Effective Property Tax Rates Research Articles

FACTOR ANALYSIS OF CORPORATE PROPERTY TAX REVENUE CALCULATED ON THE BASIS OF CADASTRAL VALUE

The paper examines the revenue of corporate property tax, calculated on the basis of the cadastral value. The purpose of the study is to identify the factors affecting the amount of corporate property tax revenues in terms of those objects, with the cadastral value as a tax base for it. The relevance of the study is due to the ongoing transition to the calculation of property tax on the basis of the cadastral value. In terms of tax on property of individuals and land tax, such a transition has already been made, and forecasting the consequences of such a transition for corporate property tax is an extremely relevant task. The scientific novelty of the study is the proposed four-factor multiplicative model. Among the proposed factors are the effective property tax rate in the region, the total number of capital construction objects in the region, the share of objects in the regional list in the total volume of capital construction objects in the region and the average cadastral value of one object in the regional list. The main method of research is the logarithmic method of deterministic factor analysis. As a result, for 85 regions of the Russian Federation, the impact of each of the selected factors was quantitatively evaluated. An important result of the study should also be called a consolidated analysis of regional lists, which provide the objects, the tax base for which is the cadastral value, for the first time undertaken in national studies. The main conclusions of the study show that for most regions the leading factor is the share of objects in the regional lists. This suggests that the expansion of the lists and the increase in the share will have a positive effect on the dynamics of corporate property tax revenues, and for most regions this direction should become most promissing for increasing the revenues from this tax.

Are the home values and property tax burdens of permanent homeowners affected by growth in housing rentals and second homes: Evidence based on big data from Florida

AbstractHomeowners who make their homes their primary residence have resisted the entry of rentals into their neighborhoods and cities. Possible reasons underlying this resistance are that rentals reduce the property values, increase the property tax burdens, and raise the price of public services for these homeowners. We relate the market values of single‐family homes occupied by permanent homeowners, the effective property tax rate of these homeowners, and the tax price they pay for public services to shifts in their city's housing units toward a variety of different types of rentals and second homes. Our analysis is based on large panels of Florida homes containing hundreds of thousands and millions of observations. Our results show that increases in the share of a city's housing units used as rentals or second homes reduce the home values, increase the property tax burdens, and raise the public services prices of homeowners who permanently reside in single‐family homes. Impacts vary in magnitude among single‐family, condominium, and mobile homes used as rentals and second homes. Estimated impacts are the strongest for share increases in single‐family rentals and second homes.

The impact of property tax exemptions on the effective property tax rate: evidence from 41 Texas cities

The impact of property tax exemptions on the effective property tax rate: evidence from 41 Texas cities

재산세 이론 관점에서 과세체계 현황 분석

Tax burden on land and houses has been increased and tax resistance to the policy aiming at increase of real estate holding tax is getting strong since revision of the taxation law in 2018. Under this circumstance, the study academically investigates theories of property tax, which is the base of real estate holding tax, and reviews whether or not the current taxation system is working in line of theories of property tax. According to theories of property tax, higher property tax should be imposed on land because of non-elasticity of land supply, elasticity of building supply and capitalization of public service. The study analyzes property tax imposed on both land and building of neighborhood facilities, based on the basic principles of property tax. The findings are as followed; First, the study calculates total expenditure spent on buildings and value of lands, using Standard Market Price for buildings and lands, respectively. According to the result, it is shown that total expenditure spent on a building is higher than value of a land in Provinces. On the other hand, Seoul and other metropolitan cities shows the opposite result. Second, property tax on land is lower than property tax on building in Provinces. The same results is shown in the analysis of effective property tax rate with revised panel data. In other words, the current property tax system imposes higher tax expenditure on building than land, which is not in line with the basic principle of property tax. Third, the current property tax rate should be reviewed and revised by revision of the current taxation law to improve the current circumstance and match with theories of property tax. The findings above may have some academic implications for theories of property tax and provide implications on policy preparation to revise property tax rate.

How Does a Reduction in Mandated Medicaid Spending Affect Local Fiscal Behaviors? Evidence from New York State

In 2005, New York (NY) state capped the growth of county-level Medicaid spending, which abruptly decreased counties’ Medicaid outlay in both relative and absolute terms. This study exploits this discontinuity in county Medicaid outlay to estimate the impact of the relief mandate policy on county budgets and property tax levies. It bridges a gap in the public finance literature by addressing local government responses to a sudden decrease in the outlay of a large mandatory spending category. We find a compositional change but no income effect on non-Medicaid spending. However, the policy reduced the effective property tax rate significantly by 6.6 to 8.1 percent on average among affected NY counties after the enactment of the policy relative to control counties. This study advances our understanding of local fiscal responses to an intergovernmental fiscal policy that changes how state and local governments share the costs of a large public social insurance program.

