author

T. Nicolaus Tideman

Virginia Polytechnic Institute & State University - Department of Economics

Pennsylvania cities that adopted split-rate land value taxes enjoyed significantly higher levels of construction activity than they would would with single-rate property taxes. Increasing the tax rate on land, balanced by a decrease in the tax rates on the income of capital and labor, can provide a fiscal means to stimulate the economy while maintaining current levels of expenditures and debt. Increasing the tax rate on land from 0.55% to 5.55%, balanced by reductions in taxes on capital and labor by 28% and 10%, respectively, would increase the welfare of a representative household by 3.4%, and increase output by 15%. In an econometric model, land value taxation yields double the amount of welfare and output gains as a wealth tax that raises the same revenue. "Most land rent is paid out as interest to banks and that bank credit is a major driver of increases in housing prices." In other words, unaffordable housing may not be a mere symptom of inequality, but rather, a key driver of it. Land represents about 40% of household assets in the U.S.
Post-Corona Balanced-Budget Super-Stimulus: The Case for Shifting Taxes onto Land A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction
Land Value Tax
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