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    Intrajurisdictional capitalization and the incidence of the property tax

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    Author
    Zodrow, George R.
    Date
    2014
    Abstract
    Two views dominate the debate about property tax incidence — the “capital tax” or “new” view, under which the tax distorts capital allocation and is borne primarily by capital owners, and the “benefit tax” view, under which the tax is an efficient user charge. Evidence of both interjurisdictional and intrajurisdictional capitalization of property taxes and public services has been argued to provide compelling evidence for the benefit tax view. This paper focuses on the latter — the intra-jurisdictional capitalization effects that underlie what is arguably the most plausible derivation of the benefit tax view of the property tax. The analysis provides a model in which the capital reallocations that characterize the capital tax view induce intrajurisdictional capitalization effects that are generally similar — indeed, in the benchmark case, identical — to those that arise under the benefit tax view, suggesting that empirical evidence supporting such capitalization effects cannot distinguish between the two views. In addition, the analysis shows that these capitalization effects imply that even under the stringent assumptions of the benefit view, the property tax is not a benefit tax for a property-tax-financed increase in local public services; rather, it only becomes a benefit tax for future home purchasers — after the modeled intrajurisdictional capitalization effects occur.
    Citation
    Zodrow, George R.. "Intrajurisdictional capitalization and the incidence of the property tax." Regional Science and Urban Economics, 45, (2014) Elsevier: 57-66. http://dx.doi.org/10.1016/j.regsciurbeco.2014.01.002.
    Published Version
    http://dx.doi.org/10.1016/j.regsciurbeco.2014.01.002
    Keyword
    property tax incidence; intrajurisdictional capitalization; capital tax view; new view; benefit tax view
    Type
    Journal article
    Publisher
    Elsevier
    Citable link to this page
    https://hdl.handle.net/1911/91691
    Link to related resources
    http://www.bakerinstitute.org/research/intrajurisdictional-capitalization-and-incidence-property-tax/
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    Home | FAQ | Contact Us | Privacy Notice | Accessibility Statement
    Managed by the Digital Scholarship Services at Fondren Library, Rice University
    Physical Address: 6100 Main Street, Houston, Texas 77005
    Mailing Address: MS-44, P.O.BOX 1892, Houston, Texas 77251-1892
    Site Map