Property Tax Policy Research Articles

Homestead Tax Deductions and Home Values: The Case of Washington DC Versus Maryland

In Washington DC, homeowners benefit from a generous homestead property tax deduction, which significantly reduces their property tax burden. This deduction specifically exempts a substantial portion of home assessment values from taxation. To understand the causal effects of this policy on home values, this article examines the impact of an increase in DC homestead tax deductions. The increase was implemented as a policy decision to index the homestead deduction to the Consumer Price Index starting from 2013. In the absence of a comparable property tax policy change in Maryland around the relevant years, we utilize this policy based natural experiment and compare the home value increases in the census tracts along the DC-Maryland border. Our findings reveal that this policy led to an economically and statistically significant increase in estimated home value in DC tracts compared to neighboring tracts in Maryland. Moreover, our results indicate that this effect is even more pronounced in neighborhoods with a majority Black population, thereby highlighting the potential redistributive implications of such tax policies.

Factors influencing forest landowner enrollment in preferential property tax programs

One of the most common approaches to conserving forestland in the US are state-run programs offering reduced property taxes on forestland. Although some form of preferential forest property tax program exists in all 50 states of the US, few studies have examined factors associated with landowners’ enrollment in such programs. As interest increases in incentivizing forestland owners to address various environmental or ecological goals, such as enhancing carbon storage or ecosystem services via private forest management, the need for improved knowledge about factors that influence landowners to participate in such programs grows. We examined factors associated with NIPF owner enrollment in preferential property tax programs in Oregon (US). Oregon currently has two primary preferential forest property tax programs. The Forestland Program is the default program for most forestland owners, and the Small Tract Forestland Option (STF), which is a voluntary program wherein landowners pay reduced annual property taxes and an additional timber harvest severance tax. We used a survey to gather information from 1190 Oregon Small Woodlands Association (OSWA) members owning between 10 and 5000 acres of forestland in western Oregon. Respondents were asked about their socio-demographic characteristics and forest management, as well as their enrollment status in Oregon's preferential property tax programs. Our econometric analysis of survey data indicate that preferential property tax programs enable long-term forest ownership, extended rotation ages, and investment in stewardship activities, suggesting that these programs are likely an effective tool for encouraging environmental or ecological goals among NIPF owners in Oregon.

The Impact of Property Tax Expectations on Household Asset Allocation

Rational asset allocation is central to household wealth accumulation. This paper employs data derived from the 2019 China Household Finance Survey to methodically examine the influence of property tax expectations on the asset allocation decisions of households. This study finds that the expectation of property tax positively influences both the probability of holding risky financial assets and their proportion of household assets. The percentage of housing assets constitutes a substantial negative moderating factor affecting the relationship between property tax expectation and household investments in risky financial assets. The positive effect of property tax expectations is more significant in eastern China. A definite expectation of property tax causes a precautionary saving effect among households. This study highlights that forming reasonable expectations about property taxes can help households adjust their investment portfolios in advance, diversify their asset allocation, and mitigate the impact of changes in property tax policies.

Factors influencing forestland enrollment in Georgia's preferential property tax programs

More than two-thirds of Georgia's private forestland (or 14.6 million acres) are enrolled in one of the state's preferential property tax programs. Besides alleviating property tax burdens for rural landowners, the purposes of these incentive programs have gradually evolved from ensuring a sustainable supply of agricultural and timber products to promoting the conservation of rural open space and provision of ecosystem services. This study examined the factors associated with forestland enrollment in Georgia's major current-use tax programs using a combination of parcel-level spatial data, property tax roll, and county-level economic data for all private forestland in the study counties. A multilevel logistic regression model was used to control the effects of hierarchical data structure. A forest parcel's size, tax savings, neighboring parcel enrollment, land value, land productivity, landowner's residence status in relation to the property, development potential (e.g., distance to cities, county population density) as well as distance to lakes and identified conservation areas are important predictors of its likelihood of being enrolled in the property tax incentive programs. Larger forest parcels, located close to identified potential conservation areas, characterized by high soil productivity, held by non-absentee owners, and adjacent to enrolled parcels were more likely to be enrolled in the current-use tax programs.

