Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-30T15:10:03.771Z Has data issue: false hasContentIssue false
  • English
  • Français

An Appraisal of Residential Property Tax Regressivity

Published online by Cambridge University Press:  06 April 2009

Robert H. Edelstein
Get access Rights & Permissions [Opens in a new window]

Extract

The findings of this study indicate, contrary to the recent claims by Aaron [1, 2], among others, that the real estate tax on residential properties is regressive. Using a data base from a sample of household observations for FHA–HUD 203–Program single–family market sales for counties contained in five major United States Standard Metropolitan Statistical Areas (SMSAs), the statistical analyses suggest that the degree of observed regressivity varies significantly across counties and is the result of two forces. First, in many counties, the poor and de facto inequitable assessment practices are the principal causes for property tax regressivity. Second, in some counties that exhibit relatively equitable and uniform assessment practices, the end product appears to be an income regressive property tax. Hence, the property tax in these counties may be intrinsically (slightly) regressive. However, in general, if there were uniform administration of the property tax, it would be (slightly) progressive.

Type
III. Issues in Residential Real Estate
Information
Journal of Financial and Quantitative Analysis , Volume 14 , Issue 4 , November 1979 , pp. 753 - 768
Copyright
Copyright © School of Business Administration, University of Washington 1979

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

[1]Aaron, Henry. “A New View of Property Tax Incidence.” The American Economic Review, Vol. 64 (05 1974), pp. 212–220.Google Scholar
[2]Aaron, Henry. who Pays the Property Tax: A New View. Washington, D.C.: The Brookings Institution (1975).Google Scholar
[3]Balestra, P., and Nerlove, M.. “Pooling Cross Section and Time–Series Data in the Estimation of a Dynamic Model: The Demand for Natural Gas.” Econometrica, Vol. 34 (06 1966), pp. 585–612.Google Scholar
[4]Black, David. “The Nature and Extent of Effective Property Tax Rate Variation within the City of Boston.” National Tax Journal, Vol. 25 (06 1972), pp. 203–210.CrossRefGoogle Scholar
[5]Buchanan, James M., and Goetz, Charles J.. “Efficiency Limits of Fiscal Mobility: An Assessment of the Tiebout Model.” Journal of Public Economics, Vol. 1 (04 1972), pp. 25–44.Google Scholar
[6]Chung, Pao Lun. “The Common Level of Assessment in Property Taxation.” National Tax Journal, Vol. 23 (03 1970), pp. 50–65.CrossRefGoogle Scholar
[7]de Leeuw, Frank. “The Demand for Housing: A Review of Cross Section Evidence.” Review of Economics and Statistics, Vol. 53 (02 1971), pp. 1–10.CrossRefGoogle Scholar
[8]Edel, Mathew, and Sclar, Elliot. “Taxes, Spending, and Property Values: Supply Adjustment in a Tiebout–Oates Model.” Journal of Political Economy, Vol. 82 (09/10 1974), pp. 941–954.CrossRefGoogle Scholar
[9]Edelson, Noel M. “Efficiency Aspects of Local School Finance: Comments and Extensions.” Journal of Political Economy, Vol. 81 (01 1973), pp. 158–173.CrossRefGoogle Scholar
[10]Edelstein, Robert H. “The Determinants of Value in the Philadelphia Housing Market: A Case Study of the Main Line 1967–1969.” Review of Economics and Statistics, Vol. 56 (08 1974), pp. 319–328.CrossRefGoogle Scholar
[11]Engle, Robert F. “De Facto Discrimination in Residential Assessments: Boston.” National Tax Journal, Vol. 48 (12 1975), pp. 445–451.CrossRefGoogle Scholar
[12]Feldstein, Martin S., and Clotfelter, Charles. “Tax Incentives and Charitable Contributions in the United States: A Microeconomic Analysis.” Journal of Public Economics, Vol. 5 (01 1976), pp. 1–26.CrossRefGoogle Scholar
[13]Follain, James R. “A Study of the Demand for Housing by Low Versus High Income Households.” Mimeo (06 1979).CrossRefGoogle Scholar
[14]Hamilton, Bruce W. “The Effects of Property Taxes and Local Public Spending on Property Values: A Theoretical Comment.” Journal of Political Economy, Vol. 84 (06 1976), pp. 647–650.CrossRefGoogle Scholar
[15]Johnston, John. Econometric Methods, 2nd ed.New York: McGraw–Hill (1972).Google Scholar
[16]Maddala, G. S. “The Use of Variance Components Models in Pooling Cross Section and Time–Series Data.” Econometrica, Vol. 39 (03 1971), pp. 341–358.CrossRefGoogle Scholar
[17]Musgrave, Richard A. “Is a Property Tax on Housing Regressive?” American Economic Review, Vol. 64 (05 1974), pp. 222–229.Google Scholar
[18]Nerlove, Marc. “Further Evidence on the Estimation of Dynamic Economic Relations from a Time–Series of Cross Sections.” Econometrica, Vol. 39 (03 1971), pp. 359–382.Google Scholar
[19]Netzer, Dick. Economics of the Property Tax. Washington, D.C.: The Brookings Institutions (1966).Google Scholar
[20]Netzer, Dick “The Incidence of the Property Tax Revisited.” National Tax Journal, Vol. 26 (12 1973), pp. 515–535.Google Scholar
[21]Oates, Wallace E. “The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis.” Journal of Political Economy, Vol. 77 (11/12 1969), pp. 957–971.CrossRefGoogle Scholar
[22]Oldman, Oliver, and Aaron, Henry. “Assessment–Sales Ratios under the Boston Property Tax.” National Tax Journal, Vol. 18 (03 1965), pp. 557–565.CrossRefGoogle Scholar
[23]Paglin, Morton, and Fogarty, Michael. “Equity and the Property Tax: A New Conceptual Focus.” National Tax Journal, Vol. 25 (12 1972), pp. 557–565.CrossRefGoogle Scholar
[24]Peterson, George E. “The Issues of Property Tax Reform.” Property Tax Reform, edited by Peterson, G. E.. Washington, D.C.: The Urban Institute (1973), pp. 1–12.Google Scholar
[25]Peterson, George E. “The Property Tax and Low Income Housing Markets.” Property Tax Reform, edited by Peterson, G. E.. Washington, D.C.: The Urban Institute (1973), pp. 107–124.Google Scholar
[26]Reid, Margaret G.Housing and Income. Chicago: University of Chicago Press (1962).Google Scholar
[27]Rosen, Harvey S. “Owner–Occupied Housing and the Federal Income Tax: Estimates and Simulations.” Journal of urban Economics, Vol. 6 (04 1979), pp. 247–266.CrossRefGoogle Scholar
[28]Sabella, Edward M. “The Effects of Property Taxes and Local Public Expenditures on the Sales Prices of Residential Dwellings.” The Appraisal Journal, Vol. 62 (01 1974), pp. 114–125.Google Scholar
[29]Theil, Henry.Economic Forecasts and Policy, 2nd ed. revised. Amsterdam: North Holland Publishing Company (1965).Google Scholar
[30]Tiebout, Charles M. “A Pure Theory of Local Expenditures.” Journal of Political Economy, Vol. 64 (10 1956), pp. 416–424.CrossRefGoogle Scholar