Property Tax Rates Research Articles

A Land Value Capture Property Tax Schedule for Municipal Infrastructure Financing in Lagos State, Nigeria

This study develops a land value capture property tax rates schedule for use in Lagos state, Nigeria, in order to aid sustainability in municipal infrastructure financing. With the poor state of infrastructure in Lagos, the LVC property tax is advanced as a sustainable means of infrastructure reform through equitable rates. Using a sample from Alimosho - the largest local government area in Lagos - a hedonic regression model is used to determine the financial contributions of municipal infrastructure in property values to show their varying influences. From the regression analysis, the schedule is then derived, which is broadly premised on a quid pro quo basis. This stems from the fair notion that the pecuniary influences of municipal infrastructure should be recovered in the form of property taxes for public gains. Not previously done in the region, the schedule determines rates payable on property taxes and are reflective of the monetary influences that municipal infrastructure confer on property values. The proposed rates schedule also take into account varying distances of locational infrastructure and their impacts on property values. The use of Geographic Positioning System (GPS) in the study represents an advancement of previous Nigerian studies on infrastructure and property values where fewer infrastructure types have been considered or less precise measurement indices have been used. The study concludes that this LVC property tax approach will engender a sustainable, equitable, and efficient source of local financing for infrastructure delivery and operations. This is because it builds a veritable rates base and it enables ratepayers to face the actual costs of benefits received from infrastructure services.

Proposition 13—America's Second Great Tax Revolt: A Forty Year Struggle for Library Survival

Proposition 13—America's Second Great Tax Revolt: A Forty Year Struggle for Library Survival

Tax subsidies for entrepreneurs in case of property tax

In Polish tax law, real estate is subject to taxation. Property tax rates depend not only on the type of property but also on the taxable person. Thus, as far as persons conducting business activity are concerned, real estate in their possession is taxed at a higher rate than that of natural persons. The amount of the tax payable annually may exceed the income of the trader concerned, since it does not depend on the taxable person's financial situation (as is the case with other taxes, e.g. personal income tax). Due to this fact, a catalog of tax reliefs and exemptions, i.e. the so-called tax subsidies, as well as the possibility of spreading the tax in instalments and deferring its payment date is an important role in real estate tax. The state, including municipalities, may create this form of aid, as long as it does not conflict with the provisions of the Act on State Aid and similar provisions in force in the European Union, which are designed to observe free competition in the market. The purpose of this Article is to indicate what are the current forms of assistance to entrepreneurs on the example of property tax.

The Effects of Property Tax Abatements on School District Property Tax Bases and Rates

The authors analyze the effects of property tax abatement on the property tax base and rates of school districts within a municipality offering the abatement using data from Franklin County, Ohio, one of the most populous counties in the United States. An increase in a school district’s Community Reinvestment Area abatement intensity correlates with (a) a decrease in the mill rate for real property, (b) a decrease in effective residential and nonresidential property tax rates, and (c) an increase in total market value of property. While these effects are small, they indicate that a municipality’s decision to abate has generated enough growth in property values, either through improvements to physical property or positive capitalization for existing property values, to offset the negative effects of an abatement. The reason for this may be that the restrictions and oversight used in this abatement program are greater than in most other places.

State Fiscal Constraints and Local Responses: Evidence from the Property Tax Limit Overrides in Massachusetts

AbstractThis research examines the determinants of the likelihood of property tax limit override attempts and successes in the context of Massachusetts's Proposition 2½. The authors apply the “Leviathan” government theory, median voter theory, and agenda‐setting theory to develop theoretical expectations and use data from Massachusetts municipalities for 1991–2013 as a sample for empirical tests. Override attempts are not randomly proposed; therefore, the two‐stage Heckman selection model is used to address selection bias in the investigation of the likelihood of override successes. Results show that a higher property tax rate reduces the likelihood of government officials’ override attempts, but previous override experiences have a positive influence. Voters bearing a higher property tax rate are less likely to approve the override, but override experiences in the previous year and the “menu” approach increase the likelihood of approval. Relatively more evidence supports the Leviathan government and agenda‐setting theories in explaining overrides of Massachusetts's property tax limit.