The New Stage of State Real Estate Cadastre Valuation (in the Russian Federation)

Accurate real estate market data is crucial for decision-making by governments, businesses, and individuals. Without it, costs rise and development of investment and tax policies suffers. In Russia, the state real estate cadastre valuation is the main data source, but its credibility wanes due to errors and delayed updates. This article reviews the 20-year evolution of this system through four stages. The aim of this study is to analyse the problems and shortcomings in conducting cadastre valuation and property assessment in the Russian Federation, and to propose recommendations for improving this system. In the process of research, normative documents that served as an information base for achieving the set goal were analysed, and a comparative analysis of property tax assessment systems and tax policies of various countries was conducted. Based on the conducted analysis, the author proposes recommendations to enhance tax policy and real estate cadastre valuation in Russia. The recommendations involve adjustments, updated tax value criteria, considering diverse property value factors, separating cadastre valuation from mass appraisal, and accommodating variations in tax base calculation. Implementing these recommendations can contribute to addressing issues in cadastre valuation and create a fairer, more effective taxation system for land and property.

When do property taxes matter? Tax salience and heterogeneous policy effects

Taxes create incentives; yet, the potency of these incentives may depend on the salience and household perception of the tax itself. We investigate this issue in the context of property taxes, exploring how accurately households perceive their property tax liabilities and what factors determine misperception. Leveraging a unique national dataset, created by linking Zillow's ZTRAX data to internal data from the American Community Survey, we first compare survey responses for how much households think they pay in property taxes to how much they actually pay based on municipal administrative records from ZTRAX. While homeowner tax perceptions are not substantially biased on average, we observe significant inaccuracy and systematic bias across different household(er) characteristics, institutional settings, and across states. Given that the vast majority of studies in the property tax capitalization literature use data concentrated in one state or locality, we also explore whether variation in tax misperceptions across states can help explain the heterogeneity in property tax effects on home prices. Results from a meta-analysis show that studies conducted in states with higher property tax misperceptions are significantly less likely to find property tax policy changes are fully capitalized into home prices.

Impacts of the Small-Tract Forestland Tax Program on Forestland Use in Oregon

Abstract Preferential tax programs for forest landowners are used to achieve land use–related environmental and social objectives. Nonindustrial landowners are likely to own forests near development boundaries, which may lead to a higher likelihood of land conversion from forests to alternative uses. This article answers the question of how preferential tax programs for small-tract forestland (STF) owners have influenced the conversion of forested lands in Oregon since 2005. We find that a 10% increase in STF program participation within a county (as measured by acreage enrolled) can lead to a conversion of 127 ac from wildland forest to mixed forest/agriculture since the prior forest inventory period. Compared with the default “Forestland” tax program, participation in the alternative STF tax program has had a smaller and statistically weaker effect on the number of acres converted to low-density residential use. However, hypothetical elimination of the STF tax program would increase enrollment in the default Forestland tax program, which was measured to have a greater effect on the conversion of wildland forest to low-density residential land. Hence, the results overall provide evidence that the STF program has achieved its objective of mitigating development pressures and reducing conversion of forestland to nonforest uses.

An assessment of the sustainability of family forests in the U.S.A.

Across the U.S.A., as across many countries, families, individuals, trusts, estates, and family partnerships, collectively referred to as family forest ownerships, own a plurality of the forestland. The Montréal Process Criteria and Indicators (C&I) were used to assess the sustainability of these lands. There are currently 109 million ha of family forestland across the conterminous U.S.A., but this area is decreasing by 1 million ha yr−1 with 64% of this acreage going to non-forest uses and the rest going to other forest ownership classes. While forest-type groups have remained relatively constant, the area of forestland in smaller stand sizes has been decreasing and the area in larger stand sizes has been commensurately increasing. These forests provide critical habitat for many species with an average of 3.3 at-risk species per location. There is an estimated 12.7 billion m3 of wood on these lands with annual timber harvests of 160 million m3. For most species, the ratio of net growth to removals is well above 1.0, but there are notable exceptions, often associated with insects, changing fire regimes, or other departures from historical conditions. Looking only at timber harvesting, family forests are annually supporting an estimated 47.4 thousand jobs with combined wages of USD$2 billion. Land regulations, taxation, and incentives vary considerably across the U.S.A. with regulations ranging from regulatory to voluntary. Overall, the C&I indicate a mixed prognosis for the sustainability of America's family forests: while many of the general ecological and productivity indicators are positive, the loss of family forestland is of notable concern as are the threats posed by specific disturbances and for specific species. To maintain the sustainability of America's family forest, the analysis suggests focusing on policies, such as conservation easements and preferential property tax programs, aimed at keeping family forests as family forests.

