Land value taxation and new housing development in Pittsburgh
This is a study of the effects of land value taxation on new housing development in Pittsburgh. Land value taxation generally refers to the taxation of land at rates higher than those levied against buildings and other improvements. Liquidity and incentive effects of shifting the tax base from improvements to land will, according to theory, encourage development. In recent years, real estate tax rate changes in Pittsburgh have consisted of a steady and substantial increase in the land tax rate and fluctuations in the rate applied to improvements. These changes provide a basis for testing the proposition that land value taxation encourages development.
This dissertation is divided into five main chapters, the first of which is an introduction. The second chapter is a review of previous empirical studies of land value taxes, while the third chapter is a discussion of the economic theory of land value taxation. The fourth chapter presents an econometric model for testing the proposition that land value taxation encourages new housing development. The model's dependent variable is a measure of new housing development based on building permit values. The independent variables include the taxes on land and improvements and other factors affecting new housing development.
The results of estimating the model are presented in the fifth chapter. It was found that the improvement tax rate has had a significant inverse effect on the amount of new housing development. This effect has involved the number of new housing units but not the average cost of new units. The land tax rate was found to be an insignificant determinant of the level of new housing development.
Area planning & development
0999: Area planning & development