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Implications of a Land Value Tax with Error in Assessed Values

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  • Jeffrey I. Chapman
  • Robert J. Johnston
  • Timothy J. Tyrrell

Abstract

Land value taxation has numerous potential advantages compared to conventional property taxes on capital and land. The models that establish these advantages, however, are grounded in the unlikely assumption that land values are assessed without error. This paper demonstrates that levying taxes based on land values assessed with error is equivalent to the application of one tax rate to the true value of land and a different effective tax rate to capital. The model demonstrates that a land value tax will have at most the distortion effects of a property tax, even with the worst possible land value assessment errors.

Suggested Citation

  • Jeffrey I. Chapman & Robert J. Johnston & Timothy J. Tyrrell, 2009. "Implications of a Land Value Tax with Error in Assessed Values," Land Economics, University of Wisconsin Press, vol. 85(4), pages 576-586.
    • Handle: RePEc:uwp:landec:v:85:y:2009:i:4:p:576-586
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    References listed on IDEAS

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    Cited by:

    1. Kalkuhl, Matthias & Fernandez Milan, Blanca & Schwerhoff, Gregor & Jakob, Michael & Hahnen, Maren & Creutzig, Felix, 2017. "Fiscal Instruments for Sustainable Development: The Case of Land Taxes," MPRA Paper 78652, University Library of Munich, Germany.
    2. Yang, Zhou, 2018. "Differential effects of land value taxation," Journal of Housing Economics, Elsevier, vol. 39(C), pages 33-39.
    3. Nicolai V. Kuminoff & Jaren C. Pope, 2013. "The Value of Residential Land and Structures during the Great Housing Boom and Bust," Land Economics, University of Wisconsin Press, vol. 89(1), pages 1-29.
    4. Kalkuhl, Matthias & Fernandez Milan, Blanca & Schwerhoff, Gregor & Jakob, Michael & Hahnen, Maren & Creutzig, Felix, 2018. "Can land taxes foster sustainable development? An assessment of fiscal, distributional and implementation issues," Land Use Policy, Elsevier, vol. 78(C), pages 338-352.
    5. Mayor, Karen & Lyons, Seán & Tol, Richard S. J., 2010. "Designing a property tax without property values: Analysis in the case of Ireland," Papers WP352, Economic and Social Research Institute (ESRI).
    6. Joshua M. Duke & TianHang Gao, 2023. "Land Value Taxation: A Spatially Explicit Economic Experiment with Endogenous Institutions," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 673-694, November.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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