The Journal of Real Estate Finance and Economics
Volume 18, Issue 2, Article 3 (Abstract)
Title:	Two-Rate Property Tax Effects on Land Development
Author:	John E. Anderson
Abstract:	Economists have long understood that the conventional property tax causes the housing stock to be smaller than it would be in the presence of a non-distortionary tax such as a land or site value tax. This note brings together the results from models of housing development timing and structural density with the results of a modern model of a graded property tax in an urban setting. The combination of results is used to investigate the effects of a community's movement from a property tax to a two-rate tax system where land is taxed at a higher rate than structures. The conditions under which increasing reliance on a land or site value tax will increase housing structural density and speed development are identified and examined. Policy implications are drawn.
Keywords:	property tax, two-rate tax, housing, development timing, structural density