IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v95y2013i3p685-704.html
   My bibliography  Save this article

Impact of a Two-Rate Property Tax on Residential Densities

Author

Listed:
  • Seong-Hoon Cho
  • Seung Gyu Kim
  • Dayton M. Lambert
  • Roland K. Roberts

Abstract

Municipalities sometimes reform property tax schedules in an effort to increase suboptimal residential densities. One such approach is to reduce the tax rate applied to building values and increase the tax rate applied to land, known as a two-rate property tax (TPT). This paper evaluates the impact of a TPT on residential density in Nashville-Davidson County, Tennessee where a conventional property tax schedule prevails during 2006--2007. When land taxes are proportionally higher than taxes on structures, 1.07 to 1 and 1.25 to 1 for general and urban service districts, respectively, ex ante simulations suggest that housing density increases by 18% in general services districts and 83% in urban services districts. Copyright 2013, Oxford University Press.

Suggested Citation

  • Seong-Hoon Cho & Seung Gyu Kim & Dayton M. Lambert & Roland K. Roberts, 2013. "Impact of a Two-Rate Property Tax on Residential Densities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 685-704.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:3:p:685-704
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ajae/aas141
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    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. Erik Lichtenberg & Ian Hardie, 2007. "Open Space, Forest Conservation, and Urban Sprawl in Maryland Suburban Subdivisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1198-1204.
    4. Raymond J.G.M. Florax & Peter Nijkamp, 2003. "Misspecification in Linear Spatial Regression Models," Tinbergen Institute Discussion Papers 03-081/3, Tinbergen Institute.
    5. Carmen Carrión-Flores & Elena G. Irwin, 2004. "Determinants of Residential Land-Use Conversion and Sprawl at the Rural-Urban Fringe," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 889-904.
    6. Cho, Seong-Hoon & Newman, David H., 2005. "Spatial analysis of rural land development," Forest Policy and Economics, Elsevier, vol. 7(5), pages 732-744, August.
    7. Klier, Thomas & McMillen, Daniel P, 2008. "Clustering of Auto Supplier Plants in the United States," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 460-471.
    8. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444, Decembrie.
    9. Alfonso Flores‐Lagunes & Kurt Erik Schnier, 2012. "Estimation of sample selection models with spatial dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(2), pages 173-204, March.
    10. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845, Elsevier.
    11. Jan K. Brueckner, 2003. "Strategic Interaction Among Governments: An Overview of Empirical Studies," International Regional Science Review, , vol. 26(2), pages 175-188, April.
    12. Wallace E. Oates & Robert M. Schwab & Wallace E. Oates & Robert M. Schwab, 2004. "The Impact of Urban Land Taxation: The Pittsburgh Experience," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 16, pages 273-293, Edward Elgar Publishing.
    13. Raymond J. G. M. Florax & Serge Rey, 1995. "The Impacts of Misspecified Spatial Interaction in Linear Regression Models," Advances in Spatial Science, in: Luc Anselin & Raymond J. G. M. Florax (ed.), New Directions in Spatial Econometrics, chapter 5, pages 111-135, Springer.
    14. Kopits, Elizabeth & McConnell, Virginia & Miles, Daniel, 2009. "Lot Size, Zoning, and Household Preferences: Impediments to Smart Growth?," RFF Working Paper Series dp-09-15, Resources for the Future.
    15. Lyytikäinen, Teemu, 2009. "Three-rate property taxation and housing construction," Journal of Urban Economics, Elsevier, vol. 65(3), pages 305-313, May.
    16. Mark M. Fleming, 2004. "Techniques for Estimating Spatially Dependent Discrete Choice Models," Advances in Spatial Science, in: Luc Anselin & Raymond J. G. M. Florax & Sergio J. Rey (ed.), Advances in Spatial Econometrics, chapter 7, pages 145-168, Springer.
    17. Plassmann, Florenz & Tideman, T. Nicolaus, 2000. "A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction," Journal of Urban Economics, Elsevier, vol. 47(2), pages 216-247, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cho, Seong-Hoon & Lee, Juhee & Roberts, Roland & Yu, Edward T. & Armsworth, Paul R., 2018. "Impact of market conditions on the effectiveness of payments for forest-based carbon sequestration," Forest Policy and Economics, Elsevier, vol. 92(C), pages 33-42.
