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A Dual-rate Property Tax: Exploring the Potential for Moderating the Effects of Sprawl on Development

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Abstract

This research evaluates the effectiveness of a dual-rate property tax on moderating sprawl, focusing particularly on how land-development decisions accumulate over space and affect changes in spatial patterns of development. A spatial process model of landowners’ conversion decisions links the effects of a dual-rate property tax on parcel-level land conversion through ex ante simulations. We conclude that the dual-property tax helps reduce the mean nearest neighbor of residential parcels and thus promotes the development of land around existing infrastructure more than land distant from existing infrastructure; however, the dual-property tax alone does not completely mitigate sprawl.

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Notes

  1. First proposed by the American social economist Henry George in the nineteenth century, land value taxation is an ad valorem tax where only the value of land itself is taxed (George 1896).

  2. The details of how these matrices are constructed are found in Cho et al. (2011a, b).

  3. Illinois first adopted the state constitution requiring real estate property to be taxed according to its value (ad valorem tax) in 1818. Missouri followed in 1820 and Tennessee in 1834. All real estate property was taxed equally by value for 33 states by the end of the 18th Century (U.S. Census 2015).

  4. The neighbor parcels are defined by spatial weight matrix composed of Thiessen polygon (queen contiguity, order 3) specification.

  5. Inverse distance-based Moran’s indexes for per unit land and structure values for the 2460 parcels are 0.22 and 0.01, respectively.

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Acknowledgements

This research was supported in part by USDA Hatch Projects NE-1049 and W-3133.

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Authors and Affiliations

  1. Department of Agricultural and Resource Economics, The University of Tennessee, 2621 Morgan Circle, Knoxville, TN, 37996-4518, USA

    Seong-Hoon Cho, Roland K. Roberts & Dayton M. Lambert

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  1. Seong-Hoon Cho
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  2. Roland K. Roberts
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  3. Dayton M. Lambert
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Correspondence to Seong-Hoon Cho.

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Cho, SH., Roberts, R.K. & Lambert, D.M. A Dual-rate Property Tax: Exploring the Potential for Moderating the Effects of Sprawl on Development. Appl. Spatial Analysis 9, 251–267 (2016). https://doi.org/10.1007/s12061-015-9150-6

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  • DOI: https://doi.org/10.1007/s12061-015-9150-6

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