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Reducing property taxes for agriculture: Diffusion of use-value assessment policy across the United States

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  • Anderson, John E.
  • Giertz, Seth H.
  • Shimul, Shafiun N.

Abstract

We analyze the spread across the fifty states of use-value assessment (UVA) programs applied to agricultural and rural land for property tax purposes. Taxing land based on the value associated with its current use in agriculture rather than its full market value can confer substantial tax savings for landowners, affecting land use patterns. Using time-to-event models, we find that the secular trend toward urbanization across all fifty states was a driving force behind the spread of UVA policies. In particular, increasing secular trends in agricultural land values (associated with urbanization) provide a strong motivation for agriculture to pursue UVA, and this factor appears to be the key driver of UVA adoption throughout all of our models. We delve deeper, hoping to understand underlying factors through which UVA is spread across states. We consider the literature on policy diffusion as well as factors suggested by models of collective action, based on concentrated benefits and dispersed costs. Once land values are accounted for, the role of these underlying factors is generally inconclusive. One exception is the relationship between agriculture’s share of state GDP and UVA adoption. Here, a clear negative relationship is found; that is, UVA adoption is more rapid in states where agriculture’s share of state GDP is smaller. This result is at odds with traditional voting models where the median voter, likely not an agricultural landowner, would be expected to favor non-adoption of UVA policies.

Suggested Citation

  • Anderson, John E. & Giertz, Seth H. & Shimul, Shafiun N., 2022. "Reducing property taxes for agriculture: Diffusion of use-value assessment policy across the United States," Land Use Policy, Elsevier, vol. 120(C).
    • Handle: RePEc:eee:lauspo:v:120:y:2022:i:c:s0264837722003258
    DOI: 10.1016/j.landusepol.2022.106298
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    Cited by:

    1. Bigelow, Daniel P. & Kuethe, Todd, 2023. "The impact of preferential farmland taxation on local public finances," Regional Science and Urban Economics, Elsevier, vol. 98(C).

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    More about this item

    Keywords

    Property tax; Use-value assessment; Policy diffusion; Rural land; Collective action;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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