Factors Influencing Family Woodland Management Action After Calling a Public Agency Forester

Abstract Many public agencies make foresters available to answer landowners’ land management questions. We gathered data about landowner calls to private forest management (PFM) foresters employed by a Minnesota state agency in 2017 and 2018. We used a mailed questionnaire to assess the outcomes of these contacts, including land management actions taken and factors most influential the landowner’s subsequent decision process. The most common topic landowners called about was enrolling in a property tax program, followed by harvesting and planting trees, obtaining financial assistance, and controlling forest pests. Eighteen months after the initial call, implementation rates and intent were high, ranging from 73%–91%. Across management actions, information from a PFM forester, likelihood of timely implementation, and expected benefit were highly influential. PFM calls also informed landowners about additional land management actions, many of which they implemented. Our results offer new insight into the value of landowner contact with public sector foresters.

Research on the Policy Effect of Property Tax Reform: Take the Pilot Reforms in Chongqing and Shanghai as Examples

It has been ten years since the implementation of property tax reform in Shanghai and Chongqing. With the continuous promotion of tax reform, the central government clearly put forward the decision to accelerate the pilot real estate tax reform in 2021. Every piece of news about the pilot and promotion of property tax reform attracts close attention from people in related fields and becomes a hot topic on the Internet and media. Reform policies are carefully formulated and improved, and the relationship between reform policies, market demand, and people’s livelihood is properly handled so that the real estate market will develop in a healthy and stable manner and have a significant impact on the economy and society. This article mainly starts with the history of property tax development, reform priorities, and comparison with property tax policies of other countries. It takes Chongqing and Shanghai as the research objects, selects several typical factors, and uses multiple linear regression models for analysis. This article studies the impact of China’s property tax pilot on the real estate industry and its effects from both theoretical and empirical aspects and discusses the policy effects of the property tax policy pilot. The levy of real estate tax has a certain effect in a short period of time, but it is not ideal in the long run. Studying the economic effects of Shanghai‐Chongqing property tax is conducive to perfecting China’s property tax reform and promoting the healthy development of real estate market and economic and social development.

Challenges and opportunities for agroforestry practitioners to participate in state preferential property tax programs for agriculture and forestry

All 50 states offer preferential property tax programs that lower the taxes paid on enrolled agricultural and/or forest lands. While agroforestry is a land-use that combines elements of both agriculture and forestry, eligibility criteria and other rules and regulations may prevent landowners from enrolling agroforestry practices in one or more of the agricultural and forestry tax programs. This pilot-scale study developed conceptual and methodological frameworks to identify the current barriers to and opportunities in preferential tax policies applicable to agroforestry practices. We conducted an extensive review of state preferential property tax programs relevant for agroforestry practices, following focus group discussions with regional experts in five selected states across the United States: North Carolina, Nebraska, Wisconsin, New York, and Oregon. Based on a systematic review of statutes and their supporting documents, we developed a database of programs, which support or create barriers to enrollment of agroforestry practitioners into the programs. We found that agricultural tax assessments were more likely to favor multi-use agriculture and forestry systems than the preferential tax assessments of forestlands in the five states. Forest farming and silvopasture, followed by alley cropping, windbreaks, and riparian forest buffers, were found to be the most common agroforestry practices allowed under preferential tax classifications in the study states. This study provides a framework for cataloging and analyzing preferential property tax-programs to document barriers and facilitators to agroforestry practices in the United States.

A Bayesian piecewise linear model for the detection of breakpoints in housing prices.

