The Property Tax Bound

Giertz, J. Fred

doi:10.17310/ntj.2006.3.19

Cited by 18 publications

(17 citation statements)

References 3 publications

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“…The reliability of property tax revenues also lies in the legally defined value of properties (Brunori, 2003;Giertz, 2006;Alm, Buschman, & Sjoquist, 2011). There are other factors reducing the cyclicality of local revenues arising from property taxes: for instance, Lutz, Molloy, and Shan (2011) find that policy-makers tend to offset declines in the property tax base (e.g., following housing prices' declines) by raising the tax rates, despite the sensitivity of voters to changes of this particular tax, as documented by Cabral and Hoxby (2012).…”

Section: Review Of Related Literaturementioning

confidence: 99%

The influence of decentralized taxes and intergovernmental grants on local spending volatility

Sacchi

Salotti

2015

Regional Studies

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The influence of decentralized taxes and intergovernmental grants on local spending volatility. Regional Studies. This paper studies what affects the volatility of sub-central public spending in 20 Organisation for Economic Co-operation and Development (OECD) countries. The evidence based on data from 1972 to 2007 shows that the volatility of intergovernmental grants from upper levels is positively associated with the volatility of local expenditure. On the other hand, the volatility of local tax revenues -mainly that of property taxes -exerts the opposite effect. These findings suggest that making local governments rely more on grants than own tax revenues adversely affects their spending stability. Allowing them to levy autonomously taxes relying on responsive tax bases provides incentives to smooth their expenditure. L'impact de la décentralisation fiscale et de l'octroi des subventions intergouvernementales sur la volatilité des dépenses locales. Regional Studies. Cet article étudie ce qui influe sur la volatilité des dépenses publiques au niveau régional dans 20 pays de l'Organisation de coopération et de développement économique (OCDE). À partir des données pour la période allant de 1972 jusqu'à 2007, les résultats laissent voir une corrélation positive entre la volatilité des subventions intergouvernementales provenant des niveaux supérieurs d'administration avec la volatilité des dépenses locales. De l'autre côté, la volatilité des recettes fiscales locales -principalement les impôts fonciers -produit l'effet contraire. Ces résultats laissent supposer que la dépendance des administrations locales des subventions plutôt que des recettes fiscales propres a un effet négatif sur la stabilité de leurs dépenses. Leur permettre de prélever de façon autonome des impôts qui reposent sur des assiettes fiscales adaptables fournit des incitations au lissage de leurs dépenses. MOTS-CLÉS RESUMENLa influencia de los impuestos descentralizados y las subvenciones intergubernamentales en la volatilidad del gasto local. Regional Studies. En este artículo estudiamos qué factores influyen en la volatilidad del gasto público subcentral en 20 países de la Organización para la Cooperación y el Desarrollo Económico (OCDE). Según los resultados de datos de 1972 a 2007, la volatilidad de las subvenciones intergubernamentales de niveles superiores está positivamente asociada a la volatilidad del gasto local. Por otra parte, la volatilidad de los ingresos fiscales locales -principalmente de impuestos inmobiliarios-ejerce el efecto contrario. Estos resultados indican que si los Gobiernos locales confíen más en las subvenciones que en sus propios ingresos fiscales se produce un efecto negativo en la estabilidad de sus gastos. Si se permite que recauden impuestos autónomamente y cuenten con bases impositivas receptivas se crean incentivos para amortiguar sus gastos. PALABRAS CLAVESvolatilidad del gasto local; ingresos locales; impuestos inmobiliarios; subvenciones intergubernamentales JEL E62, H71, H77, R50 HISTORY

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Section: Review Of Related Literaturementioning

confidence: 99%

The influence of decentralized taxes and intergovernmental grants on local spending volatility

Sacchi

Salotti

2015

Regional Studies

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“…The points are clustered along the 45-degree line, illustrating that despite the historic increase in house prices, the property tax share held essentially constant in all states. This stability has long been seen as one of the primary virtues of the property tax (Brunori 2003;Giertz 2006). The magnitude of the collapse in the housing market, however, raises the possibility that property tax revenues might fall.…”

Section: Housing Marketmentioning

confidence: 99%

The housing crisis and state and local government tax revenue: Five channels

Lutz¹,

Molloy²,

Shan³

2011

Regional Science and Urban Economics

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State and local government tax revenues dropped steeply following the most severe housing market contraction since the Great Depression. We identify five main channels through which the housing market affects state and local tax revenues: property tax revenues, transfer tax revenues, sales tax revenues (including a direct effect through construction materials and an indirect effect through the link between housing wealth and consumption), and personal income tax revenues. We find that property tax revenues do not tend to decrease following house price declines. We conclude that the resilience of property tax receipts is due to significant lags between market values and assessed values of housing and the tendency of policy makers to offset declines in the tax base with higher tax rates. The other four channels have had a relatively modest effect on state tax revenues. We calculate that these channels jointly reduced tax revenues by $15 billion from 2005 to 2009, which is about 2 percent of total state own-source revenues in 2005. We conclude that the recent contraction in state and local tax revenues has been driven primarily by the general economic recession, rather than the housing market per-se.

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“…Indeed, the relative stability of the property tax over the course of the business cycle is often cited as one of the primary virtues of property taxation (e.g. Brunori 2003;Giertz 2006). The recent nationwide housing market run-up and subsequent weakness, however, raises the possibility that the property tax will not be as stable going forward as it has been in the past.…”

Section: Introductionmentioning

confidence: 99%

The Connection Between House Price Appreciation and Property Tax Revenues

Lutz

2008

FEDS

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This paper explores two aspects of the connection between property tax revenues and house prices. First, I estimate the elasticity of property tax revenues with respect to house prices. This elasticity does not necessarily equal 1 as governments may adjust effective tax rates to offset changes in property values. Second, I examine the timing of the relationship. Institutional features of the property tax make it unlikely that changes in house prices will immediately influence tax revenues. The results suggest that the elasticity eventually equals 0.4 and that it takes three years for house price changes to impact tax revenues.

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The Property Tax Bound

Cited by 18 publications

References 3 publications

The influence of decentralized taxes and intergovernmental grants on local spending volatility

The influence of decentralized taxes and intergovernmental grants on local spending volatility

The housing crisis and state and local government tax revenue: Five channels

The Connection Between House Price Appreciation and Property Tax Revenues

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