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The Real Estate Transfer Tax and Government Ideology: Evidence from the German States

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  • Manuela Krause
  • Niklas Potrafke

Abstract

Since 2007 the German state governments have been allowed by a constitutional reform to set real estate transfer tax rates. We exploit this reform and investigate whether government ideology predicts the levels and increases in the real estate transfer tax rates. The results show that left wing and center governments were more active in increasing the real estate transfer tax rates than right wing governments. Many voters were disenchanted with the policies and platforms of the established German parties. Disenchantment notwithstanding, real estate transfer tax policies show that the established political parties are still prepared to offer polarized policies.

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  • Manuela Krause & Niklas Potrafke, 2020. "The Real Estate Transfer Tax and Government Ideology: Evidence from the German States," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 76(1), pages 100-120.
  • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2019-0014
    DOI: 10.1628/fa-2019-0014
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    Cited by:

    1. Thiess Buettner & Manuela Krause, 2021. "Fiscal equalization as a driver of tax increases: empirical evidence from Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 90-112, February.
    2. Buettner Thiess & Krause Manuela, 2018. "Föderalismus im Wunderland: Zur Steuerautonomie bei der Grunderwerbsteuer," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 19(1), pages 32-41, March.
    3. Niklas Potrafke & Kaspar Wuthrich, 2020. "Green governments," Papers 2012.09906, arXiv.org, revised Sep 2021.
    4. Potrafke, Niklas, 2020. "Dragnet-Controls and Government Ideology," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 485-501.
    5. Björn Kauder & Manuela Krause & Niklas Potrafke, 2021. "Do Left-wing Governments Decrease Wage Inequality among Civil Servants? Empirical Evidence from the German States," Public Finance Review, , vol. 49(1), pages 106-135, January.
    6. Krause, Manuela & Büttner, Thiess, 2017. "Does Fiscal Equalization Lead to Higher Tax Rates? Empirical Evidence from Germany," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168214, Verein für Socialpolitik / German Economic Association.
    7. Christofzik, Désirée I. & Feld, Lars P. & Yeter, Mustafa, 2020. "Heterogeneous price and quantity effects of the real estate transfer tax in Germany," Freiburg Discussion Papers on Constitutional Economics 20/10, Walter Eucken Institut e.V..
    8. Thiess Büttner, 2017. "Welfare Cost of the Real Estate Transfer Tax," CESifo Working Paper Series 6321, CESifo.
    9. Manuela Krause, 2019. "Empirical essays on fiscal federalism and political economy in Germany," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 84, December.
    10. Fritzsche, Carolin & Vandrei, Lars, 2019. "The German real estate transfer tax: Evidence for single-family home transactions," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 131-143.
    11. Carolin Fritzsche & Lars Vandrei, 2016. "Auswirkungen von Grunderwerbsteuererhöhungen auf den Wohnungsmarkt," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(06), pages 14-19, December.
    12. Luisa Dörr & Stefanie Gäbler, 2020. "Does Highway Accessibility Influence Local Tax Factors? Evidence from German Municipalities," ifo Working Paper Series 321, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Jens Boysen-Hogrefe & Wolfgang Scherf & Carolin Dresselhaus & Thomas Schäfer & Kunka Petkova & Alfons J. Weichenrieder & Reiner Holznagel & Jens Lemmer & Manuela Krause & Niklas Potrafke & Alfons Weic, 2017. "Stagnierende Wohneigentumsquote, Share Deals: Wie sollte die Grunderwerbsteuer reformiert werden?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(21), pages 03-24, November.
    14. Florian Dorn & Stefanie Gäbler & Björn Kauder & Manuela Krause & Luisa Lorenz & Niklas Potrafke & Alexander van Roessel & Luisa Dörr, 2017. "Demokratische Vielfalt in Deutschland – unterscheiden sich die Volksparteien noch?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(20), pages 28-37, October.

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    More about this item

    Keywords

    real estate transfer tax; reform; partisan politics; government ideology; fiscal federalism;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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