Property Tax Revenue and the Quality of Government Services: A County-Level Analysis

Abstract

We examine all 159 counties within the state of Georgia to determine the impact of per capita personal and business property taxes collected on the Economy, Education, Health, and Public Safety of each county. We find a strong positive association between per capita residential property tax collections and the overall quality of services provided by county governments. Alternatively, we find that higher sales tax rates and higher business property tax collections per capita are associated with significantly lower measurements of the quality of county government services. We perform additional analyses to determine that the assessed values of residential and business property, rather than the property tax rate, is driving the relationship between quality of government services and property tax collections. We also find interesting results when we examine the impact of property tax collections on each of the individual factors (Economy, Education, Health, and Public Safety) of a county.