Statistical thresholds occur when the changes in the relationships between a response and predictor variables are not linear but abrupt at some points of the predictor variable values. In this paper, we defined a piecewise-linear regression model which can detect two thresholds in the relationships via changes in slopes. We developed the corresponding Bayesian methodology for model estimation and inference by proposing prior distributions, deriving posterior distributions, and generating posterior values using Metropolis and Gibbs sampling algorithm. The parameters in our model are easy to understand, highly interpretable, and flexible to make inferences. The methodology has been applied to estimate threshold effects in housing market pricing data in two cities - Kamloops and Chilliwack - in British Columbia, Canada. Our findings revealed that the implementation of changes in the government property tax policies had threshold effects in the market price trend. The proposed model will be useful to detect threshold effects in other correlated time series data as well.

Property Tax, Resource Allocation and Urban Production Efficiency

In 2011, Shanghai and Chongqing pioneered the property tax reform as pilot cities. Related studies mostly focus on the short-term impact of property tax on housing prices, land prices, finance and industry. Fewer researches pay attention to the impact of property tax policy, as the main mechanism of long-term regulation for the real estate market, on the long-term driving force of urban development in China. Taking Shanghai’s 2011 property tax reform as a quasi-natural experiment, this paper uses the synthetic control method to empirically test the actual impact of property tax on urban productivity in China. The results show that the property tax in Shanghai, owing to its relatively wider tax base and the transitional policy of “incremental levy and retrospective imposition”, has alleviated the irrational growth of housing prices, optimized the industrial capital allocation and labor allocation in Shanghai, and significantly improved the productivity of Shanghai.This paper may have the following contributions: （1） Using the synthetic control method, we prove that reasonable property tax policy has a positive spillover effect on urban economic efficiency. It enriches the research on the effect of property tax policy, and provides a new perspective for the path of urban productivity improvement. （2） We prove the specific mechanism of Shanghai property tax policy to promote productivity. Property tax can improve urban productivity by restraining speculative demand, especially alleviating the irrational rise of housing prices, and further improving the inter-industry capital allocation structure and labor employment structure. （3） Analyzing the policy detail of property tax in Shanghai and Chongqing, we provide further evidence for the advantages of using a wide tax base with low tax rate approach.

Property Taxation Imperatives for Africa: A Study of Four Cities

African countries are currently pressured by high urbanisation rates that threaten their ability to address the basic infrastructure and social needs of citizens. Globally, property taxes are utilised as a tool to generate revenue that supports infrastructure provision, but its use has not been effective in Africa. This study examines the trends in property tax administration in cities of four different countries in Africa. It presents an analysis of the lessons that can be learnt and improvements to be made. Using Lagos, Addis Ababa, Dar es Salaam and Kigali as case studies, the study finds that although they have carried out recent property tax reforms which have led to remarkable outcomes in terms of coverage and revenues, opportunities to take advantage of the growing real estate development markets arising from rapid urbanisation have been missed. Lack of intra-governmental co-operation is also a threat to sustaining performance in some cases. The role of local governments has been very contentious with policy changes and controversies. The need for stakeholder involvement and redistributing revenues to local services remains unexplored in all four cases. However, the use of technology in identifying the tax base, updating cadastre, and collection, represents key opportunities to increase effectiveness. Recommendations include strengthening intra-governmental co-operation, using technology to capture new real estate development and supporting local government capacities as strategies to improve property tax policy and administration.

Spatial diversification of property tax policy – Searching for yardstick competition in Polish metropolitan areas

This article contributes to the ongoing debate on local tax policy-making, in particular regarding yardstick competition in the area-based property taxation system. Based on data from 300 municipalities located in ten metropolitan areas in Poland over ten years, we identify whether we are faced with tax mimicking induced by political considerations in tax rates setting. In particular, we seek to identify whether the spatial interdependence of property tax rates set by local governments of Polish municipalities is driven by a yardstick competition mechanism.The analytical approach is based on the estimation of the spatial residential property tax reaction function by using spatial autoregressive panel models. In order to verify the presence of yardstick competition, we include a set of purely political variables in the models and test their impact on tax rate decisions.The results confirm the evidence of yardstick competition, which, however, is present only in a few of the examined metropolitan areas. We found nominal tax rates for residential buildings that were significantly lower in election years, and empirical evidence of several political factors influencing local tax policies in Poland.

