Property Taxation and Current Use Assessment

This paper discusses the relationships between property taxation and patterns of land use. In particular, it models a landowner’s decision to develop a parcel when she has the option to enroll that parcel in a current use assessment program. The analytical results highlight different factors that influence the effectiveness of a current use program. The results also underscore the difficulty a local government might have in influencing the behavior of the landowner. Except for altering eligibility rules, a local government using current use assessment has but two policy tools: a penalty for development and the property tax rate.