    2. Seong-Hoon Cho & Seung Gyu Kim & Roland K. Roberts & Dayton M. Lambert & Taeyoung Kim, 2015. "Effects of Land-Related Policies on Land Development during a Real Estate Boom and a Recession," Growth and Change, Wiley Blackwell, vol. 46(2), pages 218-232, June.
    3. Christopher England, 2018. "Land Value Taxation in Vancouver: Rent†Seeking and the Tax Revolt," American Journal of Economics and Sociology, Wiley Blackwell, vol. 77(1), pages 59-94, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anping Chen & Marlon Boarnet & Mark Partridge & Raffaella Calabrese & Johan A. Elkink, 2014. "Estimators Of Binary Spatial Autoregressive Models: A Monte Carlo Study," Journal of Regional Science, Wiley Blackwell, vol. 54(4), pages 664-687, September.
    2. Taranu, Victoria & Verbeeck, Griet, 2022. "Property tax as a policy against urban sprawl," Land Use Policy, Elsevier, vol. 122(C).
    3. 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.
    4. Yang, Zhou, 2018. "Differential effects of land value taxation," Journal of Housing Economics, Elsevier, vol. 39(C), pages 33-39.
    5. John M. Quigley & Aaron M. Swoboda, 2010. "Land use regulation with durable capital," Journal of Economic Geography, Oxford University Press, vol. 10(1), pages 9-26, January.
    6. Kathleen P. Bell & Timothy J. Dalton, 2007. "Spatial Economic Analysis in Data‐Rich Environments," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 487-501, September.
    7. 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, December.
    8. Sung-Hoon Kang & Bong-Joon Kim, 2022. "Designing a Valuation System for Property Tax: The Case of Zanzibar, Tanzania," Land, MDPI, vol. 11(7), pages 1-12, June.
    9. Rainald Borck & Jan K. Brueckner, 2018. "Optimal Energy Taxation in Cities," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(2), pages 481-516.
    10. Heijnen, P. & Samarina, A.. & Jacobs, J.P.A.M. & Elhorst, J.P., 2013. "State transfers at different moments in time," Research Report 13006-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    11. Quigley, John M. & Swoboda, Aaron M., 2007. "The urban impacts of the Endangered Species Act: A general equilibrium analysis," Journal of Urban Economics, Elsevier, vol. 61(2), pages 299-318, March.
    12. Sally Kwak & James Mak, 2011. "Political Economy of Property Tax Reform: Hawaii's Experiment with Split‐Rate Property Taxation," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(1), pages 4-29, January.
    13. Man Li & JunJie Wu & Xiangzheng Deng, 2013. "Identifying Drivers of Land Use Change in China: A Spatial Multinomial Logit Model Analysis," Land Economics, University of Wisconsin Press, vol. 89(4), pages 632-654.
    14. McMillen, Daniel & Singh, Ruchi, 2022. "Land value estimation using teardowns," Journal of Housing Economics, Elsevier, vol. 58(PA).
    15. J. Paul Elhorst & Pim Heijnen & Anna Samarina & Jan P. A. M. Jacobs, 2017. "Transitions at Different Moments in Time: A Spatial Probit Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(2), pages 422-439, March.
    16. Quigley, John M. & Swoboda, Aaron, 2006. "A General Equilibrium Analysis of Land Use Restrictions and Residential Welfare," Berkeley Program on Housing and Urban Policy, Working Paper Series qt11k4p0vt, Berkeley Program on Housing and Urban Policy.
    17. 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.
    18. Cho, Seong-Hoon & Kim, Heeho & Roberts, Roland K. & Kim, Taeyoung & Lee, Daegoon, 2014. "Effects of changes in forestland ownership on deforestation and urbanization and the resulting effects on greenhouse gas emissions," Journal of Forest Economics, Elsevier, vol. 20(1), pages 93-109.
    19. Carrión-Flores, Carmen E. & Flores-Lagunes, Alfonso & Guci, Ledia, 2018. "An estimator for discrete-choice models with spatial lag dependence using large samples, with an application to land-use conversions," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 77-93.
    20. Bonnet, Odran & Chapelle, Guillaume & Trannoy, Alain & Wasmer, Etienne, 2021. "Land is back, it should be taxed, it can be taxed," European Economic Review, Elsevier, vol. 134(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ajagec:v:95:y:2013:i:3:p:685-704. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.