American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Quasi-Experimental Evidence on the Connection between Property Taxes and Residential Capital Investment
American Economic Journal: Economic Policy
vol. 7,
no. 1, February 2015
(pp. 300–330)
Abstract
Do low property taxes attract new home construction? This question is answered using a large shock to property tax burdens caused by an unusual school finance reform in the state of New Hampshire. The estimates suggest that, in most of the state, communities with a reduced tax burden experience a substantial increase in residential construction. In the area of the state near the region's primary urban center (Boston), however, the shock clears through a price adjustment—i.e., by capitalizing into property values. The differing responses are attributed to differing housing supply elasticities. (JEL H71, H73, R31)Citation
Lutz, Byron. 2015. "Quasi-Experimental Evidence on the Connection between Property Taxes and Residential Capital Investment." American Economic Journal: Economic Policy, 7 (1): 300–330. DOI: 10.1257/pol.20120017Additional Materials
JEL Classification
- H71 State and Local Taxation, Subsidies, and Revenue
- H73 State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
- R31 Housing Supply and Markets
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