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Less Than Nothing

Land Value Taxation When Land Values Are Negative

Stanley D. Longhofer

March 2012, English

If ownership of land entails holding costs that exceed the land rents that accrue to the property owner, land values can be negative. This analysis considers the conditions under which land values might be negative and demonstrates that negative land values would not fundamentally alter the desirable efficiency characteristics of a land tax. The analysis also provides a framework for determining when external factors that influence property values are attributable to land or building values.