Do Local Governments Tax Homeowner Communities Differently?
Journal
Real Estate Economics
ISSN
1080-8620
ISSN-Digital
1540-6229
Type
journal article
Date Issued
2024-01-07
Author(s)
Abstract
This article investigates whether and how strongly the share of homeowners in a community affects residential property taxation by local governments. Different from renters, homeowners bear the full property tax burden, irrespective of local market conditions, and the tax is more salient to them. “Homeowner communities” may hence oppose high property taxes in order to protect their housing wealth. By merging granular spatial data from a complete housing inventory in the 2011 German Census with historical homeownership rates and housing damages during the Second World War as sources of exogenous variation in local homeownership, we provide empirical evidence that otherwise identical jurisdictions charge significantly lower property taxes when the share of homeowners in their population is higher. This result is invariant to local market conditions, which suggests tax salience is the key mechanism behind this effect. Moreover, we find positive spatial dependence on tax multipliers, indicative of property tax mimicking by local governments.
Language
English
Keywords
Homeownership
Public Financing
Residential Property Tax
Spatial Tax Mimicking
Yardstick Competition.
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Wiley
Volume
52
Number
2
Start page
401
End page
433
Pages
33
Subject(s)
Contact Email Address
alois.weigand@unisg.ch
Eprints ID
252731
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Real Estate Economics - 2024 - Füss - Do local governments tax homeowner communities differently.pdf
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Format
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