The housing crisis and state and local government tax revenue: Five channels

Lutz, Byron F.; Molloy, Raven; Shan, Hui

doi:10.1016/j.regsciurbeco.2011.03.009

Cited by 102 publications

(58 citation statements)

References 4 publications

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“…9 Lutz et al (2010) highlight several channels through which the housing market impacts tax revenues. First is the property tax channel, which is a function of the value of real estate and the volume of real estate transactions.…”

Section: Revenuesmentioning

confidence: 99%

“…The recent literature on local public finance shows that declines in housing prices have a lagged effect on local property tax collections, but once a decline in local public revenues occurs, localities react by cutting expenditures. For evidence on the relationship between housing prices and local government budgets, see Lutz et al (2010), Chernick et al (2011), Alm et al (2014), and Cromwell and Ihlanfeldt (2015).…”

Section: Revenuesmentioning

confidence: 99%

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Trade Shocks and the Provision of Local Public Goods

Feler¹,

Senses

2017

American Economic Journal: Economic Policy

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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. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Trade Shocks and the Provision of Local Public GoodsIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 10231 September 2016 ABSTRACT Trade Shocks and the Provision of Local Public Goods *We analyze the impact of trade-induced income shocks on the size of local government, and the provision of public services. Areas in the US with declining labor demand and incomes due to increasing import competition from China experience relative declines in housing prices and business activity. Since local governments are disproportionately funded through property and sales taxation, declining property values and a decrease in economic activity translate into less revenue, which constrains the ability of local governments to provide public services. State and federal governments have limited ability to smooth local shocks, and the impact on the provision of public services is compounded when local income shocks are highly correlated with shocks in the rest of the state. The outcome is greater inequality not only in incomes but also in the quality of public services and amenities across US jurisdictions.JEL Classification: F14, F16, H41, H70, R12, R23

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Section: Revenuesmentioning

confidence: 99%

Section: Revenuesmentioning

confidence: 99%

Trade Shocks and the Provision of Local Public Goods

Feler¹,

Senses

2017

American Economic Journal: Economic Policy

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“…8 Empirical evidence for a lag between housing price changes and property tax revenues comes from a recent empirical analysis by Lutz (2008) that finds a lag of about three years. In a recent paper, Lutz, Molloy, and Shan (2011) use data from individual states to illustrate the several year lag between the peak of the housing boom and initial declines in property tax revenues.…”

Section: The Housing Crisis and City Spendingmentioning

confidence: 99%

The impact of the Great Recession and the housing crisis on the financing of America's largest cities

Chernick

Langley

Reschovsky

2011

Regional Science and Urban Economics

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The Impact of the Great Recession and the Housing Crisis on the Financing of America's Largest CitiesThe housing crisis and the recession have placed tremendous fiscal pressure on the nation's central cities. Cuts in state government fiscal assistance to their local governments, plus shrinking property tax bases are challenging the ability of local governments to continue their current levels of public services.In this paper, we use data on the financing of the nation's largest central cities from 1997 to 2008 to forecast the impact of the recession and the housing crisis on central city expenditures between 2009 and 2013. Because expenditure responsibilities vary among city governments and because overlying governments play different roles, we develop the concept of constructed governments in order to allow us to compare the revenue-raising and spending policies of large central cities. We predict that real per capita spending in the average central city will be reduced by about seven percent during the forecast period, and that spending cuts will be substantially greater in cities hit hardest by the economic recession and the housing market collapse.

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“…Thus, we consider the property tax to be acyclical. See Lutz, Molloy, and Shan (2011) for evidence on the response of property tax receipts to the housing boom and bust of the 2000s. 10 Unemployment insurance, production (excise), and import taxes follow a different process (see Russek and Kowalewski, 2015 ii.…”

Section: Cyclical Fiscal Policy Changesmentioning

confidence: 99%

Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession

Cashin

Lenney

Lutz

et al. 2017

FEDS

Self Cite

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We examine the effect of federal and subnational fiscal policy on aggregate demand in the U.S. by introducing the fiscal effect (FE) measure. FE can be decomposed into three components. Discretionary FE quantifies the effect of discretionary or legislated policy changes on aggregate demand. Cyclical FE captures the effect of the automatic stabilizers-changes in government taxes and spending arising from the business cycle. Residual FE measures the effect of all changes in government revenues and outlays which cannot be categorized as either discretionary or cyclical; for example, it captures the effect of the secular increase in entitlement program spending due to the aging of the population. We use FE to examine the contribution of fiscal policy to growth in real GDP over the course of the Great Recession and current expansion. We compare this contribution to the contributions to growth in aggregate demand made by fiscal policy over past business cycles. In doing so, we highlight that the relatively strong support of government policy to GDP growth during the Great Recession was followed by a historically weak contribution over the course of the current expansion. NOTE:The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References to this publications should be cleared with the author(s) given its preliminary status.

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The housing crisis and state and local government tax revenue: Five channels

Cited by 102 publications

References 4 publications

Trade Shocks and the Provision of Local Public Goods

Trade Shocks and the Provision of Local Public Goods

The impact of the Great Recession and the housing crisis on the financing of America's largest cities

Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession

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