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Fiscal Illusion From Property Reassessment? An Empirical Test of the Residual View

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  • Ross, Justin M.
  • Yan, Wenli

Abstract

The property tax rate, according to the residual view, is simply the ratio of levies over total assessed values, so that growth in property values is irrelevant to the revenue raised. Critics of this view claim instead that fiscal illusion allows policymakers to take advantage of increased assessed values to raise additional revenue by not fully reducing the tax rate. Using 2000–2008 data from Virginia cities and counties, this paper tests the competing claims by studying a natural experiment in the timing of mass reappraisals. Our findings provide partial support for the fiscal illusion critique of the residual view.

Suggested Citation

  • Ross, Justin M. & Yan, Wenli, 2013. "Fiscal Illusion From Property Reassessment? An Empirical Test of the Residual View," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 7-32, March.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:1:p:7-32
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    Cited by:

    1. Ihlanfeldt, Keith & Mayock, Tom, 2015. "Foreclosures and local government budgets," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 135-147.
    2. Justin Ross & Wenli Yan & Craig Johnson, 2015. "The Public Financing Of America'S Largest Cities: A Study Of City Financial Records In The Wake Of The Great Recession," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 113-138, January.
    3. Ihlanfeldt, Keith R. & Willardsen, Kevin, 2014. "The millage rate offset and property tax revenue stability," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 167-176.
    4. Facchini, Francois, 2014. "The determinants of public spending: a survey in a methodological perspective," MPRA Paper 53006, University Library of Munich, Germany.
    5. Alm, James & Buschman, Robert D. & Sjoquist, David L., 2014. "Foreclosures and local government revenues from the property tax: The case of Georgia school districts," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 1-11.

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