This paper studies the impact of granting a community the authority to tax development when growth imposes negative externalities on existing residents. Taxes are chosen in each period by the residents who are fully forward-looking. Residents’ policy choices reflect not only the desire to counter negative externalities but also their wish to raise tax revenues and the value of their homes. There exists an equilibrium in which taxes are gradually lowered to close to optimal levels, resulting in falling housing prices and increasing community size. In addition, there exist equilibria in which taxes are set much too high and development is permanently stalled. In these equilibria, residents anticipate that lowering taxes will cause a sharp fall in the value of their homes. This multiplicity of equilibrium means that, for a broad range of initial conditions, allowing residents to tax development can increase or decrease social welfare. Regulating growth with zoning generates even worse outcomes, but allowing the community to charge developers impact fees does better.

中文翻译：

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具有外部性和纠正性税收的社区发展

本文研究了当增长对现有居民施加负外部性时，授予社区发展税收权力的影响。每个时期的税收都是由完全具有前瞻性的居民选择的。居民的政策选择不仅反映了对抗负外部性的愿望，也反映了他们增加税收和房屋价值的愿望。存在一种均衡，即税收逐渐降低到接近最佳水平，从而导致房价下跌和社区规模扩大。此外，还存在税收过高和发展永久停滞的均衡。在这些平衡中，居民预计减税将导致其房屋价值急剧下降。这种均衡的多样性意味着，对于广泛的初始条件，允许居民征税发展可以增加或减少社会福利。通过分区来调节增长会产生更糟糕的结果，但允许社区向开发商收取影响费用会更好。