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Property tax competition: A quantitative assessment

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  • Borck, Rainald
  • Oshiro, Jun
  • Sato, Yasuhiro

Abstract

We investigate which of four alternative taxation regimes often used in the public finance literature best approximates actual property taxation in Japan and Germany. To that end, we develop a model of property taxation and characterize equilibria under four alternative regimes: the Benthamite, rent-seeking, land-rent maximization, and tax harmonization regimes. We characterize possible sources of fiscal externalities in each regime. We then quantify the effects of switching from the observed tax system to each of the four regimes in Japan and Germany. We find that the Benthamite or rent-seeking regime best approximates the Japanese system, whereas the tax harmonization regime does so for Germany. We also quantify the welfare effects of switching to the different regimes.

Suggested Citation

  • Borck, Rainald & Oshiro, Jun & Sato, Yasuhiro, 2026. "Property tax competition: A quantitative assessment," Journal of Urban Economics, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:juecon:v:153:y:2026:i:c:s009411902600032x
    DOI: 10.1016/j.jue.2026.103861
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    Keywords

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    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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