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The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth
Author(s) -
Kang Sung Hoon,
Skidmore Mark,
Reese Laura
Publication year - 2015
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12077
Subject(s) - property tax , economics , competition (biology) , property value , residential property , government spending , property (philosophy) , value (mathematics) , tax reform , public economics , labour economics , market economy , finance , real estate , economic geography , welfare , ecology , machine learning , computer science , biology , philosophy , epistemology
In this article, 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.