In a survey released this morning by Scioto Analysis, nine of twelve leading Ohio economists agreed that replacing property taxes with land value taxes would encourage property development. This is largely due to the fact that property owners would not see increased tax bills after making improvements to their property. In other words, there is no disincentive to additional property development.
As Curtis Reynolds from Kent State wrote “Theory is quite clear that land taxes are more efficient than property taxes, so switching to land taxes should increase property development. How much that will happen is unclear.”
Economists were split on the question of whether land value taxes are more progressive than property taxes. In general, property taxes are often regressive, meaning lower income individuals spend a larger percentage of their income on these taxes than higher income individuals. This is because lower income individuals generally spend a greater percentage of their income on housing than higher income individuals.
As Jonathan Andreas from Bluffton University wrote: “The devil is in the details and I don't have all the details, but for urban taxes it seems hard to engineer a land value tax to be less progressive than a real estate tax because poorer people spend a larger percent of their income on housing (which is taxed less) whereas richer people own most of the land (which is taxed more).”
The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.