1983 Volume 33 Issue 3 Pages 227-239
Assuming perfect foresight, an equilibrium model of the residential development process is formulated and the effects of various forms of land taxation are analyzed. A tax on realized capital gains reduces the amount of residential land and raises the land price. A tax on land values is neutral if the tax rates are equal for all uses of land. If the tax on agricultural land is increased with that on residential land unchanged, however, the amount of residential land increases and the land price falls. The effects of a tax on accrued capital gains and a subsidy on morgage loans are also analyzed.