Housing Supply and Property Taxes

Chris EdwardsIn many cities, a shortage of housing supply has led to high housing prices. One problem is thatstrict zoning rules have undermined the construction of multifamily housing.Property taxes are another barrier to increased housing supply. TheWall Street Journalhas an interesting piece suggesting that taxing buildings as much as, or more than, land induces landlords to hold onto land undeveloped, rather than pushing ahead with building projects.The article highlights land in New York City near the U.N. that is zoned for construction of 1,500 apartments but has been empty for 17 years while the “owner has paid relatively little in taxes on the property because it doesn’t contain any buildings.” Apparently, “U.S. cities are littered with vacant or sparsely built sites like this one. New York City alone has more than 77,000 lots that are either vacant or have a building that is less than half the size of what zoning allows. ”All taxes distort, but the argument is that property taxes on land distort less than property taxes on buildings. The article continues:Some economists and housing advocates say there is a common factor behind all this vacant land: a property tax system that combines low taxes on land with high taxes on buildings.Lawmakers in Detroit, Philadelphia and Richmond, Va., have proposed reforms that would fundamentally change the way property taxes are calculated. When Andrew Yang ran for mayor of New York in 2021, he cal...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs