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Beggar Thy Neighbor? Property Taxation of Vacation Homes

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  • Anderson, Nathan B.

Abstract

Owners of vacation homes pay local property taxes, yet cannot vote on local referenda. From the standpoint of full–time residents, significant numbers of vacation homes reduce the real costs of public spending, since vacation home owners pay property taxes but consume very few public services. A one–time change in Minnesota tax assessments of vacation property in 1996 affords the opportunity to identify the effect of vacation property on local spending. The results suggest that a one–percent increase in the concentration of vacation homes in local tax base is associated with a 1.5–percent increase in per–capita spending.

Suggested Citation

  • Anderson, Nathan B., 2006. "Beggar Thy Neighbor? Property Taxation of Vacation Homes," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(4), pages 757-780, December.
    • Handle: RePEc:ntj:journl:v:59:y:2006:i:4:p:757-80
    DOI: 10.17310/ntj.2006.4.01
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    References listed on IDEAS

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    1. Braid, Ralph M., 2005. "Tax competition, tax exporting and higher-government choice of tax instruments for local governments," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1789-1821, September.
    2. A. J. Auerbach & M. Feldstein (ed.), 1987. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 2, number 2.
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    Cited by:

    1. Anderson, Nathan B., 2011. "No relief: Tax prices and property tax burdens," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 537-549.
    2. Lester Hadsell & Chad Colarusso, 2009. "Seasonal Homes and the Local Property Tax: Evidence from New York State," American Journal of Economics and Sociology, Wiley Blackwell, vol. 68(2), pages 581-602, April.
    3. Fitzpatrick, Maria D., 2017. "Pension-spiking, free-riding, and the effects of pension reform on teachers' earnings," Journal of Public Economics, Elsevier, vol. 148(C), pages 57-74.
    4. Nathan B. Anderson, 2008. "LOCAL AMENITIES AND RENTS: TIEBOUT TAKES A VACATION*[link]," Journal of Regional Science, Wiley Blackwell, vol. 48(3), pages 595-613, August.
    5. Anderson, Nathan B., 2012. "Market value assessment and idiosyncratic tax-price risk: Understanding the consequences of alternative definitions of the property tax base," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 545-560.
    6. Johnson, Erik & Walsh, Randall, 2013. "The effect of property taxes on vacation home growth rates: Evidence from Michigan," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 740-750.
    7. Erik B. Johnson & Randall Walsh, 2009. "The Effect of Property Taxes on Location Decisions:Evidence From the Market for Vacation Homes," NBER Working Papers 14793, National Bureau of Economic Research, Inc.
    8. C. Bee & Shawn Moulton, 2015. "Political budget cycles in U.S. municipalities," Economics of Governance, Springer, vol. 16(4), pages 379-403, November.
    9. Burge, Gregory S. & Piper, Brian, 2012. "Strategic Fiscal Interdependence: County and Municipal Adoptions of Local Option Sales Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(2), pages 387-415, June.
    10. Keith Ihlanfeldt & Cynthia Fan Yang, 2023. "Are the home values and property tax burdens of permanent homeowners affected by growth in housing rentals and second homes: Evidence based on big data from Florida," Journal of Regional Science, Wiley Blackwell, vol. 63(2), pages 470-502, March.
    11. Jason Giersch, 2014. "Effects of vacation properties on local education budgets," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-9, December.

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