Reducing Sprawl, Poverty And Inequality By Terminating Real Estate Speculation

Just Economy Conference – May 12, 2021


Politicians say that they want more affordable housing and jobs. But the property tax applied to buildings has the economic impact of a 10% to 20% sales tax on construction labor and materials. This reduces the amount of buildings produced and employment, while raising building prices and rents for both residents and businesses.

Infrastructure should facilitate development. But, if it is well-designed and well-executed, nearby land prices and rents rise. Existing residents and businesses are displaced. Affluent landowners are enriched, exacerbating inequality.

High land prices near existing infrastructure encourage developers to seek cheaper (but more remote and less productive) sites, creating urban sprawl. Sprawl harms the environment. It also wrecks budgets by duplicating expensive infrastructure. Sprawl development undermines the vitality of city centers, creating neighborhood decline and blight.

Private appropriation of publicly-created land values fuels land speculation, a parasitic activity that creates nothing of value. But speculation inflates land prices, particularly near urban infrastructure amenities.

Some communities have overcome these problems by reducing tax rates applied to building values (reducing the cost of construction, improvement and maintenance) while simultaneously increasing tax rates applied to land values (reducing speculation and moderating land prices). Shifting taxes off of buildings and onto land makes both buildings and land more affordable without new spending or revenue losses. It also redirects more affordable development to infill sites, reducing blight and sprawl.

Print Friendly, PDF & Email
Scroll to Top