author

H. Spencer Banzhaf

Dept. of Economics, Andrew Young School of Public Policy, Georgia State University, Associate Professor

Land or split-rate taxes exist in Denmark, Australia, parts of Indonesia, & 18 Pennsylvanian cities. Split-rate/land taxation alleviates the property tax's distortionary effect on the land/capital ratio, increasing capital stock. Split-rate tax increases development activity as measured by building permits. Split-rate tax in PA lowers the land/capital ratio, and does so more via more houses in a given land area than bigger houses (the improvement effect triumphs over the dwelling effect). Split-rate in PA increased growth in number of housing units by 2-5% relative to control groups.
How "Smart" is the Split-Rate Property Tax? Evidence from Growth Patterns in Pennsylvania
Land Value Tax
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