Abstract
Taxes on land and property are efficient in theory but uniquely unpopular in practice, and have been curtailed in 46 states. Unlike other taxes, property taxes may create financial distress when rising home values raise property tax bills but not incomes. I find that even modest tax hikes create distress: a $50 monthly tax hike increases mortgage delinquency by 9% and reduces auto consumption by $15. Homeowners report being able but unwilling to draw on housing wealth, and cite debt aversion as a key factor. Distortionary income-based relief reduces property tax animus, which is concentrated in counties that do not limit how much rising home values can raise property taxes. These findings suggest that financial distress makes efficient property taxation politically infeasible.
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