Regionally Heterogeneous Housing Cycles and Stabilization Policies

Housing cycles can vary significantly across regions. This study investigates the macroeconomic implications of regionally heterogeneous housing cycles and stabilization policies. The general equilibrium model includes two separate regions, idiosyncratic shocks in regional housing markets, and inter-regional housing investments by households. Counterfactual simulations suggest that regional housing cycles can be a source of economic inequality between regions and the level of financial status by affecting consumption, housing service, debt and welfare asymmetrically across agents. Region-specific stabilization policies such as property tax, countercyclical loan-to-value, and housing supply policies can mitigate regional housing cycles, but it takes large policy responses if the cycle is caused by housing exuberance (demand) shocks. Those policies also have asymmetric welfare effects, while housing supply policy is the most beneficial to agents in the region that experiences the cycle. Leaning against the wind monetary policy is relatively ineffective in stabilizing regional housing prices and higher interest rates during housing price appreciations lower the welfare of borrowers in all regions.

The Impact of the Electoral Cycle on Area-Based Property Tax in Poland

ABSTRACT The purpose of this paper is to identify whether tax rate choices in the area-based tax system are perceived as an instrument prone to manipulation in accordance with election cycles. We use the unique cross-sectional panel data from 300 municipalities in 10 metropolitan areas in Poland over the period 2006–2015. We find clear evidence of the property tax policy cycle in all types of communes. Our results are in line with mainstream literature findings; however, because of a different institutional framework, this study brings new insights into area-based property tax systems prevailing in many developing and developed countries.

Conservation Strategies for a Globally Imperiled and Hyper-Fragmented Ecosystem: Acquisition, Regulations, Incentives and Outreach in Miami Dade County

Pine rocklands are a globally critically imperiled ecosystem with limited geographic range, characterized by a high biodiversity of endemic herbaceous plants and frequent fire intervals (2-5 years). In Miami-Dade County, approximately 2% of the forest outside Everglades National Park (ENP) remains. The County adopted a forest property tax program in 1979, passed a forest preservation ordinance in 1984, and created a land acquisition program in 1991. Outreach and filling in the gaps between preservation areas are critical for the survival of a number of species.

PROPERTY TAX POLICY OF RURAL AND URBAN-RURAL MUNICIPALITIES IN POLAND

The article presents research on the local property tax policy of rural and urban-rural municipalities in Poland. Various methods were used to investigate the data interdependencies of mathematical statistics (Pearson’s correlation test, Spearman’s correlation test and Pearson’s independence test). For direct data and coefficients, Pearson’s classic correlation was used. With regard to the processed, dichotomic and enumerated data (including the contingency tables), Spearman’s rank correlation was used. The study showed that the tax policy of the analysed municipalities was differentiated and could, under certain conditions, give rise to a positive upward tendency of incomes generated in property tax – which should be seen as an original contribution of work from the authors of this article.

Relationships between absenteeism, conservation group membership, and land management among family forest owners

Absentee landowners, or those who do not live on their forestland, own approximately 117 million acres of private forestland in the U.S. Thus, their land management decisions and activities influence the flow of forest-based goods and services. We explore the question of whether absentee family forest owners are less active land managers than resident landowners and whether membership in conservation organizations is associated with higher levels of land management activity by absentee owners. To examine these questions, we administered a mail survey to randomly-selected family forest landowners in Indiana. While we found some support for the contention that absentee owners are less active forestland managers than resident owners, we also found they are not necessarily inactive landowners. We found absentee owners were less likely to have: inspected their forestland for invasive plants, pulled or cut invasive plants, used herbicides to kill invasive plants, reduced fire hazard, or grazed livestock than resident owners. Absentee owners were more likely to be enrolled in the Indiana Classified Forest and Wildlands Program, a preferential forest property tax program. Absentee owners who are members of a conservation organization were more likely than absentee non-member owners to have undertaken a variety of land management activities, including: undertaking wildlife habitat improvement projects, inspecting their forestland for invasive plants, pulling or cutting invasive plants, enrolling in the Indiana Classified Forest and Wildlands program, and obtaining a management plan.