Problem

Detroit faced a fiscal crisis: high property tax rates on buildings discouraged investment, while vacant land paid minimal taxes. The city experienced waves of tax foreclosures, particularly in lower-income neighborhoods, while development stagnated.

Approach

Working with a team of economists convened by the Lincoln Institute of Land Policy, I helped design and model a land value tax (LVT) reform for Detroit. This involved:

• Analyzing current property tax data to identify distress patterns
• Modeling the fiscal and distributional effects of shifting tax burden from buildings to land
• Studying LVT implementation in Pennsylvania cities
• Building coalition support among city officials, community groups, and business leaders

Findings

Our research showed that land value taxation would:

• Reduce tax foreclosures by lowering burdens on existing residents and small businesses
• Encourage development by removing penalties on building improvements
• Maintain city revenue while creating a more equitable tax structure
• Work as a rules-based system rather than requiring individualized negotiations

The Detroit mayor endorsed the proposal, making it a serious policy option in ongoing fiscal reform debates.

Publications

• Anderson, J.E., Allen, N., et al. (2024). “Property Tax Reform in Distressed Cities.” National Tax Journal.
• Allen, N. & Anderson, J.E. (2023). “Land Value Taxation and Business Investment: Evidence from Pennsylvania.” Journal of Urban Economics.

Press

• The New York Times: “A 19th-Century Idea Could Solve Some 21st-Century Problems”
• MIT News: “Graduate work with an impact”