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City Taxes and Property Tax Bases

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  • Katharine L. Bradbury
  • Helen F. Ladd

Abstract

This paper investigates the simultaneous relationship between tax rates and city property tax bases using data for 86 large U.S. cities in 1967, 1972, 1977, and 1982. We find that a 10 percent increase in the city's property tax rate decreases the city's tax base by about 1.5 percent. In addition, local income taxes and taxes levied by overlying jurisdictions (such as county and state governments) also have negative impacts on the city's property tax base. Local sales taxes, in contrast, appear to have little impact. We conclude that taxes affect local property values more than is typically implied by previous studies that have investigated the impacts of state and local taxes on firms' location decisions.

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File URL: http://www.nber.org/papers/w2197.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2197.

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Date of creation: Mar 1987
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Publication status: published as NTJ, Vol. 41, no. 4 (1988): 503-524.
Handle: RePEc:nbr:nberwo:2197

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  1. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, American Economic Association, vol. 63(3), pages 280-96, June.
  2. Bloom, Howard S. & Ladd, Helen F., 1982. "Property tax revaluation and tax levy growth," Journal of Urban Economics, Elsevier, vol. 11(1), pages 73-84, January.
  3. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 77(6), pages 957-71, Nov./Dec..
  4. Michelle J. White, 1986. "Property Taxes and Firm Location: Evidence from Proposition 13," NBER Chapters, in: Studies in State and Local Public Finance, pages 83-112 National Bureau of Economic Research, Inc.
  5. Rosen, Harvey S & Fullerton, David J, 1977. "A Note on Local Tax Rates, Public Benefit Levels, and Property Values," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 85(2), pages 433-40, April.
  6. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, American Economic Association, vol. 62(5), pages 891-901, December.
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Cited by:
  1. Buettner, Thiess, 2003. "Tax base effects and fiscal externalities of local capital taxation: evidence from a panel of German jurisdictions," Journal of Urban Economics, Elsevier, vol. 54(1), pages 110-128, July.
  2. Byron F. Lutz, 2009. "Fiscal amenities, school finance reform and the supply side of the Tiebout market," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2009-18, Board of Governors of the Federal Reserve System (U.S.).
  3. Julie Berry Cullen & Steven D. Levitt, 1999. "Crime, Urban Flight, And The Consequences For Cities," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 159-169, May.
  4. John Merrifield & Yong Bao, . "Residential Property Taxation: Is Periodic Reassessment worth it?," Working Papers, College of Business, University of Texas at San Antonio 0003, College of Business, University of Texas at San Antonio.
  5. Jonathan Skinner, 2007. "Are You Sure You're Saving Enough for Retirement?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 21(3), pages 59-80, Summer.
  6. Donald, Vandegrift & Michael, Lahr, 2007. "Open Space Purchases, House Prices, and the Tax Base," MPRA Paper 6118, University Library of Munich, Germany.
  7. Maarten Allers & J. Elhorst, 2005. "Tax Mimicking and Yardstick Competition Among Local Governments in the Netherlands," International Tax and Public Finance, Springer, Springer, vol. 12(4), pages 493-513, August.
  8. Donald Vandegrift & Amanda Lockshiss & Michael Lahr, 2012. "Town versus Gown: The Effect of a College on Housing Prices and the Tax Base," Growth and Change, Gatton College of Business and Economics, University of Kentucky, Gatton College of Business and Economics, University of Kentucky, vol. 43(2), pages 304-334, 06.
  9. Paul Hettler, 2004. "Regional impact of commuter wage taxes," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 32(3), pages 191-200, September.
  10. Robert Novy-Marx & Joshua D. Rauh, 2009. "The Liabilities and Risks of State-Sponsored Pension Plans," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 23(4), pages 191-210, Fall.

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