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Renter Illusion: Fact or Fiction?

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  • Jens Blom-Hansen

    (Department of Political Science, University of Aarhus, Denmark, jbh@ps.au.dk)

Abstract

The renter illusion hypothesis holds that renters underestimate their property tax burden and therefore support excessive levels of local expenditure. A number of studies have reached results that are consistent with the hypothesis. But so far empirical investigations have proceeded from the assumption that renter illusion is a fact and have investigated the implications of this fact. No-one has investigated renter illusion as such. In other areas of fiscal illusion, survey analyses of voter perceptions have yielded considerable insight into the validity of illusionary hypotheses. This paper follows this method and investigates a representative sample of 1000 Danish renters' and home-owners' perception of the local property tax system. The evidence raises doubts about the renter illusion hypothesis. The survey findings are corroborated by an analysis of property taxation in Danish municipalities.

Suggested Citation

  • Jens Blom-Hansen, 2005. "Renter Illusion: Fact or Fiction?," Urban Studies, Urban Studies Journal Limited, vol. 42(1), pages 127-140, January.
    • Handle: RePEc:sae:urbstu:v:42:y:2005:i:1:p:127-140
    DOI: 10.1080/0042098042000309739
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    References listed on IDEAS

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    Cited by:

    1. Martin Baekgaard & Søren Serritzlew & Jens Blom-Hansen, 2016. "Causes of Fiscal Illusion: Lack of Information or Lack of Attention?," Public Budgeting & Finance, Wiley Blackwell, vol. 36(2), pages 26-44, June.
    2. Andrew Abbott & Philip Jones, 2016. "Fiscal Illusion and Cyclical Government Expenditure: State Government Expenditure in the United States," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 177-193, May.
    3. Roberto Dell'Anno & Vincenzo Maria De Rosa, 2013. "The Relevance of the Theory of Fiscal Illusion. The Case of the Italian Tax System," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2013(2), pages 63-92.
    4. H. Spencer Banzhaf & Wallace E. Oates, 2012. "On Fiscal Illusion and Ricardian Equivalence in Local Public Finance," NBER Working Papers 18040, National Bureau of Economic Research, Inc.
    5. Ross, Justin M. & Yan, Wenli, 2013. "Fiscal Illusion From Property Reassessment? An Empirical Test of the Residual View," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 7-32, March.
    6. Arbel, Yuval & Fialkoff, Chaim & Kerner, Amichai, 2017. "Removal of renter's illusion: Property tax compliance among renters and owner-occupiers," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 150-174.
    7. H. Spencer Banzhaf & Wallace E. Oates, 2013. "On Fiscal Illusion in Local Public Finance: Re-Examining Ricardian Equivalence and the Renter Effect," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 511-540, September.
    8. Wilfred K. Anim-Odame & Precious Angelo Brenni & Damian Damianov & Dennis Philip, 2018. "Residential Occupancy and Property Tax Default," ERES eres2018_214, European Real Estate Society (ERES).
    9. Boris Begović & Tanasije Marinković & Marko Paunović, 2017. "A Case For Introduction Of Numerical Fiscal Rules In Serbian Constitution," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 62(212), pages 7-42, January -.

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