Collateral Value and Entrepreneurship: Evidence from a Property Tax Reform

We study the role of property taxes on entrepreneurial activity using a quasi-natural experiment, which unexpectedly reduced the upper bound of the Portuguese property tax rate for urban properties in 2008. Using a difference-in-differences approach, we find that treated municipalities (i.e., municipalities that had a property tax rate above the new upper bound) experienced higher entry rates in the manufacturing sector vis-a-vis control municipalities (i.e., municipalities that had a property tax rate at or below the new upper bound). Taking advantage of firm-level data, we show that start-ups created as a response to the decrease in property taxes in treated municipalities use more debt, invest more, and are more likely to survive.

Why are Residential Property Tax Rates Regressive?

Among single-family homes that enjoy the same set of property tax-funded amenities and pay the same statutory property tax rate, owners of cheap houses pay almost 50% higher effective tax rates than owners of expensive houses. This pattern appears throughout the United States and is caused by systematic assessment regressivity -- cheap houses are over-assessed relative to expensive houses. I use an instrumental variable approach to show that a large portion of this pattern can be attributed to measurement error in sale prices. Sixty percent of the remaining regressivity can be explained by tax assessors' flawed valuation methods that ignore variation in priced house and neighborhood characteristics and 40% by infrequent reappraisal. A simple valuation method can alleviate assessment regressivity and increase poor homeowners' net worth by more than 10%.

Shared Residential Occupancy and Property Tax Compliance

This article examines for the first time the property tax compliance behavior of homeowners who rent out part of their own home to tenants. This increasingly popular occupancy arrangement typically arises due to the financial constraints of homeowners. Currently little is known about the property tax compliance behavior of homeowners in this shared occupancy arrangement, relative to homeowners who fully occupy their properties. Using granular administrative-level data on occupancy characteristics from the Accra Metropolitan Assembly (AMA) in Ghana, we find that owner-and-tenant-occupied dwelling units have a higher probability of being in tax arrears, as compared to owner-occupied units. Their non-compliance is more sensitive to increases in property tax rates and is greater for those located farther away from local public amenities (suburban police stations and hospitals). Overall, our findings provide new insights for policy-makers on the tax compliance of owner-and-tenant-occupancy arrangements in a weak regulatory environment.

The Trailer

The Trailer Jennifer Anderson (bio) Click for larger view View full resolution Photo courtesy of the author Sometime in late March the camper trailer appears: fifteen feet long with a crude black-and-green paint job, discarded on our property behind Starbucks, Little Caesars, and the AT&T store. It sits parallel to one of the metal outbuildings my father rents from my sister-in-law, my husband, and me for his woodworking projects, the front-end tongue jack [End Page 139] balanced on a block of wood as if someone has planned to set up camp in our gravel parking lot. Zebra-print curtains flap in the open window. The door dangles from one hinge. I don’t remember exactly when my father tells me about it or when I first mention it to my husband and his sister. My mother-in-law, the actual owner of the property, has recently, unexpectedly, died from complications related to diabetes. “Don’t worry,” my father assures me, “I’ll get rid of it.” He reports it to the police, who write down the license-plate number and tag the street-side window with a bright pink sticker. After a few weeks pass with no response, he calls again. An officer tells him the phone number linked to the plate is out of service. There is nothing they can do. The city does not tow abandoned vehicles from private property. “Where in the hell do our taxes go?” he asks me. Out of Idaho’s forty-four counties, our north-central town of thirty- three thousand at the confluence of the Snake and Clearwater Rivers— touted as the gateway to Hells Canyon—pays the third-highest property tax rate in the state. “And for what?” he complains. He calls the local salvage yard. They will take it only if he removes the holding tank, refrigerator, and stove. He also has to haul it to them and pay a fee. He refuses to pay. I do too, so I don’t even bother telling my husband or his sister. “It’s a matter of principle,” my father and I say to each other more than once. “The city should help us—why are we responsible for someone else’s trash?” We consider hitching the trailer to my father’s truck and moving it into the street—then the city will have to deal with it—but are hesitant to actually follow through. My father’s phone number is on police record. If anything, we rationalize, he’ll receive a citation. So the trailer stays, and over the next year a clutter of feral cats takes up residence, cascading from the window—an orange, white, and black rainbow—when they hear my father’s truck, before vanishing beneath a web of blackberry bramble. Now March has come around again, and my father tells me that someone has moved in. I don’t believe him at first. He’s seventy-three, suffers from intermittent blurry vision related to dry eye, and refuses to wear glasses. “Who’d sleep in there?” I ask. [End Page 140] “I found a pipe by the tire,” he tells me, “when I was doing weeds.” He sprays the puncturevine a few times a year; otherwise, it spreads into the gravel lot and takes over everything. “What kind of pipe?” “That should hold back those damned goatheads for a while,” he continues. “I track them inside my truck, everywhere—” “Dad, what kind of pipe?” “A glass one, used for drugs.” “What kind of drugs? Meth? Weed?” “How in the hell would I know?” My father and I have lived in Idaho our entire lives—our houses sit only two miles apart—but we still somehow inhabit different worlds. I teach English composition at the state college in town. He’s a retired paper mill foreman. At fourteen, I first smoked weed from a soda can in the bluffs behind my parents’ house. I discovered acid the next summer, asking “What does it do?” only after placing the white tab on my tongue. An insecure teen with a self-destructive streak, I huffed, snorted, and smoked everything I could. If someone...

