Consider the property tax abatement, a common tool used by jurisdictions typically to encourage development of parcels or usher in a new business that will provide jobs for the local economy. The basic abatement, most often on newly developed land, is a reprieve from the property tax obligation, or a reduction, usually over a period of time. Abatements are in use across the country in a variety of forms. The free online database Significant features of the Property Tax includes information on relief measures in place in all 50 states.
The efficiency advantages of the land value tax (LVT), compared to a traditional property tax on both land and structures, are well established. In particular, a land-only tax does not discourage choices to build or maintain structures, while the property tax does. Yet authorization or adoption of a land value tax continues to be quite rare. Implementation and results vary equally widely, according to Assessing the Theory and Practice of Land Value Taxation.
Next week at Lincoln House, economist John Anderson will conclude the Fall 2011 lecture series by looking at policy recommendations that would make abatement programs closer to the LVT ideal. What form would property tax abatements take to achieve the advantages of a land value tax?To best mimic an LVT, abatements should be comprehensive, unconditional, and permanent, but a review of the features of existing abatement programs across states finds instead that most are particular, conditional, and temporary.
John Anderson is the Baird Family Professor of Economics in the College of Business Administration at the University of Nebraska-Lincoln. An advisor to public policymakers in the fields of public finance, fiscal reform, and tax policy, he served as a senior economist with the President’s Council of Economic Advisers in Washington, DC, in 2005-06. He has also advised state governors and legislatures, and numerous state agencies in the United States. In the international arena, he served as a technical advisor on fiscal reform projects and local government reform projects in Moldova, Montenegro, and Macedonia.
The lecture, at noontime on December 14, 2011 at the Lincoln Institute in Cambridge, is free but registration is required.