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Property Tax Circuit‐breakers: Good Causes but Bad Economics
Author(s) -
Harris William T.
Publication year - 1983
Publication title -
american journal of economics and sociology
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.199
H-Index - 38
eISSN - 1536-7150
pISSN - 0002-9246
DOI - 10.1111/j.1536-7150.1983.tb01706.x
Subject(s) - economics , payment , redistribution (election) , circuit breaker , property tax , labour economics , monetary economics , public economics , tax reform , finance , engineering , law , electrical engineering , political science , politics
A bstract . Since 1965, 30 states and the District of Columbia have enacted programs designed to reduce the effective rate of property taxation for some low income households and for the elderly. Most often this relief is provided by so‐called “circuit‐breakers.” It is contended that the economic arguments favoring circuit‐breakers are empirically unproven and theoretically suspect. The tax may be progressive , not regressive , and the device may transfer income from low to high income households. Any short run redistribution of income to favor the poor or the elderly would, in the long run, merely shift the timing of their tax payments. Circuit‐breakers encourage over‐consumption of housing and misallocation of housing resources. Reducing the tax base, they produce higher rates and so increase the tax burden.