Implicit Land Taxes and Their Effect on the Real Economy
Constructs a measure of 'implicit' land taxes from the gap between assessed and market land values, and identifies significant real economic effects.
Summary
This 2023 paper by Daniel Murphy and Nathan Seegert tackles a measurement problem: because assessed land values often diverge from market values, jurisdictions levy very different effective land tax rates than their statutory rates suggest.
Key Contribution
The authors build a measure of the implicit land tax — derived from the wedge between assessed and market land values — and use it to estimate real effects on construction and local economic activity. They find these implicit taxes have significant real consequences, underscoring both that land taxation already shapes behaviour and that assessment quality is central to how a land tax actually performs in practice.
Bears On
- Objection: Land value can't be assessed accurately
Sources
- Daniel Murphy & Nathan Seegert (2023), "Implicit Land Taxes and Their Effect on the Real Economy." PDF