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Financing transportation with land value taxes: Effects on development intensity

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Abstract

A significant portion of local transportation funding comes from the property tax. The tax is conventionally assessed on both land and buildings, but transportation increases only the value of the land. A more direct, efficient way to fund transportation projects is to tax land at a higher rate than buildings. The lower tax on buildings would allow owners to retain more of the profits of their investment in construction, and have the expected side effect of increased development intensity. A partial equilibrium simulation is created for three sample cities to determine the magnitude of the intensity increase for both residential and nonresidential development if various levels of split rate property taxes were enacted.

Suggested Citation

  • Jason Junge & David Levinson, 2009. "Financing transportation with land value taxes: Effects on development intensity," Working Papers 000067, University of Minnesota: Nexus Research Group.
    • Handle: RePEc:nex:wpaper:landvaluetax
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    File URL: http://hdl.handle.net/11299/180030
    File Function: Second version, 2012
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    1. Banzhaf, H. Spencer & Lavery, Nathan, 2010. "Can the land tax help curb urban sprawl? Evidence from growth patterns in Pennsylvania," Journal of Urban Economics, Elsevier, vol. 67(2), pages 169-179, March.
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    Cited by:

    1. Levinson, David M., 2013. "Introduction: The Journal of Transport and Land Use enters year six," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 6(1), pages 1-5.
    2. Levinson, David & Zhao, Zhirong Jerry, 2012. "Introduction to the special issue on value capture for transportation finance," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 5(1), pages 1-3.

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    More about this item

    Keywords

    tax; land value; locational analysis; transportation finance;
    All these keywords.

    JEL classification:

    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • 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
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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