RESTRICTIVE ZONING’S DELETERIOUS IMPACT ON THE LOCAL EDUCATION PROPERTY TAX BASE

This paper employs a boundary-discontinuity research design to estimate land-use regulations’ causal impact on residential value per student within Massachusetts municipalities. Zoning restrictions hostile toward small dwellings are found to actually reduce residential value per student. This is because small dwellings, although valued less than larger dwellings, house disproportionally fewer school-aged residents than larger dwellings do. It is then shown that restrictive zoning policies, through their mitigating effect on the local stock of smaller dwellings, force municipalities to rely on higher effective property tax rates to self-fund a particular level of per-student education expenditure, holding all else equal.

House prices and property tax revenues during the boom and bust: Evidence from small‐area estimates

AbstractAlthough the Great Recession put the US economy into a tailspin, we know little about how the changes in house prices influenced property tax collections. Using local‐level housing data from Zillow® matched to property tax data from 1998 to 2012, two questions are examined. First, the elasticity of property tax revenue with respect to house values is estimated. Second, the timing of this elasticity is determined. The analysis rules out that local policymakers capture the entire increase of house value in property tax revenues but unable to rule out that increases in house values are completely offset by changes in effective property tax rates. Decreases in values have an elasticity between 0.3 and 0.4 and take three years for changes in values to impact property tax revenues. While property tax collections declined, local policymakers adjusted effective millage rates such that revenues did not decline as much as home values.

Who benefits most from property assessment taxes? Evidence from Los Angeles County

ABSTRACTAssessment caps on property taxes are often assumed to benefit affluent homeowners the most with little gains for low-income households. Quantile regression results for Los Angeles County show that on average effective property tax rates decrease by $1994 per year due to length of ownership in the 50th percentile because of California’s Proposition 13 assessment cap. There is evidence of both horizontal and vertical inequity across the entire sample. Low-income households do benefit from California’s assessment cap as they are typically infrequent movers but their effective tax rates decrease over time. However, the most affluent households by market value do not gain the most and there is no evidence of horizontal inequity for these homeowners. There is also no evidence of horizontal inequity for middle-income households. Property tax savings vary between $18,000 and $40,000, depending on the assessed value decile and percentage quantile.

The fiscal externality of multifamily housing and its impact on the property tax: Evidence from cities and schools, 1980–2010

Negative fiscal externalities produced by apartments and other small housing units are commonly cited as the justification for many local land-use restrictions, such as minimum lot requirements and limits on multifamily developments. Because these laws effectively limit the number of small dwellings that can be built within a community, proponents argue that restrictions of this type help to guarantee that new homes will “pay for themselves” by discouraging free-riding behavior within a system of property tax funded local governments. Critics, however, have maintained that such policies constitute a veiled attempt by suburban communities at restricting entry for low-income families. Focusing on the clear distinction between housing units located in multifamily structures (i.e., apartments) and single-family homes, this paper finds strong evidence that residential per-capita values, measured as value per person and value per child, are actually higher for apartments, not single-family residences. Consequently, communities' effective property tax rates decline as apartments' share of the housing stock rises, holding all else equal. These findings are contrary to the set of assumptions that are often used to justify many of today's land-use restrictions and raise serious questions regarding the efficacy of modern fiscal zoning as a tool for promoting efficient fiscal federalism.

Property Tax Limitation and Racial Inequality in Effective Tax Rates

In the late 20th century, two thirds of American states enacted policies to limit the growth of local property tax revenues. We examine the effects of property tax limitations on the effective property tax rates reported by homeowners of different racial and ethnic groups in the United States. We find that property tax limitations reduce the effective property tax rates of homeowners regardless of their race and ethnicity, but that most forms of property tax limitation exacerbate racial inequality, providing the greatest reduction in effective tax rates to white homeowners. In the aggregate, these inequalities result in substantially unequal tax savings that might not survive democratic scrutiny if they were distributed as direct subsidies. This inequality may be especially problematic insofar as tax privileges for property owners effectively disguise a public benefit as a private property right.

Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions

We use a novel dataset on effective property tax rates in U.S. states and metropolitan statistical areas (MSAs) over the 2005–2014 period to analyze the relationship between property tax rates and house price volatility. We find that property tax rates have a negative impact on house price volatility. The impact is causal, with increases in property tax rates leading to a reduction in house price volatility. The results are robust to different measures of house price volatility, estimation methodologies, and additional controls for housing demand and supply. The outcomes of the analysis have important policy implications and suggest that property taxation could be used as an important tool to dampen house price volatility.

House Prices & Property Tax Revenues During the Boom & Bust: Evidence from Small-Area Estimates

Although the recent housing crash put the U.S. economy into a tailspin, we know very little about how the massive increase and decrease of house prices influenced property tax collections. Using local level housing data from Zillow matched to property tax data from 1998 to 2012, two questions are examined. First, the elasticity of property tax revenue with respect to house values is estimated. Second, the timing of this elasticity is determined. The analysis is able to rule out that local policy makers capture the entire increase of house value in property tax revenues but unable to rule out that increases in house values are completely offset by changes in effective property tax rates. Decreases in house values have an elasticity of between 0.3 and 0.4 and take three years for changes in house values to impact property tax revenues. While property tax collections declined, local policy makers adjusted effective millage rates such that revenues did not decline as much as home values.

