Property Tax and Urban Sprawl: Theory and Implications for US Cities

Summary

"Property Tax and Urban Sprawl: Theory and Implications for US Cities" by Yan Song (UNC Chapel Hill) and Yves Zenou (Journal of Urban Economics 60(3), 2006, pp. 519–534) asks whether the conventional property tax feeds or fights urban sprawl. Prior theory had left the sign ambiguous: Brueckner & Kim (2003) showed the property tax's effect on city size cuts both ways — taxing structures lowers capital-per-unit-of-housing (pushing cities outward) but also lowers overall housing consumption (pulling them inward).[2] Song & Zenou resolve the ambiguity: in their theoretical model (log-linear utility) a higher property tax reduces the spatial size of the city, and their empirical test on year-2000 data for US urbanized areas — instrumenting the local tax rate with state aid to schools to address endogeneity — confirms the prediction: cities with higher property tax rates have smaller urbanized footprints.[1]

Why It Matters Here — and Its Limits for Georgist Use

• It is among the few peer-reviewed empirical results connecting property taxation to sprawl, and so appears in the environmental narrative (Green Georgism).
• It is not an LVT study, and the mechanisms differ. The conventional property tax restrains sprawl partly by discouraging housing capital generally; a land value tax or split-rate design instead encourages structures on valuable land while making fringe land holding costly — the density channel documented by Banzhaf & Lavery (2010). The two results point the same direction (more tax on land-related holdings, less sprawl) through partly opposite mechanisms; the wiki cites them side by side but never interchangeably.
• Verification note. The egress proxy blocked the publisher full text this session; findings are corroborated across the journal listing, RePEc, and SSRN abstracts. Scan depth recorded as Light.

Bears On

• Narrative: Green Georgism — Charging for the Earth
• Research: Banzhaf & Lavery (2010) — the split-rate density complement
• Objection (adjacent): LVT is just a property tax — why the mechanism distinction matters

See Also

• Banzhaf & Lavery (2010)
• Split-rate taxation
• Narrative: Green Georgism

Sources

1. Yan Song & Yves Zenou, "Property Tax and Urban Sprawl: Theory and Implications for US Cities," Journal of Urban Economics 60(3), 2006, pp. 519–534. Publisher · SSRN — used for the model prediction, IV strategy, and empirical finding (B-claims; abstracts corroborated, full text unfetched — see note).
2. Jan K. Brueckner & Hyun-A Kim, "Urban Sprawl and the Property Tax," International Tax and Public Finance 10, 2003, pp. 5–23. Publisher — used for the prior theoretical ambiguity (C-claim).