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Chicago area land value exceeds $1 trillion

August 30, 2007

Finally received Lincoln Institute’s new book Land Policies and Their Outcomes. David Barker (apparently of the University of Chicago) estimated land values for four metro areas by looking at vacant land sales. Assuming that each such sale represents the per-acre value of land in its immediate area, he finds that for the Chicago 8-county MSA total land value is $2.188 trillion. From this he deducts streets and concludes that the rest of the land is worth $1.872 trillion. Of course, not all of this could be subject to a land value tax, for instance public facilities and favored nonprofits are exempt. Still, it seems that the taxable value would exceed $1 trillion. And this doesn’t count all the other privileges which could be taxed without reducing productivity.

The paper does include a much lower estimate reached by an alternative method, but that method assumes land to be worth only the difference between the parcel price and the depreciated cost of building whatever is on it. And excludes vacant land. And has some other limitations.

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