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Evidence on the Distributional Effects of a Land Value Tax on Residential Households

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  • Plummer, Elizabeth
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    This study examines how replacing a uniform property tax with a land value tax (LVT) would shift the tax burden for single-family residential properties in Tarrant County, Texas, over the period 1997–2006. Results suggest that a LVT would shift the tax burden away from single-family properties and on to other property classes. For the more recent years in the sample, the average tax liability for single-family properties would decrease about 30 percent, regardless of household income, and Suits Indices suggest that, within residential properties, a LVT would be slightly more progressive than a property tax. Horizontal equity problems would be greatest for the lowest-valued properties relative to other properties. This study also examines how a LVT would change property values due to the effects of tax capitalization.

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    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 63 (2010)
    Issue (Month): 1 (March)
    Pages: 63-92

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    Handle: RePEc:ntj:journl:v:63:y:2010:i:1:p:63-92
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    1. Poterba, James M, 1989. "Lifetime Incidence and the Distributional Burden of Excise Taxes," American Economic Review, American Economic Association, vol. 79(2), pages 325-330, May.
    2. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association, vol. 50(1), pages 1-21, March.
    3. Bowman, John H. & Bell, Michael E., 2008. "Distributional Consequences of Converting the Property Tax to a Land Value Tax: Replication and Extension of England and Zhao," National Tax Journal, National Tax Association, vol. 61(4), pages 593-607, December.
    4. David L. Sjoquist, 2007. "How Should Land Be Taxed? Analyzing the Jamaican Land Value Tax," Public Finance Review, , vol. 35(1), pages 127-149, January.
    5. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association, vol. 50(1), pages 1-21, March.
    6. Plummer, Elizabeth, 2003. "Evidence on the Incidence of Residential Property Taxes Across Households," National Tax Journal, National Tax Association, vol. 56(4), pages 739-753, December.
    7. Palmon, Oded & Smith, Barton A., 1998. "A New Approach for Identifying the Parameters of a Tax Capitalization Model," Journal of Urban Economics, Elsevier, vol. 44(2), pages 299-316, September.
    8. Do, A. Quang & Sirmans, C. F., 1994. "Residential Property Tax Capitalization: Discount Rate Evidence from California," National Tax Journal, National Tax Association, vol. 47(2), pages 341-48, June.
    9. Gravelle, Jane & Gravelle, Jennifer, 2006. "Horizontal Equity and Family Tax Treatment: The Orphan Child of Tax Policy," National Tax Journal, National Tax Association, vol. 59(3), pages 631-649, September.
    10. Geoffrey K. Turnbull & Jonathan Dombrow & C.F. Sirmans, 2006. "Big House, Little House: Relative Size and Value," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 34(3), pages 439-456, 09.
    11. England, Richard W. & Zhao, Min Qiang, 2005. "Assessing the Distributive Impact of a Revenue–Neutral Shift From a Uniform Property Tax to a Two-Rate Property Tax With a Uniform Credit," National Tax Journal, National Tax Association, vol. 58(2), pages 247-260, June.
    12. Charles A. M. de Bartolomé & Stuart S. Rosenthal, 1999. "Property Tax Capitalization in a Model with Tax-Deferred Assets, Standard Deductions, and the Taxation of Nominal Interest," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 85-95, February.
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