Can the Land Tax Help Curb Urban Sprawl? Evidence from Growth Patterns in Pennsylvania
28 Pages Posted: 24 Aug 2008
Date Written: August, 22 2008
Urban sprawl has become a policy concern of national prominence. Land or split-rate taxes are one potential way to address this issue. In theory, such taxes can raise the capital/land ratio. This in turn can raise the density of housing units where it is applied, if the average quality/size of each housing unit does not increase by enough to offset an effect on the number of housing units. This research explores these issues, looking at a panel of land uses and demographics in Pennsylvania. We confirm the theoretical prediction that the split-rate tax raises the capital/land ratio. We also find that the primary effect is in more housing units, rather than bigger or nicer units, suggesting the split-rate tax is potentially a powerful anti-sprawl tool.
Keywords: Urban Sprawl, Property Taxes, Split-Rate Tax
JEL Classification: H23, H31, H71, Q31, R31
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