Author Question: What is meant by erosion of a city's tax base? Why does it follow from exurban migration? What are ... (Read 162 times)

Wadzanai

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What is meant by erosion of a city's tax base? Why does it follow from exurban migration? What are the results?
 
  What will be an ideal response?

Question 2

What federal laws and policies tend to support urban sprawl?
 
  What will be an ideal response?



ryrychapman11

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Answer to Question 1

Erosion of a city's tax base is the declining tax revenue resulting from falling property values. Property values fall when the affluent citizens of the city leave to move to the suburbs because the demand for property in the city declines. As property values decline some individuals abandon property dropping property values even more. The result is the city government is forced  to cut local services, increase the tax rate, or, generally, both.

Answer to Question 2

The government aided this trend (purchasing of houses by returning GIs) by providing low-interest mortgages through the Veterans Administration and the Federal Housing Administration, and interest payments on mortgages (but not rent) were made tax deductible. Property taxes in suburbs were much lower than in the city. Congress passed the Highway Revenue Act of 1956, which created the Highway Trust Fund. This legislation placed a tax on gasoline and earmarked the revenues to be used exclusively for building new roads. Ironically, the Highway Trust Fund perpetuates development. A new highway not only alleviates existing congestion, but also encourages development at farther locations, because time, not distance, is the limiting factor for commuters.



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