Aligning The Tax Code With Smart Growth And Climate Goals

California has stringent goals related to greenhouse gas reduction and smart growth, but our tax policies are in many cases working at cross-purposes with these goals.  In another academic contribution from UC Berkeley, the same professor working on the urban displacement map I blogged about yesterday is also calling for a statewide tax reform effort.

In a new white paper, Professor Karen Chapple describes some examples of misaligned tax policies, including property tax measures that don’t encourage commercial property owners to upgrade their properties or cities to encourage new housing, as well as vehicle taxes that don’t account for miles driven.

An article on summarizes her findings:

Based on her review of scholarly literature examining the intersection of tax and climate policies as well as her own data analysis, Chapple recommends close evaluation of four potential tax changes to stimulate more compact development where needed in the Golden State:

  • Return more property tax to cities based on their willingness to build high-density development.
  • Share property and/or sales tax regionally, rewarding jurisdictions that meet their regional housing obligations.
  • Avoid penalizing new development, potentially through measures such as taxing vacant land at a higher rate than improved, or built-upon land.
  • Link future taxes directly to environmental and sustainability goals, through taxes on the number of miles driven, a carbon tax on vehicles or rebates or other incentives.

“At a minimum, the state should study any proposed reform to ensure that it does not conflict with climate change goals,” concludes Chapple, who specializes in housing, community and economic development, as well as regional planning.

Some of these recommendations would involve heavy political lifts, but the state is long overdue for a conversation on the subject.


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