An Economic Analysis of Housing Abandonment

Landlord abandonment of rental housing has affected many American cities since the 1960's. Because of data limitations, there have been few empirical analyses of the determinants of housing abandonment. In this paper, we use a rich database that contains information on individual residential properties in New York City to estimate a reduced form model of owner abandonment. We model an owner's decision to abandon his or her property as being similar to an investor's decision to exercise a put option on a financial instrument. When required to pay delinquent taxes, a wealth-maximizing landlord has an incentive to cede ownership of his or her residential property when the value of all outstanding liens exceeds the property's market value. Estimates from the model are used to examine whether empirical evidence supports this option model of abandonment.     

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.     

The option value of tax delinquency: Theory

How taxes are enforced matters. Current enforcement of real property taxes does not consider the option value of delinquency: the ultimate penalty is confiscation of property sometime in the future, but the value of the property to be confiscated is not known with certainty. If redemption fees are sufficiently small, it can be optimal to wait and see what the size of the penalty will be before paying taxes. We show how this can lead to excessive abandonment, and examine proposals for reform.     

Are PILOTs property taxes for nonprofits?

Nonprofit charitable organizations are exempt from most taxes, including local property taxes, but U.S. cities and towns increasingly request that nonprofits make payments in lieu of taxes (known as PILOTs). Strictly speaking, PILOTs are voluntary, though nonprofits may feel pressure to make them, particularly in high-tax communities. Evidence from Massachusetts indicates that PILOT rates, measured as ratios of payments to the value of local tax-exempt property, are higher in towns with higher property tax rates: a one percentage point higher property tax rate is associated with a 0.2 percentage point higher PILOT rate. PILOTs appear to discourage nonprofit activity: a one percentage point higher PILOT rate is associated with 0.8% lower real property ownership by local nonprofits, 0.2% lower total assets, and 0.2% lower revenues of local nonprofits. These patterns are consistent with voluntary PILOTs acting in a manner similar to low-rate, compulsory real estate taxes.     

The effect of property taxes on urban areas

The effects of property taxes on urban areas are studied relative to a local wage tax. The changes in urban population and in the consumption and price of housing are determined in cities with various types of production sectors. Distortions in the composition of housing and residential density patterns are also reported. Examples are constructed to quantify the size of the changes and test whether property taxes are capitalized into land values.     

Property tax and urban sprawl: Theory and implications for US cities

We develop a model that adopts a log-linear utility function with a variable elasticity of substitution greater than one and show that increasing the property tax reduces city size unambiguously. We then test this result using a dataset of effective property tax rates we developed using GIS methods for 448 urbanized areas. The empirical analysis estimates a regression equation relating an urbanized area's size to the property tax rate measure and other control variables such as population, income, agricultural rent, and transportation expenditure. We find that higher property taxes indeed result in smaller cities.     

Land Value Taxation and Housing Development

A bstract . 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.     

Property tax revaluation and tax levy growth

Jurisdiction-wide property revaluation, like many administrative reforms, may have unintended consequences. This paper examines one such potential consequence. By pooling 18-year time series for each of 39 Massachusetts cities (17 of which revalued) and 270 Massachusetts towns (202 of which revalued), we examine the hypothesis that politicians take advantage of the confusion generated by revaluation and raise property taxes by more than they otherwise would have. We observe such a response in cities but not in towns and attribute this difference to differences in their governmental structures.     

Property taxes and home prices: A tale of two cities

We explore the influence of property taxes on home prices, taking advantage of a policy experiment of property taxation in Shanghai and in Chongqing starting from January 2011. Using the approach suggested by Hsiao, Ching and Wan (2012) we estimate hypothetical home prices in the absence of property taxation for Shanghai and Chongqing using home prices in other cities and provinces. We show that the OLS generates consistent estimators when the price series are non-stationary I(1) processes. We apply the model to a panel of average home prices of 31 cities and provinces in China, and find the property-tax experiment lowered the Shanghai average home price by 11%–15% but raised the Chongqing average home prices by 10%–12%. An examination of the policy details and data on prices by home types suggests the post-treatment price increase in Chongqing can be driven by a spillover effect from high-end to low-end properties.     

An Address by a Georgist Sympathizer: Practical Issues in Georgist Thought

The justice and soundness of the taxation of land rent is acknowledged but problems in assessing imply a need to introduce better methods. This is particularly true when attempting to introduce the more saleable idea of two-rate tax systems because the allocation of total value of real estate parcels between land and buildings is even more arbitrarily done than determining the total assessment. The ideas fit best at the local level and there is little chance of replacing income or sales taxes. A 100% tax would be impossible since it would lead to an avalanche of tax appeals and the abandonment of some land since a high percentage of assessments are in error. The idea of a single tax does not fit modern times when revenue needs determine taxes, rather than the amount of revenue collected determining proper or necessary government expenditure levels. One tax source may be unpopular and regarded as a dangerous concept. Land is probably less important and less relatively valuable than it used to be because of technological change. Some advances in social legislation may mitigate the need for the drastic reform, George who was a moralist deeply concerned about poverty, felt reform was needed in his day. He was right about the impacts of various taxes on economic activity and income distribution.     

LAND TAXATION AND ITS IMPACT ON LAND PRICE: The Case of Japan in the 1990s

The multifold increases in land prices in Tokyo, at first, and in other major cities of Japan, later, during the last half of the 1980s brought forth government proposals to strengthen the land holding taxes which were very low in the past. This paper analyzes the background of these developments as well as their rationales, and looks at possible consequences of planned increases in land holding taxes. It is argued that the rivalry between the Ministry of Finance and the Ministry of Local Autonomy is leading to a situation in which unexpectedly heavy land holding taxes will be imposed in the near future, lowering the price of land to much less than half of what it was in the past.     

