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The Incidence and Incentive Effects of Property Tax Credits: Evidence From Michigan

Author

Listed:
  • Ronald C. Fisher

    (Michigan State University)

  • Robert H. Rasche

    (Michigan State University)

Abstract

The objectives of this article are (1) to present the income and geogtaphic incidence of property tax credits in Michigan; (2) to evaluate the influence of localproperty taxes, local income, and credit parameters on those distributions; and (3) to measure the magnitude of the potential fiscal incentives created by the circuit-breaker program. The analysisis based on a 1% sample of Michigan individual income tax returns for 1976, 1977, and 1978 that includes all the necessary data to calculate circuit-breaker benefits for each taxpayer. It is shown that the credit is a progressive element in the state's tax structure, that the credit primarily favors agricultural counties and counties with relatively higher property tax rates or property values, and that the credit generates large incentives to increase property taxes by reducing marginal property tax cost by about 24%.

Suggested Citation

  • Ronald C. Fisher & Robert H. Rasche, 1984. "The Incidence and Incentive Effects of Property Tax Credits: Evidence From Michigan," Public Finance Review, , vol. 12(3), pages 291-319, July.
    • Handle: RePEc:sae:pubfin:v:12:y:1984:i:3:p:291-319
    DOI: 10.1177/109114218401200302
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    References listed on IDEAS

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    Cited by:

    1. Tae Ho Eom & William Duncombe & Phuong Nguyen-Hoang & John Yinger, 2014. "The Unintended Consequences of Property Tax Relief: New York’s STAR Program," Education Finance and Policy, MIT Press, vol. 9(4), pages 446-480, October.
    2. Michael F. Addonizio, 1991. "Intergovernmental Grants and the Demand for Local Educational Expenditures," Public Finance Review, , vol. 19(2), pages 209-232, April.
    3. Philippe Cyrenne & Robert Fenton, 2000. "On the Incentive Effects of Municipal Tax Credits," Public Finance Review, , vol. 28(3), pages 226-246, May.
    4. Craig Maher & Mark Skidmore, 2008. "Changing Education Finance Policy, School Referenda Activity, and Success Rates," Public Finance Review, , vol. 36(4), pages 431-455, July.
    5. Michael E. Bell & John H. Bowman, 1987. "The Effect of Various Intergovernmental aid Types on Local Own-Source Revenues: The Case of Property Taxes in Minnesota Cities," Public Finance Review, , vol. 15(3), pages 282-297, July.
    6. Jackson, Jeremy, 2018. "Prairie Prosperity: An Economic Guide for the State of North Dakota," Annals of Computational Economics, George Mason University, Mercatus Center, October.
    7. R. Lankford, 1986. "Property taxes, tax-cost illusion and desired education expenditures," Public Choice, Springer, vol. 49(1), pages 79-97, January.

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