ABSTRACT
This chapter analyses the property tax, the largest single source of local government revenue and shows that it is essentially a very high rate and extremely regressive consumption tax, which as presently administered discourages consumption of housing services and deters improvements. The chapter suggests several remedies, ranging from increased state and federal responsibility for the fiscal burdens of cities and greater reliance on user charges and local income tax to more radical schemes for public recapture of the increased value of land. To the extent that the defects of the property tax are inherent ones, the principal remedies must take the form of some reduction in the reliance on the property tax for the financing of urban public services. An entirely different type of alternative revenue source would be a heavy tax on land values in urban areas as a partial substitute for currently collected property tax revenues.
