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.     

Site Value Taxation and Manvel's Land Value Estimates

Replacement of the existing property tax with a. tax on site value requires that the site value base be sufficiently large to generate the same revenue as the existing tax. The adequacy of the site value base is examined in view of Manvel's land value/property value estimates. The conclusion is that only partial replacement may be feasible in many cases, but this may still produce a desirable effect.     

Site Value Taxation and the Timing of Land Development

A bstract . Recent writers have challenged the traditional view that a tax on site value is neutral, but there is still disagreement as to the effects of the tax. The site value tax affects the timing of land development in that it provides an incentive for landowners to develop land sooner than under a property tax levied on improvements also. Confusion has resulted from a failure to distinguish market value from development value. The incidence of the site value tax must take into account the dynamics of untaxing capital and of the capitalization of the tax increase on land values , as well as of the resulting increase of land supply and its effect in further reducing land values. The increased profitability of capital improvements could then increase land rent from the demand side. Obviously, amidst such dynamic changes, the overall effect on land values and rents is unsettled pending further research.     

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.     

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.     

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.