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

and benefits from the new development will be internalized. That is, a large jurisdiction can capture all of the positive effects on local revenues, including second- and subsequent-round effects. Because in a large jurisdiction it is unlikely that all existing local public services are being used at capacity, it seems highly probable that any specific new non-residential use must impose added costs far below the added revenue (unless that development has been elicited by substantial local tax concessions).


Welfare Costs of Controls are not Obvious

If fiscal zoning works as predicted, the negative equity consequences are fairly obvious. As some of the above comments suggest, the welfare costs in the form of negative externalities that planners write about are less obvious. I offer only one comment about this. Planners emphasize the transportation consequences of low-density development. Granted that low density zoning ('sprawl') does result in more vehicle miles of travel and perhaps in more time spent in travel (which is not necessarily the case, if low density permits higher average speeds), is this a welfare loss? It does seem that, in the United States, wages are quite low — relative to the regional averages — in a good many especially low density urban areas in the Sunbelt. Examples include Tucson, Colorado Springs, Abilene, Waco, Tallahassee, the Norfolk-Hampton Roads area in Virginia, and Columbus, Georgia. 4 This implies that the time costs of travel will be relatively low in such areas, despite the additional vehicle miles travelled.

Finally, there is the whole issue of whether land use control powers should be exercised by small local government units. It has never been evident that this is inherently equitable or efficient, unless we are dealing with a pure Tiebout world. There is also the question of legitimacy, which we are probably not professionally entitled to address.


Notes
1.
Because the local governments with planning powers tended to be larger in area the further one moved from the centre of the region, the average minimum lot size required by zoning was relatively small in the furthest reaches of the region. This is hardly consistent with an Alonso-type urban model.
2.
I first made this point in Netzer ( 1962).
4.
There is a weak, but statistically highly significant, positive relation between the density of the 200 largest cities (in 1990) and average annual payroll per employee in the central counties of the metropolitan areas that contain these cities. The relationship is somewhat stronger if the Northeast and Midwest are excluded and the comparison confined to the Sunbelt, with a dummy variable for the main regions within the Sunbelt.

-80-

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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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