Abstract
A key question in tax repeal decisions facing state and local governments concerns how potential revenue loss will affect other taxes. Repeal of the personal property tax has been optional for Pennsylvania counties since 1978. This paper investigates the growth and stability of the real estate tax during this era in 66 counties. Its main contribution is that it provides a natural experiment for testing whether the loss of a significant revenue component affected the adequacy of another tax. The estimation results suggest that tax repeal resulted in higher growth and greater variability of real estate taxes. Further, most counties had significant real estate tax growth over the long-run. However, few were cyclically responsive to short-run changes in income.
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