The impact of positive property tax differentials on the timing of development
To date, few empirical studies have focused on the location decision by residential developers in response to changes in the property tax. Based on a dynamic time-to-development model by Turnbull, this paper finds, using 17Â years of parcel level data from Saint Louis County, Missouri, that higher than average tax rates increase the time-to-development for vacant parcels by between 4 and 11%, all else equal. Additionally this paper finds that the tax differential effect is cumulative, resulting in about a 20% increase in the time-to-development for the parcel facing the average number of years with a higher than average rate. These results support the analytical results by both Turnbull [Turnbull, G.K., 1988. The effects of local taxes and public services on residential development patterns. Journal of Regional Science, 28 (4), 541-562.] and McMillen [McMillen, D.P., 1990. The timing and duration of development tax rate increases. Journal of Urban Economics, 28, 1-18.] that the property tax can distort residential capital markets leading to inefficient urban growth, or sprawl.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Isaac Bayoh & Elena G. Irwin & Timothy Haab, 2006. "Determinants of Residential Location Choice: How Important Are Local Public Goods in Attracting Homeowners to Central City Locations?," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 97-120.
- Song, Yan & Zenou, Yves, 2006.
"Property tax and urban sprawl: Theory and implications for US cities,"
Journal of Urban Economics,
Elsevier, vol. 60(3), pages 519-534, November.
- Song, Yan & Zenou, Yves, 2005. "Property Tax and Urban Sprawl. Theory and Implications for U.S. Cities," CEPR Discussion Papers 5345, C.E.P.R. Discussion Papers.
- Song, Yan & Zenou, Yves, 2005. "Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities," Working Paper Series 648, Research Institute of Industrial Economics.
- McMillen, Daniel P., 1990. "The timing and duration of development tax rate increases," Journal of Urban Economics, Elsevier, vol. 28(1), pages 1-18, July.
- Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September.
- Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
- L. Randall Wray & Stephanie Bell, 2004. "Introduction," Chapters,in: Credit and State Theories of Money, chapter 1 Edward Elgar Publishing.
- Yan Song & Yves Zenou, 2009. "How Do Differences In Property Taxes Within Cities Affect Urban Sprawl?," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 801-831.
- Zax Jeffrey S. & Skidmore Mark, 1994. "Property Tax Rate Changes and Rates of Development," Journal of Urban Economics, Elsevier, vol. 36(3), pages 314-332, November.
- Mario Cleves & William W. Gould & Roberto G. Gutierrez & Yulia Marchenko, 2010. "An Introduction to Survival Analysis Using Stata," Stata Press books, StataCorp LP, edition 3, number saus3, January.
- Anderson, John E., 1986. "Property taxes and the timing of urban land development," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 483-492, November.
- Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 5-23, January.
- Cunningham, Christopher R., 2006. "House price uncertainty, timing of development, and vacant land prices: Evidence for real options in Seattle," Journal of Urban Economics, Elsevier, vol. 59(1), pages 1-31, January.
- McDonald, John F. & McMillen, Daniel P., 2000. "Employment Subcenters and Subsequent Real Estate Development in Suburban Chicago," Journal of Urban Economics, Elsevier, vol. 48(1), pages 135-157, July.
- Philippe Robert-Demontrond & R. Ringoot, 2004. "Introduction," Post-Print halshs-00081823, HAL.
- Fujita, Masahisa, 1982. "Spatial patterns of residential development," Journal of Urban Economics, Elsevier, vol. 12(1), pages 22-52, July.
- Wassmer, Robert W., 1993. "Property Taxation, Property Base, and Property Value: An Empirical Test of the 'New View'," National Tax Journal, National Tax Association, vol. 46(2), pages 135-159, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:39:y:2009:i:6:p:739-748. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If references are entirely missing, you can add them using this form.