Journal Article

Impact of a Two-Rate Property Tax on Residential Densities

Seong-Hoon Cho, Seung Gyu Kim, Dayton M. Lambert and Roland K. Roberts

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 95, issue 3, pages 685-704
Published in print April 2013 | ISSN: 0002-9092
Published online January 2013 | e-ISSN: 1467-8276 | DOI: https://dx.doi.org/10.1093/ajae/aas141
Impact of a Two-Rate Property Tax on Residential Densities

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  • Renewable Resources and Conservation
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Municipalities sometimes reform property tax schedules in an effort to increase suboptimal residential densities. One such approach is to reduce the tax rate applied to building values and increase the tax rate applied to land, known as a two-rate property tax (TPT). This paper evaluates the impact of a TPT on residential density in Nashville-Davidson County, Tennessee where a conventional property tax schedule prevails during 2006–2007. When land taxes are proportionally higher than taxes on structures, 1.07 to 1 and 1.25 to 1 for general and urban service districts, respectively, ex ante simulations suggest that housing density increases by 18% in general services districts and 83% in urban services districts.

Keywords: Residential density; spatial lag probit; two-rate property tax; Q24; R14

Journal Article.  9353 words.  Illustrated.

Subjects: Renewable Resources and Conservation ; Urban, Rural, and Regional Economics

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