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The Impact of Property Taxes and Property Tax Classification on Business Activity in the Chicago Metropolitan Area

Author

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  • Richard F. Dye
  • Therese J. McGuire
  • David F. Merriman

Abstract

The City of Chicago and the inner suburbs grew much more slowly than the outer suburbs in recent decades. In the central county of the metropolitan area, commercial and industrial property is “classified,” in that it is assessed at a higher ratio of market value than residential property. Classification is not used in the surrounding suburban counties. The empirical analysis finds evidence consistent with the notion that property tax classification contributes to differential rates of economic growth. High property tax rates lead to significantly slower growth rates for employment, commercial property, and industrial property.

Suggested Citation

  • Richard F. Dye & Therese J. McGuire & David F. Merriman, 2001. "The Impact of Property Taxes and Property Tax Classification on Business Activity in the Chicago Metropolitan Area," Journal of Regional Science, Wiley Blackwell, vol. 41(4), pages 757-777, November.
    • Handle: RePEc:bla:jregsc:v:41:y:2001:i:4:p:757-777
    DOI: 10.1111/0022-4146.00242
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    Cited by:

    1. Charles W. Swenson, 2015. "The Death of California Redevelopment Areas," Economic Development Quarterly, , vol. 29(3), pages 211-228, August.
    2. Caren Sureth & Ralf Maiterth, 2008. "The impact of minimum taxation by an imputable wealth tax on capital budgeting and business strategy of German companies," Review of Managerial Science, Springer, vol. 2(2), pages 81-110, July.
    3. McDonald, John F., 2018. "Four Decades of Futility: Economic Development Policy and Industrial Decline in Chicago," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(2), June.
    4. Rainer Niemann & Caren Sureth-Sloane, 2016. "Does Capital Tax Uncertainty Delay Irreversible Risky Investment?," CESifo Working Paper Series 6046, CESifo.
    5. Kalinin, Alexey V. & Sims, Katharine R.E. & Meyer, Spencer R. & Thompson, Jonathan R., 2023. "Does land conservation raise property taxes? Evidence from New England cities and towns," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    6. Yonghong Wu, 2012. "How Major Local Taxes Affect Private Employment," Economic Development Quarterly, , vol. 26(4), pages 351-360, November.
    7. Richard Funderburg & Timothy J. Bartik & Alan H. Peters & Peter S. Fisher, 2013. "The Impact Of Marginal Business Taxes On State Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 557-582, October.
    8. Niemann, Rainer & Sureth, Caren, 2016. "Does capital tax uncertainty delay irreversible risky investment?," arqus Discussion Papers in Quantitative Tax Research 209, arqus - Arbeitskreis Quantitative Steuerlehre.
    9. John McDonald, 2008. "Maximization of nonresidential property tax revenue by a local government," Applied Economics Letters, Taylor & Francis Journals, vol. 15(12), pages 925-928.
    10. Bev Dahlby & Ergete Ferede & Mukesh Khanal, 2021. "The Impact of Property Taxation on Business Investment in Alberta," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 14(3), March.
    11. Caren Sureth & Ralf Maiterth, 2006. "Wealth Tax As Alternative Minimum Tax ? - the Impact of Minimum Taxation on Business Structure and Strategy -," EcoMod2006 272100093, EcoMod.
    12. Yonghong Wu, 2010. "Property Tax Exportation and Its Effects on Local Business Establishments: The Case of Massachusetts Municipalities," Economic Development Quarterly, , vol. 24(1), pages 3-12, February.
    13. Rainer Niemann & Caren Sureth-Sloane, 2019. "Investment timing effects of wealth taxes under uncertainty and irreversibility," Journal of Business Economics, Springer, vol. 89(4), pages 385-415, June.
    14. Gabe, Todd M., 2003. "Local Fiscal Policy and Establishment Growth," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 33(1), pages 1-24.
    15. Anderson, Nathan B., 2012. "Market value assessment and idiosyncratic tax-price risk: Understanding the consequences of alternative definitions of the property tax base," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 545-560.
    16. Rachel Weber & Saurav Dev Bhatta & David Merriman, 2003. "Does Tax Increment Financing Raise Urban Industrial Property Values?," Urban Studies, Urban Studies Journal Limited, vol. 40(10), pages 2001-2021, September.
    17. Matthieu Chtioui Cepn & Nadine Levratto, 2020. "Fiscalité locale et dynamique d'emploi des territoires : analyse empirique sur les communes françaises (Version preprint) A paraitre dans la Revue d'Economie Régionale et urbaine, 2021," Working Papers halshs-02901499, HAL.
    18. Charles Swenson, 2023. "City Business Taxes and Retail Firm Relocation Decisions," Applied Economics and Finance, Redfame publishing, vol. 10(1), pages 1-19, February.
    19. Niemann, Rainer & Sureth-Sloane, Caren, 2015. "Investment effects of wealth taxes under uncertainty and irreversibility," arqus Discussion Papers in Quantitative Tax Research 192, arqus - Arbeitskreis Quantitative Steuerlehre.
    20. Braid, Ralph M., 2003. "A three-input model of the spatial effects of a central-city wage tax," Journal of Urban Economics, Elsevier, vol. 54(1), pages 89-109, July.
    21. Andrew Hanson, 2021. "Taxes and Economic Development: An Update on the State of the Economics Literature," Economic Development Quarterly, , vol. 35(3), pages 232-253, August.
    22. Braid, Ralph M., 2009. "The employment effects of a central city's source-based wage tax or hybrid wage tax," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 512-521, July.
    23. Rockoff, Jonah E., 2010. "Local response to fiscal incentives in heterogeneous communities," Journal of Urban Economics, Elsevier, vol. 68(2), pages 138-147, September.
    24. Enami, Ali & Reynolds, C. Lockwood & Rohlin, Shawn M., 2023. "The effect of property taxes on businesses: Evidence from a dynamic regression discontinuity approach," Regional Science and Urban Economics, Elsevier, vol. 100(C).
    25. Rainer Niemann & Caren Sureth-Sloane, 2015. "Investment Effects of Wealth Taxes under Uncertainty and Irreversibility," CESifo Working Paper Series 5610, CESifo.

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