Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169399
Authors: 
Füss, Roland
Lerbs, Oliver
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers 17-036
Abstract: 
This paper 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. Using granular spatial data from a complete housing inventory in the 2011 German Census and historical war damages as a source 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 as the key mechanism behind this effect. We find positive spatial dependence in tax multipliers, indicative of property tax mimicking by local governments.
Subjects: 
homeownership
public financing
residential property tax
spatial tax mimicking
yardstick competition
JEL: 
D72
H20
H31
H71
R31
Document Type: 
Working Paper

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