The millage rate offset and property tax revenue stability

House prices and property tax revenues during the boom and bust: Evidence from small‐area estimates

“…This is particularly true for municipalities and towns. This result is somewhat at odds with recent research by Ihlanfeldt and Willardsen (2014) who find the millage rate offset is not strong and varies in proportion to the monopoly power of local governments. However, the results are supportive of the findings of Ross and Yan (2013).…”

The Transformation of Bea Acquisition Rights to Land and Buildings (BPHTB): Case Study in Kediri City of East Java

“…On the other hand, under the capital tax view, the property tax is an inefficient tax instrument, as it reduces housing consumption and distorts resource allocation, driving capital out of high tax jurisdictions and into low tax jurisdictions. Ihlanfeldt (2014) found that the monopoly power of local government would determine their potential revenues. Those with greater monopoly power are found to increase their tax rate by more, because they have less fear of capital outflow.…”

Foreclosures and local government budgets

“…As noted in Section 5, after controlling for market conditions, there is little reason to expect a relationship between investor purchases of single-family homes and changes in the property tax base or the size 33 Using the same panel database as in this paper, Ihlanfeldt and Willardsen (2014) estimate that the elasticity of the millage rate with respect to the tax base is − .393. 34 The cost estimate is the "A" total effect amount reported in Table 7.…”

“…In the context of this paper, the "residual view" would predict that any decline in the tax base due to an increase in foreclosures would be completely offset by an increase in the millage rate. However, the most thorough investigation of the "residual view" of the millage rate rejects this hypothesis: Ihlanfeldt and Willardsen (2014) find that the millage rate elasticity with respect to the tax base is significantly less than one, implying that as REOs dampen the tax base, revenues and expenditures will also fall. Their study provides support for the "strategic view" of the millage rate, which maintains that millage rates are set with an eye toward preserving and attracting mobile capital in competition with other local governments.…”