Daniel P. Murphy

We show empirically that land taxes are associated with higher density, neighborhood diversity, business formation, and other indicators of economic performance. To investigate land taxes empirically, we estimate implicit land taxes (or subsidies) for over 2,000 counties in the U.S. These implicit land taxes arise due to idiosyncratic discrepancies in the evaluation of land and structures between tax assessors and buyers and sellers in the market.  We find substantial dispersion in implicit land taxes across U.S. counties and within metropolitan areas. They are also highly persistent within counties. Finally, we develop a model of land taxes and endogenous population to rationalize our results.