ABSTRACT

In the United Kingdom, agricultural land is exempt from property taxation, but strong efforts are made to tax away gains to landowners from the designation and sale of land for development purposes. The basic institutional choice for controlling land use within the United States system is between some use of local police power and the collective purchase of development or use rights either by securing an easement or by contracting for certain restrictions on use. Conceivably, both institutional arrangements could reach the same result, that is, a comparable degree of farmland conversion. The American arrangement is based on the assumption that land externalities are local phenomena to be addressed locally. The American system is one in which the aggregate result emerges from a large number of local political bargains—bargains struck under rules that vary somewhat from state to state. The logic of the British solution may have reached its practical limit at the national borders.