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Heterogeneity in property tax capitalization: Evidence from municipalities in Wisconsin

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  • Sergio Gárate
  • Anthony Pennington‐Cross

Abstract

This article provides evidence that higher property taxes usually decrease property value. On average, a 10% increase in property taxes decreases property value by more than 0.34%. To control for school quality and related sorting, we estimate within‐school‐district property tax impacts. The effective cost of services (driven by appraisal errors or tax code changes), preferences for local services, and the elasticity of supply of housing all play an important role in determining whether property taxes increase or decrease house prices. Locally produced and consumed municipal services such as trash collection are positively capitalized.

Suggested Citation

  • Sergio Gárate & Anthony Pennington‐Cross, 2023. "Heterogeneity in property tax capitalization: Evidence from municipalities in Wisconsin," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(5), pages 1285-1314, September.
    • Handle: RePEc:bla:reesec:v:51:y:2023:i:5:p:1285-1314
    DOI: 10.1111/1540-6229.12430
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    References listed on IDEAS

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