Measuring the Effects of a Land Value Tax on Land Development

Abstract

The objective of this research was to evaluate using land value tax as a potential policy tool to moderate sprawling development in Nashville, TN, the nation’s most sprawling metropolitan community with a population of one million or more. A land development model was used to evaluate the hypothesis that a land value tax encourages more development closer to areas of preexisting development than does the observed property tax scheme. For the median and lower and upper quartiles of empirical densities, results show that distances are shorter between areas of preexisting development and parcels predicted to be developed under a hypothetical land value tax policy than distances predicted under the observed tax scheme. This finding suggests that land value taxation could be used to design compact development strategies in Nashville, TN.

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Fig. 1
Fig. 2

Notes

  1. 1.

    See Wu and Cho (2007) for the specific land use policies under each category.

  2. 2.

    The built year information of 1800 was the oldest records available.

  3. 3.

    We could have estimated Eq. 1 with order of the time lagged period beyond q = 3, but considering the clear pattern of the percentage change in AIC, additional estimates were not generated.

  4. 4.

    The current tax rate in the county is $2.69 per $100 of assessed value per year.

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Acknowledgements

Cho, Kim, and Roberts are, respectively, assistant professors, graduate research assistant, and professor, Department of Agricultural Economics, University of Tennessee, Knoxville, TN. The views expressed here do not necessarily represent those of the University of Tennessee.

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Correspondence to Seong-Hoon Cho.

Appendix

Appendix

Table 4 Estimated coefficients and marginal effects of the single-family housing development model based on the number of nearest neighbors, k = 2 and 4
Table 5 Estimated coefficients and marginal effects of the single-family housing development model based on distance = 0.35 and 1.4 Miles

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Cho, SH., Gyu Kim, S. & Roberts, R.K. Measuring the Effects of a Land Value Tax on Land Development. Appl. Spatial Analysis 4, 45–64 (2011). https://doi.org/10.1007/s12061-009-9039-3

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Keywords

  • Compact development
  • Land value tax
  • Land development model
  • Spatial-probit model
  • Urban Sprawl