The Assessment Gap: Racial Inequalities in Property Taxation

We document a nationwide gap which leads local governments to place a disproportionate fiscal burden on racial and ethnic minorities. We show that holding taxing jurisdictions and property tax rates fixed, black and Hispanic residents face a 10-13% higher tax burden for the same bundle of public services. We decompose this inequality into between- and within- neighborhood components and find just over half of the inequality arises between neighborhoods. We then present evidence on mechanisms. Property assessments are less sensitive to neighborhood attributes than market prices are. This generates spatial variation in tax burden within jurisdiction, and leads to over-taxation of highly minority communities. We also find appeals behavior and appeals outcomes differ by race. Inequality does not arise from either (i) racial differences in transaction prices or (ii) price-regressivity in assessment ratios stemming from location-neutral features of the housing stock.

Hospitality Industry in Russia: Key Problems and Solutions

The aim of the present research is to study the condition and development of the Russian hotel market under the crisis. In the course of the present work the methods of systematic approach, economic and statistical analyses, quantitative and qualitative studies have been applied. Such methods allow to reveal the problems and prospects of the Russian hotel market development. The article presents the results of analyzing the state of the Russian hotel market. Authors identified factors hindering the development of the hospitality: worn out and outdated rooms in most hotels; high costs of labor, its training and retraining; high interest rates for financing new hotel development projects; high cost of housing and utility; high land tax rates; high property tax rate. The authors of the research have emphasized the necessity of the holding of the anti-crisis measures, aimed at the adjustment of the approaches to the hotel business management under the condition of the fluctuating market. The top priority steps are: reduce the value-added tax for hotel businesses, reduce the land tax for the hotel businesses, reduce the property tax, reduce the administrative burden on the hotel staff on migration registration of foreign and Russian citizens, create rules for providing hotel services in such a way that they protect the rights of not only consumers, but also hotels. As a result of the research the necessity of reforming the system of interaction between the hotel business and the government has been proved. All authors` references aim at the overcoming the negative tendencies on the Russian hotel market, caused by current crisis.

Impacts of Neighbors on Local Tax Rates: A Space–Time Dynamic Panel Data Analysis

This article explores the spatiotemporal pattern in the local tax system of Extremadura, a region in the southwest of Spain. Using the most relevant tax in terms of revenues at the local level in Spain, the property tax on urban land, a very general space–time dynamic panel data model with spatial and time period fixed effects, has been estimated to explore different types of strategic tax interactions among local governments. The empirical analysis uses a balanced panel database covering 383 municipalities from Extremadura for the period 2006–2015 to estimate the reaction of tax policy in a given municipality to its own past, to changes in tax policy in other municipalities, and to (direct and indirect) changes in some control variables. The results show that nominal local property tax rates are affected by tax policy inertia from the own municipality and neighboring municipalities and two observed municipal characteristics, whereas effective tax rates depend on tax policy inertia from the own municipality and property tax policies from neighboring municipalities and five observed municipal characteristics. In both cases, local spillover effects are not significant at standard statistical levels.

Who seeks reelection: local fiscal restraints and political selection

This paper analyzes the consequences of local fiscal autonomy with respect to political selection. We propose a model of political careers wherein the decisions to become candidates and to seek reelection are both endogenous. Private-sector aptitude and political ability are private information; the latter is revealed to the incumbent during her first period in office. We show that, following an unanticipated reduction in the returns from holding office, incumbents with high market ability are more likely to refrain from running for office again than their lower-ability counterparts. We test that prediction using an unexpected reduction in the upper bound of the municipal property tax rate, announced by Portugal’s prime minister in July 2008, just 15 months before the local elections. We rely on a comprehensive data set for all Portuguese mainland municipalities for the 2005 and 2009 elections, including the characteristics of the municipalities and individual mayors. We employ a difference-in-differences strategy to show that affected mayors—those who were forced to reduce the property tax rate, and thus faced a sharp tax revenue decline—are less likely to seek reelection. This effect is driven by high-professional-status incumbents.

