Geography, Land Values, and Municipal Taxation: A Spatial Paradigm for the Estimation and Reclamation of Rent

Abstract

<P> This dissertation provides an investigation into the confluence of three basic themes; geography, land values, and municipal taxation. This research examines the role of geography as it applies to addressing the inherent structural problems of the municipal property tax system, which result in inequities in municipal tax burdens. These structural problems are caused, in part, because traditional specifications of mass appraisal models are unable to sufficiently incorporate the impact of geography and because the property tax system is based more heavily on the value of capital improvements, such as buildings, than the value of land. Convincing evidence suggests a municipal taxation system based more heavily on the value of land could help mitigate many negative consequences of the property tax; thus, this research examines a spatial paradigm for the estimation of urban land values in order to study the short-run implications of transitioning to a land value tax system. </p> <P> After reviewing geography's contribution to the professional practice of real estate appraisal, this dissertation describes a spatial decision support system (SDSS) that was used to extract and validate sales of vacant land from the population of real estate transactions that occurred in Hamilton, Ontario between 1995 and 2004. Vacant land transaction prices were used to explore the spatial dynamics of land price appreciation and depreciation rates, investigate the potential for spatial models to improve the accuracy and fairness of mass appraisal, and to simulate the spatial distribution of shifting tax liabilities for residential land uses under the property tax and land value tax systems in order to examine their relationship to area-based deprivation indices. Results suggest there remains much potential for geography to make significant contributions to assessment practice, municipal taxation, and urban planning. Furthermore, there is much potential for land value taxation to contribute to equitable and sustainable cities. </p>