The Impact Xat

Paul Boudreaux, Stetson University

Abstract

Impact fees complicate the construction of new housing across the nation. Although justified as a means of forcing new development to “pay its way” for the costs of government infrastructure necessitated by the new housing, impact fees are imposed in a way that make them, in effect, a dubious population tax. Indeed, the typical impact fee does little to discourage costly suburban sprawl. This essay, using economic lessons from policies to discourage the wasteful use of resources with light bulbs, bathrooms, and buildings, suggests a new policy course. It proposes an impact xat (a cross between a tax and fee) based on a combination of distance and the size of the housing unit, along with a conservation baseline to encourage close-in, affordable housing. If it were to replace the current system of property taxes, the impact xat could offer a simpler, fairer, and wiser way forward for the regulation of housing development in the 21st century.