Local Government Tax and Land Use Policies in the United States: Understanding the Links

By Helen F. Ladd; Lincoln Institute of Land Policy | Go to book overview

1. Introduction

Helen R. Ladd

The two most important functions of local governments in the United States stem from their power to tax and their power to regulate local land use. The power to tax permits local governments to raise revenue to provide services such as public safety, health, transportation, education and social services. The power to regulate land use permits local governments to segregate land uses, to restrict various types of land use and to slow the pace of local development. The goal of land use regulation is presumably to achieve a 'better' pattern of land use (at least from the perspective of local voters) than would result from the operation of an unfettered land market.

Regulatory tools are used primarily to achieve land use goals and local tax instruments are used primarily to raise revenue. Nonetheless, land use policy and tax policy interact in complicated ways. These interactions, some of which are intended and some of which are not, are the subject of this book. Neither a review of the extensive literature on land policy alone, nor a review of local tax policy, this book focuses on the nexus between the two.


INTRODUCTORY OVERVIEW: WHY EXAMINE THESE INTERACTIONS?

The 19th-century social reformer, Henry George, found it quite natural to look at land and tax policy together. According to George, a tax on land rents would provide the correct incentives for landowners to use their land most productively and would eliminate the need for all other taxes. In particular, it would allow jurisdictions to reduce reliance on other taxes that distort economic behaviour, including the property tax which applies to improvements as well as land. Thus good tax policy would be synonymous with good land policy.

Henry George's ideas, plus the extensive use of the property tax in the United States, have generated a wealth of theoretical research on land and property taxes. Was the self-made economist Henry George correct that a single tax on land is desirable? Is it true that the property tax distorts housing

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Local Government Tax and Land Use Policies in the United States: Understanding the Links
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures vii
  • Tables viii
  • List of Contributors x
  • Acknowledgements xiii
  • Lincoln Institute of Land Policy xiv
  • 1. Introduction 1
  • Notes 21
  • References 21
  • Part I - Interactions Between Tax and Land Policies 23
  • 2. Theoretical Controversies: Land and Property Taxation 25
  • Notes 38
  • References 39
  • Notes 48
  • References 48
  • References 53
  • 3. Land Use Regulation as a Fiscal Tool 55
  • Notes 72
  • References 72
  • Notes 80
  • References 81
  • 4. Effects of Taxes on Economic Activity 82
  • Notes 99
  • References 99
  • Notes 107
  • Notes 115
  • 5. Tax Policies to Promote Economic Development 116
  • Notes 128
  • References 129
  • Part II - Tax Policy as a Land Use Tool 131
  • 6. the Pittsburgh Experience with Land- Value Taxation 133
  • Notes 141
  • References 142
  • 7. Property Tax Treatment of Farmland: Does Tax Relief Delay Land Development? 144
  • Notes 157
  • References 159
  • 8. Incentives, Firm Location Decisions and Regional Economic Performance 168
  • Notes 180
  • References 180
  • 9. Tax Increment Financing as a Tool of Redevelopment 182
  • Notes 196
  • References 197
  • Part III - Fiscal and Distributional Impacts 199
  • 10. Fiscal Impacts of Business Development in the Chicago Suburbs 201
  • Notes 212
  • References 214
  • Appendix 215
  • 11. Who Pays Development Fees? 218
  • Notes 231
  • References 233
  • 12. Regional Tax Base Sharing: the Twin Cities Experience 234
  • Notes 251
  • References 253
  • Index 255
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