Measuring the Effects of a Land Value Tax on Land Development

The objective of this research was to evaluate using land value tax as a potential policy tool to moderate sprawling development in Nashville, TN, the nation’s most sprawling metropolitan community with a population of one million or more. A land development model was used to evaluate the hypothesis that a land value tax encourages more development closer to areas of preexisting development than does the observed property tax scheme. For the median and lower and upper quartiles of empirical densities, results show that distances are shorter between areas of preexisting development and parcels predicted to be developed under a hypothetical land value tax policy than distances predicted under the observed tax scheme. This finding suggests that land value taxation could be used to design compact development strategies in Nashville, TN.