Unintended Consequences of Property Tax Relief: New York’s STAR Program
Syracuse University Center for Policy Research Working Paper No. 71
49 Pages Posted: 19 Apr 2011
Date Written: October 1, 2005
Abstract
New York’s School Tax Relief Program, STAR, provides state-funded property tax relief for homeowners. Like a matching grant, STAR changes the price of public services, thereby altering the incentives of voters and school officials and leading to unintended consequences. Using data for New York State school districts before and after STAR was implemented, we find that STAR resulted in small increases in student performance along with significant decreases in the efficiency with which this performance is delivered and significant increases in school spending and property tax rates. These tax-rate increases magnify existing inequities in New York State’s education finance system.
JEL Classification: H71
Suggested Citation: Suggested Citation
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