Federal deductibility and local property tax rates
AbstractIn current discussions of tax reform in the United States, there is considerable controversy concerning the effects of allowing individuals to deduct state and local taxes when calculating their federal income tax liability. Recent econometric work has suggested that federal deductibility of state and local taxes has raised the proportion of these taxes -- especially property taxes -- in local budgets. This paper lends additional support to these earlier findings by showing that one channel through which deductibility leads to higher local property tax revenues is by increasing the rate of local property taxation. Specifically, we find that if deductibility were eliminated, the mean property tax rate in our sample of 82 communities would fall by 0.00715 ($7.15 per thousand dollars of assessed property), or 21.1 percent of the mean tax rate.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Urban Economics.
Volume (Year): 27 (1990)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/622905
Other versions of this item:
- Douglas Holtz-Eakin & Harvey S. Rosen, 1990. "Federal Deductibility and Local Property Tax Rates," NBER Working Papers 2427, National Bureau of Economic Research, Inc.
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