Social Sciences
4 years ago

Local governments engage in strategic property-tax competition, impacting local tax rates.

SSRN Electronic Journal
Do Local Governments Engage in Strategic Property-Tax Competition?
Jan K. Brueckner, Luz Amparo Saavedra

Paper Summary

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Local governments in the Boston area compete with each other by adjusting property tax rates based on what neighboring communities are doing. Researchers used a special math model to study this competition and found that communities do change their tax rates strategically in response to what others are doing. This means that local governments are influenced by each other when setting property tax rates.