Chip Taylor

Effects of local tax structure, pt 2

In the comments to an earlier post on the effects of local reliance on sales tax, Allen Glosson notes that cities that rely more on sales tax are more likely to engage in eminent domain abuse.

Good point. Although taking a low-property value neighborhood through e.d. and turning it into a high-property value commercial development would increase property tax revenue also.

I looked up the worst and least worst states for e.d. abuse in the IJ/Castle Coalition report. They are listed below along with the range of allowable local sales tax rates*.

Worst states:
CA, 1.25-2.75
KS, 0-3
MI, 0
MD, 0
OH, 0.25-2
PA, 0-1
FL, 0-1.5
NJ, 0

Least worst:
ID, 0-3
MT, 0
NM, .125-2.25
SD, 0-2
WY, 0-2
AK, 0-7
DE, 0
NH, 0
DC, 0

Hmmm. Doesn't look very conclusive, does it?

Well, there's better data available. You'd need to control for differences in legal structure also, but the effect of tax structure on e.d. use should be empirically-measurable.

* That's not the same as local reliance on sales tax revenue, but it would probably be correlated.