.
    8. Tomomi MIYAZAKI & Motohiro SATO, 2018. "Property Tax and Land Use: Evidence from the 1990s reforms in Japan," Discussion papers 18072, Research Institute of Economy, Trade and Industry (RIETI).
    9. Chen, Yong, 2020. "Effects of development tax on leapfrog sprawl in a thinly traded land market," Land Use Policy, Elsevier, vol. 92(C).
    10. Marin V. Geshkov & Joseph S. DeSalvo, 2012. "The Effect Of Land-Use Controls On The Spatial Size Of U.S. Urbanized Areas," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 648-675, October.
    11. Jou, Jyh-Bang, 2012. "Efficient growth boundaries in the presence of population externalities and stochastic rents," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(4), pages 349-357.
    12. George R. Zodrow, 2019. "Intrajurisdictional Capitalization and the Incidence of the Property Tax," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 16, pages 489-522, World Scientific Publishing Co. Pte. Ltd..
    13. David Albouy & Andrew Hanson, 2014. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," Tax Policy and the Economy, University of Chicago Press, vol. 28(1), pages 63-96.
    14. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel, 2011. "Is there a double-dividend from anti-sprawl policies?," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 135-152, March.
    15. Thiess Büttner, 2021. "Land Use and Fiscal Competition," CESifo Working Paper Series 8958, CESifo.
    16. Adam T. Jones, 2016. "Mileage tax, property tax, sales tax, or fee: the best way to pay for commercial infrastructure that isn’t free," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(1), pages 81-98, February.
    17. Siodla, James, 2015. "Razing San Francisco: The 1906 disaster as a natural experiment in urban redevelopment," Journal of Urban Economics, Elsevier, vol. 89(C), pages 48-61.
    18. George R. Zodrow, 2007. "The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures," CESifo Economic Studies, CESifo Group, vol. 53(4), pages 495-521, December.
    19. Sohngen, Brent & Hite, Diane & Templeton, Josh, 2001. "Land Use Change And Property Taxes: An Empirical Study Of The Effect Of Property Taxes On The Timing Of Land Conversion From Agricultural To Residential Development," 2001 Annual meeting, August 5-8, Chicago, IL 20773, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Miriam Hortas-Rico & Albert Solé-Ollé, 2010. "Does Urban Sprawl Increase the Costs of Providing Local Public Services? Evidence from Spanish Municipalities," Urban Studies, Urban Studies Journal Limited, vol. 47(7), pages 1513-1540, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:39:y:2009:i:6:p:739-748. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.