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Further Empirical Evidence on Property Taxation and the Occurrence of Urban Sprawl

Robert W. Wassmer

March 2016, English

How does the effective rate of property taxation in a United States urbanized area influence the occurrence of urban sprawl (measured as greater land used for a given population) observed there? Economic theory indicates that the portion of property taxation assessed on the non-land components of a residential parcel exerts opposite influences on the intensity of capital (building and machinery) use on the parcel through a negative Improvement Effect and a positive Dwelling Size Effect. An empirical assessment of this issue is therefore necessary; however, methodological concerns in earlier empirical analyses cast doubt on the reliability of what was previously reported. The use here of years 2000 and 2010 panel data from 370 comparable, single-state United States urbanized areas, coupled with a more fully specified set of explanatory variables and fixed-effects regression methodology, results in greater confidence that the estimated influences of effective rates of commercial, industrial, single family residential, and multifamily residential property taxation on land use is valid.


Economics, Property Taxation, Taxation, Urban Sprawl