The Effects of Property Taxes and Local Public Spending on Property Values

Posted: August 25th, 2021

Student’s Name

Economics 4310

State and Local Public Finance

Written Assignment #6

Due: April 12, 2018

Outline: “The Effects of Property Taxes and Local Public Spending on Property Values”

1. Introduction
2. The topic of paper is a research on impact of local public budget on the values of properties based on the theory of shifting and incidenceof property charges (Oates 957).

Possibilities offered by the theory:

1. Reduced rental income
2. Increased rent to tenants
3. Position Statement
4. The output of public services (for example, education quality), including taxes,should determine the choice of a particular community by prospective inhabitants thus affecting the values of the local property (Oates 958).
5. Background
6. Single tax rate – applicable to all structures and land.
7. Tiebout model –consumers can maximize utilities by weighing the benefits from the program.
8. An Empirical Study
9. Based cross-sectional evaluation of selected communities.
10. Determining the interrelationships involving property values andlocal budget expenditures.

Summary of the Article: “The Effects of Property Taxes and Local Public Spending on Property Values

The study by Wallace E. Oates is a presentation of a cross-sectional analysis of local expenditures and the associated property taxes influence on property values. With the support of the two-stage least-square approximation method, Oates discovered a negative relationship between the local property valueand the effective tax charges. However, it had a definite link with the amount spent on each pupil in the local budget. The results of this study were consistent with the Tiebout model and theory. This approach became useful for rational consumers who had to make decisions regarding the benefits of choosing their residence irrespective of the cost and tax liability. He concluded that people are capable of paying more to reside in a neighborhood which is able toprovide them with high-quality services.

Works Cited

Oates, Wallace E. “The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis.” Journal of Political Economy, vol. 77, no. 6, 1969, pp. 957-971.