The Distributional Effects of Property Tax Constraints on School Districts

46 Pages Posted: 26 Oct 2020 Last revised: 29 Jun 2021

See all articles by Lucy Sorensen

Lucy Sorensen

University at Albany (SUNY)

Youngsung Kim

Colorado State University

Moontae Hwang

University at Albany (SUNY)

Date Written: April 23, 2021

Abstract

Many states in recent decades enacted laws that limit the collection of property taxes. This study examines the impacts of New York State’s 2011 tax cap on education revenues and student achievement. We use an instrumental variables approach with 663 school districts from 2006 to 2016. We find that each $1,000 loss in per-pupil revenues from the tax cap leads to drops in student test performance of 0.04 standard deviations, driven by reductions in instructional expenditures, teacher hiring, and support personnel. Wealthier districts incurred more costs from the tax cap due to their higher reliance on property taxes.

Keywords: Property Tax Cap, Tax/Expenditure Limit, Education Finance, Economics of Education

JEL Classification: H71, H75, I22, I24

Suggested Citation

Sorensen, Lucy and Kim, Youngsung and Hwang, Moontae, The Distributional Effects of Property Tax Constraints on School Districts (April 23, 2021). Available at SSRN: https://ssrn.com/abstract=3717648 or http://dx.doi.org/10.2139/ssrn.3717648

Lucy Sorensen (Contact Author)

University at Albany (SUNY) ( email )

1400 Washington Ave
Albany, NY 12222
United States

Youngsung Kim

Colorado State University ( email )

Fort Collins, CO 80523
United States

Moontae Hwang

University at Albany (SUNY) ( email )

1400 Washington Ave
Albany, NY 12222
United States

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