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The effect of property taxes on vacation home growth rates: Evidence from Michigan

  • Johnson, Erik
  • Walsh, Randall
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    The Tiebout model assumes that individuals sort to the jurisdiction which best matches their fiscal preferences. However, there is a paucity of reliable estimates for the impact of tax changes on household mobility. We utilize a state mandated school finance reform and temporal differences in vacation home densities to provide a unique test of this fundamental Tiebout assumption. The results show that changes in property taxes explain a significant amount of the variation in vacation home growth; a 3–4mil decrease in property tax rates is associated with an increase of approximately one vacation home per square kilometer.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0166046213000550
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    Article provided by Elsevier in its journal Regional Science and Urban Economics.

    Volume (Year): 43 (2013)
    Issue (Month): 5 ()
    Pages: 740-750

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    Handle: RePEc:eee:regeco:v:43:y:2013:i:5:p:740-750
    Contact details of provider: Web page: http://www.elsevier.com/locate/regec

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