An evaluation of proposals for metropolitan sharing of commercial and industrial property tax base

This paper examines proposals to withdraw taxing authority over commercial and industrial property from municipalities and confer it on a metropolitan government to be taxed at a uniform rate. A theory which suggests that local tax payments by firms represent compensation for their external effects is used to show that such proposals could reduce the efficiency of land use in the metropolitan area. Empirical work indicates that the proposals would not necessarily be progressive, and in any case they are inferior in this respect to metropolitan taxation of all property.     

OPTIMAL PROPERTY TAXATION IN CALIFORNIA: Is Greater Reliance on Land Values Feasible and Desirable?

Legal changes to Proposition 13 and fiscal imbalance provide, for the first time since 1978, the environment for serious consideration of restructuring property taxation in California. The background of the current situation is reviewed, and as a first approach to determining the optimal property tax system, Henry George's a priori case for taxing land is noted. Studies in the new public finance, especially optimal taxation theory and applications - for example, general equilibrium modeling in policy analysis - provide encouraging though limited support for greater reliance on site value taxation.     

On Modernizing Local Public Finance

Abstract . Urban economists tend to agree that land value taxation is both equitable and efficient. Then why won't American urban areas reform their property taxes into a land value tax? One explanation may be that the climate of opinion is that the taxation of wealth is wrong. This may be another of the legacies of the Great Depression. In the 20 years preceding, levels of property taxation increased very substantially; this was associated with rapid urbanization and big increases in public expenditures. Even with the collapse of property values urban governments extended expenditures and hence taxes on real property—as they did again with inflation in the 1970s. But in the 70s residents were predominantly owner-occupants—a result of counter depression policy. Their hostility to taxing unrealized capital gains is the obstacle advocates of land value taxation have to overcome.     

Pennsylvania's Success with Local Property Tax Reform

A bstract Fifteen cities in Pennsylvania are pioneering an innovative approach to local tax reform that harnesses market incentives for urban renewal .
Opting for the so-called "two-rate" or "split-rate" property tax , these cities are lowering taxes on buildings, thereby encouraging improvements and renovations , while raising the tax on land values, thus discouraging land speculation . The resulting infill development as indicated by increased building permits means downtown jobs , efficient use of urban infrastructure, an improved housing stock, and less urban sprawl .
Cities in other states are poised to follow Pennsylvania's example.     

General Property Reassessment: Relative Tax Impacts on Land and on Structures

A bstract . Many jurisdictions require periodic mass reassessment of real property to bring assessed values closer to market values and to reallocate tax burdens among property types. This paper examines the influence of general reassessment on the tax burden on land relative to that on improvements in Indiana, a state using elected local assessors, statewide mass reassessment on a regular cycle, and assessment of structures at hypothetical reproduction cost. Examination of data over the 1950-51 to 1974-75 period shows that economic growth and development reallocates property tax impact away from land: the share of land in the base declines and the effective rate paid on any given parcel of land declines. Reassessment adjusts these impacts. While reassessment increases the share of improvements in the total base, the readjustment for land is larger. From this analysis, the most recent mass assessment (1968) increased the land to improvement ratio by about 42 percent.     

Taxation for Low Cost Wood Fiber*

Abstract . If forest industry taxation is to be put on a sound economic basis, the Federal Government, the largest land owner, should pay the same taxes as any other landowner, so that the social and economic effects of taxation are realized. Specialists report that the form of the property tax preferred for the taxation of the property of the forest industry, under most circumstances, is land value taxation, not the property tax based on income realized at some point In the future which presumed the continued existence of virgin forests. This paper recognizes that the forest industry now is based on harvests of tree crops and proposes a further development of the land value taxation principle in the form of a forest tax composed of a land value tax combined with a tax on tree growth which increases as growth as a percentage of volume growth decreases with the tree's increasing age.     

Land Taxes in Agriculture

A bstract Farmland , which occupies two thirds of America's privately owned territory, provides more than food and fiber. Agricultural uses of land preserve open space, filter and store water, supfwrt wildlife, conserve rural resources, enlarge life style opportunities for an urban society. One instrument for preserving agricultural land from urban developmental pressures is the preferential assessment for real property tax, essentially a two rate tax favoring farming as a land use. Preferential assessment, administered typically at small, nonrollback differentials, has not deterred intensive land use changes. Indeed, it may have had the opposite effect. Changes in the tax on land and buildings are recommended as improvements in the preferential assessment of agricultural land.     

