Mathis and Zech's ‘Empirical Test’ of Land Value Taxation

A bstract . The Land Value Tax , which proposes that governments raise their revenues largely from taxes on the annualized economic rent of land , has been projected into current debate by recent studies and by political debate in at least half a dozen Pennsylvania cities. An effort to measure its effects o n building construction and renovation was made by two Pennsylvania economists, E. f. Mathis and C. E. Zech. Under criticism, they granted that their conclusion that there was no evidence that urban development was stimulated was tentative and debatable. The effort was valuable in that it highlighted some of the pitfalls of this kind of research. In this area, researchers must try to avoid mis‐specification of variables, wrong choice of flow or stock data, employment of oversimplified economic hypotheses. Public decision makers should be informed about inappropriate model specification and structure, input data deficiencies, and inadequate econometric analysis for urban policy determination.