An introduction to two-rate taxation of land and buildings

Jeffrey P. Cohen and Cletus C. Coughlin ()

Review, 2005, issue May, pages 359-374

Abstract: When taxing real property at the local level in the United States, land and improvements to the land, such as buildings, are generally taxed at the same rate. Two-rate (or split-rate) taxation departs from this practice by taxing land at a higher rate than structures. This paper begins with an elementary discussion of taxation and the economic rationale for two-rate taxation. In theory, moving to a two-rate tax reduces the deadweight losses associated with distortionary taxation and generates additional economic activity. The paper also provides a history of two-rate taxation in the United States and a summary of studies attempting to quantify its economic effects. Discussions of the practical and political challenges of implementing two-rate taxation complete the paper.

Keywords: Taxation; Property tax (search for similar items in EconPapers)
Date: 2005
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