Land taxes in a Latin American context

Since Henry George (1839-1897) economists have been arguing that a tax on unimproved land is an ideal tax on efficiency grounds. Output taxes, on the other hand, have distortionary effects on the economy. This paper shows that under asymmetric information output taxes might be used along with land tax in order to implement an optimal taxation scheme in a Latin American context, i.e., where land rental markets are relatively thin, land property provides non-agricultural payoffs and there is nonrevenue objectives of land taxation. Also, the model has two implications that can be tested empirically: (i) there is evasion when schemes based only on land taxes are implemented; (ii) this evasion is more severe for large landholders.

The land assembly problem revisited

As in the standard land assembly problem, a developer wants to buy two adjacent blocks of land belonging to two di¤erent owners. The value of the two blocks of land to the developer is greater than the sum of the individual values of the blocks for each owner. Unlike the land assembly literature, however, our focus is on the incentive that each lot owner has to delay the start of negotiations, rather than on the public goods nature of the problem. An incentive for delay exists, for example, when owners perceive that being last to sell will allow them to capture a larger share of the joint surplus from the development. We show that competition at point of sale can cause equilibrium delay, and that cooperation at point of sale will eliminate delay.