Efficient Classified Land Taxation
Erik B. Johnson
Quinnipiac University - Lender School of Business
Montana State University - Bozeman - Department of Agricultural Economics and Economics
April 16, 2014
While there is a rich literature on both the spatial impact of taxation and the efficient composition of differential classified taxes, there is a paucity of research on role of spatial land competition in the choice of these taxes. This paper analyzes the efficient choice of a classified land tax under differing levels and types of spatial competition through the use of both mono and duocentric city models. A key result of this analysis indicates that under the assumption of complete spatial competition (inelastic land supply), taxing all types of land at the same rate will minimize distortions. However, in the absence of direct competition between land use types (elastic land supply), efficient classified tax differentials are sensitive to city structure, the relative size of the tax bases and the slopes of the bid rent functions at the land use boundaries.
Number of Pages in PDF File: 45
Keywords: Efficient Taxation, Spatial Competition, Local Public Finance, Land Tax
JEL Classification: R1, R5, H21, H3working papers series
Date posted: May 10, 2014
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