This paper examines how land taxation affects urban sprawl and suburban development using nationwide data from Japan. We exploit the 1994 property tax reform, which standardized the assessed-to-market value ratio for land across municipalities, generating heterogeneous land tax increases without changes in building taxation or local public expenditures. We find that a 1 percent increase in land tax burden reduced business land development by about 0.4 percent, driven by a reallocation of development from high-tax to low-tax areas rather than an overall decline. Development in low-tax areas occurred through land-use conversion and expansion into low-density areas, contributing to urban sprawl. Land markets adjusted differently by use: residential land responded through prices, while business land adjusted primarily through quantities. These results highlight an avoidance mechanism through which land taxation may unintentionally exacerbate urban sprawl.

In 2024, Finland split the general municipal property tax into land and building components, creating a de facto land value tax (LVT). We study the adoption and early consequences of this reform for municipal public finance. We document how municipalities set LVT rates and whether they offset land taxation by lowering other tax rates, or by adjusting spending, investment, and borrowing. For identification, we exploit quasi-experimental variation induced by statutory minimum rates that bound local LVT choices. The project delivers the first comprehensive evidence on the implementation margins of an LVT in a contemporary setting, informing the design of property taxation and the fiscal instruments available to local governments.

Local governments may use tax-setting discretion strategically when politicians perceive tax burdens to fall differently across voter groups. We study this mechanism in the context of Germany’s property tax reform, which created exogenous variation in expected tax burdens across municipalities and voter groups through different state-level valuation models. In some states, standardized valuations implied a higher tax base for rental properties than for comparable owner-occupied units. We examine whether property tax multipliers increased more after reform details were announced when municipalities were governed by homeowner-friendly parties and located in states where tenants would face higher tax bases. Using a triple difference-in-differences design and panel data from 3,769 West German municipalities between 2017 and 2024, we find evidence consistent with strategic tax adjustments. Our results provide causal evidence on the political determinants of recent increases in German property tax multipliers.

This paper studies the capitalization of property taxes into housing prices using a large-scale natural experiment in the Czech Republic. We exploit a 2024 reform that sharply increased statutory tax rates for municipalities above specific population thresholds and apply regression discontinuity and difference-in-discontinuities designs to isolate exogenous variation in tax liabilities. We find strong evidence of capitalization: an 80% statutory rate increase reduced property prices by 12.6% to 17.5% in non-touristic municipalities. The effects are heterogeneous, with significantly weaker responses in touristic areas and in municipalities with high pre-existing tax burdens. Despite the sizable fiscal shock, we detect little evidence of strategic tax interaction across local governments, suggesting that institutional constraints limit competitive tax-setting. Overall, the results provide robust support for the capitalization hypothesis and highlight the role of market segmentation and local amenities in shaping tax incidence.