The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

40 Pages Posted: 29 Aug 2012

See all articles by Sung Hoon Kang

Sung Hoon Kang

Korea Institute of Public Finance; Michigan State University

Laura Reese

Michigan State University

Mark Skidmore

Michigan State University - Department of Agricultural Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 31, 2012

Abstract

In this paper, we examine the effects of changes in property tax rates and school spending on residential and business property value growth in southeast Michigan. We use panel data for 152 communities in the five counties surrounding Detroit between the years 1983 and 2002, a period during which state government mandated major changes to school finance. Using the mandated changes to identify causality, we find that: 1) residential property values are more responsive to school spending changes than property tax rate changes; 2) business property values are more responsive to tax rate changes than school spending changes, and 3) business property values are more sensitive to changes in tax rates as compared to residential property. We also examine tax competition effects on property value growth, showing that tax competition plays an important role in property value growth in the southeast Michigan region.

Keywords: local public finance, property tax, property value growth

JEL Classification: R100, R500

Suggested Citation

Kang, Sung Hoon and Reese, Laura and Skidmore, Mark L., The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth (July 31, 2012). CESifo Working Paper Series No. 3899, Available at SSRN: https://ssrn.com/abstract=2137558

Sung Hoon Kang

Korea Institute of Public Finance ( email )

79-6 Garak-Dong, Songpa-Ku
Seoul
United States
+82-2-2286-2207 (Phone)

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Laura Reese

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Mark L. Skidmore (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
52
Abstract Views
805
rank
418,790
PlumX Metrics