Property Taxes and Residential Rents
| Autor: | Leah J. Tsoodle, Tracy M. Turner |
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| Rok vydání: | 2008 |
| Předmět: | |
| Zdroj: | Real Estate Economics. 36:63-80 |
| ISSN: | 1540-6229 1080-8620 |
| DOI: | 10.1111/j.1540-6229.2008.00207.x |
| Popis: | ∗∗∗ Property taxes are a fundamental source of revenue for local governments, constituting 73% of local government tax revenue in the United States. In this article, we empirically investigate the impact of residential property taxes on residential rents. Using data from the American Housing Survey and the National League of Cities, we estimate numerous specifications of a hedonic rent equation with comprehensive unit-level, neighborhood-level and city-level controls. We find that a one standard deviation increase in the property tax rate raises residential rents by roughly $400 annually. Property taxes are a fundamental source of revenue for local governments, constituting 73% of local government tax revenue in the United States (United States Census Bureau 2006); an extensive literature examines their economic impacts. By extending and empirically testing the Tiebout (1956) model, much of this research investigates the extent to which property taxes and public services are capitalized into house prices and whether household mobility and local government competition can lead to an efficient provision of local public services. Dowding, John and Biggs (1994) and Zodrow (2001, 2006) provide excellent reviews of the literature and insights into the three views of property tax incidence: the traditional view, the capital tax view and the benefits view. Although the three views generate alternative predictions of who ultimately bears the economic incidence of the property tax, each view implies the possibility that property taxes may be capitalized into local house prices, residential rents and wages (Zodrow 2001). There is a large body of empirical research that examines the impact of property taxes in markets where the user of housing services and the property owner are one and the same: the owner-occupier. In particular, the extent of the capitalization of property taxes into house prices has been examined in numerous studies, and there is consensus that such capitalization occurs: if two communities have |
| Databáze: | OpenAIRE |
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