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Evidence on the Distributional Effects of a Land Value Tax on Residential Households

Plummer, Elizabeth

Abstract:

This study examines how replacing a uniform property tax with a land value tax (LVT) would shift the tax burden for single-family residential properties in Tarrant County, Texas, over the period 1997–2006. Results suggest that a LVT would shift the tax burden away from single-family properties and on to other property classes. For the more recent years in the sample, the average tax liability for single-family properties would decrease about 30 percent, regardless of household income, and Suits Indices suggest that, within residential properties, a LVT would be slightly more progressive than a property tax. Horizontal equity problems would be greatest for the lowest-valued properties relative to other properties. This study also examines how a LVT would change property values due to the effects of tax capitalization.

Citation

Plummer, Elizabeth (2010), Evidence on the Distributional Effects of a Land Value Tax on Residential Households, National Tax Journal, 63:1, pp. 63-92

DOI: dx.doi.org/10.17310/ntj.2010.1.03