Property Taxes and Polycentricity

Abstract

Elinor and Vincent Ostrom have dedicated their professional careers to understanding polycentric forms of public administration. From a public finance perspective, the Ostrom-polycentric system represents a number of challenges. America’s answer to the public financing of polycentric public administration has been the real property tax, which has characteristics that are unique among taxes. This essay describes these unique characteristics as they pertain to the permissibility of multiple, decentralized, and overlapping polycentric nodes of public administration that each maintain a financial independence necessary for local autonomy. We conclude that reforms aimed at eliminating the property tax will ultimately undermine polycentric public administration as well.