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Property Tax Capitalization in a Model with Tax-Deferred Assets, Standard Deductions, and the Taxation of Nominal Interest

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  • Charles A. M. de Bartolomé
  • Stuart S. Rosenthal

Abstract

Previous property tax capitalization studies assume that families itemize, that they save in taxable assets, and that real interest income is taxed. However, many families do not itemize, many families invest in tax-deferred assets, and nominal interest income is taxed. As a consequence, prior studies likely misspecify the property tax capitalization equation for roughly ninety percent of their samples. Taking federal tax provisions into account increases the precision of our estimated capitalization rate. In addition, our results suggest that biases in prior studies likely contribute to the variety of capitalization estimates in the literature. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Charles A. M. de Bartolomé & Stuart S. Rosenthal, 1999. "Property Tax Capitalization in a Model with Tax-Deferred Assets, Standard Deductions, and the Taxation of Nominal Interest," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 85-95, February.
    • Handle: RePEc:tpr:restat:v:81:y:1999:i:1:p:85-95
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    Cited by:

    1. Clapp, John M. & Nanda, Anupam & Ross, Stephen L., 2008. "Which school attributes matter? The influence of school district performance and demographic composition on property values," Journal of Urban Economics, Elsevier, vol. 63(2), pages 451-466, March.
    2. Löffler, Max & Siegloch, Sebastian, 2015. "Property Taxation, Local Labor Markets and Rental Housing," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112967, Verein für Socialpolitik / German Economic Association.
    3. Shan, Hui, 2010. "Property taxes and elderly mobility," Journal of Urban Economics, Elsevier, vol. 67(2), pages 194-205, March.
    4. Frank Peck & Simon Parry & Gail Mulvey & Keith Jackson & Ignazio Cabras & Jacqui Jackson, 2014. "The Role and Significance of Rates Relief for Supporting Businesses in Wales," Environment and Planning C, , vol. 32(6), pages 982-999, December.
    5. Plummer, Elizabeth, 2010. "Evidence on the Distributional Effects of a Land Value Tax on Residential Households," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(1), pages 63-92, March.

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