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Incidence of the Property Tax on Commercial Real Estate: The Case of Downtown Chicago

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  • McDonald, John F.

Abstract

Presents and empirical study of office rents and property taxes for individual buildings in downtown Chicago in 1991. The results show that 45 percent of property tax differentials are shifted forward to tenants as higher gross rents. Application of the Hausman(1978) test for specification error reveals that assessed value per square foot (the base for the property tax) is exogenous with respect to gross rent per square foot.

Suggested Citation

  • McDonald, John F., 1993. "Incidence of the Property Tax on Commercial Real Estate: The Case of Downtown Chicago," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 109-120, June.
    • Handle: RePEc:ntj:journl:v:46:y:1993:i:2:p:109-20
    DOI: 10.1086/NTJ41789004
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    Citations

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    Cited by:

    1. Carroll, Robert & Yinger, John, 1994. "Is the Property Tax a Benefit Tax? The Case of Rental Housing," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 295-316, June.
    2. Sirmans, G. Stacy & Diskin, Barry A. & Friday, H. Swint, 1995. "Vertical Inequality in the Taxation of Real Property," National Tax Journal, National Tax Association, vol. 48(1), pages 71-84, March.
    3. Man, Joyce Y., 1995. "The Incidence of Differential Commercial Property Taxes: Empirical Evidence," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(4), pages 479-496, December.
    4. Sirmans, G. Stacy & Diskin, Barry A. & Friday, H. Swint, 1995. "Vertical Inequality in the Taxation of Real Property," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(1), pages 71-84, March.
    5. Steve Bond & Kevin Denny & John Hall & William McClusky, 1996. "Who pays business rates?," Fiscal Studies, Institute for Fiscal Studies, vol. 17(1), pages 19-35, February.
    6. Christopher R. Bollinger & Keith R. Ihlanfeldt & David R. Bowes, 1998. "Spatial Variation in Office Rents within the Atlanta Region," Urban Studies, Urban Studies Journal Limited, vol. 35(7), pages 1097-1118, June.
    7. Landers, Jim, 2006. "Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 36(1), pages 1-16.
    8. Sofia Dermisi & John F. McDonald, 2010. "Selling Prices/sq.ft. of Office Buildings in Downtown Chicago – How Much Is It Worth to Be an Old But Class A Building?," Journal of Real Estate Research, American Real Estate Society, vol. 32(1), pages 1-22.
    9. Carroll, Robert & Yinger, John, 1994. "Is the Property Tax a Benefit Tax? The Case of Rental Housing," National Tax Journal, National Tax Association, vol. 47(2), pages 295-316, June.
    10. Stephen Billings, 2009. "Do Enterprise Zones Work?," Public Finance Review, , vol. 37(1), pages 68-93, January.
    11. Man, Joyce Y., 1995. "The Incidence of Differential Commercial Property Taxes: Empirical Evidence," National Tax Journal, National Tax Association, vol. 48(4), pages 479-96, December.

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