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Tax Rules, Land Development, and Open Space

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  • Simpson, R. David

Abstract

Concern about “open space” is growing. Conservation advocates worry that private land use decisionmakers preserve too little open space. Yet private land developers are deciding on their own to preserve open space in new developments because it provides amenities to purchasers of lots. Moreover, tax provisions provide incentives for preserving more open space than would be privately optimal. Many jurisdictions have adopted “use-value assessment” standards granting favorable tax treatment to lands maintained in open space. Also, donations of open space can be deducted from income in computing tax liabilities. Both factors may be empirically important, although tax deductibility may have larger conservation effects than does use-value assessment. These conclusions raise several unanswered questions: How important are tax incentives in practice? Do they motivate enough conservation of open space? Do tax incentives target the right conservation priorities?

Suggested Citation

  • Simpson, R. David, 2002. "Tax Rules, Land Development, and Open Space," Discussion Papers dp-02-61, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-02-61
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-02-61.pdf
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    References listed on IDEAS

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    1. Richard Cornes & Charles F. Mason & Todd Sandler, 1986. "The Commons and the Optimal Number of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 641-646.
    2. Anderson, John E. & Griffing, Marlon F., 2000. "Use-Value Assessment Tax Expenditures in Urban Areas," Journal of Urban Economics, Elsevier, vol. 48(3), pages 443-452, November.
    3. John E. Anderson, 1993. "Use-Value Property Tax Assessment: Effects on Land Development," Land Economics, University of Wisconsin Press, vol. 69(3), pages 263-269.
    4. T. Nicolaus Tideman, 1990. "Integrating Land-Value Taxation with the Internalization of Spatial Externalities," Land Economics, University of Wisconsin Press, vol. 66(3), pages 341-355.
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    More about this item

    Keywords

    income tax; property tax; tax deductions; use-value assessment; ecosystem services; open space; conservation; amenity value;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • 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

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