The taxation of land value as the means towards optimal urban development and the extirpation of excessive economic inequality

Generally, subsidies increase the supply of goods beyond optimal amounts, and generate deadweight losses. The urban fringes receive implicit land-rent subsidies from the governmental provision of public works and civic services paid for mostly by taxing properties, goods, and income, rather than onl...

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Bibliographic Details
Published in:Land use policy 2017-12, Vol.69, p.331-337
Main Authors: Foldvary, Fred Emanuel, Minola, Luca Andrea
Format: Article
Language:English
Subjects:
Economic development
Land appraisals
Land policy
Land use
Land value taxation
Markets
Productivity
Property taxes
Property values
Public goods
Public lands
Public works
Speculation
Subsidies
Taxation
Taxes
Urban areas
Urban development
Urban planning
Urban sprawl
Urbanization
Wages & salaries
Water utilities
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Summary:Generally, subsidies increase the supply of goods beyond optimal amounts, and generate deadweight losses. The urban fringes receive implicit land-rent subsidies from the governmental provision of public works and civic services paid for mostly by taxing properties, goods, and income, rather than only the land values generated by these public goods. The provision of utilities such as water is also skewed towards subsidizing the fringes. The taxation of most of the land rent or land value, combined with the elimination of other taxes, especially on improvements, would prevent such subsidies and allow development markets to generate an optimal urban development. Urban sprawl, defined as the use of land relative to optimal use, would gradually become eliminated with the elimination of both horizontal land subsidies and the taxation of vertical development. Land value taxation would also prevent distortive land speculation and, combined with a reduction of taxes on wages or goods paid from wages, would remove a major source of economic inequality while improving productivity.
ISSN:0264-8377
1873-5754
DOI:10.1016/j.landusepol.2017.09.022