Reforming local public finance to reduce resource consumption: the sustainability case for graduated property taxation

Abstract

The customary mode of flat rate-property taxation used in the United States and many other Anglospheric countries encourages the consumption of ever greater volumes of energy and materials by relatively affluent households and exacerbates social inequalities. Transition from an invariable tax rate on residential real estate to a graduated schedule could enhance local sustainability by ameliorating the trend toward larger houses and associated increases in resource appropriation. This form of progressive property taxation was most notably implemented in New Zealand during the latter years of the nineteenth century, and has periodically attracted attention as a way to discourage the amassing of large landholdings in rural areas and to maintain housing affordability in cities. This paper considers the design and implementation challenges of a graduated property tax which, by dampening demand for outsized dwellings, could be a useful part of a comprehensive package of climate-change policies for local governments.