Property Tax Policy and Housing Affordability

National Tax Journal, Volume 77, No. 4, forthcoming

51 Pages Posted: 26 Aug 2024 Last revised: 12 Oct 2024

See all articles by Emily Horton

Emily Horton

U.S. Department of the Treasury

Cameron LaPoint

Yale School of Management

Byron F. Lutz

Board of Governors of the Federal Reserve System

Nathan Seegert

University of Utah - Department of Finance

Jared Walczak

Tax Foundation

Date Written: June 10, 2024

Abstract

We examine property tax reduction as a tool for increasing housing affordability. Analyzing various tax reduction policies through the lens of property tax incidence reveals a complex relationship between affordability and property taxes, with differential effects across demographic groups. Many policies often fail to improve affordability for young first-time homebuyers and renters, sometimes worsening affordability. We present a new nationwide atlas documenting the prevalence of local measures altering property tax burdens. Quasi-experimental evidence from Georgia’s homestead exemption valuation freezes suggests strong capitalization of assessment limits into home values, reinforcing that property tax relief may worsen affordability for first-time buyers. 

Keywords: property tax, incidence, housing affordability, assessment limits, homestead exemption

JEL Classification: H22, H71, R21, R31, R38

Suggested Citation

Horton, Emily and LaPoint, Cameron and Lutz, Byron F. and Seegert, Nathan and Walczak, Jared, Property Tax Policy and Housing Affordability (June 10, 2024). National Tax Journal, Volume 77, No. 4, forthcoming, Available at SSRN: https://ssrn.com/abstract=4901553 or http://dx.doi.org/10.2139/ssrn.4901553

Emily Horton

U.S. Department of the Treasury ( email )

1500 Pennsylvania Avenue
Washington, DC 20220
United States

Cameron LaPoint (Contact Author)

Yale School of Management ( email )

165 Whitney Ave
P.O. Box 208200
New Haven, CT 06511
United States

HOME PAGE: http://som.yale.edu/faculty/cameron-lapoint

Byron F. Lutz

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Nathan Seegert

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Jared Walczak

Tax Foundation ( email )

1325 G St NW
Suite 950
Washington, DC 20005
United States
2024645101 (Phone)

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