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Preferential Assessment of Rural Lands in the United States

A Literature Review and Reform Proposals

Richard England

December 2011, English

This paper summarizes and evaluates the U.S. experience with use-value or current-use assessment of undeveloped land for tax purposes. The reasons for proposing preferential assessment of rural land is first detailed, followed by several histories of its adoption by state governments. These legislative histories are then followed by a description of interstate differences in the specific features of use-value assessment programs.

After describing the adoption and implementation of preferential assessment programs, the paper details an account of theoretical analyses of use-value assessment (UVA). Various empirical studies of the impacts of use-value assessment in states ranging from Virginia to California to Hawaii follows. These empirical studies have tried to discover whether UVA programs have indeed protected family farmers and slowed down expansion of metropolitan regions, whether they influence the timing of development decisions, and in what ways they have redistributed the local tax burden among owners of real property.

This paper ends with a discussion of reforms that this and other authors have proposed that could improve the performance of UVA programs.