A Simple General Test for Tax Bias

A bstract .   The paper infers the biasing effects of taxes from their differential effects on the present values of rival uses for given tracts of land. After-tax wage rates, interest rates, and commodity prices are exogenous, hence not affected by taxes, which are therefore all shifted to land rents and values. The effects are differential among rival uses, hence change their ranking in the eyes of the landowner-manager. Most taxes downgrade the highest use into a lower use, inducing quantum leaps away from higher and better uses into lower and worse uses. The paper uses forestry as an allegory for all land uses. It compares yield taxes, property taxes, income taxes, and site value taxes. It finds that a change from the first three to the site value tax would induce quantum leaps from lower to higher uses of land.     

Is there an S in urban housing supply? or What on earth happened in Detroit?

This article examines the substantial housing stock declines between 2000 and 2010 in many major US central cities. It updates an analysis first formulated in the 1970s, of an S-shaped housing supply curve, to explain decreases in absolute housing stocks. Explanatory variables include Metropolitan Statistical Area standardized rents, center city prior occupancy rates, regional unemployment rates, and a set of regional and state dummy variables. The analysis provides strong evidence of a lower tail of the S, and more tentative evidence of an upper tail. Market fundamentals explain a considerable portion of the large housing stock losses, but in several cities loss of dwelling units and housing abandonment were worse than could be explained by the fundamentals.     

Race and the Production of Extreme Land Abandonment in the American Rust Belt

Extreme land abandonment is one of the most visible expressions of urban decline. Conventional theory emphasizes housing lifecycle processes, municipal fiscal challenges and deindustrialization to explain its prevalence. Empirically however, these factors are not strongly associated with the most extreme instances of land abandonment in the American Rust Belt. Race, by contrast, is strongly associated with these patterns, yet there is little mention of it in conventional theory. This article draws on group threat theory to explain how the construction of Blackness as a threat to white property, power and political influence, has propelled the production of extreme land abandonment. The constructed threat has translated into a sustained suppression of demand and capital for overwhelmingly black neighborhoods. These forces operate both independently and as an accelerant for other abandonment drivers.     

我国城市低碳建筑发展缓慢的原因分析

分析了低碳建筑的内涵,论述了低碳建筑与低碳城市的关系。认为我国城市低碳建筑所以发展缓慢,是相关法规不完善、相关政策缺乏可操作性、相关政策落实不到位、执行人员存在认知偏差等所致。基于此提出了推动我国城市低碳建筑发展的政策建议。     

IMPLEMENTING PROPERTY TAX REFORM IN DEVELOPING COUNTRIES: Lessons from the Property Tax in Indonesia1

Indonesia is currently undergoing a major property tax reform. The reform has been undertaken in two steps. First, a new Land and Building Tax was enacted in 1986. This new law dramatically simplified the property tax structure and replaced seven different land-related taxes. Second, the Government initiated a major institutional exercise to strengthen property tax administration. This resulted in a major reorganization of the tax department, the adoption of a “collection-led” implementation strategy, and the introduction of an innovative payment point collection system (SISTEP). Since the enactment of these legal and institutional reforms, property tax revenues have increased dramatically from Rp.154 billion in 1985/86 to over Rp.900 billion in 1991/92. Collection efficiency has improved and enforcement activities have resulted in a historic property seizure for property tax delinquency in October 1991. This paper analyzes the results of the Indonesian property tax reform and identifies lessons for developing countries interested in strategically implementing property tax reform.     

房产税对房产市场影响的实证研究——上海模式和重庆模式的比较

文章首先运用HP滤波的方式分析了沪渝两地房产税对新房和二手房在价格和成交量上的影响,发现上海房地产市场对房产税的的征收反应更为理性,影响效果更好,但两地区新房和二手房市场的反映都存在差异;此外,利用房价对数模型,发现房产税都能有效的影响两地的房价,但由于影响两地房价的因素有很大的差异,效率并不一样,上海地区房产税每增加1%,房价将下降0.553%,重庆地区房产税每增加1%,房价将下降0.041%。因此国家需区别对待新房和二手房市场,并且因地制宜,推广不同的房产税模式。     

Property Tax and Housing Returns

This paper evaluates the effects of property tax on housing. While land tax and capital gains tax are widely used for curbing hoarding of land and speculation, its effectiveness is inconclusive. The imposition of a capital gains tax will impair the liquidity of property transaction, lower the rate of return on property investment, and reduce revenue from land sales which represents an important tax resource for the communities. This paper shows that a capital gains tax is capitalized into housing prices. Individuals tend to postpone the purchase of houses because of transaction taxes. Using an impulse response function, we show that a transaction tax has a dynamic negative impact on housing returns. While this paper focuses on Hong kong, for the purpose of comparison Singapore and Taiwan are also discussed.     

浅析我国城市建筑物停车配建指标制定思路

为了解决我国各大城市目前面临的停车难的问题,旨在通过研究城市建筑物的停车需求特点,进而制定出合理的建筑物停车配建指标。本论文针对我国目前的实际静态交通情况,提出了城市建筑物停车配建指标的制定思路。     

Is the New England Urban Tax Rate Too High?

A bstract . Whether urban property tax rates in New England are too high is a matter of proper comparison. 20 cities in the 100,000 to 200,000 class size ate compared in respect of urban financial structure, economic characteristics, and tax rates to determine in what sense taxes could be said to be high. Average tax bills , measures of tax burden and dependence on revenue sharing were found to be significantly higher in New England. This was true despite the evidence that these cities–selected to be representative of many regions in the nation–were essentially alike. One emergent conclusion is the difference in tax rates reflects an actual difference in demand. That difference seems traceable to the one outstanding difference, the density of settlement.