Are Property Taxes Capitalized Into House Values?

Bloom, Howard S.; Ladd, Helen F.; Yinger, John

doi:10.1016/b978-0-12-781820-7.50012-1

Cited by 10 publications

(4 citation statements)

References 21 publications

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“…The level of capitalisation reveals the extent to which the present value of the expected stream of tax liability is reflected in the market value of properties. Degree of capitalisation is sensitive to the selection of the discount rate (Bloom et al, 1983 andYinger et al, 1988). When allowance is made for the appreciation of property value in the time horizon, a nominal discount rate should be employed.…”

Section: Empirical Studies and Methodological Issuesmentioning

confidence: 99%

Capitalisation of Property Tax in Indian City

Rath¹

2014

The Indian Economic Journal

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This paper attempts to estimate the rate of capitalization of property tax following Tiebout-Oates tradition. A sample of properties, which were transacted in the property market in main city and suburbs in Greater Mumbai, is considered here for estimation. It concentrates only on residential properties. Findings of the paper suggest that the impact of the property tax on the value of the property may not be neutral. This has important implication for local fiscal policy.

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Section: Empirical Studies and Methodological Issuesmentioning

confidence: 99%

Capitalisation of Property Tax in Indian City

Rath¹

2014

The Indian Economic Journal

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“…The conceptual ideas Tiebout presented have made a lasting contribution in many different areas of the social sciences. In the field of economics, one can find the Tiebout hypothesis playing an important role in questions of school choice (Rubinfield et al 1987) and tax capitalization (Bloom et al 1983;Mieszkowski and Zodrow 1989). In addition, Tiebout's basic idea that communities compete for residents has been borrowed in the literature about firm location and tax competition policy (Brueckner 2000).…”

Section: Further Readingmentioning

confidence: 99%

Local Residential Sorting and Public Goods Provision: A Classroom Demonstration

Brouhle

Corrigan

Croson

et al. 2005

The Journal of Economic Education

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This classroom exercise illustrates the Tiebout (1956) hypothesis that residential sorting across multiple jurisdictions leads to a more efficient allocation of local public goods. The exercise places students with heterogeneous preferences over a public good into a single classroom community. A simple voting mechanism determines the level of public good provision in the community. Next the classroom is divided in two, and students may choose to move between the two smaller communities, sorting themselves according to their preferences for public goods. The exercise places a cost on movement at first, then allows for costless sorting. Students have the opportunity to observe how social welfare rises through successive rounds of the exercise, as sorting becomes more complete. One may also observe how immobile individuals can become worse off because of incomplete sorting when the Tiebout assumptions do not hold perfectly.

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“…However, capitalization depends on perfect knowledge on the part of potential buyers of the property in the community. While there exists empirical evidence in support of capitalization of local taxes and services (viz Bloom, Ladd, and Yinger (1983)) it is hard to imagine that potential buyers would have complete understanding of the savings compact, especally at the state level.…”

Section: Arbitrage and Asset Accumulationmentioning

confidence: 99%

Arbitrage and the Savings Behavior of State Governments

Metcalf¹

1990

The Review of Economics and Statistics

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Are Property Taxes Capitalized Into House Values?

Cited by 10 publications

References 21 publications

Capitalisation of Property Tax in Indian City

Capitalisation of Property Tax in Indian City

Local Residential Sorting and Public Goods Provision: A Classroom Demonstration

Arbitrage and the Savings Behavior of State Governments

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