Political Economy of Property Tax Reform: Hawaii’s Experiment with Split Rate Property Taxation

Sally Kwak and James Mak ()
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James Mak: Department of Economics, University of Hawaii at Manoa

No 200915, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Economic theory suggests that switching from a general property tax to a split-rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split-rate property taxation, land is typically taxed at a significantly higher rate than improvements. Beginning in 1965 Hawaii experimented with a statewide split-rate property tax system to encourage economic growth and effect land reform. The experiment was ended in 1977. Following the transfer of property taxing powers to the counties in 1978, some counties brought back the split-rate property tax at times. Since 2006, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than land for most property classes. This paper chronicles and explains the rationale behind Hawaii state and county experiments with split rate property taxation.

Keywords: Property taxes; split rate property taxation; tourist taxes (search for similar items in EconPapers)
JEL-codes: H (search for similar items in EconPapers)
Pages: 42 pages
Date: 2009-12-07
New Economics Papers: this item is included in nep-tur and nep-ure
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http://www.economics.hawaii.edu/research/workingpapers/WP_09-15.pdf Originally posted in July 2009; revised on December 23, 2009 (application/pdf)

Related works:
Journal Article: Political Economy of Property Tax Reform: Hawaii's Experiment with Split‐Rate Property Taxation (2011)
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