THE TIMING AND DURATION OF DEVELOPMENT TAX RATE INCREASES

The effects of permanent, temporary, anticipated, and unanticipated changes in a development tax are considered in a model of land development. The effect of uncertainty over the timing of the changes is also considered. Expectations regarding a future tax rate increase are shown to affect the direction of a change in the path of land development in a given time period, while the duration of a rate increase affects the magnitude of the change. Uncertainty regarding the timing of an increase in the development tax rate increases the magnitude of a change in the path of land development. © 1990.