The Impact of a Graded Tax on a Rural Area: A Case Study in Indiana County, Pa.

Abstract . The graded tax is a reform of the property tax which would tax land values at a higher rate than improvements in or on the land. What would be its impact on different types of rural owners of real property? A study of rural Indiana County, Pennsylvania, by William Ritter shows that the impact would vary according to the level of development the individual tract or parcel has undergone.     

Patterns of Property Tax Exploitation Produced By Infrequent Assessments

A bstract . Out of dace assessments of real property for ad valorem taxation may give rise to systematic inequities in the distribution of the tax burden. One such inequity is the exploitation of a taxing jurisdiction's core area by its periphery. We provide an explanation of how such exploitation may arise. This explanation is tested empirically by observing the patterns of assessment in a sample of Pennsylvania school districts. We find a consistent pattern of overpayments, supporting an hypothesis that core areas are exploited by peripheral areas. The overpayments to school districts could be claimed by city governments.     

Equity in Financing Primary and Secondary Education

Abstract . Per pupil educational costs for Kansas counties are analyzed according to degree to which the county is rural. The loss or gain due to migration of educated young people is then added into the costs. Those costs are then compared to ability to pay according to a number of indicators in each category of the county. The impact of various forms of taxation to support schools is analyzed. Rural counties spend more per pupil and pay higher per capita property taxes. The differences in cost between rural and urban areas is even greater when the effects of migration are included. Household incomes tend to be lower in more rural counties. The effects of a court-ordered change in school finance will increase the inequalities between rural and urban areas. It is contended that reliance on the property tax contributes highly to this inequality.     

HOW SHOULD CAPITAL BE TAXED?

This survey discusses how capital should be taxed in advanced economies. We review the theoretical optimal tax literature, survey empirical studies on the distribution of capital and the distortionary costs of capital taxation, and analyze the desirability of specific taxes on capital income, wealth, property, inheritances, and corporate profits. Our overall conclusion is that capital taxation plays an important role in an optimal tax system, but only certain ways of taxing capital are able to strike a balance between optimality and administrative feasibility.     

Neighborhood Revitalization and New Life: A Land Value Taxation Approach

When a neighborhood declines, the poor get poorer, crime rises, and those who can leave the area. The tax base shrinks, so the rates paid by those least able to pay increase. The prevailing system of a low tax on land values leads to land speculation and private land banking, assuring that the landowner can hold out for a very high price for a very long time. A higher tax on land values (coupled with reduction in building taxes) creates an incentive to sell that land or do something with it rather than waiting. In cities that use land‐value taxes, real‐estate markets start to work again and neighborhoods recover. Clairton, Pennsylvania's adoption of a land‐value‐taxation system demonstrates the neighborhood revitalization to which it leads, as owner‐occupied residences and multi‐family units saw a relief in their tax burden. In contrast, vacant properties' contribution to the city budget tripled, providing the resources to pay for the education of Clairton's children and liberate working and middle‐class families from the bonds of labor and capital taxation.     

Coordinating Opposite Approaches to Managing Urban Growth and Curbing Sprawl: A Synthesis

The purchase of development rights to farmland and open space has recently gained in popularity as a growth management tool. A purchase of development rights program pays the landowner for the unearned increment in exchange for strong deed restrictions, limiting the use of the property. On the other hand, land value taxation, a modification of Henry George's Single Tax, would tax land more heavily than improvements, thus encouraging the development of land. While land value taxation and the purchase of development rights appear to be opposing fiscal policies, they could be employed together as part of a regional planning strategy to encourage in-fill development within and near cities and to curb sprawl by retaining farm, forest, and ranch lands.     

论物业税与现行房地产税收的关系

目前房价居高不下,政府调控房地产市场的措施陆续出台,在众多调控措施中,备受关注的一项措施是开征物业税。在开征物业税的过程中,必然会涉及到如何处理物业税与现行房地产税收的关系。对此,专家学者从不同角度发表了各自的看法。本文认为,现行的房产税、城镇土地使用税、城市维护建设税、教育费附加应该并入物业税,耕地占用税应并入土地出让金,土地增值税应该取消或并入物业税,契税应继续保留。我国应该通过正确处理物业税与现行房地产税收的关系,健全房地产税收体系。     

Land Value Taxation in Vancouver: Rent‐Seeking and the Tax Revolt

At the beginning of the 20^th century, Vancouver obtained international acclaim as a “single‐tax” city. Supporters claimed that land value taxation was responsible for the spectacular growth of the city. Even critics believed that it had produced a building boom and declining rents. Yet, over several decades, the system was scaled back and ultimately ended in 1984. This article argues that the property tax revolt can be understood with Mancur Olson's model of collective action. Property owners are better organized than other parties impacted by housing policy because they have financial resources and a salient economic concern in housing. Thus, the special interests of property owners in higher values and unrestricted use prevailed over the interests of tenants and prospective buyers. While the property tax revolt was often articulated in the progressive language of ability to pay, when confronted with progressive counterarguments, it collapsed into explicit arguments for rent‐seeking.     

