Property Tax and Property Values: Evidence from the 2012 Italian Tax Reform

51 Pages Posted: 6 Sep 2017 Last revised: 13 Sep 2019

See all articles by Tommaso Oliviero

Tommaso Oliviero

CSEF - University of Naples Federico II - Department of Economic and Statistical Sciences; CSEF; CefES; MoFiR

Annalisa Scognamiglio

CSEF; CSEF - University of Naples Federico II - Department of Economic and Statistical Sciences; Research Institute of Industrial Economics (IFN)

Date Written: March 11, 2019

Abstract

This paper assesses the extent to which property taxes are capitalized into property values, exploiting the 2012 Italian tax reform. Municipal-level variation in the level of the property tax rates is instrumented using the exogenous staggered timing of local elections. We show that the incumbent local governments with upcoming elections in 2013 shifted the composition of fiscal revenues towards lower property tax. Our 2SLS estimate shows that a one standard deviation increase in municipal-level property tax intensity leads to a 2.7% reduction of municipal property values in the year of the reform. We elicit information on the characteristics of the compliers and show that these municipalities feature inefficient public spending and low social capital.

Keywords: Real estate values, Property tax capitalization, Political economy, Compliers

JEL Classification: D72, G12, H20, R32

Suggested Citation

Oliviero, Tommaso and Scognamiglio, Annalisa, Property Tax and Property Values: Evidence from the 2012 Italian Tax Reform (March 11, 2019). Available at SSRN: https://ssrn.com/abstract=3031881 or http://dx.doi.org/10.2139/ssrn.3031881

Tommaso Oliviero (Contact Author)

CSEF - University of Naples Federico II - Department of Economic and Statistical Sciences ( email )

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Annalisa Scognamiglio

CSEF ( email )

Via Cintia
Naples, 80126
Italy

CSEF - University of Naples Federico II - Department of Economic and Statistical Sciences ( email )

Via Cintia 26
Napoli
Italy

Research Institute of Industrial Economics (IFN) ( email )

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Stockholm, SE-102 15
Sweden

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