Property Tax Web Series

Abstract

I investigate the effect of property tax changes on individual homeowner mobility and voted tax rates using a panel of individual assessment and sales records in Ohio. I use regulatory stabilization rules that cause changes in individual taxes with no mechanical change in quantity of public goods to examine how changes in a homeowner’s tax bill influence sales, foreclosure events, and home equity loan origination. The changes in taxes I observe are driven by changes in relative assessment growth within school districts and allow me to identify the effects of changes in taxes separately from the effects of changing housing wealth. Using a leave-one-out by county random forest regression on assessed values to instrument for tax changes, I find that a $0.10 increase in the price per dollar of services leads to a 5% increase in the likelihood of sale with no change in the likelihood of foreclosure. I also find suggestive evidence of increased voted tax rates at the school district level when the ratio of median to mean taxable value decreases.

This paper was presented by Rebecca Fraenkel (University of California - San Diego) on December 16, 2022 as part of the 2022-2023 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. Justin Ross (Indiana University - Bloomington) was the discussant for this presentation. Ross comments on Fraenkel's "Property Tax-Induced Mobility and Redistribution: Evidence from Mass Reappraisals."