Property taxation and the demand for housing: An econometric analysis

There is disagreement among economists regarding the effect of a local increase in property taxation on the housing market. In defining the price of housing services studies of the demand for housing have treated the property tax exclusively as an excise tax on housing consumption. Two recent theoretical developments suggest this is a misrepresentation of the tax. One theory holds that the excise effects of property taxation may be shifted backward to the factors employed in the production of housing. The other theory concludes that the property tax is not an excise, but rather serves as an efficient price for local public services. To investigate these hypotheses, data from the Annual Housing Survey were employed to estimate a housing demand model which included the net effective property tax rate among the set of independent variables. In addition to revealing the property tax-housing demand relationship, the model provides more reliable estimates of income and price elasticities by eliminating specification errors found in previous studies. Results indicate that the property tax reduces the housing consumption of central city homeowners, but does not distort the suburban housing market.     

Site Value Taxation in a Declining City

A bstract . The relationship is analyzed between the economic decline of a central city and the likelihood that a site value tax will be politically acceptable. Public choice and land use models are combined to generate a scenario of land use changes and changes in improvements to land ratios which determine whether a specific property owner will gain or lose from a revenue-neutral site value tax. A case study is presented which substantiates many of the effects suggested by the model. In general, private and public sector responses to a city's decline result in an atmosphere that is relatively hostile to site value taxation.     

Site Value Taxation on Australia

A bstract . Site value taxation is neither a new nor a strictly western concept. Taxing land based on location was proposed in India around 300 B.C. François Quesnay, David Ricardo and John Stuart Mill were among the economists favoring land taxes but Henry George is credited with bringing it about in several areas, notably Australia. That subcontinent has experimented with the land tax on the national as well as the state and local levels but it is presently used only on the latter two. Empirical tests of the tax instrument are few. Pollock and Shoup (1977) forecast that eliminating the tax on improvements would increase investment levels by about 25 per cent in the long run. Hutchinson (1963) found great differences in house values and stocks. This study evaluates the effects of site value taxation on the basis of multivariate regression analysis. It finds strong evidence that, where improvements are relieved of taxation and more revenues are obtained from land values, the average value of housing is significantly higher and the value of the housing stock substantially larger.     

Three-rate property taxation and housing construction

This paper examines the effect of property taxation on housing construction. In 2001, Finnish municipalities were allowed to levy an extra property tax on undeveloped land zoned for housing. Municipalities that adopted the new tax instrument have a three-rate tax property tax system with different tax rates on land before development, land after development and buildings. The remaining municipalities have a two-rate system with a uniform land tax and a building tax. A theoretical model of decisions by landowners suggests that the pre-development land tax ought to lead to faster development, but also the density of development may be affected. In the two-rate system land tax is neutral. The empirical results suggest that landowners respond to the tax incentives. Municipalities that adopted the three-rate property tax system saw an increase in single-family housing starts of roughly 12 percent.     

The Constitutionality of a Federal Net Wealth Tax

A bstract . Consideration of a Federal Net Wealth Tax would help settle the question of the scope and limits of the taxing powers of the United States Government. The confusion attending this, which has prevented the federal government from taxing land and kept state taxation of land too low to bean efficient allocator of this resource , can be clarified. The Constitution's Article I, Section VIII, gave the federal government power to levy taxes, duties, imports and excises, as "indirect" taxes, requiring only that the duties, imposts and excises be "uniform throughout the United States." The 16th Amendment authorized a "direct" tax on "incomes, from whatever source derived." The intent of the Founding Fathers—almost all large landholders—was to prevent the new federal government from using land as a tax base. But the distinction between the types of taxes lacks economic meaning. By making the base of a new tax the net wealth of taxpayers. Congress could obtain a Supreme Court test to end the confusion. If the Court, following precedent, required that land be excluded from the tax base, this would assure land as a tax base to the states and permit them to tax it in a way to end speculative withholding of tracts and sites and to bring about orderly development according to current need.