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Our most academic publication offers research and surveys on monetary policy, national and international developments, banking, and more. The content is written for an economically informed readership—from the undergraduate student to the PhD.

Vol. 87, No. 3 (Posted 2005-05-01)

An Introduction to Two-Rate Taxation of Land and Buildings

by Jeffrey P. Cohen and Cletus C. Coughlin

In the U.S., land and improvements to that land (e.g., buildings) are generally taxed at the same rate. This paper describes historic and current arguments for two-rate (or split-rate) taxation, which taxes land at a higher rate than structures. In theory, two-rate taxation reduces deadweight losses associated with distortionary taxation and generates additional economic activity.

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