The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper, 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. Terms of use: Documents inJEL-Code: R100, R500.

Are Rising College Premiums Capitalized into House Prices? Evidence from China

“…Black (1999), Gibbons and Machin (2003) and Downes and Zabel (2002) find evidence of capitalization of school quality, for example, while Bayer, Ferreira and McMillan (2007) and Ries and Somerville (2010) find a capitalization effect only under certain circumstances. Kang et al (2015) find that school spending changes have a larger impact on residential property values than property tax changes. 11 To the best of our knowledge, our article is the first to address the house-price capitalization of the higher education premium, and we do so by taking advantage of the unique institutional setting in China.…”

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The Capitalization of School Quality into Renter and Owner Housing

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