PROPERTY VALUE ASSESSMENT GROWTH LIMITS AND REDISTRIBUTION OF PROPERTY TAX PAYMENTS: EVIDENCE FROM MICHIGAN

We examine the change in the distribution of property tax payments resulting from Michigan’s imposition of a property tax assessment growth cap in 1994. The cap restricts growth in property value for tax purposes to the infl ation rate, for those maintaining continuous ownership. Upon sale, however, the tax base is adjusted to refl ect market value. Using data from a survey conducted in 2008, we fi nd that long-time homeowners enjoy an average reduction in effective tax rates (relative to new homeowners) of 19 percent. The cap also appears to have reduced effective property tax rates for older homeowners, and for those with higher incomes.

HOW DO DIFFERENCES IN PROPERTY TAXES WITHIN CITIES AFFECT URBAN SPRAWL?*

ABSTRACT We develop a duocentric‐city model and show that the ratio between the property tax in the suburbs and in the center has an ambiguous impact on the size of the city. We test this model by using a dataset of effective property tax rates which we developed using GIS techniques for central cities and suburbs in 445 urbanized areas. Results from the empirical analyses suggest that a lower property tax rate in the suburbs as compared to the central city is associated with more expansive urban growth and a greater level of decentralization of population and employment.

A Reconnaissance of Alternative Measures of Effective Property Tax Rates

Informed policy discussions on local property tax reform initiatives require accurate and reliable information about the tax's current use. This paper reviews two popular measures of property tax burden and their limitations. The paper then reports the results of a reconnaissance of measures of effective property tax rates and how they vary across the 50 states. The paper also reports the findings of a 50‐state survey that indicates how states calculated and reported effective property tax rates. These comparisons lead to a suggested framework for certain methodologies for calculating effective property tax rates.

Seasonal Homes and the Local Property Tax: Evidence from New York State

AbstractThis study examines the growth of seasonal (i.e., second or vacation) homes and their impact on local property tax rates using evidence from towns and villages in New York State between 1990 and 2000. We find that a greater concentration of seasonal homes in a municipality is associated with a lower effective property tax rate in towns, and a higher rate in small and rural villages. An alternative measure of tax burden, property taxes as a percentage of median household income, is not related to the presence of seasonal homes in towns but is positively related in small and rural villages. Our findings for towns contradict the findings of an earlier study by Fritz (1982) that found that an increase in town property allocated to vacation homes was significantly associated with an increasing property tax rate, although our findings for villages supports his findings.

How Differences in Property Taxes within Cities Affect Urban Sprawl?

This article attempts a formal analysis of the connection between the differentiated property tax rates within urban areas and urban spatial pattern in U.S. cities. We first develop a duocentric-city model where the Central Business District (CBD) is located at the origin while the Suburban Business District (SBD) is at the other end of the city. We show that the ratio between the property tax in the suburbs and in the center has an ambiguous impact on the size of the city. We then test this model empirically to determine this sign by using a dataset of effective property tax rates we developed using GIS techniques for central cities and suburbs in 445 urbanized areas. The empirical analysis estimates the link between these two variables by controlling for variables such as population, income, agricultural rent, commuting cost, climate, crime, and employment structure. Results from the empirical analyses suggest that a lower property tax rate in the suburbs in comparison to the central city is associated with more expansive urban growth and greater level of decentralization of population and employment.

Full Disclosure: Controlling Property Tax Increases During Periods of Increasing Housing Values

This paper examines the outcome of a non-binding full disclosure process to control increases in the property tax. The data used in the study cover a 20-plus-year period in five MS As in Utah. During the period of our analysis, metro areas in Utah experienced rapid increases in the market value of residential housing. The results of our analysis suggest that local assessors in Utah captured this increased value in their appraisal and reappraisal processes. However, our results also demonstrate that the effective property tax rate did not keep pace with increases in assessed property values, implying that a non-binding full disclosure law did limit growth in the property tax. Furthermore, it limited the property tax while avoiding some of the unintended consequences imposed by binding property tax limitations.

Property tax and urban sprawl: Theory and implications for US cities

We develop a model that adopts a log-linear utility function with a variable elasticity of substitution greater than one and show that increasing the property tax reduces city size unambiguously. We then test this result using a dataset of effective property tax rates we developed using GIS methods for 448 urbanized areas. The empirical analysis estimates a regression equation relating an urbanized area's size to the property tax rate measure and other control variables such as population, income, agricultural rent, and transportation expenditure. We find that higher property taxes indeed result in smaller cities.

Lags in Real Property Revaluations and Estimates of Shortfalls in Property Tax Collections in North Carolina

AbstractFinancing local public goods is a major issue in many communities, especially those that have experienced rapid growth. This paper analyzes problems associated with locally collected real property taxes where the real property tax base is only revaluated at long time intervals. Using counties in North Carolina as the subject of the analysis, we find that effective real property tax rates fall between revaluations. We calculate that a system of taxing market values of real property at a constant legislated tax rate would have yielded additional annual revenues of $320 million for North Carolina counties over 1980 to 1995.