Do Local Governments Tax Homeowner Communities Differently?

Item Type Monograph (Working Paper)
Abstract This paper investigates whether and how strongly the share of homeowners in a community affects residential property taxation by local governments. Different from renters, homeowners bear the full property tax burden irrespective of local market conditions, and the tax is more salient to them. “Homeowner communities" may hence oppose high property taxes in order to protect their housing wealth. Using granular spatial data from a complete housing inventory in the 2011 German Census and historical war damages as a source of exogenous variation in local homeownership, we provide empirical evidence that otherwise identical jurisdictions charge significantly lower property taxes when the share of homeowners in their population is higher. This result is invariant to local market conditions, which suggests tax salience as the key mechanism behind this effect. We find positive spatial dependence in tax multipliers, indicative of property tax mimicking by local governments.
Authors Füss, Roland; Lerbs, Oliver & Weigand, Alois
Language English
Keywords Homeownership, Public Financing, Residential Property Tax, Spatial Tax Mimicking, Yardstick Competition.
Subjects finance
HSG Classification contribution to scientific community
HSG Profile Area SOF - System-wide Risk in the Financial System
Refereed No
Date 25 March 2022
Publisher SoF HSG
Place of Publication School of Finance Working Paper Series
Volume 2017
Number 14
Number of Pages 58
Official URL
Contact Email Address
Depositing User Geraldine Frei-Böbel
Date Deposited 27 Nov 2017 11:05
Last Modified 20 Jul 2022 17:33


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Füss, Roland; Lerbs, Oliver & Weigand, Alois: Do Local Governments Tax Homeowner Communities Differently? , 2022, 14.

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