It was in Alberobello, a small town in southern Italy, that I first learned about the Trulli. They are medieval homes erected without the use of mortar, a unique construction approach used to avoid taxes. When officials from Naples were on their way to extract the kingdom’s share of wealth, inhabitants of the Trulli would simply disassemble their homes. No home, no tax. When the tax collectors moved on, the house was reassembled, and life resumed.

I have a model Trullo on my desk, a humble reminder that humans—including myself—respond to incentives, often in ways that are unintended.

The Mansard roof is another example. In France, property owners were taxed based on the number of floors below the roofline. By putting two slopes into the roof and adding some dormers, the Mansard roof allows a building owner to have a tax-free floor. Paris is filled with them.

American cities are also shaped by the taxing approach we have chosen to use. Most cities have a property tax, which is a tax on the value of land plus the value of the improvements that have been made on that land. During suburbanization, governments favored property taxes because they put most of the tax burden on newly-developed properties. Cities that grew horizontally collected a lot of taxes very quickly.

As the post-war development pattern matured, as shopping malls and big box stores began to appear, the sales tax grew in popularity. For the lucky city that could capture a regional retail hub, a sales tax shifted more of the burden to outsiders. The sales tax is also popular because it raises lots of revenue in ways generally imperceptible to the payer.

Cities continue to mature, and the tax systems they are allowed to use need to be updated to reflect an evolving set of challenges. Today’s cities are burdened with maintenance expenses from prior investments; they have too much infrastructure and do not make very good use of it. The number of neighborhoods trapped in decline is growing. And in those neighborhoods that do receive private investment, it tends to cause displacement of the residents who have lived there the longest. It’s an all-or-nothing bargain; the trickle or the fire hose.

There are many causes of the stress our communities are experiencing, but a major factor—and one we can address—is the incentives that come with our current approaches to local taxation.

The property tax punishes modest improvements and rewards steady decline. People who take steps to add value to their property pay more taxes, while those who allow their property to diminish in value pay less. The property tax makes slumlords possible, allowing them to buy distressed properties and ride the cash flow down a slope of decline, paying minimal taxes the entire way.