Optimization of the Number and Frequency of Repairs

When managing the production process at an enterprise, it is important to correctly develop a policy for overhauls of machinery and equipment. Usually for this purpose, enterprises use the standards for the repairs frequency recommended in the literature. In publications on the reliability theory, repair policy is considered as an optimization problem. In publications on the theory of reliability, this problem is considered as optimization. In this case, usually the criterion of optimization is some kind of relative indicator, such as availability rate or average operating costs per unit of time. However, such criteria do not fully reflect the economic interests of enterprises – owners of equipment. In a market economy, these enterprises are focused on maximizing their market value. In this paper, we propose to form a repair policy in which the market value of the enterprise, and therefore all its assets, will be most. The corresponding mathematical model is the best use underling the valuation theory. It also takes into account the physical deterioration of machines during their operation, as well as the possibility of random marginal failures, leading to the need to stop using the machine. In this case, the improvement of the technical condition of the machine after its overhaul is described using the Kijima imperfect repair model. The calculations carried with our model allow establishing how the optimal number and timing of repairs depend on such parameters as repair cost and its restoration factor, the rate of physical wear of machines, and the intensity of their resource failures. We show how to use the constructed model to take into account the effect of inflation rates and income and property tax rates on the repair policy.

Political Economy of the Parcel Tax in California School Districts

This article examines the effect of home price distribution on the likelihood of parcel tax adoption in California school districts. A parcel tax is a regressive tax imposed as the same amount per unit of property regardless of property values and requires a two-thirds supermajority vote to be adopted. Despite the growing role that local parcel taxes have in funding public education, it has not been fully understood how their regressive nature influences adoption. I argue that because the regressive tax imposes different marginal property tax rates for voters, the distribution of home prices within a district determines the likelihood of parcel tax adoption. Using the Heckman selection models with California school district–level data, I find that a large gap in home values within a district significantly lowers the likelihood of parcel tax adoption.

Property tax and property values: Evidence from the 2012 Italian tax reform

This paper assesses the extent to which property taxes are capitalized into property values, exploiting the 2012 Italian tax reform. Municipal-level variation in the level of the property tax rates is instrumented using the exogenous staggered timing of local elections. We show that the incumbent local governments with upcoming elections in 2013 shifted the composition of fiscal revenues towards lower property tax. Our 2SLS estimate shows that a one standard deviation increase in municipal-level property tax intensity leads to a 2.7% reduction of municipal property values in the year of the reform. We elicit information on the characteristics of the compliers and show that these municipalities feature inefficient public spending and low social capital.

On the Public Finance of Capital Punishment

A capital trial is a costly affair. When a local government bears the expense of trial, it must raise funds or reallocate them from other sources. In Texas, among other states, the cost of trial is borne primarily at the county level. A panel of Texas county spending over the last decade, constructed from audited financial statements, shows counties meet the expense of trial by raising property tax rates and by reducing public safety expenditure. Property crime rises as a consequence of the latter. The death penalty may therefore impede criminal deterrence if its finance is left to local, rather than centralized government.

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.

Local taxation and tax base mobility: Evidence from France

This paper investigates the impact of tax base mobility on local taxation. First, we develop a theoretical model in order to examine the connection between local business property taxation and tax base mobility within a metropolitan area. We find that, in the presence of a budget compensation, decreasing capital intensity in business property tax base, composed of capital and land, increases the business property tax rates and decreases the tax rates on residents. We test this result using a French reform which changed the composition of the main local business tax base in 2010. Difference-in-difference estimations show that in 2010, the reduction in tax base mobility indeed resulted in a 14% rise in business property tax rates and a reduction in housing tax rates of 1.3%, compared to pre-reform average levels.

Fiscal interactions in the short and the long run: evidence from German reunification

AbstractThis paper uses the quasi-experiment of Germany’s reunification to test for strategic interactions in local taxation. After reunification, East-German municipalities were allowed to choose, for the first time in decades, local business and property tax rates. I explore whether the tax rates they chose were influenced by the tax rates in adjacent West-German municipalities. The results show that East-German municipalities mimicked the business tax rates of their western neighbors immediately after reunification, but not in later years. I find no evidence for interactions in property tax rates. These results are broadly consistent with models of social learning in fiscal policy.