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Financing transportation with land value taxes: Effects on development intensity

Author

Listed:
  • Junge, Jason

    (Minnesota Department of Transportation)

  • Levinson, David

    (University of Minnesota)

Abstract

A significant portion of local transportation funding comes from the property tax. The tax is conventionally assessed on both land and buildings, but transportation increases only the value of the land. A more direct, efficient way to fund transportation projects is to tax land at a higher rate than buildings. The lower tax on buildings would allow owners to retain more of the profits of their investment in construction, and have the expected side effect of increased development intensity. A partial equilibrium simulation is created for Minneapolis, Richfield and Bloomington, Minnesota to determine the intensity effects of various levels of split-rate property taxes for both residential and nonresidential development. The results indicate that split-rate taxes would lead to higher density for both types of development in all three cities.

Suggested Citation

  • Junge, Jason & Levinson, David, 2012. "Financing transportation with land value taxes: Effects on development intensity," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 5(1), pages 49-63.
    • Handle: RePEc:ris:jtralu:0076
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    References listed on IDEAS

    as
    1. Banzhaf, H. Spencer & Lavery, Nathan, 2010. "Can the land tax help curb urban sprawl? Evidence from growth patterns in Pennsylvania," Journal of Urban Economics, Elsevier, vol. 67(2), pages 169-179, March.
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    Cited by:

    1. Levinson, David M., 2013. "Introduction: The Journal of Transport and Land Use enters year six," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 6(1), pages 1-5.
    2. Levinson, David & Zhao, Zhirong Jerry, 2012. "Introduction to the special issue on value capture for transportation finance," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 5(1), pages 1-3.

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    More about this item

    Keywords

    Value capture; Property tax; Split-rate land tax; Development intensity; Density; Minnesota;
    All these keywords.

    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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